G45 SPE (2017)


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
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
                                                   BIGGER, BETTER,
                                                   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

 4 NZTE Statement of Performance Expectations
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
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
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 Expectations


                                                                             INFRASTRUCTURE                  INNOVATION



                                                                                NATURAL                     SKILLED & SAFE
                                                                               RESOURCES                     WORKPLACES

                                 Goal: Exports to 40%
                                 of GDP by 2025

                                NZTE’s ASPIRATIONAL GOAL:
                                    15% + $5b by 2020*
                            TRADE CUSTOMERS                                  INVESTMENT CUSTOMERS
                            Annual F700                                      Annual
                            Customer Growth                                  Investment
                            % International
                            Revenue Growth                                   $ pDEI

         $ Trade              # International              $ International                     % Customer View:                      $ Investment
     Customer Deals          Growth Outcomes               Growth Fund:                       F700 customers in a                        Deals
                                                            pDEI & rDEI                       stronger position to
                                                                                              grow internationally

  # 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

                                         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

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 Expectations9
Statement 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

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 Expectations
International 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

Revenue Crown                                                                                           145.4
Revenue Other                                                                                              4.1
Total Revenue                                                                                           149.5
Expenses                                                                                                149.5
Total                                                                                                       0

                                                                NZTE Statement of Performance Expectations11
International 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
Total value of trade deals9                  Exceeds 2014/15                   $1.5b                            Exceeds 2015/16                     $1.5b
achieved with NZTE                           result                                                             result
Number of International                      Meets or exceeds                  635                              Meets or exceeds                    700
Growth Outcomes (IGOs)                       2014/15 result                                                     2015/16 result
achieved with NZTE
% 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
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
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 Expectations13
Services 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

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 Expectations
Collaborative 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
                                                                                    • Leveraging special events

Collaborative activity and special events 2017/18 revenue and expenses

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 Expectations15
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

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 Expectations

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


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)

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 Expectations17
Consultation 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 Expectations
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 Expectations19
Statement of Comprehensive Revenue and Expense


 Revenue Crown Operating                                  166,349
 Revenue Crown Grants                                       31,231
 Other operating income                                     4,899
 Finance income                                               610
 Total revenue                                            203,089

 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 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

 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 Expectations
Statement of Financial Position

 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 Expectations21
Financial statements
Statement of Costs by Output Expense

 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
 Total                                                                          166,349


 Revenue from Crown – operating                                                 156,633
 Revenue fromof Grant
              Crown    Expense
                    – grants                                                     22,083
 Customer revenue                                                                   236
 Other operating revenue                                                         12,988
 Finance revenue                                                                  5,330
  Total revenue                                                                 197,270
 International Growth Fund                                                       30,027
 Sector Strategies and Facilitation
 Expenditure                                                                       1,204
 Personnel costs                                                                 31,231
 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
 Surplus/(deficit) before income tax                                              8,189

 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

Explanations of significant variances against budget are detailed in note 25.
The accompanying notes form part of these financial statements.

22NZTE Statement of Performance Expectations
Statement of Cash Flows

 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 Expectations23
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:
• 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 Expectations
Revenue 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.
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.
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 Expectations25
IMPAIRMENT 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 Expectations
Concentration 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.

                                                                     NZTE Statement of Performance Expectations27
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