Statement of Intent healthalliance (FPSC) Ltd. Incorporating the Statement of Performance Expectations

Transcription

1 Statement of Intent healthalliance (FPSC) Ltd Incorporating the Statement of Performance Expectations

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3 Contents About healthalliance (FPSC) Limited... 2 Our Environment & Focus... 3 Role... 4 Stakeholder Engagement... 5 Governance and Accountability... 7 Organisation... 8 Business and Statutory Policies Statement of Performance Expectations Financial Statement of Significant Accounting Policies Page 2 healthalliance (FPSC) Limited Statement of Intent

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5 Introduction This Statement of Intent (SOI) has been prepared by healthalliance (FPSC) Limited, (the Company), in accordance with Part 4 of the Crown Entities Act This document sets out the organisation s strategic direction for the next four years, taking into account the current economic environment of increasing financial restraint. Government expectations (including the NZ Health Strategy), District Health Board (DHB) priorities, health sector efficiency programmes, legislative compliance and public sector accountability have all been considered and reflected in this Statement of Intent. The Statement of Performance Expectations has been included in this document. The Company is responsible for the Prospective Financial Statements and Statement of Performance Expectations contained in this document, including the appropriateness of the assumptions underlying them. Signed on behalf of healthalliance (FPSC) Limited: Paul Harper Board Chairperson healthalliance (FPSC) Limited Board Anthony Norman Director healthalliance (FPSC) Limited Board Date 01/07/16 Date 01/07/16 Page 1 healthalliance (FPSC) Limited Statement of Intent

6 About healthalliance (FPSC) Limited BACKGROUND healthalliance (FPSC) Limited is a wholly owned subsidiary of healthalliance N.Z. Limited. Incorporated in September 2013, in response to requirements from the health sector, the Company began operations in February 2014 and was intended to be the vehicle for delivery of national Finance, Procurement and Supply Chain services to DHBs and associated parties. In July 2014 the Company began providing National Procurement Services to New Zealand DHBs. In July 2015 it advanced its autonomy by appointing its first CEO. In December 2015 the Company became accountable for the Northern Region DHB s Supply Chain function. STATUS AS AN ENTITY As a wholly owned subsidiary of healthalliance N.Z. Limited, the Company is a Crown Entity Subsidiary in terms of the Crown Entities Act It is owned by a Crown Entity subsidiary and subsequently parented by multiple Crown Entities. healthalliance (FPSC) Limited is a public benefit entity. It is domiciled in New Zealand, as defined under NZ IAS 1 and incorporated in New Zealand. Its primary objective is to provide shared services to its DHB customers and where appropriate, these services are also provided for approved external organisations. As a Crown Entity operating within the public health sector, the Company complies (in so far as they are relevant) with the objectives and functions set out in the New Zealand Public Health and Disability Act (NZPHDA) in respect to DHBs, and the Crown Entities Act in respect to Crown Entities and Crown Entity subsidiaries. HISTORY ROAD MAP Page 2 healthalliance (FPSC) Limited Statement of Intent

7 Our Environment & Focus THE MINISTER OF HEALTH S EXPECTATION OF DHBS: The Minister of Health s Letter of Expectations has provided District Health Boards (DHBs), and their subsidiaries, with this year s funding envelope and the out-year assumptions to help prepare 2016/17 Annual Plans (December 2015). In this letter the Government acknowledges both fiscal constraints and the existence of compelling drivers to make new funding available for the improvement of health services. The Government released the revised New Zealand Health Strategy in April DHBs are required to drive change from the five themes of the refreshed strategy: + People powered + Closer to home + Value and high performance + One team + Smart systems Additionally, DHBs are required to focus on the following: + Living within their means + Working across Government + Achieving National Health Targets + Tackling obesity + Shifting and Integrating Primary Health Services + Supporting the Health IT Programme Delivery of requirements from the Minister s Enduring Letter of Expectations + Thinking beyond narrow definitions of health and collaborating with others to achieve wellbeing ASSISTING DHBS TO MEET THEIR TARGETS The Company has developed a set of strategic priorities which link to the national and regional strategies. A high level overview of the relationships is shown below. The nature of these linkages will be further explained in subsequent sections. At the time of writing, the scope of healthalliance (FPSC) services sit under Customer review. NZ Health Partnerships - on behalf of National DHBs - have recently finalised the DHB Procurement Strategy and Northern Region DHBs are undertaking a review of Supply Chain. The impact, implications and any changes to the final operating model for the Company are unclear at this time. Page 3 healthalliance (FPSC) Limited Statement of Intent

8 Role healthalliance (FPSC) has Strategic Priorities which are centred on assisting our DHB customers deliver their agreed health goals and aspirations. Through our people there is a core mission to deliver sustainable cost savings, drive efficiencies, and deliver professional, standardised, and customer centric services to DHBs. This enables us to realise our Purpose right behind better healthcare and our Vision to be the recognised experts in making the healthcare dollar go further. OUR PURPOSE Right behind better healthcare Providing non clinical services to DHBs for National Procurement and regional Supply Chain activities OUR VISION To be the recognised experts in making the health dollar go further We will assist the health sector to spend wisely, enabling DHBs to direct money to frontline clinical services, by providing savings, automated processes, efficiencies and standardisation. It is important that funding is used efficiently and effectively by the sector to improve health services for all New Zealanders. The Government expects the health sector will continue to manage within available funding structures and reduce deficits where they exist. Our activities, therefore, may be subject to agreement with our customers around funding and the prioritisation of resources. Streamlining and uniting processes, consistent application and shared service platforms will minimise the resources required to drive those processes. The Company enables DHBs to provide clinical service delivery through: + National Procurement and regional Supply Chain services - achieving savings and efficiency gains in addition to necessary disciplines and structures NATURE OF ACTIVITIES AND SCOPE This Statement of Intent describes how the Company will support its DHB customers to achieve their objectives over the next four financial years. The outputs provided by the Company can be summarised as follows: + Procurement + Supply Chain KEY PRIORITIES In order to meet our stated objectives (Our Purpose), and our deliverables, our key strategic priorities for the period of this Statement of Intent will include: + Delivery of Expected Benefits (Budgetary and Non Budgetary) + Transitioning medical device procurement to PHARMAC under an agreed timeline + Enabling Northern Region residual procurement efficiencies including contract management + Building efficiencies within Supply Chain activities + Integrating Procure to Pay synergies + Engaging our people in future operating models We will build stronger relationships with key stakeholders through appropriate governance models; growing our people to develop a highly performing staff culture and resilient leaders; and through collaboration on the right funding model. We expect our service leaders to actively maintain safe and high performing environments. We enable our people to be the best that they can be in their delivery of positive customer experiences. Page 4 healthalliance (FPSC) Limited Statement of Intent

9 Stakeholder Engagement A key element for success is successful partnerships with DHBs, and other health organisations, to support the delivery of benefits and savings. The Company s overall engagement framework is designed to raise awareness of our services at the appropriate level within each DHB. Key stakeholders are the business and clinical advocates for the service changes that we propose, particularly the implementation of Procurement and Supply Chain initiatives. The Company s employees engage at all levels in the DHB including: + National Advisory Groups + Regional Governance Groups + DHB Board + DHB Executive Team + DHB Management The Company is building strong relationships with other key stakeholders including MoH, MBIE, National Health Board, PHARMAC, other Service Providers, health agencies, and suppliers. NATIONAL COLLABORATION The Company plays a substantial role in the provision of National Procurement as well as local Procurement and Supply Chain services. The primary contract holder for National Procurement is New Zealand Health Partnerships (NZHP), which is owned by the 20 National DHBs and commenced trading on 1 July As part of our National Procurement Service, we engage and have formal relationships with NZ Health Partnerships, PHARMAC and MBIE to ensure that our procurement activities meet the needs of the sector. Page 5 healthalliance (FPSC) Limited Statement of Intent

10 NORTHERN REGION COLLABORATION In December 2015 the Company took over the accountability of delivering Supply Chain services to the Northern Region DHBs to complement its national and local focused procurement activities. Northern Region DHBs have initiated the establishment of regional governance groups to support regional decisionmaking. These governance groups include the: + Regional Governance Group + Regional CFO Group They provide strategic direction and alignment to regional planning and prioritisation guided through: + District Strategic/Annual Plans for DHBs + Health Sector efficiency programmes + National and Regional Plans including the Northern Region Health Plan and the Minister of Health s Letter of Expectations Page 6 healthalliance (FPSC) Limited Statement of Intent

11 Governance and Accountability CORPORATE The Board of healthalliance (FPSC) is appointed by its shareholder and has an independent Chair. The Board meets bi-monthly and the Audit and Risk Committee quarterly. The functions and purpose of the Company are set out in this Statement of Intent which has been developed on the basis of the Company s business plans. These mechanisms are supported by the Minister s Letter of Expectation to the shareholding DHBs and the contract between healthalliance (FPSC) and NZ Health Partnerships. The Company s performance is monitored by the Board and then by the Northern Region Regional Governance Group (comprising Northern Region Chairs, CEOs and CMOs) or New Zealand Health Partnerships Limited with respect to the contracts that they hold with healthalliance (FPSC). MINISTERIAL POWER TO DIRECT The Company will ensure that decision-making processes comply with all legislative requirements to consult with, or notify the Minister of Health. There is no intention to routinely or regularly report matters to the Minister. Any Ministerial Directions will generally be dealt with through the Board Chairperson. INFORMATION REQUIRED BY MINISTERS The Company commits to provide Ministers with information as required to enable timely responses to: + Parliamentary questions + Process routine Ministerial correspondence + Process Select Committee inquiries The Company is required to comply with the provisions of the Official Information Act. Page 7 healthalliance (FPSC) Limited Statement of Intent

12 Organisation OUR PRINCIPLES STRUCTURE The Board appoints the Chief Executive who is responsible for the day to day operations. The Chief Executive is supported by the Senior Executive Team each of whom manages key service areas and supports the internal organisation. Corporate Services are provided by the parent company, healthalliance N.Z. Limited. ORGANISATIONAL STRUCTURE AS AT 30 JUNE 2016 CEO Head of Regional IT Procurement Head of National Procurement Head of Supply Chain Manager Business Performance FTE Numbers For the year ended 30 June 2015 Actual healthalliance (FPSC) Limited Total FTE Note the operational resources required to provide Supply Chain services are employed by the parent company (healthalliance N.Z. Limited). GOOD EMPLOYER The Crown Entities Act 2004 Section 118, places a requirement on all Crown Entities to be good employers by ensuring processes and procedures are in place for the fair and proper treatment of all employees. healthalliance (FPSC) takes its responsibility as a good employer very seriously. The Company is committed to promoting and maintaining the health, safety and wellbeing of its staff in the workplace and acknowledges its responsibilities under the Health and Safety at Work Act Health and Safety representatives have been appointed and trained; policies are in place and health, safety and wellbeing services are available to all staff. 1 Increase in FTE primarily relates to transition of Procurement & Supply Chain from healthalliance N.Z. Limited Page 8 healthalliance (FPSC) Limited Statement of Intent

13 CAPABILITY healthalliance (FPSC) is a focused and efficient organisation which continues to evolve over time to meet the service delivery expectations of our customers. The Company s core workforce will be permanent employees supported, as required, by resources contracted where there is a need for additional capacity or capabilty to support the service delivery. PEOPLE STRATEGY Our people are at the centre of everything we do. For the 16/17 year we have chosen to focus on innovative approaches to: + Organisational Culture + Talent Management + Leadership Development + Health, Safety and Wellbeing The Company is a focused and efficient organisation which continues to evolve over time to meet the service delivery expectations of our customers. Our workforce will have the ability to flex to meet requirements. This is important, and will be a growing trend as the Company moves toward an operating model that requires it to be more flexible and agile. In order to successfully deliver our services, our team will have competency in the following areas: + Leadership - Ability to lead healthalliance (FPSC) workforce in tandem with leading private company resourcing solutions that enable the Company to readily flex resourcing needs, access international intellectual property, and experience. Commercial and financial related leadership experience and skills. Strategic leadership to develop and set direction, manage a complex stakeholder environment, develop road maps and commercial options. Management of ambiguity and transformation, whereby leaders are dealing with incomplete information, new operating models, and the need to take people on a direction of change + Customer Service Leaders will be required to demonstrate and understand customer service and evolve their models to be in alignment with agreed customer care models and channel strategies. Leaders will be required to self-assess their Services to ensure they are designed to meet the agreed customer needs, to ensure that continual improvement is part of the fabric of their day to day routine, and to ensure that costs operate to benchmark and annual cost savings are realised + Service Delivery - to manage the delivery support services as part of end to end standardised processes. These will be budgeted for and added to the structure in an agreed and sequenced way + Risk Management - assurance that risks that could prevent the Company from achieving its objectives are identified, assessed; mitigated and monitored; that good management principles are applied, and risks are managed in a consistent, proactive manner + Business Acumen knowing our market and our customers and providing the best the marketplace has to offer in functional expertise, efficiency and service quality across all our services. The Company continues to work towards implementation of our people strategy. We believe our journey towards a service driven; commercially orientated organisation will require a move towards more innovative approaches to people drivers. Key components of the People Strategy include: = An articulated high performance culture demonstrated by the leadership team = A change ready engaged work force capable of current and future delivery = A scalable people/hr infrastructure = Future state organisational design and workforce planning Resources and capability are assessed as part of the process of developing the Business Plan each year. Staff are regularly involved in a Performance Development Review to ensure their KPIs are in line with those of the organisation and to identify opportunities for augmenting their skill base and competencies. Training is provided, when appropriate, based on a performance development review. The Company promotes and encourages equal employment opportunities to managers to ensure there is awareness of the need to provide fair and equitable opportunities for all employees and potential employees. Page 9 healthalliance (FPSC) Limited Statement of Intent

14 Business and Statutory Policies OPERATING RESPONSIBILITIES The Company operates in a sustainable manner so that its services benefit both current, and future, customers. In order to meet this objective the Company: + Maintains an appropriate business model that is sustainable, cost-effective and meets the on-going shared service needs of its stakeholders + Has a clear governance and decision-making framework in place which articulates the respective roles and responsibilities of the Company and our customers + Maintains effective relationships with stakeholders that are mutually supportive and productive + Provides high-quality shared services effectively and efficiently + Has a sustainable, competent and engaged workforce + Maintains effective systems to establish a baseline of performance and cost data for the measurement of gains to the sector + Maintains appropriate monitoring tools and performance issue resolution processes for initiatives as they are implemented + Develops and maintains policies appropriate for the business, including risk management policies STATUTORY AND COMPLIANCE REQUIREMENTS As a Crown Entity subsidiary, the Company is required to comply with a variety of legislation including the: + Companies Act + Health and Safety at Work Act + Crown Entities Act + Public Finance Act + Official Information Act The Company will establish mechanisms to ensure it meets its legal compliance obligations. Of note, in the last year, compliance requirements were intensified by the introduction of the MBIE Rules of Sourcing and changes in the Health and Safety legislation. The Company is committed to achieve the highest level of compliance with these changes. We acknowledge, however, that within this sector there are substantial and related compliance costs. OPERATIONAL PROCESSES The Company is required to operate within the functions, powers and constraints outlined above. Comprehensive operational policies and procedures have been developed concerning the manner in which the Company conducts its operational processes. The Company also conducts itself under National Shared Service policies as part of the National Shared Service Programme. DIVIDEND POLICY The Company s objective is to break even each financial year. TREATY OF WAITANGI healthalliance (FPSC) will provide shared services to the population of New Zealand as served by the national DHBs. For information about the populations those DHBs serve and the health profiles of each DHB, please refer to their Statements of Intent. Page 10 healthalliance (FPSC) Limited Statement of Intent

15 Statement of Performance Expectations OUTPUTS Our Statement of Performance Expectations (SPE) is based on agreed targets with our DHB shareholders and customers. The following outline our forecast, aligned to key performance areas of customer benefits and service quality. healthalliance (FPSC) as an organisation, in addition to customer benefits and service quality measures, measures itself on the achievement of our Business Plan and Statement of Intent, which are approved and signed off by the Company s Board and Shareholder. Reporting against commitments, together with major service projects, is discussed on a regular basis by the Executive Team and Board. OUTPUT CLASSES The Company measures its performance through the following output classes: 1 Procurement: Leveraging the combined volumes of national DHBs for best quality, service, technology and price in consumables, capital items, and services; ensuring operational efficiencies in the procurement of goods and services. 2 Supply Chain: Leveraging systems and processes to provide efficiencies in the supply chain and managing inventory, to provide on-time availability with reduced held stock. PROCUREMENT Results will be visible in Procurement benefits and will focus on the following key deliverables: Measure of Success Deliverables + Non Budgetary savings = To be agreed with NZ Health Partnerships as part of implementing the DHB Procurement Strategy + Budgetary savings = To be agreed with NZ Health Partnerships as part of implementing the DHB Procurement Strategy + Milestones of PHARMAC transition met = healthalliance (FPSC) to deliver on 90% of its transition milestones (to be agreed as part of the DHB Procurement Strategy) SUPPLY CHAIN Supply Chain will progress the delivery of a consistent operating model that delivers significant, visible results to our customers. Improvements in efficiencies and cost effectiveness, on-going business stabilisation and continued implementation of agreed Supply Chain improvement projects will support and deliver regional requirements. In addition to maintaining and enhancing the base services set over the last three years, Supply Chain will also focus this year on enabling customers to make the most of procurement opportunities. Where Procurement originates the contract; Supply Chain will complete the process with successful supply, and focus on achieving the Company s strategic goals. The move of accountability for Northern Region Supply Chain activities to healthalliance (FPSC) is the first phase of enabling efficiencies. Measure of Success Deliverables + Efficiency measure = All Service Level Agreements met within Budget + DIFOTIS Done In Full On Time In Specification = Baseline established and increased by 1% Page 11 healthalliance (FPSC) Limited Statement of Intent

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17 Financial STATEMENT OF RESPONSIBILITY The information contained in this Statement of Performance Expectations has been prepared in accordance with the Public Finance Act and the Crown Entities Act healthalliance (NZ) Limited is responsible for: + The preparation of the financial statement and the judgements herein + Establishing and maintaining a system of internal control designed to provide reasonable assurance on the integrity and reliability of the financial reporting. These financial statements are prepared in accord with the statement of concepts and consistent use of accounting principles from period to period is implicit. These financial statements have been prepared on the basis that the organisation is a going concern and expects to continue operations for the foreseeable future. In the opinion of healthalliance (NZ) Limited, the forecast financial statements fairly reflect the financial position and operations of healthalliance (FPSC) Ltd. FORECAST FINANCIAL STATEMENTS The forecast financial statements for the four years ending 30 June 2020 are included. The Company s main financial objectives is to provide services within the agreed funding envelope. Revenue is planned to be equal to total expenses as healthalliance (FPSC) Ltd only charges net expenses to its customers. In December 2015 the Company took over the accountability of delivering Supply Chain services to the Northern Region DHBs. The financial forecasts reflect a transition of Supply Chain and Northern Region Procurement services from healthalliance (NZ) Limited from 1 July Where a Northern Region DHB or NZ Health Partnerships Limited requests us to develop new services or expand current services through approved business cases, budgets and FTE numbers will flex accordingly. Financial forecasts (including FTE forecasts on page 8) are based on the continuation of existing services that the Company provides to its current customers. At the time of writing the SOI, healthalliance (FPSC) Ltd services are being reviewed by their customers. NZ Health Partnerships, on behalf of National DHBs, has recently finalised the DHB Procurement Strategy and Northern Region DHBs are undertaking a review of Supply Chain. The impact, implications and any changes to the final operating model for the Company remains unclear at this time, and have not been reflected in these financial forecasts. If new opportunities to provide additional services do arise, they will only be undertaken if the related additional revenue is forecast to be equal to, or greater than, any additional expenditure. It is anticipated at this stage that any significant changes in revenue generation and expense forecasts will be as a result of the DHB Procurement Strategy and the Northern Region DHBs review of Supply Chain. healthalliance (FPSC) Ltd s operational funding is provided by other state funded health sector entities based on work packages agreed annually. The Company also has a standby facility to cover short term cashflow requirements with a commercial bank. The facility is currently capped at $2.5m, reducing by $0.25m each quarter, terminating 31 December The classes of output healthalliance (FPSC) Ltd expects to supply are detailed on page 11. The expected revenue to be earned and expenses to be incurred for each class of outputs are as follows (i.e. revenue is equal to expenditure for all classes of outputs). Page 13 healthalliance (FPSC) Limited Statement of Intent

18 FORECAST STATEMENT OF OUTPUTS For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Finance Supply Chain - - 8,377 8,430 8,480 8,530 Procurement 13,258 12,940 10,708 10,780 10,840 10,900 Total Outputs 13,695 12,940 19,085 19,210 19,320 19,430 FORECAST STATEMENT OF EXPENDITURE FOR OUTPUTS For the year ended 30 June 2016 Personnel ($000 s) Information Technology ($000 s) Telecom ($000 s) Depreciation ($000 s) Amortisation Software ($000 s) Other Expenses ($000 s) Total Value of Services ($000 s) healthalliance (FPSC) Limited Supply Chain 7, ,377 Procurement 6, ,021 10,708 Total Outputs 14, ,599 19,085 FORECAST STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Revenue Revenue from NZ Health Partnerships 12,918 11,814 8,554 8,610 8,660 8,710 Revenue for Northern Region DHBs - - 9,808 9,870 9,930 9,990 Other Revenue Total Revenue 13,636 12,812 19,085 19,210 19,320 19,430 Expenses Personnel 6,038 5,240 14,538 14,630 14,720 14,810 Information Technology Telecommunication Costs Depreciation Other Operating Expenses 6,621 6,757 3,599 3,647 3,682 3,785 Total Expenses 13,695 12,940 19,085 19,210 19,320 19,430 Total Comprehensive Income (59) 129) FORECAST STATEMENT OF MOVEMENTS IN EQUITY For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Equity at Beginning of Year 1 (58) (187) (187) (187) (187) Net Surplus for Year (59) (129) Paid Up Shares Issued Equity at End of Year (58) (187) (187) (187) (187) (187) REVENUE PER RELATED PARTIES For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Revenue from Related Parties NZ Health Partnership 12,918 11,814 8,554 8,610 8,660 8,710 Northern Region DHBs - - 9,808 9,870 9,930 9,990 Total Revenue from Related Parties 12,918 11,814 18,362 18,480 18,590 18,700 Page 14 healthalliance (FPSC) Limited Statement of Intent

19 FORECAST CAPITAL SPEND For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Business Applications Premises Total Capital Spend FORECAST OF FINANCIAL POSITION For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Current Assets Cash, Bank & Investments (60) ,090 1,485 Trade & Other Receivables Total Current Assets ,160 1,555 Long-term Assets Property Plant & Equipment 3,211 2,761 2,314 1,861 1,423 1,068 Total Long-term Assets 3,211 2,761 2,314 1,861 1,423 1,068 Total Assets 3,779 2,798 2,553 2,573 2,583 2,623 Current Liabilities Provision & Accruals 651 1, Employee Entitlements ,890 1,900 1,910 1,930 Borrowings 1, Total Current Liabilities 2,952 2,805 2,560 2,580 2,590 2,630 Long-term Liabilities Provision & Accruals Employee Entitlements Total Long-term Liabilities Total Liabilities 3,837 2,985 2,740 2,760 2,770 2,810 Net Assets (Liabilities) (58) (187) (187) (187) (187) (187) Shareholder Capital Retained Earnings (58) (187) (187) (187) (187) (187) Total Equity (58) (187) (187) (187) (187) (187) FORECAST STATEMENT OF CASHFLOWS For the year ended 30 June 2015 Audited healthalliance (FPSC) Limited Cash Flows - Operating Activities Receipts from Services 13,362 10,458 18,297 18,480 18,590 18,700 Other Income Interest Received Total Revenue - Operating Activities 13,366 11,456 19,020 19,210 19,320 19,430 Payments to employees 6,312 5,494 13,068 14,620 14,710 14,790 Payments to suppliers 6,326 4,959 5,051 4,112 4,157 4,240 Interest Paid Total Expenses 12,732 10,510 18,184 18,737 18,872 19,035 Net Cash Flow - Operating Activities Cash Flows Investing Activities Sale of Assets Purchase of Assets (236) Net Cash Flow - Investing Activities (236) Cash Flows Financing Activities Borrowings (627) (856) (697) Net Cash Flow - Financing Activities (627) (856) (697) Movements in Cash Net Cash flow (229) Opening Cash 169 (60) ,090 Closing Cash (60) ,090 1,485 Page 15 healthalliance (FPSC) Limited Statement of Intent

20 Statement of Significant Accounting Policies The following is a summarised description of the accounting policies used in preparation of the Statement of Intent. A full description of the accounting policies used by the group, can be found in the 2014/15 Annual Report. GENERAL ACCOUNTING POLICIES REPORTING ENTITY healthalliance (FPSC) Limited is a company wholly-owned by healthalliance N.Z. Limited. healthalliance N.Z. Limited is jointly owned by Northland, Waitemata, Auckland and Counties Manukau Health District Health Boards. healthalliance (FPSC) s ultimate parent is the New Zealand Crown. healthalliance (FPSC) is a crown entity subsidiary in terms of the Crown Entities Act 2004, owned by the Crown and domiciled in New Zealand. healthalliance (FPSC) is a public benefit entity for financial reporting purposes as defined under NZ IAS 1. The group financial statements include healthalliance (FPSC) Limited and its parent, healthalliance N.Z. Limited. BASIS OF PREPARATION STATEMENT OF COMPLIANCE The financial statements have been prepared in accordance with the requirements of the Crown Entities Act 2004 and the Financial Reporting Act 1993 which include the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP). The financial statements have been prepared in accordance with Tier 1 Public Benefit Entity accounting standards. FUNCTIONAL AND PRESENTATION CURRENCY The financial statements are presented in New Zealand Dollars (NZD), rounded to the nearest thousand. The functional currency of healthalliance is NZD. MEASUREMENT BASE The financial statements are prepared on the historical cost basis. FORECAST FINANCIAL INFORMATION The forecast financial statements have been prepared in accordance with Public Benefit Entity Financial Reporting Standard 42, Prospective Financial Statements. The Company is required under the Crown Entities Act 2002 to present forecast financial statements as part of its Statement of Intent. The Company is responsible for the forecast financial statements presented, including the assumptions underlying statements and all other disclosures. The forecast statements have been prepared on the basis of best estimates as to future events which the Company expects to take place. The Company has considered factors that may lead to a material difference between information in the forecast financial statements and actual results. Page 16 healthalliance (FPSC) Limited Statement of Intent

21 PARTICULAR ACCOUNTING POLICIES The following particular accounting policies which materially affect the measurement of results and financial position are applied: BASIS OF CONSOLIDATION The consolidated forecast financial statements are prepared by adding together like items of assets, liabilities, equity, income and expenses on a line by line basis. All intragroup balances, transactions, income and expenses are eliminated in full on consolidation. healthalliance N.Z. Limited consolidates into the financial statements all entities where they have the capacity to control the financing and operating policies so as to obtain benefits from the activities of the subsidiary. REVENUE RECOGNITION Revenue is recognised on receipt, or delivery, of service - whichever is the earlier. TAXATION The Group entities are exempt from income tax under section CW38 of the Income Tax RECEIVABLES AND PREPAYMENTS Receivables and Prepayments are stated at expected realisable value after providing for doubtful debts. STATEMENT OF CASH FLOWS Cash balances on hand, held in bank accounts, demand deposits and other highly liquid investments in which the Company invests as part of its day-to-day cash management. Operating activities include cash received from all income sources of the Company and records the cash payments made for the supply of goods and services. CHANGES IN ACCOUNTING POLICIES There have been no changes in accounting policy. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are included at cost less depreciation to date. DEPRECIATION Depreciation is provided on a straight-line basis on all tangible property, plant and equipment at rates calculated to allocate the cost, less estimated residual value, over their estimated useful lives. Major depreciation rates are: IT equipment: 20% to 33% Other equipment: 10% to 20% Leasehold Improvements: 11% to 33% INTANGIBLE ASSETS Software acquired by the Group is stated at cost less accumulated depreciation and impairment losses. Where software is developed or modified internally, the cost of internal staff time is added to the value of the software where future economic benefits will flow to the Group. AMORTISATION Amortisation is recognised in the surplus or deficit on a straight line basis over the estimated useful lives of intangible assets. Major amortisation rates are: Software: 12 to 33% Page 17 healthalliance (FPSC) Limited Statement of Intent

22 LEASES Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are recognised as expenses in the periods in which they are incurred. PAYABLES TO SHAREHOLDERS Payables to shareholders are advances payable on demand and are interest free. EMPLOYEE ENTITLEMENTS Employee benefits that are due to be settled within the next 12 months are measured at nominal values based on entitlements at current rates. The value of benefits that will be settled beyond 12 months after the end of the period in which the employee renders the related service have been calculated on an actuarial basis taking into account the likelihood that staff will reach the point of entitlement, their years of service and the present value of estimated future cash flows. Page 18 healthalliance (FPSC) Limited Statement of Intent

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