Overview and outlook

Tourism Australia reported a $39.7 million (FY19: $0.2 million) net operating result for 2019/20. The operating surplus was mainly due to an additional $41.5 million from the Australian Government to assist bushfire recovery of Australia’s tourism industry, as well as a delay in the delivery of marketing activities due to COVID-19 travel restrictions. This has resulted in both an operating surplus and a stronger cash position of $68.7 million (FY19:$13.6 million) at year-end.

In 2019/20, Australia’s tourism industry was impacted by the worst bushfire season on record and thee ongoing global pandemic (COVID-19). At a national level, Tourism Australia has re-entered the domestic market and is working with state and territory tourism organisations and industry in fire affected regions on recovery measures. However, progress has been slowed due to the impact of COVID-19.

Due to Australian border restrictions and limited international travel demand, it is anticipated that Tourism Australia will devote additional resources to domestic campaigns in the short term. Whilst longer-term financial and economic effects of reduced international travel are not yet known, it is anticipated that activity and sponsorship from industry partnerships and overseas campaigns will reduce in the short term. Given the current environment, Tourism Australia has taken the opportunity to make us a stronger organisation for when borders reopen by investing in new content, development of australia.com, business events brand refresh, Aussie Specialist Program 2.0 and several industry initiatives.

Revenue

Tourism Australia receives revenue both from the Australian Government and from own sourced income. In 2019/20, Tourism Australia’s initial budget was $154.1 million. In January 2020, we were allocated an additional $41.5 million in bushfire recovery funding, bringing our total government funding to $198.2 million (2018/19: $155.4 million).

In 2019/20, Tourism Australia’s direct own sourced revenue decreased by 35 per cent to $15.9 million (2018/29: $24.4 million). The reduction is mainly due to cancellation of our major events (such as the Australian Tourism Exchange) due to COVID-19 travel restrictions.

Expenditure

Gross expenditure decreased by 3 per cent to $174.3 million in 2019/20 (2018/19:$180 million), which was primarily driven by reduced marketing activities in the second half of the year due to COVID-19. A weaker Australian dollar in China, Europe, UK and the USA increased gross expenditure in these markets.

An impairment cost was recognised in our 2019/20 financial statements for Matesong campaign asset losses. The campaign was halted in January 2020 due to the impact of Australia’s bushfires on the perception of Australia as a tourism destination. An impairment test was undertaken and approved by our Board which resulted in $7.8 million in impairment costs.

Remuneration expenses of $35.8 million (2018/19: $35.0 million) were 2 per cent higher than last year. This was mainly due to the weaker Australian dollar which impacted overseas payroll costs. The increase in remuneration costs of 2 per cent relates to increases in Australia (as per our Enterprise Bargaining Agreement) and higher wage growth in eastern markets.

Financial position

Financial assets

Net assets increased by $41.3 million to $62.2 million due to a stronger cash position at 30 June 2020. It is anticipated that cash will reduce in 2020/21 as the number of domestic campaigns and production assets are expected to return to a similar delivery pattern to 2018/19 thus reducing cash at bank.

Trade and other receivables were $2.2 million lower than in 2018/19. Of this, trade debtors were $1.4 million lower, with 100 per cent of receivables less than 30 days old. Foreign exchange losses of $2.6 million were recognised this year compared with $3.9 million in 2018/19.

Non-financial assets

The value of non-financial assets increased to $18.3 million in 2019/20 (2018/19: $17.6 million). This was due to increases in building assets of $9.7 million upon first-time adoption of AASB 16 Leases. This was partially offset by a $7.6 million decrease in tangibles for the impairment of the Matesong production asset due to COVID019.

Liabilities

Total liabilities for Tourism Australia increased by $12.3 million to $31.3 million, driven by recognition of $10 million in lease liability, with the adoption of AASB 16 Leases. There was an increase in year-end suppliers’ balance of $11.4 million (2018/19: $6.8 million) due to increased accruals for committed costs at the year end.