STATEMENT OF PERFORMANCE EXPECTATIONS 2017/2018 - NZ Parliament
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G45 SPE (2017) STATEMENT OF PERFORMANCE EXPECTATIONS 2017/2018
CONTENTS
02 Setting the scene
05 Our strategy
07 What we will focus on in 2017/18
08 Measuring our performance
09 NZTE’s Performance Framework
10 Statement of Performance Expectations
18 Consultation and Reporting
19 Prospective Financial Statements
for the Year Ending 30 June 2018
28 NZTE’s International Network
NZTE Statement of Performance Expectations1
SETTING THE SCENE
New Zealand Trade and Enterprise (NZTE), and protectionism are alive and well, and in
Te Taurapa Tūhono, is the Government’s turbulent global markets, New Zealand’s small
international business development agency. companies can be easily buffeted.
We take our direction from the Government’s
To mitigate the challenges of distance and scale,
Business Growth Agenda (BGA) which aims to
and to build resilience in an increasingly volatile
create a diverse and internationally connected
environment, New Zealand needs to become more
economy to deliver improved quality of life for
internationally connected through flows of people,
New Zealanders. Alongside other New Zealand
technology and ideas, and to ensure that we have a
government agencies, NZTE is a key player in
diverse goods and services export mix, to a broader
contributing to the BGA’s goal of increasing
range of markets, for higher value. These themes of
exports to 40% of GDP by 2025. From this,
the BGA and its ambitious goals are NZTE’s ‘light on
NZTE has a clear purpose: to grow companies
the hill’ – it guides us to where we need to be.
internationally — bigger, better, faster — for the
benefit of New Zealand. We know we’re up against some tough challenges
from our external environment, but at NZTE, we
As a small country on the edge of the world,
remain optimistic. Through the BGA we have a
New Zealand cannot become prosperous selling
clear and coherent path ahead; and we believe
to itself. We need to go global. Scale and distance
that NZ Inc 1 , (our partners within government and
remain issues for New Zealand companies growing
the business community) is more joined up than it
internationally, in terms of the comparative size
ever has been. We also believe that there is huge
of our companies, and distance from markets.
potential for Māori economic development and
In addition, we face a challenging external
our regions to contribute to New Zealand’s future
environment. The forces of anti-globalisation
(Left to right) Robin Hapi, Charles Finny, Jennifer Kerr, Andrew Ferrier, Wayne Norrie, Charlotte Walshe, Carmel Fisher, Peter Chrisp.
1 NZ Inc agencies include the Ministry of Foreign Affairs (MFAT), the Ministry of Business, Innovation and Employment (MBIE),
Callaghan Innovation, the Ministry of Primary Industries (MPI), the Treasury, Te Puni Kōkiri and others.
2NZTE Statement of Performance Expectations
prosperity. NZTE has performed strongly in the last marketing. We also provide services to boost our
few years, and we continue to learn how to have customers’ global reach, for example, in-market
greater impact for our customers. immersion, investor connections and access to
trade promotions events.
In 2017/18, we will continue to support the BGA by
focusing on our strategy of growing a diversified Having reached our previous goal of 10%
portfolio of knowledge-intensive, value-adding international revenue growth in 2016, earlier
companies and coalitions. We will also continue to than anticipated, we’ve set ourselves a new, very
contribute to the BGA Investment workstream, to ambitious goal. Our aim is to reach a customer
support and attract investment to accelerate growth growth rate of 15% 2 for our F700 portfolio and to
throughout New Zealand. achieve an investment impact of $5b3 by 2020 4 .
In short, to reach 15% + $5b by 2020. This is a
NZTE has two operating models for our two
deliberately aspirational goal which, for NZTE,
overlapping groups of customers: The Customer
will stretch our thinking and drive us towards
Way, and The Investment Way. The Customer Way
achieving exceptional outcomes for our customers.
is how we work with our trade customers. This
By focusing our efforts on achieving 15% + $5b
includes intensive engagement with the Focus
by 2020, we’re setting our sights on making
700 (F700) portfolio and coalitions, and a lighter
a significant contribution to the BGA goals.
touch engagement with our Foundation ‘Build’ and
Foundation ‘Start’ customers. To drive the delivery of great impact for our
customers and achieve our goals, we commenced
The Investment Way is our operating model for ‘Ascent’, our three-year change programme.
investment customers. We work with New Zealand NZTE will continue to work on implementing and
sectors, regions and companies to identify embedding our Ascent programme in 2017/18.
and develop opportunities, then match these Through Ascent, our aims are to increase quality
opportunities with investors, both in New Zealand investment, to relentlessly focus on growth, and
and overseas. to deliver breakthrough customer experiences.
NZTE’s global presence enables us to deliver value To deliver this, we are progressing on a journey
to our customers through our ‘know-how’ for within NZTE to align our operating model, culture
international growth and ‘know-who’ to make the and leadership with our customers’ needs. We
right connections along the way. Our know-how know that we can only provide optimal value to
and know-who is expressed in our Māori name: our customers if our global team is aligned in
Te Taurapa Tūhono. Te Taurapa is the stern post of terms of how we work together.
a traditional Māori waka, which records valuable We will continue to work closely with our NZ Inc
knowledge, and stabilises and guides the craft partners, as we believe that NZTE has an integral
forward. Tūhono represents connections to people role to ensure the effective flow of information,
and an ability to build relationships. NZTE has a team insights and knowledge, in both directions. For
of highly connected and knowledgeable people example, in the coming year, we will work with MFAT
around the world, wrapped around the customer to utilise their knowledge to keep our customers
and sharing a common goal: international growth. informed on global trade and economic trends and
For both sets of customers, we deliver services in export opportunities.
New Zealand and in international markets. These To achieve success, we’ll need to execute our
include capability building services such as Export strategy with sustained focus and energy. We are
Essentials, investment readiness, and digital determined to do just that.
Andrew Ferrier Charles Finny Peter Chrisp
Chair, NZTE Board NZTE Board Chief Executive, NZTE
2 15% International Revenue Growth for our portfolio of Focus 700 customers under $500m.
3 $5 billion in investment impact, also known as pDEI: potential Direct Economic Impact.
4 By the end of the 2020/21 financial year.
NZTE Statement of Performance Expectations3
To grow
WHY companies
internationally
BIGGER, BETTER,
FASTER
for the benefit of
New Zealand.
KNOW HOW & KNOW WHO
To grow companies internationally
CUSTOMER WAY INVESTMENT WAY
Growing companies Matching investors
WHAT from New Zealand with opportunities
OUR ASPIRATIONAL GOAL
15% + $5B by 2020
AMBITION DRIVES US
ADVENTURE TEACHES US
HOW HONESTY FREES US
TRUST BINDS US
MANAAKI IS US
4NZTE
4 NZTE Statement of Performance Expectations
OUR STRATEGY
Our purpose A coalition is a self-selected, business-led group
of companies, who are willing to work together
At NZTE, we’re here to be part of something
for a common go-to-market purpose. Companies
that is bigger than ourselves: to grow companies
who form a coalition can benefit by sharing
internationally — bigger, better, faster — for the
knowledge, and leveraging collective resources,
benefit of New Zealand.
expertise and technology to bolster their chances
NZTE is uniquely positioned to do this through our of long term success.
global network and our government ‘imprimatur’.
Our Foundation customers are at an earlier stage
We have a network of over 600 people across
in their international journey. They are either
40 locations. This gives our customers a bigger
committed to getting started, already exporting
footprint on the world stage than they could
and wanting to become better or they may be
ever have by themselves, helping to mitigate the
companies who prefer a less intense engagement.
challenge of scale and distance. NZTE’s government
NZTE supports Foundation customers with the
imprimatur or endorsement, provides credibility and
practical tools, knowledge and advice they need to
mana to help open doors for companies in markets
start or build their international journey.
around the world.
The Investment Way is our operating model for
Know-how and Know-who investment customers, focused on matching
investment with opportunities. NZTE is a major
Our global presence enables us to deliver value
contributor to the BGA Investment workstream,
to our customers through our ‘know-how’ for
which has a key priority to support and attract
international growth, and ‘know-who’ to make the
investment to accelerate growth throughout
right connections along the way. Having people
New Zealand. To match quality investment with
in locations around the world gives us in-depth
opportunities, NZTE identifies and develops
knowledge and experience of how to compete in
New Zealand investment opportunities in target
a range of markets. Our people have the sharp
sectors and regions. To help companies prepare for
commercial, investment and advisory skills to lift
investment, we work with them to build capability
international growth. This is our ‘know-how’.
and become investment ready. Then we connect
Our ‘know-who’ is the global network of committed New Zealand opportunities with investors identified
people in New Zealand and around the world who through our networks internationally and in
we can call upon in our customers’ interests. This New Zealand.
includes NZ Inc partners, industry leaders, local
Our Māori business strategy is integrated into
business people or expat Kiwis. We can help with
our overall strategy, with the same areas of focus.
connections to experts who are experienced in
NZTE’s Māori F700, Coalition and Investment
running international businesses, both in New Zealand
teams have strong knowledge of Māori business,
and in market, as well as partners and distributors,
culture and economic development, with deep
local experts, investors and other businesses at a
connections within Māoridom. NZTE plays an active
similar stage on their international journey.
role in the implementation of the Māori Economic
Development Strategy: He kei kai aku ringa. We
Operating models: The Customer are committed to growing more Māori companies
Way and The Investment Way of international scale across a range of industries,
Our two business models, The Customer Way, and developing more commercial leaders and mobilising
The Investment Way reflect our two defined groups more capital and partners. Our focus is working with
of customers. For each group, we have specific ways high intensity Māori companies to increase the value
of working and outcomes we are aiming towards. We of Māori exports year on year, and to increase the
work with trade customers using The Customer Way. pDEI from investment deals.
In order to use our resources most effectively and
achieve the most impact, we segment our customer What we offer our customers
base, with the majority of our efforts on the F700 For both investment and trade customers, we
portfolio and coalitions. We’ve weighted the F700 deliver services in New Zealand and in international
towards ICT, high value F&B, specialised manufacturing markets. NZTE provides capability building services
and Māori companies, reflecting the BGA commitment to strengthen a customer’s business such as Export
to grow a diversified value-added economy. Essentials, market research and connections with
NZTE Statement of Performance Expectations5
Beachheads advisors 5 . We boost customers’ global Our aspirational goal:
reach with information about trends in markets and
sectors, and connect customers with local experts,
15% + $5b by 20206
potential distributors, and customers. In addition, NZTE’s aspirational goal is to achieve 15% customer
we provide investment readiness advice and growth and $5 billion in investment impact by 2020.
connections to international and local investors. This is a very ambitious goal. It is designed to stretch
our thinking and push toward the BGA goals. Our
Working with NZ Inc ambition for customers is high and we expect a lot
Our NZ Inc partners are fundamental to delivering from ourselves.
our strategy. They provide expertise and services We measure customer growth based on the
that benefit our customers, and are beyond NZTE’s international revenue of the F700 (under $500m).
expertise. NZTE works with agencies such as MFAT, Once we’ve reached 15%, the goal is to achieve this
MBIE, MPI and Callaghan Innovation on a range level of growth each year after that – so in effect
of activities such as resolving non-tariff barriers, each year we start afresh.
ensuring companies know how to benefit from
Free Trade Agreements, and identifying and co- For investment, we measure the potential Direct
ordinating work with shared customers. Economic Impact (pDEI)7 calculated from
investment deals. We’re increasing the pDEI goal
NZTE works closely with MFAT on G2G Know-How, each year until we reach $5 billion in 2020. Again,
a partnership to take New Zealand governmental the goal is to achieve this level of pDEI each year
skills, systems and know-how to market on a after 2020.
commercial basis. NZTE also assists with the
New Zealand Story, an online free marketing toolkit
One Global Team
to help companies showcase the unique value that
We know that we can only provide optimal value to
New Zealand offers the world through our people,
our customers if our global team is aligned in terms
culture and character.
of how we work together. We share five ‘characters’,
which guide our actions and behaviour. It’s what
we do and how we treat others. Ambition drives us,
Adventure teaches us, Honesty frees us, Trust binds
us and Manaaki is us.
It’s about how we do what we do – we want to
embody these characters to work across continents
and time zones. We believe that together, as One
Global Team, we can show the world just how big
a small country can be.
Ambition Drives Us Adventure Teaches Us
Our ambition for our customers is high, Experimentation is more powerful than
and we always rise to the occasion. perfection as only through learning
We help meet their business from our missteps can we truly
expectations by expecting succeed. That’s why ‘giving it a
greatness of ourselves. go’ is the best way to learn.
Honesty Frees Us
Clarity of action can only come
GLOBAL TEAM Trust Binds Us
Our people may be worlds apart,
from ‘brave conversations’. That’s but it’s trust that holds us together.
why every interaction welcomes Growing a nation is only possible
deep exploration, intellectual when we keep promises and
challenge and absolute honesty. honour commitments.
Manaaki Is Us
We celebrate the mana (strength and
dignity) of each other as being equal
to or greater than our own.
We strive to enhance mana
in everything we do through
our hospitality, generosity
and mutual respect.
5 Our Beachheads Program connects participating companies to a network of 6 By the end of the 2020/21 financial year.
private sector advisors in New Zealand and around the world who provide insights 7 Potential Direct Economic Impact is the forecast return to the economy though
into the realities of growing internationally successful businesses. increased profits, wages and supplier spend.
6NZTE Statement of Performance Expectations
WHAT WE WILL FOCUS ON IN 2017/18
We will continue to support the BGA by Ascent: Knowledge, leadership
focusing on our strategy of growing a diversified
portfolio of knowledge-intensive, value-adding
and capability
companies and coalitions. We will also continue As part of Ascent, we are progressing on a journey
to contribute to the BGA Investment workstream, within NZTE to align our operating model, culture
to support and attract investment to accelerate and leadership with our customers’ needs. We
growth throughout New Zealand. We will focus know that we can only provide optimal value to our
on implementing and embedding our change customers if our global team is aligned in terms of
programme, ‘Ascent’, to drive the delivery of how we work together.
greater impact for our customers. Our work with We are working to make our collective knowledge
NZ Inc is another important area for NZTE in more accessible and usable. We will also be focusing
2017/18, with activities planned with many of our on aligning and embedding our culture, capability
NZ Inc partners. and leadership so that we can work together
In particular, in 2017/18, NZTE will focus on the effectively as a global team and have
following areas: greater impact for our customers.
Ascent: Increase catalytic Delivering with NZ Inc
investment While our Ascent challenges will involve engaging
with other NZ Inc agencies, we will also work with
This means attracting quality investment into
NZ Inc on the following:
New Zealand’s regions, target sectors and
companies. We will be scoping and developing • Leading the commercialisation of government
innovative projects like Project Palace, and work with knowledge through G2G Know-How
regions to grow the pipeline of regional investment • Investing in the NZ Story as a comprehensive and
prospects and finalise the Regional Investment compelling narrative to support the successes of
Attraction model. We will also work to address the New Zealand businesses on the world stage
capital raising needs of early stage companies, and
• Alongside MBIE, gaining better understanding of
the investment needs of our F700 customers.
the broader exporter population and identifying
high-growth potential firms that may benefit from
Ascent: Relentless focus NZTE’s support, and using cost-to-serve analysis
on growth as part of ongoing management of the F700
We will develop deeper insights into the F700 to • Jointly with Callaghan Innovation, ensuring
enable more active and effective management of the effective and coordinated engagement around
portfolio. We will develop strategies to identify which shared customers
companies will most benefit from NZTE assistance • Using the knowledge gained through NZTE’s work
and to address poor performance in the F700. We with customers to inform wider policy development
will continue to embed The Customer Way, with
• Contributing information about export businesses
clear and sharp value propositions and engagement
into the Longitudinal Business Database in
models for our different customer segments.
conjunction with MBIE and Statistics NZ
• Incorporating MFAT’s knowledge of global
Ascent: Deliver breakthrough trade and economic trends to inform customers,
customer experiences identify emerging export opportunities, and
Having recently launched our new Export Essentials ensuring that NZTE’s work fits within the broader
module for Foundation customers, we will focus on ‘trade policy’ framework
bedding this in, which includes rolling out workshops in • Continuing to identify non-tariff barriers impacting
regions across New Zealand. We will continue to improve on specific exporters
our support to Foundation customers, with emphasis
• Agreeing with MPI how to gather and use
on online tools, and more one-to-many services and
data to assist exporters to capture emerging
activities to help more early stage companies.
opportunities, including through their Exporter
We will also ensure that we have a defined, fit- Regulator Advice service.
for-purpose and scalable service offering and
evolve our service delivery to meet our customers’
changing growth needs. This includes reviewing
service locations and delivery modes.
NZTE Statement of Performance Expectations7
MEASURING OUR PERFORMANCE
NZTE’s performance framework is closely aligned and engagement, including completion rate for
with the goals of the BGA agenda, the actions in customer growth plans and the Net
and is directed towards customer growth. Promoter Score for our services.
We have two headline growth measures, for our We know that we need to have robust organisational
two sets of customers. These provide us with a health to achieve the outcomes we’re striving
clear view to how we are progressing towards our for. This means keeping our finances healthy and
aspirational goal 15% + $5b by 2020, and alongside keeping a close eye on the health, safety and
this, the longer term BGA focus. These are: engagement of employees.
• Are trade customers growing their To keep us on track, our Board and Leadership
international revenue? Team monitor organisational performance through
• Are we attracting and matching high a monthly dashboard of key performance indicators.
quality investment? For example, we measure International Growth
Outcomes (IGOs), which are earlier in the pipeline
NZTE’s impact on our customers is the key to than deals. IGOs relate to commercial results or
achieving growth. We look at measures such as: milestones that create a new platform and/or
capability for NZTE customers, such as opening an
• Are trade customers achieving deals in-market
office or hiring staff in-market.
as a result of our efforts?
• Do our customers perceive that we are At an operational level, team dashboards provide
adding value? performance information to support and improve
our decision making capabilities.
To deliver impact, we need to ensure that we are
effectively engaging with our customers, actively The full set of top level performance measures are
managing our portfolios and pipelines, and providing included on the following page.
services that will achieve results for our customers.
We have a range of indicators to track our servicing
8 NZTE | STATEMENT OF PERFORMANCE EXPECTATIONS
8NZTE Statement of Performance ExpectationsNZTE’S PERFORMANCE FRAMEWORK
BUSINESS
EXPORT
MARKETS
GROWTH
INFRASTRUCTURE INNOVATION
BUSINESS
GROWTH
AGENDA
AGENDA
NATURAL SKILLED & SAFE
RESOURCES WORKPLACES
Goal: Exports to 40%
of GDP by 2025
INVESTMENT
NZTE’s ASPIRATIONAL GOAL:
15% + $5b by 2020*
TRADE CUSTOMERS INVESTMENT CUSTOMERS
Annual F700 Annual
Customer Growth Investment
Impact
% International
Revenue Growth $ pDEI
IMPACT MEASURES: CONTRIBUTIONS TO GROWTH
$ Trade # International $ International % Customer View: $ Investment
Customer Deals Growth Outcomes Growth Fund: F700 customers in a Deals
pDEI & rDEI stronger position to
grow internationally
SERVICING & ENGAGEMENT INDICATORS
# F700 # Foundation # Business # Active % Growth # IGF # Days # Services # NPS # Tier 1 # F700
Customers Customers accessing Coalitions Plan & SIF between IGF NPS All Investment Customers
RBPN Actions grants consent and Customers deals in the working with
completed approval pipeline Callaghan
Innovation
ORGANISATIONAL HEALTH
% H&S incidents and
hazards reported, # NPS:
% Employee % PDPs % Challenge Traffic % Budget
investigated and NZ Inc,
Engagement completed Lights (Green) Variance
controlled/closed IP & Strategy
within 4 weeks
GLOSSARY
F700 Focus 700 customers SIF Strategic Investment Fund PDP Performance Development SPE Measures
pDEI Potential Direct NPS Net Promoter Score Plan
Non SPE Measures
Economic Impact RBPN Regional Business IGF International Growth Fund
rDEI Realised Direct Partner Network IP Internal Partners
Economic Impact H&S Health and Safety
* By the end of the 2020/21 financial year.
NZTE Statement of Performance Expectations9Statement of
Performance Expectations
Our core performance measures represent Our full suite of organisational measures is shown
the majority of NZTE’s spend and reflect in the diagram on the previous spread, and our core
the most important aspects of our business group of performance measures are set out in the
and performance. following pages.
NZTE is funded under two Multi-Category
Appropriations through Vote, Business, Science
and Innovation.
NZTE’S Multi-category appropriations 2017/18
$m
Category: International business growth services 145.4
Services to support the growth and development of New Zealand businesses 15.2
Collaborative activity and special events 5.8
Grants International Growth Fund 30.0
Sector Strategies and Facilitation – Strategic Investment Fund 1.2
Total 197.6
10NZTE Statement of Performance ExpectationsInternational business growth services
We support individual or groups of companies We help potential recipients of investment funds,
to enhance their global reach and grow in and investors looking to invest in New Zealand
international markets, and match quality business opportunities by:
investment with opportunities, the growth • Identifying and connecting with investors
of whom benefits New Zealand. This output domestically and internationally
category is our greatest area of focus. • Matching quality investment with New Zealand
opportunities in target sectors
We help individual or groups of companies to
internationalise by: Our customer managers and international teams
provide tailored support, advice and linkages for our
• Improving their capability and readiness
internationalising customers. Around this, we wrap
• Identifying and exploiting market opportunities services to build capability, connect with global
• Overcoming internationalisation barriers and opportunities, access capital and develop effective
enabling access to international business networks strategies for growth.
International business growth services 2017/18 revenue and expenses
$m
Revenue Crown 145.4
Revenue Other 4.1
Total Revenue 149.5
Expenses 149.5
Total 0
NZTE Statement of Performance Expectations11International business growth services Performance Target Actual Target Target Measure 2015/16 2015/16 2016/17 2017/18 Annual growth in 3 percentage points 5.6 percentage 3 percentage points 3 percentage points international revenue for above NZ export points above NZ above NZ export above NZ export NZTE’s F700 customers benchmark.8 export benchmark. benchmark. benchmark. with international revenue under $500m. $ potential Direct Economic Baseline $2b $1.5b $2b Impact (pDEI) for investment deals Total value of trade deals9 Exceeds 2014/15 $1.5b Exceeds 2015/16 $1.5b achieved with NZTE result result involvement Number of International Meets or exceeds 635 Meets or exceeds 700 Growth Outcomes (IGOs) 2014/15 result 2015/16 result achieved with NZTE involvement10 % F700 that consider to a New measure 60%12 great or very great extent in 2017/18 that NZTE has put them in a stronger position to grow internationally11 Total Net Promoter New measure +3014 Score for Build in 2017/18 Foundation customers13 Total Net Promoter Score +45 +50 +45 +50 for NZTE services 8 In 2015/16 and 2016/17, NZTE measured the F700 (less than $500m) portfolio against the ‘NZ Goods & Services Exports Benchmark’. The Benchmark, calculated by NZTE, is a subset of the total NZ Goods & Services exports (sourced from Statistics New Zealand) which only includes companies with exports under $500m, and in similar sectors as the F700. The model adjusts for the difference in financial year end reporting dates, to create a ‘like for like’ comparison. The measure excludes customers who have changed their financial year-end, have not provided financial data at year-end or had other types of incomplete financial data. 9 A deal is a sale of goods and services with a dollar value over a defined time period, achieved with the assistance of NZTE. The deal value should generally be calculated over a 12 month period, but can be calculated beyond this period if it is specified in an agreed signed contract 10 An IGO is a result achieved with the assistance of NZTE, that is not a sale, but that provides a significant platform for future international growth. 11 This is a new measure in 2017/18 which replaces the previous measure, %F700 that agree or strongly agree NZTE has added value to their business. 12 NZTE monitored this result internally in 2016/17 and therefore chose to set a target in 2017/18 rather than a baseline. 13 This is a new measure in 2017/18 which replaces the previous measure % Build Foundation that agree or strongly agree that NZTE has added value to their business. The Net Promoter Score is calculated by taking the percentage of promoters (those that gave a score of 9 or 10) and subtracting the percentage of detractors (those that gave a score of 0 to 6). This is a measure of how likely customers are to promote the service to others, and is an indicator of the perceived value added by that service. 14 NZTE monitored this result internally in 2016/17 and therefore chose to set a target in 2017/18 rather than a baseline. 12NZTE Statement of Performance Expectations
International business growth services
Activity Activity Standard Actual Activity Standard Activity Standard
Indicator 2015/16 2015/16 2016/17 2017/18
15
Number of F700 customers 675-725 705 690-720 670-730
in NZTE’s customer portfolio
Total number of customers 3000-3500 3850 3000-3500 (demand 3500
in NZTE’s foundation (demand driven) driven) (demand driven)
customer portfolio
Number of coalitions under 25 (demand driven) 19 20 (demand driven) 25 (demand driven)
active management
15 Performance standard is the number of F700 customers in NZTE’s customer portfolio at the end of the financial year.
NZTE Statement of Performance Expectations13Services to support the growth and
development of New Zealand businesses
We build and enhance business and management The Regional Business Partner Network is a network
capability by providing access to effective assessment, of 14 regional organisations that are jointly funded
advice, training, mentoring and information. by NZTE and Callaghan Innovation to deliver
specialist services, support and funding, to enhance
Services funded under this output category are
business management capability and grow business
mainly delivered via the Regional Business Partner
investment in research and development.
Network or other third party providers.
Services to support the growth and development of New Zealand businesses
2017/18 revenue and expenses
$m
Revenue Crown 15.2
Revenue Other 0
Total Revenue 15.2
Expenses 15.2
Total 0
Services to support the growth and development of New Zealand businesses
Performance Target Actual Target Target
Measure 2015/16 2015/16 2016/17 2017/18
Total Net Promoter Score Meets or exceeds +48 +50 +60
for the Regional Business 2014/15 result
Partner Network
Services to support the growth and development of New Zealand businesses
Activity Activity Standard Actual Activity Standard Activity Standard
Indicator 2015/16 2015/16 2016/17 2017/18
Number of businesses 2,500 4,410 5,000 5,000
receiving business (demand driven) (demand driven)
development services
through the Regional
Business Partner Network
14NZTE Statement of Performance ExpectationsCollaborative activity and special events
We collaborate with other New Zealand agency Activities within this output class include:
partners to leverage New Zealand’s profile in • G2G Know-How – established with MFAT to
international markets, and secure and capitalise internationalise our public sector skills, systems
on special events or opportunities that support and know-how
New Zealand’s export growth. • The New Zealand Story – a free business
toolkit, delivered with NZ Inc partners to help
New Zealand businesses promote themselves
internationally
• Leveraging special events
Collaborative activity and special events 2017/18 revenue and expenses
$m
Revenue Crown 5.8
Revenue Other 0.8
Total Revenue 6.6
Expenses 6.6
Total 0
Collaborative activity and special events
Performance Target Actual Target Target
Measure 2015/16 2015/16 2016/17 2017/18
Value of contracts secured $21m $12.9m $21m $16m16
through G2G Know-How Cumulative target Cumulative target
for the period for the period
Jan15-Jun18 Jul17-Jun19
Total Net Promoter Score for Baseline 2015/16 +52 Meets or exceeds +52
the New Zealand Story 2015/16 result
Total number of New measure in Baseline
organisations working with 2017/18
Callaghan Innovation and
NZTE as an F700 customer
16 The G2G Know-How targets have been updated to be based on cumulative periods. These longer periods take into account the uneven nature of G2G deals and the time
required to negotiate deals between governments. Due to the budget rollover of G2G Know-How, the previous period was to Jun 18, but will now end in Jun 17 and be
reported on in NZTE’s 16/17 Annual Report. The new cumulative period will commence in Jul 17.
NZTE Statement of Performance Expectations15Grants
NZTE administers two grants:
International Growth Fund (IGF) Sector Strategies and Facilitation
The IGF supports high-growth businesses to carry – Strategic Investment Fund
out additional market development and business The Strategic Investment Fund co-funds feasibility
capability activities required for internationalising studies. These studies are used to develop and
and growth in new markets. This delivers benefits present the business case for investment in
for both the businesses concerned and the wider New Zealand.
New Zealand economy.
Grants 2017/18 revenue and expenses
$m
International Growth Fund
Revenue Crown 30.0
Revenue Other 0
Total Revenue 30.0
Expenses 30.0
Total 0
Sector Strategies and Facilitation
Revenue Crown 1.2
Revenue Other 0
Total Revenue 1.2
Expenses 1.2
Total 0
16NZTE Statement of Performance ExpectationsGrants
Performance Target Actual Target Target
Measure 2015/16 2015/16 2016/17 2017/18
Potential Direct Economic 4 to 1 5.5 to 1 4 to 1 4 to 1
Impact ratio for approved
IGF grants17
Realised Direct Economic 4 to 1 5.8 to 1 4 to 1 4 to 119
Impact ratio for completed
IGF projects18
Grants
Activity Activity Standard Actual Activity Standard Activity Standard
Indicator 2015/16 2015/16 2016/17 2017/18
Number of IGF grants 60 (demand driven) 123 80 (demand driven) 80 (demand
awarded driven)20
Number of SIF grants 6 (demand driven) 3 6 (demand driven) 6 (demand driven)
awarded
17 Potential DEI is the forecast return to the economy through increased profits, wages and supplier spend. The target is $4 for every dollar invested (by both business and
government). The potential DEI return of 4x is measured after adjusting each application and the portfolio by a risk factor of 35%. Potential DEI does not apply to market
validation and coalition projects.
18 Results are based on completed IGF projects for IGF grants approved in the preceding five years.
19 rDEI is based on results from completed IGF projects for IGF grants approved in the preceding five years so the same target has been retained.
20 This demand driven activity standard remains at the same level in 2017/18. This is due to a diminishing pool of F700 companies not already engaged with an IGF, and a
sharper focus on quality IGF applications.
NZTE Statement of Performance Expectations17Consultation and Reporting
As a Crown Agency, our agenda and direction is • Any activities that are potentially outside of the
set by the government; therefore, we consult with scope of appropriations made by Parliament or
and report to Ministers regularly. The Board and/ relevant legislation applying to NZTE
or the Chief Executive provide the Minister for • Any significant organisational decisions that will
Economic Development and the Minister of Trade give rise to Parliamentary interest or public debate.
with regular reports.
The Board reports to joint Ministers annually on
Three progress reports will be provided in 2017/18 full-year performance against the SPE. This report
for the periods July – October, November – February also includes Board updates regarding fees and
and March – June. These will be provided within allowances paid, and attendance levels.
30 days following the end of each period. These
NZTE is also committed to sharing information
reports will cover:
with our NZ Inc partners. We undertake to provide
• Progress against key performance indicators regular updates, insights and analysis on areas of
• Key organisational risks mutual interest.
• Financial management Lastly, we will be working with MBIE to share
Ministers and relevant government agencies are knowledge and practices so that we can better
consulted before NZTE makes a decision regarding: understand and demonstrate our impact on
companies and the economy.
• Any material change in the capability and
functionality of NZTE’s network (in New Zealand
and internationally)
18NZTE Statement of Performance ExpectationsProspective
Financial Statements
For the year ending 30 June 2018
Prospective Financial Other information
Statements – 2017/18 These statements have been prepared on the basis
of government policies and NZTE outputs at the
These statements are presented in accordance
time the statements were finalised.
with the requirements of the Crown Entities Act
2004, which includes the requirement to comply Please note that this is forecast information and
with New Zealand generally accepted accounting therefore the actual results achieved for the period
practice (NZ GAAP). The prospective financial may vary from the information presented due to
statements have been prepared in accordance external factors.
with Tier 1 PBE (public benefit entity) accounting The financial statements are presented in
standards, New Zealand PBE Financial Reporting New Zealand dollars and all values are rounded to
Standard No 42 – Prospective Financial Statements the nearest thousand dollars ($000). The functional
and other applicable financial reporting standards, currency of NZTE is New Zealand dollars.
as appropriate for Public Benefit entities.
NZTE Statement of Performance Expectations19Statement of Comprehensive Revenue and Expense
Budget
2018
$000
Income
Revenue Crown Operating 166,349
Revenue Crown Grants 31,231
Other operating income 4,899
Finance income 610
Total revenue 203,089
Expenditure
Personnel costs 87,469
Other operating expenses 79,389
Depreciation and amortisation expense 5,000
Grant expense 31,231
Total expenditure 203,089
NET SURPLUS/(DEFICIT) 0
OTHER OPERATING EXPENSES
Other operating expenses include the following
major categories: development and implementation
of iPlans, business capability services, rental expense
on operating leases and promotional activities.
Statement of Changes in Equity
Budget
2018
$000
Equity at the beginning of the year 21,642
Net operating Surplus/(Deficit) for the year 0
Total Recognised Revenue and Expenses 21,642
EQUITY AT THE END OF THE YEAR 21,642
20NZTE Statement of Performance ExpectationsStatement of Financial Position
Budget
2018
$000
Current Assets
Cash 7,196
Trade and other receivables 17,452
Crown debtor – grants 14,600
Prepayments 2,570
Deposits 1,073
Total Current Assets 42,891
Non Current Assets
Deposits 1,113
Property, plant and equipment 16,628
Intangible Assets 1,898
Total Non Current Assets 19,639
Total Assets 62,530
Current Liabilities
Trade and other payables 15,666
Employee benefits and provisions 6,050
Finance and other liabilities 280
Provisions – grants 14,600
Total Current Liabilities 36,596
Non Current Liabilities
Employee benefits 2,693
Finance and other liabilities 1,599
Total Non Current Liabilities 4,292
Total Liabilities 40,888
NET ASSETS 21,642
EQUITY 21,642
NZTE Statement of Performance Expectations21Financial statements
Statement of Costs by Output Expense
Budget
2018
$000
International Business Growth Services 145,382
Statement of Comprehensive Revenue and Expense
Services to Support the Growth and Development of NZ Businesses 15,181
Collaborative Activity and Special Events Budget
5,786
2018
Total 166,349
$000
Income
Revenue from Crown – operating 156,633
Statement
Revenue fromof Grant
Crown Expense
– grants 22,083
Customer revenue 236
Budget
Other operating revenue 12,988
2018
Finance revenue 5,330
$000
Total revenue 197,270
International Growth Fund 30,027
Sector Strategies and Facilitation
Expenditure 1,204
Total
Personnel costs 31,231
78,013
Depreciation and amortisation expense 5,004
Finance expense 1,615
Grant expense 22,083
Other operating expenses 82,366
Reconciliation: Statement of Costs by Output Class to Total Expenditure
Total expenses 189,081
Budget
2018
Surplus/(deficit) before income tax 8,189
$000
Statement of Costs by Output Class 166,349
Income tax (43)
Revenue Crown Grants 31,231
Sundry Revenue, including Interest 5,509
Total Expenditure perRevenue
Comprehensive Statement ofExpense
and Comprehensive Income 203,089
8,146
Explanations of significant variances against budget are detailed in note 25.
The accompanying notes form part of these financial statements.
22NZTE Statement of Performance ExpectationsStatement of Cash Flows
Budget
2018
$000
Net cash flows from:
Operating activities:
Revenue from Crown – operating 167,757
Revenue from Crown – grants 31,231
Client and other income 4,316
Interest received 610
Payments to suppliers (79,176)
Payments to employees (86,449)
Payments to grant recipients (31,231)
Capital Charge Paid (1,731)
Net Cash Flows from operating activities 5,327
Investing activities
Proceeds from sale of property, plant and equipment -
Purchase of property, plant and equipment (5,500)
Purchase of intangible assets (600)
Net Cash Flows from investing activities (6,100)
Net increase/(decrease) in cash and cash equivalents (773)
Cash and cash equivalents at beginning of year 7,969
BALANCE CASH AT END OF PERIOD 7,196
NZTE Statement of Performance Expectations23ACCOUNTING POLICIES
REPORTING ENTITY REVENUE CROWN OPERATING
NZTE is a Crown Agency as defined by the Crown AND REVENUE CROWN GRANTS
Entities Act 2004 and is domiciled in New Zealand. NZTE receives funding from the Crown for the
NZTE’s parent is the New Zealand Crown. specific purposes of NZTE as set out in the
The consolidated financial statements of the Group Statement of Performance Expectations and the
consist of the parent entity, NZTE and it’s subsidiaries, scope of the relevant government appropriations.
NZ G2G Partnerships Ltd, NZTE Limited and the NZTE considers there are no conditions attached to
wholly owned foreign entity, New Zealand Trade and the funding and it is recognised as revenue at the
Enterprise Consulting (Shanghai) Co. Limited. point of entitlement.
NZTE’s primary objective is to encourage and NZTE receives funding from the Crown for grants
promote economic development and investment as set out in the Statement of Performance
opportunities in New Zealand, as opposed to Expectations and the scope of the relevant
making a financial return. government appropriations. Revenue Crown
Grants is recognised when the revenue conditions
NZTE has designated itself as a public benefit entity have been met, which is when the related grant
(PBE) for financial reporting purposes. expenditure is incurred, and a grant receivable is
due. Grant expenditure is recognised when the third
Foreign currency transactions party recipient incurs expenditure that meets the
Foreign currency transactions (including those for grant conditions. These two revenue streams are
which forward exchange contracts were held) are considered non-exchange transactions.
translated into New Zealand dollars using the exchange
rates prevailing at the date of transaction. Foreign
CAPITAL CHARGE
exchange gains and losses resulting from the settlement
of such transactions and from the translation at year- The capital charge is recognised as an expense in
end exchange rates of monetary assets and liabilities the period to which the charge relates.
denominated in foreign currencies are recognised in the
Statement of Comprehensive Revenue and Expense. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand,
Accounting estimates and judgements deposits held on call with both domestic and
Application of NZTE’s accounting policies requires international banks, and other short-term, highly
the use of estimates and judgements. The estimates liquid investments, with original maturities of three
are based on historical experience and other factors months or less.
that are believed to be reasonable. Actual results
may differ from these estimates. The areas of TRADE AND OTHER
significant estimation and judgement are as follows:
RECEIVABLES
• grant accrual
Debtors and other receivables are initially measured
• useful lives of property, plant and equipment at fair value and subsequently measured at amortised
• useful lives of intangible assets. cost using the effective interest method, less any
provision for impairment.
SIGNIFICANT ACCOUNTING Impairment of a receivable is established when there
POLICIES is objective evidence that NZTE will not be able to
collect amounts according to the original terms of the
The following significant accounting policies, which
receivable. Significant financial difficulties of the debtor,
materially affect the measurement of financial
probability that the debtor will enter into bankruptcy,
results and financial position, have been applied
and default in payments are considered indicators that
consistently to all periods presented in these
the debtor is impaired. The amount of the impairment
financial statements.
is the difference between the asset’s carrying amount
and the present value of estimated future cash flows,
discounted using the original effective interest rate. The
carrying amount of the asset is reduced through the
use of an allowance account, and the amount of the
loss is recognised in the Statement of Comprehensive
24NZTE Statement of Performance ExpectationsRevenue and Expense. When the receivable is Depreciation
uncollectible, it is written off against the allowance Depreciation is provided on a straight-line basis on
account for receivables. Overdue receivables that have all property, plant and equipment at rates that will
been renegotiated are reclassified as current (i.e. not write off the cost of the assets to their estimated
past due). residual values over their useful lives. The useful
lives and associated depreciation rates of major
PROPERTY, PLANT AND asset classes have been estimated as follows:
EQUIPMENT Computer equipment
Property, plant and equipment asset classes consist 3 years 33%
of computer hardware, leasehold improvements,
Furniture and office equipment
furniture and office equipment, and motor vehicles.
4 to 5 years 20% to 25%
Property, plant and equipment are shown at cost, less
any accumulated depreciation and impairment losses. Leasehold improvements
Up to 9 years 11% to 33%
Leased assets
Motor vehicles
Leases where NZTE assumes substantially all the risks 4 years 25%
and rewards of ownership are classified as finance
leases. The assets acquired by way of finance lease Leasehold improvements are depreciated over
are stated at an amount equal to the lower of their the unexpired period of the lease or the estimated
fair value and the present value of the minimum lease remaining useful lives of the improvements, whichever
payments at inception of the lease, less accumulated is the shorter. The residual value and useful life of an
depreciation and impairment losses. asset is reviewed, and adjusted if applicable, at each
financial year end.
Additions
The cost of an item of property, plant or equipment INTANGIBLE ASSETS
is recognised as an asset only when it is probable Software acquisition and development
that future economic benefits or service potential Acquired computer software licences are capitalised
associated with the item will flow to NZTE and the on the basis of the costs incurred to acquire and
cost of the item can be measured reliably. Where an bring to use the specific software. Costs that
asset is acquired at no cost, or for a nominal cost, are directly associated with the development of
it is recognised at fair value when control over the software for internal use by NZTE, are recognised
asset is obtained. as an intangible asset. Direct costs include software
development, employee costs and an appropriate
Disposals portion of relevant overheads. Staff training costs,
Gains and losses on disposals are determined costs associated with maintaining computer
by comparing the proceeds with the carrying software, and costs associated with the development
amount of the asset. Gains and losses on disposals and maintenance of NZTE websites are recognised as
are included in the Statement of Comprehensive an expense when incurred.
Revenue and Expense.
Amortisation
Subsequent costs The carrying value of an intangible asset with a finite
Costs incurred subsequent to initial acquisition life is amortised on a straight-line basis over its useful
are capitalised only when it is probable that future life. Amortisation begins when the asset is available
economic benefits or service potential associated for use and ceases when the asset is derecognised.
with the item will flow to NZTE and the cost of the The amortisation charge for each period is
item can be measured reliably. The costs of day- recognised in the Statement of Comprehensive
to-day servicing of property, plant and equipment Revenue and Expense. The useful lives and
are recognised in the Statement of Comprehensive associated amortisation rates of major classes of
Revenue and Expense as they are incurred. intangible assets have been estimated as follows:
Computer software (developed)
3 to 5 years 20% to 33%
Computer software (acquired)
4 to 5 years 20% to 25%
NZTE Statement of Performance Expectations25IMPAIRMENT OF Financial instruments categories
NON-FINANCIAL ASSETS and fair value
The carrying amounts represent the fair values
Property, plant and equipment and intangible
of financial instruments. The carrying amounts of
assets that have a finite useful life are reviewed
financial instruments included in the Statement of
for impairment whenever events or changes in
Financial Position reflect the fair values of the financial
circumstances indicate that the carrying amount
instruments at balance date.
may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s
Estimation of fair values analysis
carrying amount exceeds its recoverable amount.
Major methods and assumptions used in estimating
The recoverable amount is the higher of an asset’s
the fair values of financial instruments are
fair value less costs to sell and value in use.
summarised below:
Value in use is depreciated replacement cost for an
asset where its future economic benefits or service Derivatives
potential are not primarily dependent on its ability The fair value of forward exchange contracts has
to generate net cash inflows and where NZTE been determined using a discounted cash flow
would, if deprived of the asset, replace its remaining valuation methodology based on quoted forward
future economic benefits or service potential. foreign exchange market rates.
If an asset’s carrying amount exceeds its recoverable Where discounted cash flow techniques are
amount, the asset is impaired and the carrying used, estimated future cash flows are based on
amount is written down to the recoverable amount. management’s best estimates and the discount rate is
The total impairment loss is recognised in the a market related rate for a similar instrument at balance
Statement of Comprehensive Revenue and Expense. date. Where other pricing models are used, inputs are
For assets not carried at a revalued amount, the based on market-related data at balance date.
reversal of an impairment loss is recognised in the
Statement of Comprehensive Revenue and Expense. Trade and other receivables
and payables
FINANCIAL RISK MANAGEMENT For receivables and payables with a remaining life of
less than one year, the notional amount is deemed
NZTE’s principal financial instruments (other than
to reflect the fair value.
derivatives), comprise cash and short-term deposits.
The main purpose of these financial instruments is
Capital management
to fund NZTE’s operations. NZTE has various other
NZTE’s capital is its equity, which comprises capital
financial instruments such as trade debtors and trade
injections by the Crown and accumulated funds.
creditors which arise directly from its operations.
Equity is represented by net assets. NZTE is subject
NZTE also enters into derivative transactions
to the financial management and accountability
consisting principally of forward currency contracts.
provisions of the Crown Entities Act 2004, which
The purpose of these is to manage the currency risks
imposes restrictions in relation to borrowings,
arising from NZTE’s operations and its sources of
acquisition of securities, issuing guarantees and
finance. It is NZTE’s policy that no trading in financial
indemnities and use of derivatives. NZTE will comply
instruments shall be undertaken.
with these restrictions throughout the period. NZTE
NZTE is exposed to credit risk, interest rate risk, manages its equity as a by-product of prudently
liquidity risk and foreign currency risk. NZTE’s senior managing revenue, expenses, assets, liabilities,
management oversees the management of these risks. investments, and general financial dealings to
NZTE’s senior management is supported by an Audit ensure that NZTE effectively achieves its objectives
and Risk Committee that provides assurance to senior and purpose, while remaining a going concern.
management and the Board that NZTE’s financial risks
are identified, measured and managed in accordance a) Credit risk
with NZTE’s policies and procedures and that financial In the normal course of business, NZTE is exposed to
risks are identified, measured and managed in credit risk from cash and term deposits with banks,
accordance with NZTE’s policies and risk objectives. trade and other receivables, and derivative financial
instrument assets. For each of these, the maximum
credit exposure is best represented by the carrying
amount in the Statement of Financial Position.
26NZTE Statement of Performance ExpectationsConcentration of credit risk from accounts Forecasted transactions
receivable are limited due to the large number NZTE has not designated its forward exchange
and variety of customers. MBIE is the largest contracts as cash flow hedges. Accordingly, fair
single debtor (approximately 99 percent). As the value movements in outstanding forward exchange
government-funded purchaser, it is assessed to be a contracts are accounted for either as a net gain or loss
low risk, high-quality entity. from derivative financial instruments directly in the
Statement of Comprehensive Revenue and Expense.
b) Interest rate risk
NZTE has interest rate risk arising from interest Recognised assets and liabilities
bearing Call Account and Term Deposit balances. Changes in the fair value of forward exchange
NZTE does not actively manage its exposure to contracts that economically hedge monetary assets
interest rate risk. and liabilities in foreign currencies and for which no
hedge accounting is applied are recognised in the
c) Liquidity risk Statement of Comprehensive Revenue and Expense.
Liquidity risk is the risk that NZTE will encounter Both the changes in fair value of the forward
difficulty raising liquid funds to meet commitments contracts and the foreign exchange gains and losses
as they fall due. Prudent liquidity risk management relating to the monetary items are recognised as
implies maintaining sufficient cash and ability to part of finance income and finance expense.
close out market positions.
NZTE manages liquidity risk by continuously
monitoring forecast and actual cash flow requirements.
d) Foreign currency risk
NZTE has offices overseas and undertakes
transactions denominated in foreign currencies. As a
result of these activities, exposures in foreign currency
arise. The currencies giving rise to this risk are
primarily the United States dollar, Chinese yuan, Euro,
Great Britain pound, Hong Kong dollar, Singapore
dollar, Canadian dollar, Japanese yen and Australian
dollar. It is NZTE policy to hedge foreign currency risks
and use forward and spot foreign exchange contracts
to manage this exposure. In accordance with Crown
policy, the foreign exchange contracts are completed
approximately nine months before the financial year
begins. The appropriation from the Crown for the
financial year is primarily based on the same foreign
exchange contracted rates.
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