Company Proﬁle 03 Product Vision & Strategy 05 Chairman’s Report 09 Operational Report 11 Board of Directors 15 Executive Leadership Team 17 Changing IT Perceptions 19 20th Anniversary Spotlight 21 Orion Health Timeline 23 Directors’ Statement 25 Financial Statements 26 Independent Auditor’s Report 63 Corporate Governance 64 Shareholder Information 65 Company Directory 67 Orion Health Annual Report 2013 2 3 Orion Health Annual Report 2013

Company Proﬁle Orion Health Annual Report 2013 4

COMPANY VISION: Enable a better healthcare future through the pioneering use of information technology and knowledge creation.

About Us Our Values Orion Health is a privately owned software exporter and a The following values of Orion Health articulate who we global leader in eHealth software. are and what we stand for:

Founded in 1993, by CEO Ian McCrae, Orion Health has grown Enable Client Success from a specialist health integration vendor into a company that Acting in a client-centric fashion by ensuring clients sells a comprehensive suite of eHealth solutions. have great trust in Orion Health’s ability to deliver; get Orion Health has extensive experience in the design and on well with Orion Health people; and ﬁnd dealing with installation of complex systems within demanding healthcare Orion Health an enjoyable experience. environments. With an inherent ability to interconnect the wide variety of information systems found in health, Orion Health Challenge The Boundaries has risen to be considered a global leader in its industry. Solving problems by being creative and having a ‘can do’ attitude and working with enthusiasm, commitment and Today, our products and solutions are currently implemented in passion. over 30 countries, used by hundreds of thousands of clinicians, and help facilitate care for tens of millions of patients. Do The Right Thing All dealings conducted with honesty, integrity, openness, respect and consideration.

Collaborative Spirit (Ngatahi) A company working in unison both internally and with customers.

Get Things Done Consistently delivering results. Learn and Grow Acknowledging failure, continual self-development, and encouraging the development of others. 5 Orion Health Annual Report 2013

Product Vision and Strategy

Orion Health offers a comprehensive suite of health software, HOW OUR VISION DRIVES OUR PRODUCT STRATEGY with our products being grouped into three main areas: Orion Health’s vision is to enable a better healthcare future through the pioneering use of information technology and ä Collaborative Care: Our software enables health knowledge creation. professionals to see relevant information about their patients, no matter where it is collected. This allows The Orion Health product strategy supports our company doctors, nurses and other health professionals to work vision. By understanding the factors that influence healthcare together to successfully manage the health of patients delivery models today and in the future we are able to adopt outside of the hospital. and create the latest technologies, position our solutions to support trends and be a leader and key enabler in critical ä Hospital Solutions: Orion Heath is one of only a healthcare transformations. handful of companies globally that offers an extensive range of hospital software. We can help facilitate We believe the future of healthcare delivery will be influenced hospital automation, moving it away from paper-based by: systems, improving efficiencies and positively impacting ä Patient-driven healthcare; enabling greater collaboration patient safety. between hospitals, specialists, General Practitioners ä Healthcare Integration: We link together different (GPs) and community care providers and giving software systems, within a single organization or a individuals the information and tools to better manage across multiple, to improve the sharing of data between their own health, ultimately keeping more people out of healthcare professionals. This means that data that is the hospital. collected can be made available to those that need it ä Increased focus on mobile devices; in healthcare centers, most, to improve care for patients as well as run their the community and the home, using telemedicine organization better. and widespread provision of mobile technologies and We continue to develop creative and modern healthcare adoption of devices will be critical to delivering world- software that is fully integrated - meaning our software class healthcare. components complement and interface with each other ä Leveraging cloud computing; with software-as-a-service elegantly - positioning Orion Health apart from our (SaaS) the software and the associated data is hosted competitors and setting a new standard in healthcare outside the customers’ premises and accessed securely technology. through the internet, enabling a more efficient IT delivery model. Orion Health Annual Report 2013 6

Imagine a better healthcare future where you do not waste time answering the same questions when you visit your doctor, pharmacist or hospital nurse. With our software healthcare professionals, who could work at diﬀerent organizations, can share the same information about you, to provide better care for you

ä Gaining greater health insights; health IT is increasingly COLLABORATIVE CARE becoming a data science and we can use genetic data Our Collaborative Care Suite caters to all those such as a patient’s DNA sequence to predict health responsible for managing the healthcare needs of a risks across a population. With the increasing use of population, for example, regional health boards, private health monitoring devices, generating increasingly healthcare networks and insurance companies. Our large amounts of data, powerful data analysis helps us Collaborative Care solutions provide the capabilities to: uncover hidden patterns and enable better healthcare. ä Manage the exchange of information Our solutions are modern, user friendly and developed on the ä Collaborate together to provide coordinated care latest technologies, setting them apart from our competitors. experiences All of our solutions are modern stacks of modules or components and therefore can combine seamlessly, to ä Manage populations of patients provide a cohesive suite of products. We can quickly adapt ä Provide patients access to their medical records our components into new configurations that meet changing needs, and consistently enable previously disconnected care Orion Health software enables the secure exchange providers to work together as one. of any clinical information between organizations, ensuring that clinical staff have access to relevant, up- Orion Health has three distinct solution portfolios, each with to-date and accurate patient information - regardless different strategies, markets, customers, and benefits. of where care is provided or the clinician is located. By improving provider collaboration in this way, healthcare delivery is enhanced through reduced medical errors and the elimination of costs associated with duplicate procedures.

COLLABORATIVE HOSPITAL HEALTHCARE Specific solutions included in this suite are: CARE SOLUTIONS INTEGRATION ä Health Information Exchange (HIE), a powerful clinical data exchange that enables healthcare provider organizations and clinical communities to coordinate care and share complete patient records. This US specific solution is slightly modified and sold as an Electronic Health Record (EHR) in the rest of the world. 7 Orion Health Annual Report 2013

ä Direct Secure Messaging (DSM) allows physicians HOSPITAL SOLUTIONS anywhere to quickly send accurate patient information The Hospital Solutions Suite caters to hospitals in order to to other healthcare specialists. help them automate key processes across both the hospital and the wider organization, as well as to improve patient ä EMR Lite, a Primary Care Electronic Medical Record safety and clinical efficiency within a hospital. We sell two (EMR) solution, provides GPs with secure, convenient main solutions: and low cost web-based access and functionality to manage patient records electronically. 1. Best of breed Electronic Medical Record (EMR) solutions ä Chronic Condition Management provides tools for 2. A fully integrated Hospital Information System (HIS) guiding the management of patients with chronic Many hospitals around the world have invested in multiple conditions (such as diabetes or heart disease) using leading specialist software systems, usually covering Patient evidence based guidelines and facilitating coordinated Administration, Radiology, Laboratory, Pharmacy and teams of hospital clinicians, GPs, specialists and corporate functions. Clinical Workflow, Electronic Orders, community providers. Care Pathways, Clinical Documentation and Mobile Clinical ä Breast Screening provides support for breast cancer Applications, however, are generally overlooked, not available screening programs to maximize participation and focus and never integrated. Orion Health EMR solutions can solve on early detection and assessment. This software can this problem by providing integration capabilities directly be used for large-scale region-wide programs as well as into existing hospital systems to provide these additional mobile screening. applications. Each core solution can be supplemented with optional In other instances a hospital may seek a single vendor to components including Clinical Referrals, Business provide a fully integrated hospital information system. Orion Intelligence, Mobile and Patient Portal, which build on Health HIS utilizes our EMR but integrates it seamlessly the core functions to support a continuously evolving and with our own Patient Management and Ancillary Services improving healthcare system: solutions (e.g. Cardiology, Physiology, Pharmacy) to provide a comprehensive solution that can help facilitate automation of ä Clinical Referrals is designed to provide intelligent, an entire hospital. customizable referral forms, which are completed by GPs when referring patients to hospital specialists. Both our EMR and HIS solutions can be extended into the community through our Collaborative Care optional ä Business Intelligence (BI) provides the capability components, such as Clinical Referrals, Chronic Condition to measure and manage clinical and administrative Management and Patient Portal, setting us apart from our outcomes through reporting and analytics. For example, competitors. BI can measure and record diabetes severity across a population. Specific components within Orion Health HIS solution can also be sold separately, these include: ä Mobile is an iPhone application that allows clinicians to search for and view patient results conveniently from ä Patient Management, a Patient Administration System any secure location. (PAS) supports and manages the administrative details of a patient’s encounter with a hospital. ä Patient Portal is a secure web-based solution that provides patients access to their personal healthcare ä Scanned Medical Records (SMR) digitizes paper records information as well as their families’ medical and attaches them to the patient record, which can then information. It provides tools and information to support be viewed by clinical users everywhere. patients becoming more active in managing their own ä Radiology Information Systems (RIS) and RIS/PACS healthcare. (Picture Archiving and Communication Systems) Our long term goal is for our Collaborative Care Suite to be represent a comprehensive radiology workflow solution the world leader in coordinated care, specifically in the areas (a series of connected radiology processes). of HIE, EHR and Chronic Condition Management. We are Our goal for the Orion Health Hospital Solutions Suite is to actively working to extend our solutions into the areas of become the number one fully integrated hospital solution device integration (for example insulin pumps, inhalers), big outside the United States. data analytics (making sense of huge volumes of data) and using mobile devices. Orion Health Annual Report 2013 8

Imagine a better healthcare system where personal smart mobile devices help improve clinical work ﬂows and positively impact patient outcomes. With our software health professionals can leave behind their complete reliance on computer workstations to enhance patient care

HEALTHCARE INTEGRATION Orion Health Rhapsody Integration Engine is a global leader Our Healthcare Integration Suite caters to healthcare in healthcare integration, used in over 30 countries and in providers who manage the exchange of data between the US by public health departments in 49 states. We have diﬀerent systems, public health analysts who capture and also recently released a Rhapsody Mobile extension to enable report on health events of interest and software vendors to business-critical monitoring and maintenance capabilities enhance their integration capabilities. while on the go. Our Healthcare Integration solutions allow: The long-term goal for our Healthcare Integration suite is to be the clear market leader in healthcare integration engines, ä Integration of various healthcare systems by all available measures - market share, sales revenue, ä Consolidation, sharing and reuse of data customer satisfaction and market perception. ä Provision of value beyond original intended use Solutions included in the Healthcare Integration Suite are: ä Rhapsody Integration Engine, which provides a set of tools to simplify healthcare integration. It enables interoperability between healthcare IT systems by None of our solution suites remain static. On- providing connectivity between them regardless of going investment in new features and extensions technology or messaging standards. ensures we continue to grow with our customers ä Symphonia, a toolkit that allows software developers and the changing face of healthcare delivery. to add structured messaging interfaces into their coded applications. We believe that our solutions will become the ä Rhapsody Connect, which is speciﬁcally designed for US platform on which our partners and customers will Public Health and automates standards-based electronic build communities, software extensions, and new reporting to provide fast, secure transmission of data healthcare delivery models to guarantee the future between healthcare providers, public health agencies, HIEs, Regional Health Information Organizations success of their businesses. (RHIOs), and other trading partners. 9 Orion Health Annual Report 20132012

Chairman’s Report

THE RESULT INVESTMENT IN HIS The FY13 financial year was challenging for Orion Health. In February 2012 we completed the acquisition of the Operating revenue increased to $113 million, representing Microsoft ‘Amalga’ business. The purchase enabled us to a 13% increase year-on-year. Whilst we have shown some significantly expand our health offering with a full Hospital revenue growth, revenue and profit have fallen short of our Information System (HIS). This, in combination with our targets and it is disappointing to report an operational loss of Integration and Collaborative Care expertise, means we will $1.3 million. Net profit after tax was $7.8 million, reflecting a be able to offer a near complete health solution to hospitals, $9.1 million one-off gain on the sale and leaseback of our head regional health systems or indeed countries. office building in Auckland. During FY13 we progressively integrated the HIS business There were three main drivers of our reduced performance in into Orion Health. The HIS business made an operating loss FY13: investment in our Software as a Service (SaaS) business, of $7.6 million compared to the expected loss of $5.5 million, a slower than expected uptake in our Hospital Information reflecting a longer time frame to get full engagement with System (HIS), and unsatisfactory results from our Professional new customers. We have now secured our first new HIS Services Group in the United States and Australia. customers but further investment in development of this product will be required over the next 24 months before we It is worth noting that as employee bonuses are tied to profit see profitability from our Hospital Solutions product. performance, no general bonuses were paid this year, the first time this has occurred in several years. PROFESSIONAL SERVICES GROUP (PSG) INVESTMENT IN SAAS PSG is responsible for implementation services and makes More and more of Orion Health’s customers are demanding up an increasing proportion of Orion Health operating SaaS or a Managed Service basis for the delivery of Orion revenue. A key measure for PSG is the PSG contribution Health products. This is generally a positive change for the margin (services revenue less service delivery costs and PSG business as it provides greater annuity revenue for several management expenses). The United States and Australian years as opposed to the more traditional one off license fee PSG teams earned lower than targeted PSG contribution with a trail of around 20% support and maintenance. margins in FY13. This was in part due to hiring a significant number of new staff to meet client commitments – many new We have started the FY14 financial year with recurring SaaS staff required training before becoming billable, negatively revenues of $8.2 million, up 86% from the beginning of FY13. impacting contribution margins. The short term impact of this investment in building our SaaS offering is that it creates a hole in current reported revenue, ORION HOUSE cash and profits as compared to our traditional license deals We completed the redevelopment of Orion House in where we received the larger one-off license payment. Auckland during the year, creating a great environment for our team that reflects the way we work and how teams interact. It has provided a space where innovation can flourish. Orion Health Annual Report 20132012 10

Imagine a better healthcare future where you can pro actively inﬂuence your own health and get access to the latest research and treatment recommendations. With our software you can manage your health conditions and improve your quality of life

We were subsequently approached to consider selling Orion We are operating in a fast growing but complex sector. House and leasing it back. This had not been our intention as Progress has to be made carefully and properly. Orion Health there is further expansion intended for the site to cater for is on a journey. We believe we can make a real difference to growth. Fortunately, we were able to structure a transaction the future of healthcare and thereby grow into a significant that means we retain that flexibility to further develop Orion and valuable company for society, our customers, our staff House but also have a good landlord with reasonable terms. and shareholders. The one-off $9.1 million gain on sale reflects the quality of the We are fully committed to continued growth and seek to redevelopment work undertaken and is a credit to the team deliver operating profits. We have set an ambitious but involved. achievable FY14 target for the revenue generating parts of HEALTHLINK the business. We will be containing overheads and continuing Orion Health has owned a majority stake in Healthlink to invest in development of our solutions. This development since its inception in the mid-90s. In more recent times the will include significant progress on our HIS business, taking us strategic vision of the companies started to diverge. On closer to a complete health solution. 19 July 2013 Healthlink management agreed to buy Orion Additionally we will be investing in areas such as quality Health’s majority share for $8.3 million (closing 19 October management, staff remuneration and performance systems 2013). We are very pleased with the outcome, which will and integrating our internal systems to reflect the growth and allow Orion Health to invest this capital in its own strategic internationalization of the business. Facilitating the company initiatives. working as a coordinated group of global teams with good NEW BOARD MEMBERS communication and knowledge sharing is crucial to our future. I am pleased to report that Paul Shearer and Roger France As Chairman of the Board and a shareholder of Orion Health, have joined the Orion Health Board of Directors. Paul I would like to express my gratitude for the hard work and has already been a valuable Advisor to the Board for dedication of the many talented individuals working for Orion several years, bringing with him extensive international Health around the world. Our continued success is made healthcare experience. Roger was a senior partner at possible by their energy, passion and dedication 24 hours a PricewaterhouseCoopers after being Chief Financial Officer day, all over the world. at two listed companies. He brings a wealth of accounting, governance, financial analysis and strategy experience to Orion Health.

WHERE TO FROM HERE? Orion Health aspires to design, produce and sell elegant software that enables the integration, sharing and intelligent Andrew Clements use of health information. Ultimately we believe that this will Chairman enable better healthcare outcomes. 11 Orion Health Annual Report 20132012

Operational Report

FY13 REVENUE AND NPBT Revenue FY08 - FY13 Orion Health total revenue increased to $122 million and (NZD Millions) operating revenue increased 13% to $113 million in FY13 from $100 million in FY12. Whilst double-digit growth is 140 something many companies would envy, we did not meet 120 Other our 30% revenue growth target. The lower revenue than Cumulative annual growth targeted in part reflects our investment in our Software as a rate of 22% from FY08 to FY13 100 Service (SaaS) business, a slower than expected uptake in our Hospital Information System (HIS), and unsatisfactory results 80 from our Professional Services Group in the United States and Operating Revenue Australia. 60 Net Profit Before Tax (NPBT) for FY13 was $7.4 million, including a one-off gain from the sale of Orion House of 40 $9.1 million. Material variances from FY12 to FY13 include a reduction in license revenue of $4.7 million, an increase in 20 PSG revenue of $8.9 million, a $4.1 million increase in direct 0 operating expenses, an $8.4 million increase in employee FY08 FY09 FY10 FY11 FY12 FY13 benefits expenses and a $7.5 million loss from our HIS business (normalized for currency movement). The reduction in license revenue reflects an increasing proportion of our business being transacted on a SaaS basis. 953 4,087 3,187

NPBT Bridge FY12-FY13 3,739 8,428 8,919 (NZD Millions)

4,691 8,152 2,161 9,059 307 7,409 7,540

Licence PSG Client SaaS and Other Direct Employee Other HIS Gain on sale FX movement 2012 revenue support managed services revenue operating expenses bene expenses Building 2013 fts expense

Movement in Revenues Movement in Expenses Orion Health Annual Report 20132012 12

Imagine a better healthcare future where all systems seamlessly interact and data can ﬂow easily within and between organizations. With our software all health data is connected to ensure the best possible patient outcomes

Orion Health invested $26.7 million in Research and Product solution, which we acquired. An upgrade of the solution had Maintenance (R&PM) during FY13, equivalent to 24% of not previously been attempted by Microsoft or Orion Health. operating revenue. At present, none of this expenditure We completed the upgrade with an Orion Health team and a is capitalised. We expect to invest a similar proportion of very satisﬁed customer. operating revenue in R&PM in FY14 to support the product The next milestone for our HIS was being selected as road map underlying our company vision and strategy. preferred provider by the South Island Alliance to work on planning for a new patient administration system for the R&PM Spend 26.7 South Islands’ one million residents and ﬁve District Health 24.6 Boards. The engagement with the South Island Alliance is a (NZD Millions) partnership to pursue our shared vision of enabling patient centred, community driven healthcare. In April 2013 we secured another new HIS customer, American Hospital in 16.0 Istanbul, the premier private hospital in Turkey. 14.3 12.8 CONTINUED SUCCESS IN OUR ESTABLISHED MARKETS 11.1 The United States Health Information Exchange (HIE) market continues to provide numerous opportunities. In FY13 we had several big wins including the Commonwealth of Massachusetts HIE, State of New Mexico HIE and the Mississippi Division of Medicaid HIE. The Massachusetts and New Mexico transactions

2008 2009 2010 2011 2012 2013 were contracted on a SaaS basis. In March 2013 we announced an expanded alliance with Caradigm, a Microsoft and GE Healthcare company. The alliance integrates the Orion Health EARLY SUCCESSES IN OUR HIS BUSINESS HIE solution with the Caradigm Intelligence Platform in the US FY13 reflects a full year contribution from our Hospital market. This integrated end-to-end solution offers healthcare Information System (HIS) business, which we acquired from organizations the ability to move beyond simple data exchange Microsoft in early 2012. As anticipated, this first year required by using near real-time data aggregated from disparate systems significant investment in development of the HIS solution and across the healthcare community to rapidly gain insight about this is set to continue into FY14. We have also focussed on patients, populations, performance and outcomes. integrating the ex-Microsoft HIS team into Orion Health and sharing our collective knowledge. Our first major success in the HIS business was the upgrade of Franco-Vietnam (FV) Hospital to Orion Health HIS 8.0. FV Hospital was an existing customer with the Microsoft Amalga 13 Orion Health Annual Report 20132012

Revenue by Type In EMEA, Health and Social Care Northern Ireland selected Orion Health for its clinical portal-based Electronic Care 3% Record for Northern Ireland covering a population of over 1.8 7% million people. This followed a successful Proof of Concept Licence revenue pilot involving over 200 clinicians and 9,000 patients. We also 4% 4% made our ﬁrst Rhapsody Integration Engine sales into the large 19% PSG German market. 17%

46% 37% Client support In Asia Paciﬁc we won a contract to deploy a single Clinical 29% SaaS and Information System across the New Zealand Central Region’s 2012 managed services six District Health Boards (DHBs). Our software will allow 34% Other the DHBs to connect to a single primary care shared record system in the region and form a complete information package 2013 for patients. In Australia we secured BreastScreen Tasmania and BreastScreen ACT as customers for our Breast Screening product and achieved a number of milestones on the Australian However, the multiyear duration of our SaaS contracts provides Personally Controlled Electronic Health Record project. an increasing base of recurring revenue and better returns from a net present value perspective. We have started FY14 with Segment Revenue $8.2 million of recurring SaaS revenue, almost double what we started with for FY13.

3% As part of our SaaS strategy we have recently moved our 15% low-risk hosting environments from our hosting partner 3% (LogicWorks) to an Orion Health data centre in Boston. This North America 12% initiative is expected to deliver meaningful cost savings over

Asia Pacifc the next few years. 51% 58% 24% 34% EMEA Professional Implementation Services (PSG) accounted for 34% of revenue in FY13, up from 29% in FY12. Gross margins 2012 Other after delivery costs for PSG range from around 20% to 50%, lower than licence revenue and support revenue which deliver 2013 gross margins of 100% and approximately 75% respectively. Our changing revenue mix therefore has an impact on Orion Health’s overall profitability. However, we established an North America remains our largest market, accounting for Auckland-based Global Resource Centre within PSG during 58% of FY13 operating revenue. The region also consistently FY13. This team gives us greater flexibility of resourcing and delivers strong growth, with FY13 North American revenue is cost effective. We expect to see margin benefits from the of $65.3 million up 30% from FY12. Asia Pacific revenue was Global Resource Centre in FY14. $24.5 million in FY13, down 29% from FY12, reflecting the fact that a single customer contributed revenue of $12.9 million in Support revenue continues to grow at excellent margin, FY12 which was not repeated in FY13. The EMEA region grew increasing from $16.9 million in FY12 to $21.7 million in FY13. 54% from $11.5 million of revenue to $17.7 million and now Contracted support revenue at the beginning of FY14 was $22.8 accounts for 15% of group revenue. million. Combined with our existing SaaS contracts, this gave us a total recurring revenue base of $31 million for FY14. CHANGING REVENUE MIX Orion Health’s revenue mix is changing. In FY13 37% of CASH MANAGEMENT AND BALANCE SHEET operating revenue was generated from licence fees, down Orion Health closed FY13 with cash of $9.3 million, allowing us from 46% in FY12. This change in part reflects a shift to SaaS to invest in FY14 growth with confidence. Accounts receivable revenue in our largest market, the United States. Developing collection has improved relative to FY12 and we continue to our SaaS business is a long term strategy. In the short term, streamline our internal processes. Total assets at 31 March substituting traditional licence deals with SaaS deals reduces 2013 were $76.6 million, including $54.4 million of receivables. our revenue and profitability. Under a traditional licence deal Orion Health would typically receive a one-off up-front licence Our Audit process continues to improve and we believe we now fee. In contrast, under a SaaS deal the up-front licence fee is operate on the timescale and with the level of professionalism foregone and we instead receive a smaller annual fee. There are of a listed company. also ongoing costs associated with hosting and supporting a SaaS client. Orion Health Annual Report 20132012 14

Expenses LOOKING FORWARD Orion Health’s well established markets are New Zealand, 2% 4% 11% Australia, the United States, Canada and the United Kingdom. Direct operating expense 6% We have also gained a foothold in Asia and Continental Europe 2% 2% Employee benefts expense 4% 9% / Middle East. For FY13 we have reported three regions: North 7% 2% America, Asia Pacific and EMEA. To create greater alignment Marketing expense and accountability we will now be reporting seven regions: 75% 76% Administration and other expense our five established markets plus our two emerging markets. Ambitious but achievable FY14 targets have been set for each Occupancy expense 2012 region to continue our growth trajectory. Depreciation and amortisation expense In December 2012 the leadership team was reorganized. A new 2013 Executive Leadership Team (ELT) was established consisting of the Chief Executive Officer, Chief Financial Officer and the PEOPLE head of each functional area (Sales, Products & Marketing, Orion Health is a people driven business, with staff costs Development and Services). The ELT replaces the larger Senior making up 75% of our total expenses. Over the course of FY13 Management Team previously in place. Profiles of the ELT can total staff numbers increased 19% from 633 to 752. Having be found on page 17. This leadership structure is encouraging the best and brightest people in the industry on the Orion greater coordination and alignment between the different Health team is key to our success. Our innovative, fun working functional areas of Orion Health. We are also in the process environment that rewards people who live by our values and of introducing a new performance management framework provides flexible opportunities for career progression help us to and associated incentive scheme for all staff to better align retain talented individuals. behaviour with targeted results.

We actively support New Zealand universities – in FY13 we To support the realization of our product road map we will employed 27 graduates and 11 summer interns. We also continue to invest around 20% of revenue in our Development launched Codeworx in March 2013, an initiative to encourage team, including further evolution of the HIS solution acquired and support secondary school students to take an interest in from Microsoft. This investment in HIS is expected to come to computer science. Codeworx provides an online collaborative fruition in the medium term. The revenue from an HIS deal is community for students, teachers and industry professionals large relative to other Orion Health solutions but the delivery to interact on all things computer science. The purpose of period is typically 12-24 months, delaying revenue recognition. Codeworx is to create a larger pipeline of students taking HIS implementations are also relatively complex, hence we computer science courses at university and thereby increasing are taking a measured approach and focussing on successfully the talent pool from which Orion Health can hire in the future. delivering for the South Island and American Hospital in the Orion Health has provided funding to buy “Raspberry Pi” near term. computers for students and designed a national competition to generate a buzz and encourage innovation. It is an exciting time in healthcare. With our modern, user friendly and technologically advanced solutions, Orion Health HEALTHCARE DELIVERY IS CHANGING has ample opportunity for growth. We are conﬁdent that our A key theme in healthcare today is the goal of moving more product road map, revamped leadership and greater alignment care out of hospitals and into primary, community and of incentives with results will deliver another year of increasing home settings where patients have more control over their revenue. own health. In support of this, healthcare organisations are seeking insights into the health of populations and individuals through genomics and big data analytics (making sense of vast quantities of patient or population data).

We are also seeing a move towards greater use of mobile Ian McCrae devices within care settings, reducing the presence of paper Chief Executive Oﬃcer and enabling more eﬃcient healthcare delivery. Similarly, interest in cloud technology is increasing.

These themes provide direction for our product strategy. We are adopting and creating the latest technologies and positioning our products to support these themes, allowing us to be a leader and key enabler in the transformation of Rodney Hyde healthcare delivery. Chief Financial Oﬃcer 15 Orion Health Annual Report 2013

Board of Directors

Andrew, known as Clem, is an investor and professional director. Clem was managing director of Emerald Capital Limited, a Canadian-owned investment company, from 1998 until 2008. His prior experience includes nine years with Goodman Fielder Wattie in various ﬁnancial and general management positions in New Zealand and Asia, following corporate money market and foreign exchange positions in New Zealand and London. In addition to Orion Health, Clem is currently chairman of New Zealand Asset Management and Amadeus Asset Administration. He is a director of NZX-listed Ryman Healthcare, State Owned Enterprise Genesis Power Limited, RDGP Limited and Antipodes Wing Limited. Clem is also a shareholder and Director of two other private Andrew Clements investment companies, Zeus Management Limited and Jacon Investments Limited. He Chairman is a trustee of private and public trusts, including Chairman of the New Zealand Football Foundation and The Mt Wellington Stadium Charitable Trust. He is a member of the Institute of Directors and completed the New Zealand Institute of Management advanced management program in 1991. He holds a Bachelor of Commerce from the University of Auckland.

Ian founded Orion Health in 1993 with a four-person staff in Auckland, New Zealand. Under his stewardship, the company has seen unprecedented growth and success. With over 750 staff members and 18 international offices, Orion Health has introduced its solutions to over 30 countries. Before founding Orion Health, Ian was a senior telecommunications consultant for Clearfield Consulting Ltd., specializing in message standards and connectivity of data network systems and infrastructures. Prior to his work at Clearfield, Ian worked for Ernst & Young designing corporate networks. Ian has also worked as a product manager at Imagineering Micro Distributors in New Zealand and a senior business analyst for the Ian McCrae London Stock Exchange. Chief Executive Officer and Managing Director Ian has a Masters in Engineering Sciences and Bachelor of Engineering (Honors) from the University of Auckland in New Zealand. Orion Health Annual Report 2013 16

Andrew has held a number of director and executive positions for large multinationals and has 30 years of experience in international business. He has a strong background in building global, performance-driven teams and international business experience. From 2003 to 2011, Andrew was CEO of Fonterra Cooperative Group Limited in New Zealand. Prior to Fonterra, Andrew served as the President and Chief Executive Oﬃcer of GSW Inc. of Toronto, and spent 16 years in the sugar industry working in North America and the United Kingdom, serving as President and CEO of Tate & Lyle North America Sugars Inc, and President of Redpath Sugars. Andrew currently runs his own investment company, Canz Capital Ltd, is Chairman of Andrew Ferrier the New Zealand Government’s economic development agency New Zealand Trade and Director Enterprise, sits on the Council of the University of Auckland, and in addition to Orion Health, sits on the Boards of Bunge Ltd. in New York and Lufa Farms Inc. in Montreal, as well as other charitable and volunteer Boards. He has a Bachelor of Business Administration from the University of New Brunswick and a Master of Business Administration from Concordia University.

Neil has been involved in the IT industry for more than 40 years. Prior to 1993 he was CEO and Director of Paxus Corporation, an Australian publicly listed IT company with operations across Asia/Paciﬁc, Europe and Canada. Following the merger in 1993 of Paxus with The Continuum Company in Austin, Texas, he moved to become Executive Vice-President of Continuum. In 1996 Continuum was acquired by Computer Sciences Corporation (CSC) and this led to him being appointed as Executive Vice-President of CSC’s Financial Services Group based in Austin. Since 1999, Neil has participated in a number of public and private companies in the IT industry both as an investor and Director in New Zealand and Australia. For much of this Neil Cullimore period he has had a signiﬁcant concentration across a broad spectrum of the healthcare Director sector. He holds a Bachelor of Science (Maths) from the University of Auckland.

Paul is the Senior Vice President of Sales & Marketing for Fisher & Paykel Healthcare, a global leader in the design, manufacture, sale and marketing of a range of respiratory medical devices. Joining Fisher & Paykel Healthcare in 1990, Paul has extensive international experience working within the healthcare industry. He has held various managerial positions while living in the United States, United Kingdom and France establishing Fisher & Paykel Healthcare sales offices. Paul is responsible for 350 offshore staff and is a director of various Fisher & Paykel Healthcare subsidiary companies. Prior experience includes positions held at ICL Ltd and Computercorp Ltd. Paul received his Bachelor of Commerce degree from the University Paul Shearer of Canterbury, New Zealand. Director

Roger France spent the first 11 years of his professional career with a PricewaterhouseCoopers predecessor firm. He then had 10 years as Chief Financial Officer with two New Zealand publicly listed companies, before returning to what was then Coopers & Lybrand. Following the merger with Price Waterhouse, he sat on the Management Board of PricewaterhouseCoopers and led its Corporate Value Consulting practice in Asia Pacific. He joined Air New Zealand’s Board in October 2001, acting as Executive Director until February 2002 and is the Chairman of its Audit Committee. Roger was a director of Fonterra Co-operative Group Limited for six years until the end of 2008, served on its Roger France Audit, Finance and Risk Committee and was Chairman of the Fair Value Share Committee. In February 2009, he was appointed to the Board of Fisher & Paykel Healthcare Director Corporation Limited and Chairman of its Audit Committee. Roger was Chancellor of The University of Auckland from 2009 to 2012. Roger holds a Bachelor of Commerce and is a Fellow of the Institute of Chartered Accountants of New Zealand. 17 Orion Health Annual Report 2013

Executive Leadership Team

As CEO of Orion Health, Ian McCrae is responsible for setting the vision and direction of the organization. Under Ian’s leadership, the senior leadership team drives their respective business units in the execution of the business strategy and contribution to Orion Health’s success.

Ian McCrae Chief Executive Oﬃcer and Managing Director

Rodney is responsible for the company’s global Financial Operations and Corporate functions. A CIMA qualified management accountant (United Kingdom), Rodney joined Orion Health in July 2011 from Navico, the market leader in marine electronics. His most recent role was Vice President of Finance and Chief Financial Officer for the Americas region and Manufacturing. Rodney has extensive experience in the technology industry with Navman NZ and Navico. His previous experience also includes financial roles with NZ Dairy Foods, BP Oil and GlaxoWelcome. Rodney earned a Bachelor of Commerce from Auckland University before moving to the United Kingdom to study CIMA whilst working for BP Oil. Rodney Hyde Chief Financial Officer Orion Health Annual Report 2013 18

Paul Viskovich started the North American business for Orion Health in 2002 and now heads the Sales operation globally. In this capacity, he is an active member of Health Information and Management Systems Society (HIMSS), eHealth Initiative and other organizations promoting the advancement of IT in healthcare. Previously, Paul was responsible for the strategy and operations of Orion Health in North America. In addition to the successful establishment of Orion Health in the North American market, Paul also established Orion Health’s Australian and European operations. Prior to joining Orion Health, Paul enjoyed more than 20 years in the IT industry Paul Viskovich across senior sales, marketing and management positions with Fujitsu, Amdahl President, Global Corporation, DMR Consulting and Eagle Technology Group within the Asia Paciﬁc Region.

Wayne is responsible for Orion Health’s Product Management, Marketing, Bid Management and Design Groups. Collectively these provide the strategic direction to the Orion Health product development function, to ensure the continued creation of innovative health IT solutions for healthcare providers and patients. Wayne has managed various aspects of the Orion Health business, including Services, Product Management, Product Development, and the New Zealand and Asian Sales teams. He also managed the integration of the Microsoft HIS business during 2012. Having spent over 17 years working in healthcare technology, Wayne has worked within numerous healthcare organizations, including a public hospital, health insurance company and IT consulting companies before joining Orion Health in 2003. Wayne Oxenham Executive Vice President, Wayne earned a Bachelor of Science majoring in Mathematics before continuing Products and Marketing his tertiary education completing a Bachelor of Management Studies in Accounting and Finance. In 2012 Wayne received a Prime Minister’s Business Scholarship to extend his international business studies at Harvard Business School.

Gareth leads the Product Development Group for Orion Health, looking after the teams building Orion Health’s products in its four development centers in Auckland, Christchurch, Canberra, and Bangkok. Gareth believes in the beneﬁt of marrying agile practices with the level of quality assurance that the health industry demands. As an advocate for the role of software in the “NZ Inc.” knowledge economy, Gareth works with universities and industry bodies to promote the evolution of technical education in the secondary and tertiary sectors to address an ever-increasing demand for skilled creators of software. Gareth left an earlier career as a piano teacher and musician to undertake a BSc (Hons) in Computer Science, work as a Software Engineer, and then later Gareth Cronin complete an MBA at the University of Auckland. Prior to joining Orion Health Vice President, in 2010, he was leading the development teams at Kiwiplan, a successful Product Development New Zealand software house supplying 600 customer sites in the packaging manufacturing industry. 19 Orion Health Annual Report 2013

Changing IT Perceptions Orion Health Annual Report 2013 20

Imagine a better healthcare future where health professionals have access to a complete electronic record for every patient they see. With our software those who deliver care get a whole patient picture, when and where they need it

ORION HEALTH LAUNCHES CODEWORX Orion Health realized that in order to have any impact on The emerging shortage of high performing, IT knowledge New Zealand youth, it needed to create collaborative learning workers is forming as the biggest threat to the ongoing opportunities that brought together industry, and secondary success of the New Zealand IT industry. As a significant schools – allowing for secondary school students, teachers employer within the industry, Orion Health has a very real and IT professionals to interact through Computer Science. interest in making sure that the resource pool of New Zealand Codeworx is a fully custom built website, developed during Computer Science and Engineering Science graduates one of Orion Health’s innovation weeks to provide the expands. necessary guidance and support to allow students to begin The key issue that is driving this shortage seems to center their journey towards actually creating software. To help around a perception issue that exists within New Zealand raise initial awareness within schools, Orion Health has also youth. Computer science is generally misunderstood and developed the 2013 Codeworx Challenge – a competition viewed negatively, largely stemming back from the traditional based on finding the most innovative solutions utilizing a way in which it is taught at secondary schools. Students are Raspberry Pi computer. taught how to consume IT and are not provided with the CEO Ian McCrae officially launched Codeworx and the 2013 necessary teaching to allow them to begin to develop their Codeworx Challenge at the Manukau Institute of Technology own digital tools. on Thursday 21st March 2013.

www.codeworkx.co.nz 21 Orion Health Annual Report 2013

20th Anniversary Spotlight Orion Health Annual Report 2013 22

ORION HEALTH CELEBRATES 20 YEARS! In 1993 when entrepreneur and innovator Ian McCrae left a consulting job at Ernst & Young to start a ‘software’ company, not many shared his dream. In fact only 3 ½ people formed the basis of Orion Health as it began its journey as a boutique IT consultancy based in Auckland.

Since then Orion Health has enjoyed a very successful history of winning key contracts all around the world, highlighting a ﬂexible and adaptable approach to business. Major deals have been brokered in the USA, Australia, Canada, Spain, New Zealand, Turkey, France, Ireland, Saudi Arabia and Scandinavia, and more recently in Japan, Singapore and China.

A full twenty years later, and Orion Health has grown into a New Zealand success story with revenues of over $100m and in excess of 750 global employees across 18 oﬃces. Orion Health remains independently owned and New Zealand operated with ambitious plans and clear strategies for ongoing signiﬁcant growth.

Ian McCrae sees the future of healthcare as one where patients are enabled to participate fully in their own healthcare decisions, supported by their entire network of healthcare professionals. He believes that mathematical analysis of data, advances in genomics, the ability to practice proactive medicine based on predictive modeling and the ongoing analysis of historical information, is the face of future healthcare.

“Orion Health is now positioned to provide support to patients and doctors across the entire healthcare environment. With our modern and fully integrated suite of technology we can eliminate the majority of common challenges facing local, regional and national healthcare systems. There is no limit for us and we’re in a market that is currently running at $40 - 50 billion. We have consistently posted double digit annual growth and predict great things for the company’s future” 23 Orion Health Annual Report 2013

Orion Health Timeline 1992 to 2013

1992 1997 ä Orion Systems makes its first Clearfield Consulting is founded Medlink HL7++ evolves sale in the UK market, winning by Ian McCrae and three other into Symphonia, which is a project in Walsall. An office colleagues as a boutique consultancy able to support all health is set up to support the Walsall firm in Auckland New Zealand messaging protocols implementation and to provide support for ongoing sales ä Orion Systems is awarded Hi- ä The company ships its first software product, Tech Company of the Year at the called MedLink HL7++, a specialised HL7 New Zealand Hi-Tech Awards health integration application for developers Orion Systems changes 2001 ä Orion Systems is one of the first New Zealand from a generalist companies to connect to the internet software vendor into an eHealth specialist 1994 1999

1992

2000 Orion Systems shifts its head 1993 office to Mt Eden, Auckland. It also expands operations 1998 Clearfield Consulting sets up a into the Australian market, software development company, Orion Systems develops a relocating sales staff to drive subsequently renamed Orion web-based portal for clinical initial business Systems. Ian McCrae takes on the applications and names it role of CEO Concerto, the first of its kind, extending Orion Systems’ innovative reputation

1995 Orion Systems achieves its first sale 2002 into North America, selling its Medlink ä Orion Systems expands into the North HL7++ product to Beth Israel Hospital American market, setting up an office in Santa Monica, California ä The first version of Rhapsody Integration Engine is released, and this furthers Orion Systems leadership position in health integration Orion Health Annual Report 2013 24

ä Orion Health celebrates its 20th year in An internal design team is set up to business on April 1st 2013 ä Orion Systems wins its largest work exclusively on improving the deal to date, in the Canadian user experience across Orion Health ä Orion Health sells a nationwide Electronic province of Alberta, to supply an software. A design-oriented approach is Care Record to Northern Ireland Electronic Health Record (EHR) applied to every aspect of every product, ä Orion Health signs global partnership ä The Orion Health Board of in recognition of the fact that usability is agreement to integrate Orion Health HIE Directors is established a key requirement of all users software into the Caradigm eHealth solution 2003 2008 2013

Orion Systems is oﬃcially Orion Health is named New Zealand renamed Orion Health to help International Business of the Year and reinforce its eHealth focus and Supreme winner at the New Zealand specialization International Business Awards 2005 2012

2013

2004 Orion Systems wins a second 2010 2011 large deal, this time in New South ä A highly structured product ä Orion Health signs its largest deal Wales, Australia, to provide a development methodology is to date, to provide a Personally regional EHR in a pilot project for employed, with software officially Controlled Electronic Health Record the entire state released three times per year, to throughout Australia help improve quality and better meet customer expectations ä Orion Health acquires the Microsoft Amalga HIS product portfolio 2007 ä Week-long innovation windows, ä Orion Health is a finalist in the Orion Health begins consolidating known as Scratcharama, are established every four months for Company of the Decade Award at the its overall brand. Over the next five New Zealand Hi-Tech Awards years, four distinct core solution developers to work freely on new packages and 16 optional extras ideas ä Orion Health purchases new premises are developed, all under the single ä A Quality Management and for its Auckland headquarters, brand name of Orion Health Assurance programme is redesigning and redeveloping the site, introduced to embed safety tailoring it to specific needs including and reliability throughout the a virtual hospital demonstration organization and ensure better environment patient outcomes 25 Orion Health Annual Report 2013

Directors’ Responsibility Statement

The Directors are responsible for the preparation, The Directors have responsibility for the maintenance in accordance with New Zealand generally accepted of a system of internal control designed to provide accounting practice, of the financial statements which reasonable assurance as to the integrity and reliability give a true and fair view of the financial position of of the financial reporting. The Directors consider that Orion Corporation Limited and Group as at 31 March adequate steps have been taken to safeguard the assets 2013 and the results of their operations and cash flows of the Company and Group and to prevent and detect for the year ended 31 March 2013. fraud and other irregularities. The Directors consider that the financial statements The Directors are pleased to present the financial of the Company and the Group have been prepared statements of Orion Corporation Limited and Group for using accounting policies appropriate to the Company the year ended 31 March 2013. and Group’s circumstances, consistently applied and The annual report is dated 28 June 2013 and is signed supported by reasonable and prudent judgements in accordance with a resolution of the Directors made and estimates, and that all applicable New Zealand pursuant to section 211(1) (k) of the Companies Act equivalents to International Financial Reporting 1993. Standards and Financial Reporting Standards have been followed. For and on behalf of the Board of Directors The Directors have responsibility for ensuring that proper accounting records have been kept which enable, with reasonable accuracy, the determination of the financial position of the Company and Group and enable them to ensure that the financial statements comply Ian McCrae Andrew Clements with the Financial Reporting Act 1993. Chief Executive Officer Chairman Orion Health Annual Report 2013 26

Financial Statements

- Statements of Comprehensive Income

- Statements of Financial Position

- Statements of Change in Equity

- Statements of Cash Flow

- Notes to the Financial Statements 27 Orion Health Annual Report 2013

Statements of Comprehensive Income For the year ended 31 March 2013

Group Parent

2013 2012 2013 2012

Note NZ$’000 NZ$’000 NZ$’000 NZ$’000

Revenue

Customer revenue 5 109,431 95,746 - -

Other income 5 3,436 3,826 310 250

Operating Revenue 112,867 99,572 310 250

Gain on sale of land and buildings 5 9,059 - - -

Total Revenue 121,926 99,572 310 250

Expenses

Direct operating expenses (12,190) (8,265) - -

Employee beneﬁts expense 6 (85,173)(69,215) - -

Marketing expenses (2,496) (2,127) (16) -

Administration and other expenses (6,853) (6,421) (288) (229)

Occupancy expenses 26 (5,074) (3,732) - -

Depreciation and amortisation expense 6 (2,443) (1,900) - -

Other operating gains/(losses) 6 (414) (307) (1) (4)

(114,643)(91,967) (305) (233)

Operating proﬁt 7,283 7,605 5 17

Finance income 7 285 289 - -

Finance costs 7 (523) (117) - -

Net ﬁnance costs (238) 172 - -

Share of proﬁt/(loss) from associate 12 364 375 - -

Proﬁt before income tax 7,409 8,152 5 17

Income tax credit/(expense) 8 341 (2,438) (2) (12)

Net proﬁt for the year attributable to 7,750 5,714 3 5 equity holders of parent

Other comprehensive income

Currency translation diﬀerences 21 (285) (761) - -

Total other comprehensive income (285) (761) - -

Total comprehensive income attributable 7,465 4,953 3 5 to equity holders of parent

The accompanying notes form an integral part of these ﬁnancial statements Orion Health Annual Report 2013 28

Statements of Financial Position As at 31 March 2013

Group Parent

2013 2012 2013 2012

Note NZ$’000 NZ$’000 NZ$’000 NZ$’000

ASSETS

Current assets

Cash and cash equivalents 9 9,278 7,293 - -

Trade and other receivables 10 54,385 48,839 12,984 12,971

Current income tax asset - - 25 -

63,663 56,132 13,009 12,971

Non-current assets

Trade and other receivables 10 - 843 - -

Deferred tax assets 8 3,818 1,944 17 -

Investment in subsidiaries 11 - - 1 1

Investment in associates 12 1,494 1,130 - -

Property, plant and equipment 13 6,750 13,118 - -

Intangibles 14 922 738 - -

12,984 17,773 18 1

TOTAL ASSETS 76,647 73,905 13,027 12,972

LIABILITIES

Current liabilities

Bank overdraft 9 2 1,814 - -

Trade and other payables 15 10,030 7,454 371 68

Current income tax payable 655 926 - 252

Employee beneﬁts 16 5,293 5,766 - -

Revenue in advance 17 29,883 26,127 - -

45,863 42,087 371 320

Non-current liabilities

Bank borrowings 18 - 8,500 - -

- 8,500 - -

TOTAL LIABILITIES 45,863 50,587 371 320

NET ASSETS 30,784 23,318 12,656 12,652

EQUITY

Share capital 19 12,528 12,527 12,528 12,527

Retained earnings 20 19,155 11,405 128 125

Foreign currency translation reserve 21 (899) (614) - -

TOTAL EQUITY ATTRIBUTABLE TO THE 30,784 23,318 12,656 12,652 OWNERS OF THE PARENT

The accompanying notes form an integral part of these ﬁnancial statements 29 Orion Health Annual Report 2013

Statements of Changes in Equity For the year ended 31 March 2013

ATTRIBUTABLE TO THE OWNERS OF THE PARENT

Foreign currency Issued Capital Retained Earnings Total Equity translation reserve

Note NZ$’000 NZ$’000 NZ$’000 NZ$’000

GROUP

Balance at 1 April 2011 12,517 5,691 147 18,355

Proﬁt for the year - 5,714 - 5,714

Other comprehensive income for the year 21 - - (761)(761)

Total comprehensive income for the year ended 31 March 2012 - 5,714 (761) 4,953

Transactions with owners in their capacity as owners

Issue of share capital 19 10 - - 10

Total transactions with owners 10 - - 10

Balance at 31 March 2012 12,527 11,405 (614) 23,318

Balance at 1 April 2012 12,527 11,405 (614) 23,318

Proﬁt for the year - 7,750 - 7,750

Other comprehensive income for the year 21 - - (285)(285)

Total comprehensive income for the year - 7,750 (285) 7,465 ended 31 March 2013

Issue of share capital 19 1 - - 1

Total transactions with owners 1 - - 1

Balance at 31 March 2013 12,528 19,155 (899) 30,784

PARENT

Balance at 1 April 2011 12,517 120 - 12,637

Proﬁt for the year - 5 - 5

Total comprehensive income for the year - 5 - 5 ended 31 March 2012

Issue of share capital 19 10 - - 10

Total transactions with owners 10 - - 10

Balance at 31 March 2013 12,527 125 - 12,652

Balance at 1 April 2012 12,527 125 - 12,652

Proﬁt for the year - 3 - 3

Total comprehensive income for the year ended 31 March 2013 - 3 - 3

Issue of share capital 19 1 - - 1

Total transactions with owners 1 - - 1

Balance at 31 March 2013 12,528 128 - 12,656

The accompanying notes form an integral part of these ﬁnancial statements Orion Health Annual Report 2013 30

Statements of Cash Flows Group Parent For the year ended 31 March 2013 2013 2012 2013 2012

Note NZ$’000 NZ$’000 NZ$’000 NZ$’000

CASH FLOW FROM OPERATING ACTIVITES

Cash provided from:

Receipts from customers 113,184 95,382 - -

Interest received 279 289 - -

Taxation refunds - 291 - -

113,463 95,962 - -

Cash applied to:

Payment to suppliers (25,727)(21,164) - -

Payment to employees (85,490)(68,533) - -

Interest paid (643)(206) - -

Taxation paid (1,876)(1,126) - -

(113,736)(91,029) - -

Net cash (outﬂow)/inﬂow from operating activities 27 (273) 4,933 - -

CASH FLOWS FROM INVESTING ACTIVITIES

Cash provided from:

Property, plant and equipment 21,037 - - -

Cash applied to:

Property, plant and equipment (7,781)(11,541) - -

Intangibles (633)(546) - -

Net cash inﬂow/(outﬂow) from investing activities 12,623 (12,087) - -

CASH FLOW FROM FINANCING ACTIVITIES

Cash provided from:

Issue of shares 1 10 - -

Dividend received - 2 - -

Bank borrowings 500 8,500 - -

501 8,512 Cash applied to: Bank borrowings (9,000) - - - Net cash (outflows)/inflow from financial activities (8,499) 8,512 - -

TOTAL NET CASH INFLOW 3,851 1,358 - -

Cash and cash equivalents as the beginning of period 5,479 4,281 - -

Eﬀect of exchange rate on foreign currency balances (54)(160) - -

Net cash ﬂow 3,851 1,358 - -

Cash and cash equivalents at the end of period 9 9,276 5,479 - - Composition of cash and cash equivalents Cash and cash equivalents 9,278 7,293 - - Bank overdraft (2)(1,814) - - 9 9,276 5,479 - - The accompanying notes form an integral part of these ﬁnancial statements 31 Orion Health Annual Report 2013

Notes to the Financial Statements FOR THE YEAR ENDED 31 MARCH 2013

1. REPORTING ENTITY The consolidated financial statements for the ‘Group’ are for the economic entity comprising Orion Corporation Limited (‘Parent’ or ‘Company’) and its subsidiaries, (together referred to as the Group and individually as ‘Group entities’) and the Group’s interest in associates. Orion Corporation Limited is incorporated in New Zealand and registered under the New Zealand Companies Act 1993. The registered office is 181 Grafton Road, Grafton, Auckland 1010, New Zealand. The Parent and Group are designated as profit oriented entities for financial reporting purposes. The Parent and Group are primarily involved in the sale, support and implementation of software with a focus on the healthcare IT market. These financial statements were approved by the Directors on 28 June 2013. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation of financial statements Statement on compliance The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (‘NZ GAAP’). They comply with New Zealand equivalents to International Financial Reporting Standards (‘NZ IFRS’), and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. Full compliance with NZ IFRS ensures compliance with International Financial Reporting Standard (‘IFRS’). Basis of measurement The financial statements have been prepared on the basis of historic cost, except when specific items are carried at fair value as identified in specific accounting policies below.

(b) New accounting standards and interpretations Standards, amendments, and interpretations effective in 2013 There are no NZ IFRSs or NZ IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 April 2012 that would be expected to have a material impact on the group. The Group has adopted the following new and amended NZ IFRSs of relevance to the Group and Company as of 1 April 2012: ä NZ IFRS 7 (amendment): Financial Instruments disclosures – Transfer of Financial Assets (effective for annual periods beginning on or after 1 July 2011). The amendments require additional disclosures about transfer of financial assets to enable users of financial statements äTo understand the relationship between transferred financial assets that are not de recognized in their entirety and the associated liabilities; and äTo evaluate the nature of, and risks associated with, the entity’s continuing involvement in de recognized financial assets. ä FRS 44 New Zealand Additional Disclosures and Harmonization Amendments (effective for annual periods beginning on or after 1 July 2011). FRS 44 sets out New Zealand specific disclosures for entities that apply NZ IFRSs. These disclosures have been relocated from NZ IFRSs to clarify that these disclosures are additional to those required by IFRSs. The Harmonization Amendments amends various NZ IFRSs for the purpose of harmonizing with the source IFRSs and Australian Accounting Standards. ä NZ IAS 12 Recovery of Underlying Assets (effective from 1 January 2012). The amendment requires the measurement of deferred tax assets or liabilities to reflect the tax consequences that would follow from the way management expects to recover or settle the carrying of the relevant assets or liabilities, that is through use or through sale. The adoption of these amendments has not resulted in material accounting or disclosure changes for the Group or Company. Orion Health Annual Report 2013 32

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 April 2012 and not early adopted New standards, amendments and interpretations issued by the International Accounting Standards Board (IASB) and the External Reporting Board (XRB) have been published that will be mandatory for the Group’s accounting periods beginning on or after 1 April 2013. None of these standards have been early adopted by the Group. These new standards, amendments and interpretations potentially impacting the group include: ä NZ IFRS 10 Consolidated Financial Statements, NZ IFRS 11 Joint Arrangements, NZ IFRS 12 Disclosure of Interests in Other Entities, revised NZ IAS 27 Separate Financial Statements and NZ IAS 28 Investments in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2013). NZ IFRS 10 replaces all of the guidance on control and consolidation in NZ IAS 27, and NZ IFRIC 12. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. The Group does not expect the new standard to have a significant impact on its composition. ä NZ IFRS 12 sets out the required disclosures for entities reporting under the two new standards, NZ IFRS 10 and NZ IFRS 11, and replaces the disclosure requirements currently found in NZ IAS 28. Application of this standard by the Group will not affect any of the amounts recognized in the financial statements, but will impact the type of information disclosed in relation to the Group’s investments. ä NZ IAS 27 is renamed Separate Financial Statements and is now a standard dealing solely with separate financial statements. Application of this standard by the Group and Company will not affect any of the amounts recognized in the financial statements, but may impact the type of information disclosed in relation to the parent’s investments in the separate parent entity financial statements. Amendments to NZ IAS 28 provide clarification that an entity continues to apply the equity method and does not re-measure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a “partial disposal” concept. The Group is still assessing the impact of these amendments. The Group expects to adopt these new standards in the financial statements for the annual reporting period ending 31 March 2014. ä NZ IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013) NZ IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across NZ IFRSs. The Group has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognized in the financial statements. However, application of the new standard will impact the type of information disclosed in the notes to the financial statements. The Group and Company expect to adopt the new standard in the financial statements for the annual reporting period ending 31 March 2014. ä NZ IAS 1 Amendments Presentation of Items of Other Comprehensive Income (effective for annual periods beginning on or after 1 July 2012). The amendment requires entities to separate items presented in other comprehensive income into two groups, based on whether they may be recycled to profit or loss in the future. This will not affect the measurement of any of the items recognized in the balance sheet or the profit or loss in the current period. The Group and Company expect to adopt the amendment in the financial statements for the annual reporting period ending 31 March 2014. ä NZ IFRS 9 Financial instruments (effective for annual periods beginning on or after 1 January 2015) NZ IFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities and replaces the parts of NZ IAS 39 relating to classification and measurement of financial instruments. NZ IFRS 9 requires financial instruments to be classified into two measurement categories: amortised cost and fair value. The determination is made at initial recognition. All equity investments are measured at fair value. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Otherwise it is measured at fair value through profit or loss. For financial liabilities the standard retains most of the NZ IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The new standard is not expected to have a material impact on the Group or Company’s financial statements. The Group and Company have not yet decided when to adopt NZ IFRS 9. There are no other IFRSs and IFRIC interpretations that are not yet effective that would be expected to have material impact on the Group. 33 Orion Health Annual Report 2013

(c) Basis of consolidation Subsidiaries Subsidiaries are entities that are controlled, either directly or indirectly, by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Investments in subsidiaries held by the Parent are accounted for at cost less impairment losses in the separate financial statements of the parent entity. Business Combinations Acquisitions of businesses are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition- related costs are recognized in profit or loss as incurred.

Investments associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The Group’s investment in its associates is accounted for using the equity method of accounting in the consolidated financial statements. Investments in associates held by the Parent are accounted for at cost less impairment losses in the separate financial statements of the parent entity.

Under the equity method, investments in the associates are carried in the consolidated statements of financial position at cost plus the Group’s share of the profit or loss and other comprehensive income of equity accounted investees, from the date that significant influence commences until the date that significant influence ceases. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised.

Dividends receivable from associates are recognized in the parent entity’s proﬁt or loss, while in the consolidated ﬁnancial statements they reduce the carrying amount of the investment.

(d) Foreign currency translation (i) Functional and presentation currency Both the functional and presentation currency of Orion Corporation Limited and its New Zealand subsidiaries are New Zealand dollars ($). The functional currencies of other subsidiaries are as follows:

Subsidiary Country of Incorporation Functional currency

Orion Health Inc. United States of America United States dollar (USD)

Orion Health Limited Canada Canadian dollar (CAD)

Orion Health Limited United Kingdom Great Britain pound (GBP) Orion Health Annual Report 2013 34

Orion Health Pty Limited Australia Australian dollar (AUD)

Orion Health S.L.U. Spain Euro (EUR)

Orion Health SAS. France Euro (EUR)

Orion Health Pte. Limited Singapore Singapore dollar (SGD)

Orion Health K K Japan Japanese yen (JPY)

Orion Health Systems FZ-LLC United Arab Emirates United Arab Emirates dirham (AED)

Orion Health Limited Thailand Thai baht (THB)

Orion Sağlık ve Bilgi Sistemleri Limited Turkey United States dollar (USD) Şirketi

(ii) Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date, with any gain or loss being recognized in the proﬁt and loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(iii) Translation of Group Companies functional currency to presentation currency The transactions of foreign subsidiaries are translated into New Zealand dollars at the rate prevailing at the end of the month in which the transaction took place. Assets and liabilities are translated at exchange rates prevailing at reporting date. Exchange variations resulting from the translation are recognized in the foreign currency translation reserve (“FCTR”) in other comprehensive income. When a foreign operation is disposed of in part or in full, the relevant amount in the FCTR is transferred to the proﬁt or loss as part of the proﬁt or loss on disposal.

(e) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (‘CODM’). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identiﬁed as the group senior executive team.

(f) Property, plant and equipment Recognition and measurement All items of property, plant and equipment are stated at cost, including costs directly attributable to bringing the asset to its working condition as intended by management, less accumulated depreciation and accumulated impairment losses. Any subsequent expenditure that increases the economic beneﬁts derived from an asset is capitalised. Expenditure on repairs and maintenance that does not increase the economic beneﬁts of an asset is expensed in the period it is incurred.

When an item of property, plant and equipment is disposed of the diﬀerence between net disposal proceeds and the carrying amount is recognized as a gain, or loss, in proﬁt or loss.

Depreciation for the current and prior periods is calculated over the economic useful life of the asset less any residual value using Diminishing Value (DV), Capital Cost Allowances (CCA) or Straight Line (SL):

Leasehold improvements DV: 9% – 40% CCA: 20% SL: 6 – 13 years

Furniture and ﬁttings DV: 18% - 48% CCA: 20% - 25% SL: 3 – 7 years

Oﬃce and café equipment DV: 13% - 67% CCA: 20% SL: 3 – 7 years

Computer equipment DV: 18% - 67% CCA: 45% SL: 3 – 4 years 35 Orion Health Annual Report 2013

The assets’ residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

(g) Intangible assets Software Software assets acquired separately are initially measured at cost, software assets acquired in a business combination are initially measured at fair value. Following initial recognition, software is carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of software assets are assessed to be finite. Intangible assets with finite lives are amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. An assessment of indicators of impairment is carried out at each reporting date. The amortisation period and the amortisation method for a software asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognized in profit or loss. Amortisation is calculated on a diminishing value basis at a rate of 45%-60%. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred. Research and development costs Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognized only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intentions to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development are all determinable. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefit from the related project. The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use or more frequently when an indication of impairment arises during the reporting period.

(h) Revenue recognition Revenue is recognized based on the state of completion to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is recorded net of GST and discounts. The following specific recognition criteria must be met before revenue is recognized:

Support and Maintenance In general support and maintenance services are billed in advance for a ﬁxed term. Revenue is deferred and recognized on a straight line basis over the term of the contract billing period, as services are provided.

Licences Licence revenue is recognized if there is a contractual arrangement in place. Revenue from ‘off-the-shelf’ software (or non-‘off-the- shelf’ software sold without a professional services implementation contract) is recognized as revenue in the month of billing. For non-‘off-the-shelf’ software sold with a professional services implementation contract, the revenue is deferred and recognized in proportion to the percentage complete of the associated professional services contract.

Professional services Time and materials contracts are generally billed monthly in the month in which the service is provided. Provided a legitimate arrangement is in place, the revenue is recognized in the month of billing, as services are provided. Fixed price contracts are typically designed on milestone achievement. Normally invoicing is aligned to these milestones. Revenue recognition, however, is aligned to the percentage of work complete. Where a loss is expected to occur it is recognized immediately and is made for both work in progress completed to date and for future work required on the contract.

Government grants Government grants are recognized at their fair value where there is reasonable assurance that the grants will be received and all attaching conditions will be complied with. When a grant relates to a speciﬁed expense item, it is recognized as income over the Orion Health Annual Report 2013 36

period necessary to match the grant on a systematic basis to the cost that it is intended to compensate. When the grant does not relate to a speciﬁed expense item, it is recognized as income in the period it is received or becomes receivable.

Dividend and interest revenue Dividend revenue from investments is recognized when the shareholder’s right to receive payment has been established. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the eﬀective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the ﬁnancial asset to that asset’s net carrying amount.

(i) Revenue in advance Revenue invoiced but not able to be recognized under the above policy is recorded in statements of ﬁnancial position as “Revenue in advance”.

(j) Cash flows For the purpose of the statements of cash flows, cash and cash equivalents are defined in 2(o). Principal draw down and repayment of Bank term credit facilities are shown as part of financing activities.

(k) Employee benefits Accruals are made for benefits accruing to employees in respect of short term employee benefits and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Accruals are made in respect of employee benefits expected to be settled within 12 months and are measured at their nominal values using the remuneration rate expected to apply at the time of settlement, on an undiscounted basis.

Long service leave The liability for long service leave is recognized in the statements of ﬁnancial position and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted to present value.

(l) Income tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities based on the period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences except: ä When the deferred income tax liability arises from an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or ä When the taxable temporary difference is associated with investments in subsidiaries or associates, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized, except: ä When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of goodwill, or an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects neither the accounting profit nor taxable profit or loss; or ä When the deductible temporary difference is associated with investments in subsidiaries or associates, in which case a deferred tax asset is only recognized to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. 37 Orion Health Annual Report 2013

Unrecognized deferred income tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(m) Other taxes Revenues, expenses and assets are recognized net of sales tax (and other similar taxes), except; ä When the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and ä For receivables and payables, which are stated with the amount of sales tax included. Cash flows are included in the cash flow statements and the sales tax component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows. Commitments and contingencies are disclosed net of sales tax.

(n) Impairment of non-financial assets Orion Corporation Limited conducts an annual internal review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are assessed for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

(o) Financial instruments A financial instrument is recognized if the Group or Parent becomes a party to the contractual provisions of the instrument. Financial assets are de recognized if the Group’s or Parent’s contractual rights to the cash flows from the financial assets expire or if the Group or Parent transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial liabilities are de recognized if, and only if, the Group or Parent obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability de recognized and the consideration paid and payable is recognized in profit or loss.

Non-derivative financial instruments Non-derivative financial instruments comprise trade receivables, related party receivables, cash and cash equivalents, bank credit facilities, trade, other payables and bank borrowings. Non-derivative financial instruments are recognized initially at fair value plus, for instruments not subsequently measured at fair value through profit and loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below: ä Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statements of cash flows. ä Trade receivables are subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. Trade receivables on terms beyond 12 months accrue interest monthly at applicable market rates. ä Impairment of financial assets - Collectability of trade receivables is reviewed on an on-going basis at an operating unit level. Individual debts that are known to be uncollectible are written off when identified. An impairment allowance is recognized in profit or loss when there is objective evidence that the Group will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the Orion Health Annual Report 2013 38

receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. ä Trade and other payables are carried at amortised cost, and those of a short term nature are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 45 days of recognition.

(p) Leased assets Operating lease Leases in which a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are recognized as an expense in the profit or loss on a straight-line basis over the lease term. Any lease incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS Critical accounting estimates and judgements The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. Management has identified the following critical balances and transactions for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. Impairment of non-financial assets The Group assesses impairment of all assets at each reporting date by evaluating internal and external indicators specific to the Group and to the particular asset that may lead to impairment. These include product performance, technology, economic and political environments and future product expectations. Management has determined that there are no significant internal or external indicators present in relation to non-financial assets that would require these items to be tested for impairment as at reporting date.

Estimation of useful lives of assets The estimation of the useful lives, residual values, and method of depreciation is reviewed at each reporting date, against past historical experience and the condition of the asset as at reporting date. Adjustments to useful lives, residual values, and method of depreciation are made when considered necessary. Depreciation charges are included in note 6.

Percentage completion of services contracts As part of deriving revenue in advance to be released on projects, the percentage completion of services contracts must be estimated by the persons managing the project. This process uses estimations of time required to complete the project, but is based on detailed information on hours worked to date, prior experience and project scheduling tools. The Group employs experienced project managers who are required to provide regular information to management on the progress of projects. All estimates are reviewed by peers and senior management as part of project review meetings held monthly.

Taxation and deferred tax The Group’s accounting policy for taxation requires management’s judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognized on the statements of financial position. Deferred tax assets, including those arising from carried forward tax losses, capital losses and temporary differences, are recognized only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Deferred tax liabilities arising 39 Orion Health Annual Report 2013

from temporary differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognized unless repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future. Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognized on the statements of financial position and the amount of other tax losses and temporary differences not yet recognized. In such circumstances, some or all of the carrying amounts of recognized deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the profit or loss. The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. In the ordinary course of business there are some transactions for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determinations are finalized.

4. SEGMENT INFORMATION The Group has six reportable segments, which are the business regions of the Groups business operations in the sale, support and implementation of software in the Healthcare IT market. For each reportable segment the CODM reviews internal management reports on at least a monthly basis.

Information regarding the results of each reportable segment, which reconciles to the financial statements and notes to the financial statements, is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Group’s CODM. Segment profit is used to measure performance as Orion Health Annual Report 2013 40

management believes that such information is the most relevant in evaluating reportable segment results relative to other entities that also operate within these reportable segments.

CORP DEV NA EMEA APAC HIS Total 31 March 2013 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000

Revenue and other income: third party

License revenue - - 27,150 9,198 5,692 - 42,040 Professional implementation - - 19,549 5,173 12,292 1,373 38,387 services Client support services - - 11,947 3,008 5,909 862 21,726

SaaS and managed services - - 6,670 276 332 - 7,278

Other revenue 212 - 31 1 105 - 349

Government grants 383 2,496 - - 208 - 3,087

Operating revenue 595 2,496 65,347 17,656 24,538 2,235 112,867 Gain on sale of land and 9,059 - - - - - 9,059 buildings Total third-party revenue 9,654 2,496 65,347 17,656 24,538 2,235 121,926

Revenue and other income: inter-segment License and support contact - 19,020 (12,255)(3,350)(4,168) 753 - fee Development service fee - (1,285) - - 1,285 - -

Management service fee 14,769 - (8,239)(2,226)(3,500)(804) -

14,769 17,735 (20,494)(5,576)(6,383)(51) -

Total segment revenue 25,018 20,231 44,853 12,080 18,155 2,184 121,926 Earnings before interest 12,212 (349) 2,797 708 (132)(7,589) 7,647 and taxation Interest income 14 - 264 - 7 - 285

Interest expense (523) - - - - - (523)

Taxation (expense)/credit (433) 2,524 (1,263)(136)(351) - 341

Total segment proﬁt 11,270 2,175 1,798 572 (476)(7,589) 7,750

Significant non-cash items recognized in segment profit Depreciation and (828)(452)(549)(117)(276)(221)(2,443) amortisation Share of profit from 364 - - - - - 364 associate 41 Orion Health Annual Report 2013

CORP DEV NA EMEA APAC1 HIS Total 31 March 2012 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000

Revenue and other income: third party

License revenue - - 23,557 5,562 17,083 - 46,202

Professional implementation services - - 12,064 3,642 12,775 150 28,631

Client support services - - 10,909 2,235 3,754 - 16,898

SaaS and managed services - - 3,758 - 257 - 4,015

Other revenue 319 - 38 50 475 - 882

Government grants - 2,944 - - - - 2,944

Operating Revenue 319 2,944 50,326 11,489 34,344 150 99,572

Revenue and other income: inter-segment

License and support contact fee - 25,791 (16,521) 3,270 (12,540) - -

Development service fee - (162) - - 162 - -

Management service fee 13,190 - (6,813)(1,555)(4,671)(151) -

13,190 25,629 (23,334) 1,715 (17,049)(151) -

Total segment revenue 13,509 28,573 26,992 13,204 17,295 (1) 99,572

Earnings before interest and taxation 1,498 5,130 1,497 372 1,768 (2,285) 7,980

Interest income 6 - 265 - 18 - 289

Interest expense (105) - (1)(1)(10) - (117)

Taxation expense (246)(1,417)(658)(75)(551) 509 (2,438)

Total segment proﬁt 1,153 3,713 1,103 296 1,225 (1,776) 5,714

Signiﬁcant non-cash items recognized in segment proﬁt

Depreciation and amortisation (622)(492)(364)(169)(223)(30)(1,900)

Share of proﬁt from associate 375 - - - - - 375

1 Includes one customer which contributed license revenue totalling $12,931,000.

The segments are: CORP – Corporate Head Oﬃce and related entities DEV – Product development NA – North America sales region EMEA – Europe, Middle East and Africa sales region APAC – Asia Paciﬁc sales region HIS – newly acquired Hospital Information System business unit Orion Health Annual Report 2013 42

5. REVENUE Group Parent

2013 2012 2013 2012

Note NZ$’000 NZ$’000 NZ$’000 NZ$’000 REVENUE Customer Revenue Product sales License revenue 42,040 46,202 - - Services Professional implementation services 38,387 28,631 - - Client support services 21,726 16,898 - - SaaS and managed services 7,278 4,015 - - 109,431 95,746 - - Other income Other revenue 349 882 310 250 Government grants 3,087 2,944 - - 3,436 3,826 310 250 Operating revenue 112,867 99,572 310 250 Gain on sale of land and buildings 13 9,059 - - - Total Revenue 121,126 99,572 310 250

6. OPERATING EXPENSES Group Parent

2013 2012 2013 2012

Note NZ$’000 NZ$’000 NZ$’000 NZ$’000 EMPLOYEE BENEFITS Wages and salaries 72,567 57,247 - - Other employee costs 9,590 10,015 - - Contributions to deﬁned contribution funds 3,016 1,953 - - 85,173 69,215 - - DEPRECIATION AND AMORTISATION Depreciation of property, plant and equipment 13 1,993 1,577 - - Amortisation of intangible assets 14 450 323 - - 2,443 1,900 - - RESEARCH & PRODUCT MAINTENANCE Research and product maintenance costs included in proﬁt or loss across all expense categories 26,739 24,557 - -

OTHER Donations paid - 212 - - Directors fees 196 143 196 143 Net foreign exchange losses/(gains) 85 1,040 - 4 Bad debts written oﬀ 173 471 - - Provision for trade receivable impairment 55 (723) - - Gain on business acquisition 22 - (7) - -

AUDITORS REMUNERATION Audit fees 125 199 - - Taxation services 229 376 - - Other services 12 59 - - 43 Orion Health Annual Report 2013

7. FINANCE INCOME AND FINANCE COSTS

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Interest received – loans and receivables 263 265 - -

Interest received – cash and cash equivalents 16 24 - -

Interest received – other 6 - - -

285 289 - -

Interest paid – cash and cash equivalents (523) (117) - -

Net ﬁnance (costs) / income (238) 172 - -

8. INCOME TAX

(a) Income tax expense Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Current tax 1,563 2,205 19 12

Deferred tax (1,904) 233 (17) -

(341) 2,438 2 12

The tax on the Group’s and Parent’s result before tax diﬀers from the theoretical amount that would arise using the weighted average tax rate applicable to the results of the consolidated entities as follows:

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Proﬁt before income tax 7,409 8,152 5 17

Tax calculated at the Parent’s income tax rate of 28% 2,075 2,283 1 5

Foreign tax rate adjustment (254) 349 - -

Expenses not deductible 143 179 - 5

Non-taxable income (2,439) (98) - -

Other adjustments 128 (37) - -

Deferred tax expense/(income) resulting from reduction - 58 - - in tax rate

Prior year adjustment 113 (170) 1 2

Tax losses for which no deferred income tax asset was (5) (21) - - recognized

Associate results reported net of tax (102) (105) - -

Income tax expense/(credit) (341) 2,438 2 12

The weighted average applicable tax rate was -5% (2012: 30%), Parent 40%, (2012: 71%). Orion Health Annual Report 2013 44

(b) Recognized deferred tax assets and liabilities Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Deferred tax assets:

Deferred tax assets to be recovered after more than 12 2,034 99 - - months

Deferred tax assets to be recovered within 12 months 1,784 1,845 17 -

Net deferred tax assets 3,818 1,944 17 -

The gross movement on the deferred income tax accounts is as follow:

Opening balance 1,944 1,783 - -

Charged to income 1,904 291 17 -

Impact of change in tax rate - (58) - -

Foreign exchange diﬀerences (30) (72) - -

Closing balance 3,818 1,944 17 -

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the oﬀsetting of balances within the same jurisdiction, is as follows:

Property, plant Doubtful Employee Other Future income Total & equipment debts beneﬁts tax beneﬁt

GROUP NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000

At 1 April 2011 (108) 573 727 215 376 1,783

(Charged)/credited to 111 (334) 440 258 (184) 291 income statement Impact of change in - (38) (19) (1) - (58) tax rate Foreign exchange 3 - (36) (25) (14) (72) diﬀerences

At 31 March 2012 6 201 1,112 447 178 1,944

(Charged)/credited to (10) 224 57 (271) 1,904 1,904 income statement Foreign exchange 4 - (13) (8) (13) (30) diﬀerences

At 31 March 2013 - 425 1,156 168 2,069 3,818

PARENT

At 31 March 2012 ------

(Charged)/credited to - - - 17 - 17 income statement

At 31 March 2013 - - - 17 - 17

(c) Unrecognized temporary diﬀerences The Group did not recognise deferred income tax assets of EUR285,000 (2012: EUR284,000) in respect of losses amounting to EUR1,137,000 (2012:EUR 1,135,000) that can be carried forward against future taxable income. These losses have no expiry date. 45 Orion Health Annual Report 2013

(d) Imputation credit account

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Opening balance 3,924 2,915 - -

Taxation paid 296 1,009 - -

Closing balance 4,220 3,924 - -

9. CASH AND CASH EQUIVALENTS Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Cash at bank and on hand 9,278 7,293 - -

Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash ﬂow statement:

Cash at bank and on hand 9,278 7,293 - -

Bank overdraft (2) (1,814) - -

Cash and cash equivalents 9,276 5,479 - -

The carrying amounts of the Group’s credit facilities approximate their fair value, all of which are on demand.

10. TRADE AND OTHER RECEIVABLES

Group Parent

2013 2012 2013 2012

Note NZ$’000 NZ$’000 NZ$’000 NZ$’000

TRADE RECEIVABLES

Trade receivables – current 43,215 44,674 - -

Trade receivables – non-current - 843 - -

Less allowance for impairment (1,517) (716) - -

Net trade receivables 41,698 44,801 - -

Sundry receivables 72 69 - -

Prepayments 3,587 2,083 - -

Accrued revenue 8,788 2,365 - -

Government Grants receivable 240 240 - -

Intra-group receivables 23 - - 12,984 12,847

Loans due from related parties 23 - 124 - 124

54,385 49,682 12,984 12,971

Less non-current portion trade receivables - (843) - -

Current portion 54,385 48,839 12,984 12,971 Orion Health Annual Report 2013 46

Trade receivables are non-interest bearing and are generally on 30-60 day terms. Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell) receivables. As of 31 March 2013, trade receivables of the Group: $25,146,000 (2012: $30,664,000) were fully performing. None of the ﬁnancial assets that are fully performing have been re-negotiated. As of 31 March 2013, trade receivables of Group: $16,350,000 (2012: $13,892,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of trade receivables past due but not impaired is as follows:

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

1-60 days 12,221 5,579 - -

61-90 days 789 2,904 - -

91-180 days 2,344 4,309 - -

Over 180 days 996 1,100 - -

16,350 13,892 - -

As of 31 March 2013, trade receivables of the Group: $1,719,000 (2012: $961,000) were impaired and partially provided for. The amount of the provision was Group: $1,517,000 (2012: $716,000). The impaired receivables mainly relate to customers who are in ﬁnancial diﬃculty or dispute. It was assessed that a portion of the receivables is expected to be recovered.

The aging analysis of receivables past due and impaired is as follows:

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Current 762 - - -

1-60 days - - - -

61-90 days 11 272 - -

91-180 days 133 73 - -

Over 180 days 813 616 - -

1,719 961 - -

Movements on the Group provision for impairment of trade receivables are as follows:

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Opening balance 716 2,016 - -

Receivable written oﬀ during the year (15) (471) - -

Additional allowance/(release) 818 (723) - -

Foreign exchange movement (2) (106) - -

1,517 716 - - 47 Orion Health Annual Report 2013

Included within impaired receivables is $762,000 in relation to a receivable from Healthlink Limited for Symphonia Support revenue for the period 1 January 2008 to 31 March 2013. On 19 June 2013 Healthlink Limited, Orion Corporation Limited and others entered into an agreement, which included inter alia, full settlement of this invoice for $0. Refer to note 25 for events after reporting date.

Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 28.

11. INVESTMENT IN SUBSIDIARIES Parent

2013 2012 NZ$’000 NZ$’000 Investments in subsidiaries – at cost 1 1

Country of Balance Interest held by Group Name of entity Principal activities incorporation date (%)

2013 2012

Orion Systems International Limited Management services New Zealand 31 March 100 100

Orchestral Developments Limited Software development New Zealand 31 March 100 100

Orchestral Development Holding company New Zealand 31 March 100 100 International Limited

Orion Health Asia Paciﬁc Limited Holding company New Zealand 31 March 100 100

Orion Health Asia Holdings Limited Holding company New Zealand 31 March 100 100

Orion Health Corporate Trustee Holding company New Zealand 31 March 100 100 Limited

Orion Health Hosting Limited Dormant New Zealand 31 March 100 100

Orion Health Online Limited Dormant New Zealand 31 March 100 100

Orion Health Limited Sales and support New Zealand 31 March 100 100

Orion Health Properties Limited Property owner New Zealand 31 March 100 100

Sales and support and Orion Health Pty Limited Australia 31 March 100 100 Software development

Orion Health Limited Sales and support Canada 31 March 100 100

Orion Health SAS Sales and support France 31 March 100 100

Orion Health K K Sales and support Japan 31 March 100 100

Orion Health Pte Limited Sales and support Singapore 31 March 100 100

Orion Health S.L.U. Sales and support Spain 31 March 100 100

Software development and Orion Health Limited Thailand 31 March 100 100 sales and support

Orion Sağlık ve Bilgi Sistemleri Sales and support Turkey 31 March 100 - Limited Şirketi

United Arab Orion Health Systems FZ-LLC Sales and support 31 March 100 100 Emirates

Orion Health Limited Sales and support United Kingdom 31 March 100 100

Orion Health Inc. Sales and support USA 31 March 100 100 Orion Health Annual Report 2013 48

During the period a new subsidiary (Orion Sağlık ve Bilgi Sistemleri Limited Şirketi) was established and incorporated by a subsidiary of the Parent Company. They were not acquired in relation to business combination transactions.

The Parent has not received dividends from any of its subsidiaries for the year end 31 March 2013 (2012: $nil). The Parent received administration recoveries of $310,000 (2012:$250,000) from the subsidiaries during the year.

12. INVESTMENT IN ASSOCIATE

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Carrying value as at 1 April 1,130 755 - -

Share of current year proﬁt/(loss) 364 375 - -

Carrying value as at 31 March 1,494 1,130 - -

The Parent carrying amount on investment in associate is less than $1,000.

Country of incorporation Assets Liabilities Revenues Proﬁt/(loss) % Interest held

NZ$’000 NZ$’000 NZ$’000 NZ$’000

2013 Healthlink International Limited New Zealand 4,020 (1,311) 13,146 695 52.4

2012 Healthlink International Limited New Zealand 3,957 (1,943) 12,632 715 52.4

Orion Corporation Limited is the majority shareholder (52.4%) of Healthlink International Limited. Orion Corporation Limited does not have the power to appoint any further directors as 75% shareholder approval is required to appoint a further director under article 15.2 of the Healthlink Constitution. Currently, Orion Corporation Limited holds one of two current Director positions (maximum allowable Director positions under the Healthlink International Limited’s Constitution is four). Therefore “control” does not exist.

Refer to note 25 for details of the subsequent divestment of Healthlink International Limited. 49 Orion Health Annual Report 2013

13. PROPERTY, PLANT AND EQUIPMENT

Land & Leasehold Furniture & Oﬃce & Café Computer Assets under Total GROUP Buildings improvements ﬁttings equipment equipment construction NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000

At 1 April 2011

Cost - 1,189 1,509 658 3,284 - 6,640

Accumulated depreciation - (611)(827) (299)(1,929) - (3,666)

Net book amount - 578 682 359 1,355 - 2,974

Year ended 31 March 2012

Opening net book amount - 578 682 359 1,355 - 2,974

Additions/transfers - 210 640 52 1,231 9,442 11,575

Disposals - - - - 271 - 271

Depreciation charge - - - (1) - - (1)

Depreciation on disposals - (306)(181) (127)(963) - (1,577)

FX movement - (17)(65) (11)(31) - (124)

Closing net book amount - 465 1,076 272 1,867 9,442 13,118

At 31 March 2012

Cost - 1,366 2,049 686 4,707 9,442 18,250

Accumulated depreciation - (901)(973) (414)(2,844) - (5,132)

Net book amount - 465 1,076 272 1,863 9,442 13,118

Year ended 31 March 2013

Opening net book amount - 465 1,076 272 1,863 9,442 13,118

Additions/transfers 13,490 805 857 230 1,676 (9,442) 7,616

Acquisition of business (21,037) - (289) (35)(3) - (21,364)

Disposals 9,059 - (91) (8) - - 8,960

Depreciation charge - (353)(281) (136)(1,223) - (1,993)

Depreciation on disposals - 198 28 2 - 228

FX movement - 10 110 20 45 - 185

Closing net book amount 1,512 927 1,580 371 2,360 - 6,750

At 31 March 2013

Cost 1,512 2,171 2,617 885 6,382 - 13,567

Accumulated depreciation - (1,244)(1,037) (514)(4,022) - (6,817)

Net book amount 1,512 927 1,580 371 2,360 - 6,750

No property, plant and equipment was held by the parent company (2012: $nil). During the year the Group capitalised borrowing costs amounting to $nil (2012: $290,000). Orion Health Annual Report 2013 50

14. INTANGIBLE ASSETS

Group

Computer software Total

NZ$’000 NZ$’000

At 1 April 2011

Cost 801 801

Accumulated depreciation (497) (497)

Net book amount 304 304

Year ended 31 March 2012

Opening net book amount 304 304

Additions/transfers 542 542

Acquisition of business 226 226

Amortisation charge (323) (323)

FX movement (11) (11)

Closing net book amount 738 738

At 31 March 2012

Cost 1,554 1,554

Accumulated depreciation (816) (816)

Net book amount 738 738

Year ended 31 March 2013

Opening net book amount 738 738

Additions/transfers 625 625

Amortisation charge (450) (450)

FX movement 9 9

Closing net book amount 922 922

At 31 March 2013

Cost 2,179 2,179

Accumulated depreciation (1,257) (1,257)

Net book amount 922 922

All intangibles assets are acquired and have ﬁnite lives. No intangible assets were held by the Parent (2012: $nil). 51 Orion Health Annual Report 2013

15. TRADE AND OTHER PAYABLES

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Trade payables 4,449 3,524 - -

Sundry payables and accruals 5,581 3,930 30 68

Intercompany payables - - 341 -

10,030 7,454 371 68

Trade payable balances are unsecured and attract no interest. Balances are usually paid within 45 days of recognition, are of short term nature and are not discounted.

The Group’s and Company’s exposures to currency and liquidity risk relate to trade and other payable is disclosed in note 28.

16. EMPLOYEE BENEFITS

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Annual leave 3,616 2,669 - -

Long service leave 477 496 - -

Commissions payable 1,174 1,393 - -

Bonus accrual 26 1,208 - -

5,293 5,766 - -

17. REVENUE IN ADVANCE Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Licences 2,932 4,631 - -

Professional implementation services 16,318 7,719 - -

Client support services 7,953 11,882 - -

SaaS and managed services 2,680 1,857 - -

Other - 38 - -

29,883 26,127 Orion Health Annual Report 2013 52

18. BANK BORROWINGS Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Term advance - 8,500 - -

- 8,500 - -

Current year On 28 March 2013 the Orion Health Properties Limited committed revolving cash advance facility was repaid in full and was closed. Prior year On 28 July 2011, Orion Health Properties Limited drew down $7,415,000 under the committed revolving cash advance facility; a further $1,085,000 was drawn down on 21 December 2011. The facility expires in July 2014. The average interest rate during the period on this facility was 4.35%. This facility is secured by a general security deed over all the present and future assets and undertakings of the Orion Health Properties Limited and a ﬁrst registered mortgage over the property located at 181 Grafton Road, Auckland. The carrying amounts of the Group’s credit facilities approximate their fair value as interest is charged at market rates.

19. SHARE CAPITAL Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Ordinary shares

Carrying value 12,528 12,527 12,528 12,527

Fully paid ordinary shares carry one vote per share and carry the right to dividends. All shares rank equally with regard to the Parent company’s residual assets. No. shares NZ$’000

At 31 March 2011 13,111,714 12,517

Share issue 69,694 10

At 31 March 2012 13,181,408 12,527

Partly paid shares - 1

Share issue 263,628 -

Share split 121,005,324 -

At 31 March 2013 134,450,360 12,528

At 31 March 2013 the total authorised number of ordinary shares, including treasury shares is 134,450,360 shares (2012: 13,181,408):

ä 131,117,140 are fully paid shares (2012: 13,111,714) ä 225,000 partly paid ($0.09) restricted ordinary shares (2012: 22,500) ä 471,940 partly paid ($0.001) ordinary shares held by Orion Health Corporate Trustee Limited (2012: 47,194) ä 2,636,280 unpaid ordinary shares held by Orion Health Corporate Trustee Limited (2012: nil) On 31 March 2013 each of the Fully Paid Shares, Partly Paid Shares and Incentive Shares were subdivided into 10 ordinary shares. 53 Orion Health Annual Report 2013

Orion Health Senior Executive Partly Paid Share Scheme On 9 February 2012, 22,500 ordinary shares under this Scheme (subsequently split to 225,000) were issued to selected senior executives of the Group at an issue price of $18.00 per share with $0.45 per share being received from participating executives on issuance. At 31 March 2013, $11,000 had been received. Further annual payments of $0.45 per share ($0.045 per share following the 10% share split) are required annually for the next three year with the balance of $16.20 per share ($1.62 per share since the share split) due four years after the date of issue. Until the shares are fully paid they are not entitled to be sold, charged or transferred. If a participant ceases employment prior to the shared being fully paid the participant can make full payment of the remaining balance or Orion Corporation Group may sell the shares. At 31 March 2013 225,000 shares exist under this scheme. Orion Health All Employee Share Scheme (previously named Orion Health Senior Executive Share Scheme) On 9 December 2011, 47,194 ordinary shares under this Scheme were issued to Orion Health Corporate Trustee Limited. These shares were able to be allocated to selected senior executives of the Group. No allocations were made for year ended the 31 March 2013. The shares remain with Orion Health Corporate Trustee Limited. At 31 March 2013 471,940 shares exist under this scheme. Orion Health Long Term Share Incentive Scheme On 29 March 2013, 263,628 ordinary shares under this Scheme were issued to Orion Health Corporate Trustee Limited. These shares were able to be allocated to selected senior executives of the Group. No allocations were made for year ended the 31 March 2013. The shares remain with Orion Health Corporate Trustee Limited. At 31 March 2013 2,636,280 shares exist under this scheme.

20. RETAINED EARNINGS

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Opening balance 11,405 5,691 125 120

Proﬁt for the year 7,750 5,714 3 5

Closing balance 19,155 11,405 128 125

21. RESERVES Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Foreign Currency Translation Reserve

Opening balance (614) 147 - -

Movement for the year (285) (761) - -

Closing balance (899) (614) - -

22. BUSINESS ACQUISITION

Prior year On 15 February 2012, the Group acquired selected assets and liabilities of Microsoft Corporation for cash consideration of USD1. The acquisition was undertaken to broaden the Group’s product oﬀering.

A net loss after tax of $2,622,000 has been recognized since acquisition. Disclosure of the revenue and net assets of the business as if the acquisition had been eﬀected on 1 April 2011 has not been provided due to the purchase not including the entire Microsoft business. Orion Health Annual Report 2013 54

The Group’s share of assets and liabilities arising from the acquisition were as follows: NZ$’000

Purchase consideration -

Acquisition related costs included in the statement of comprehensive income for the period ended 31 March 2012 (672)

Recognized amounts of identiﬁable assets and liabilities assumes Preliminary fair value

NZ$’000 Prepayments 107

Plant and equipment 271

Intangible assets 226

Employee beneﬁts (490)

Trade payable (107)

Total identiﬁable net assets 7

Purchase consideration -

Bargain gain on acquisition 7

23. RELATED PARTIES (a) Subsidiaries All related party transactions were completed at arm’s length at normal trade terms. Balances are on demand and attract no interest. There have been no impairments of related party balances as at period end (2012: nil). There have been no write-oﬀs of related party balances during the year (2012: nil). Balances outstanding as at reporting date are shown below. Parent

2013 2012

NZ$’000 NZ$’000

Orchestral Developments Limited (335) (259)

Orion Systems International Limited 11,602 11,728

Orion Health Limited (NZ) 1,332 1,332

Orion Health Pty Limited 4 4

Orion Health Limited (UK) 5 5

Orion Health S.L.U 2 2

Orion Health Limited (Canada) 14 14

Orion Health Incorporated 25 26

Orion Health Services Limited (5) (5)

12,644 12,847 55 Orion Health Annual Report 2013

(b) Key management personnel

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Short-term employee beneﬁts 2,300 3,934 - -

Directors fees 196 143 - -

2,496 4,077 - -

(c) Transactions with related parties McCrae Limited The ultimate holding company is McCrae Limited. There have been no transactions with this company during the year (2012: nil) Revera Limited Andrew Clements, Chairman, was previously a Director of Revera Limited (ceased 7 May 2013) which provided hosting services to the Group. These transactions were at arm’s length at normal trade terms. Healthlink Limited Healthlink Limited, ( a subsidiary of Healthlink International Limited, an equity accounted associate) provides e-referral services to Group entities as well as purchasing licences from Group entities. These transactions were at arm’s length at normal trade terms. Zeus Management Limited During the prior year, Zeus Management Limited provided consulting services in relation to the employee share schemes. New Zealand Trade and Enterprise Andrew Ferrier, Director is Chairman of New Zealand Trade and Enterprise. During the year, the Group won the Supreme Award at the 2012 NZTE NZ International Business Awards. The prize entitled the Group to claim $100,000 in cost reimbursement from NZTE. In addition to this the Group has been receiving cost reimbursements from NZTE for cost incurred in expanding into Japan.

(d) Loans due from related parties The amount owing to Orion Corporation Limited from Healthlink International Limited, an equity accounted associate of which Orion Corporation Limited holds 52.4% of the share capital was fully repaid during the year (2012: $124,000). This loan was on demand and was non-interest bearing. Repayment was agreed between the relevant parties.

(e) Trading transactions During the period, Group entities entered into the following transactions with related parties:

Sale of Goods/Services/ Purchase of Goods/Services Government Grants

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Healthlink Limited 863 60 59 143

Revera Limited - - 61 53

Zeus Management Limited - - - 5

New Zealand Trade and Enterprise 573 - - - Orion Health Annual Report 2013 56

24. CONTINGENT LIABILITIES (i) Letters of credit The Group had outstanding letters of credit of NZD $2,120,000 (2012: $766,000). The Group has a standby letter of credit in place with ASB Bank Limited for GBP 150,000 eﬀective 28 July 2009. This was put in place to cover the issue of Visa corporate credit cards by HSBC Bank Plc. to Orion Health employees based in the United Kingdom used for purposes of normal business and travel expenses. The Group has lease bonds in favour of: ä Kintella Pty Ltd for AUD18,775 ä Perpetual Trustee Company Ltd for AUD58,400 ä Concessionaire des Immeubles for EUR32,550 ä Bumrungrad Hospital Public Company Limited for THB1,737,780 ä HSBC Institutional Trust for SGD38,428 ä Broadway 10-Ten PO Fee LLC for USD200,336 The Group has performance bonds in favour of: ä Cancer Institute NSW for AUD 1,154,533

25. EVENTS AFTER REPORTING DATE On 19th of June 2013, Nexus Holdings Limited agreed to buy Orion Corporation Limited’s shares in Healthlink international Limited for $8.3 million, which includes a deposit of $250,000 paid on signing. The balance of the purchase price is payable to Orion Corporation Limited on 19th October 2013 (Completion Date).

26. COMMITMENTS

(i) Leasing commitments Operating lease commitments – Group as lessee. The Group has entered into commercial leases on certain premises and oﬃce equipment. These leases have an average life of between three and ﬁve years. There are no restrictions of entry placed upon the lessee. Future minimum rentals payable under non-cancellable operating leases as at 31 March are below.

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

No later than 1 year 4,466 2,724 - -

Later than 1 year and no later than 5 years 12,201 2,825 - -

Later than 5 years 19,238 612 - -

35,905 6,161 - -

Included within Occupancy costs is $3,204,000 (2012: $2,713,000) for operating lease expenses incurred during the year.

(ii) Property, plant and equipment commitments The Group had contractual obligations to purchase property, plant and equipment for nil (2012: $2,670,000) at reporting date. 57 Orion Health Annual Report 2013

27. RECONCILIATION OF NET PROFIT FOR THE YEAR WITH NET CASH FLOWS FROM OPERATING ACTIVITIES

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

NET PROFIT AFTER INCOME TAX 7,750 5,714 5 5

Adjusted for:

Non-cash items

Depreciation and amortisation 2,443 1,893 - -

(Proﬁt) on disposal of property, plant and equipment (8,960) - - -

Impairment allowance – trade receivables 230 (724) - -

Deferred tax 32 107 - -

Net loss on foreign exchange 66 1,219 1 4

Share of proﬁt of equity accounted investment (364) (375) - -

Impact of changes in working capital items

Decrease/(increase) in trade and other receivables 610 (10,356) 325 79

(Decrease)/ increase in trade and other payables 2,808 370 (37) 20

(Decrease)/ increase in employee entitlements (313) 192 - -

(Decrease)/ increase in income tax (2,304) 1,563 (294) (108)

(Decrease)/ increase in revenue in advance (2,271) 5,330 - -

Net cash ﬂow from operating activities (273) 4,933 - -

28. FINANCIAL RISK MANAGEMENT The Group has exposure to the following risks from its use of ﬁnancial instruments: ä Credit risk ä Liquidity risk ä Market risk This note presents information about the Groups exposure to each of the above risks, the Groups objectives, policies and processes for measuring and managing risks, and the Groups management of capital.

Financial risk management objectives and policies The principal financial instruments of the Group and Parent comprise receivables, payables, bank loans, overdrafts and cash. The Group and Parent manages their exposure to key financial risks, including interest rate, currency risk, and credit risk in accordance with the Group’s financial risk management policies. The objective of these policies is to support the delivery of the Group and Parent’s financial targets whilst protecting future financial security. If deemed necessary by management the Group and Parent may enter into derivative transactions, principally interest rate swaps and forward currency contracts, although no such transactions were entered into in the current year or prior year. The purpose is to manage the interest rate, currency, and credit risks arising from the Group and Parent’s operations and its sources of finance. The main risks arising from the Group and Parents’ financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The Group and Parent use different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate and foreign exchange. Ageing analysis and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts. Orion Health Annual Report 2013 58

The Board reviews and agrees policies for managing each of these risks as summarized below. Primary responsibility for identification and control of financial risks rests with senior management under the authority of the Board. The Board reviews and agrees policies for managing each of the risks identified below, including the setting of limits for trading in derivatives, hedging cover of foreign currency and interest rate risk, credit allowances, and future cash flow forecast projections. (i) Financial instruments by category

Group Parent

Loans and Total Loans and Total receivables receivables

31 MARCH 2013 NZ$’000 NZ$’000 NZ$’000 NZ$’000

Financial Assets

Cash and cash equivalents 9,278 9,278 - -

Trade receivables 41,698 41,698 - -

Related party receivables - - 12,984 12,984

50,976 50,976 12,984 12,984

Amortised Amortised Total Total Cost Cost

Financial Liabilities NZ$’000 NZ$’000 NZ$’000 NZ$’000

Bank overdraft (2) (2) - -

Trade and other payables (10,030) (10,030) (30) (30)

Related party payables - - (341) (341)

(10,032) (10,032) (371) (371)

Loans and Total Loans and Total receivables receivables

31 MARCH 2012 NZ$’000 NZ$’000 NZ$’000 NZ$’000

Financial Assets

Cash and cash equivalents 7,293 7,293 - -

Trade receivables 44,801 44,801 - -

Related party receivables 124 124 12,971 12,971

52,218 52,218 12,971 12,971

Amortised Amortised Total Total Cost Cost

Financial Liabilities NZ$’000 NZ$’000 NZ$’000 NZ$’000

Bank overdraft (1,814) (1,814) - -

Trade and other payables (7,454) (7,454) (68) (68)

Borrowings (8,500) (8,500) - -

(17,768) (17,768) (68) (68) 59 Orion Health Annual Report 2013

(ii) Market risk Interest rate risk The exposure to market interest rates relates primarily to the Group debt obligations. The level of debt is disclosed in notes 9 and 18. At reporting date, the Group had the following mix of ﬁnancial assets and liabilities exposed to New Zealand variable interest rate risk that are not designated in cash ﬂow hedges:

Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

Financial Assets

Cash and cash equivalents 9,278 7,293 - -

9,278 7,293 - -

Financial Liabilities

Bank overdrafts (2) (1,814) - -

Borrowings - (8,500) - -

(2)(10,314) - -

Net exposure 9,276 (3,021) - -

At 31 March 2013, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax proﬁt and equity would have been aﬀected as follows;

Post tax proﬁt higher/(lower) Equity

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

GROUP

+1% (100 basis points) (67) (22) (67) (22)

-0.5% (50 basis points) 33 11 33 11

Foreign currency risk Orion Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies arising from normal trading activities. The foreign currencies in which the Orion Group primarily transacts are Australian Dollars, Arab Emirate Dirhams, Canadian Dollars, Euros, Great British Pounds, Japanese Yen, Singapore Dollars, Thai Baht and United States Dollars. Where exposures are certain, it is the Orion Group’s policy to evaluate the risk and hedge these risks if necessary as they arise. Orion Health Annual Report 2013 60

The following signiﬁcant exchange rates applied during the year:

Average rate Reporting date mid-spot rate

NZD 2013 2012 2013 2012

AED 2.9944 2.9906 3.0788 3.0086

AUD 0.7897 0.7749 0.8040 0.7914

CAD 0.8182 0.8084 0.8531 0.8182

EUR 0.6334 0.5906 0.6539 0.6140

GBP 0.5165 0.5095 0.5517 0.5115

JPY 67.9072 64.4739 78.9831 67.8974

SGD 1.0119 1.0199 1.0396 1.0303

THB 25.1574 24.8544 24.733 25.6269

USD 0.8151 0.8165 0.8380 0.8189

The table below summarizes the material foreign exchange exposure on the net monetary assets of each Group entity against its respective functional currency, expressed in NZD: Group Parent

2013 2012 2013 2012

NZ$’000 NZ$’000 NZ$’000 NZ$’000

AUD - 17 - -

EUR 533 1,298 - -

GBP 731 - - -

USD 1,341 5,331 - -

Sensitivity analysis Based on the net exposure above, the table below outlines the sensitivity of proﬁt and equity to movements of that currency to the NZD. Post tax proﬁt Other comprehensive income higher/(lower) higher/(lower)

2013 2012 2013 2012

GROUP NZ$’000 NZ$’000 NZ$’000 NZ$’000

10% weakening in NZD

AUD - 1 - 1

EUR 43 104 43 104

GBP 58 - 58 -

USD 107 426 107 426

5% strengthening in NZD

AUD - (1) - (1)

EUR (18) (44) (18) (44)

GBP (25) - (25) -

USD (46) (183) (46) (183) 61 Orion Health Annual Report 2013

(iii) Credit risk Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade receivables, and related party receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at reporting date is addressed in each applicable note. The credit risk on cash and cash equivalents is limited because counter parties are banks with high credit ratings assigned by international credit-rating agencies. The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognized, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitize its trade and other receivables. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country, in which customers operate, has less influence on credit risk. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the Board. These risk limits are regularly monitored. In addition, receivable balances are monitored on an on-going basis with the result that the Group’s experience of bad debts had not been significant. Credit quality of financial assets:

S&P rating Internal rating Total

A+ and Closely monitored Other above customers customers

GROUP NZ$’000 NZ$’000 NZ$’000 NZ$’000

At 31 March 2013

Cash and cash equivalents 9,278 - - 9,278

Trade receivables - 3,400 39,815 43,215

9,278 3,400 39,815 52,493

At 31 March 2012

Cash and cash equivalents 7,293 - - 7,293

Trade receivables - 9,832 35,685 45,517

7,293 9,832 35,685 52,810

The S&P rating represents the rating of the counter party with whom the financial asset is held rather than the rating of the financial asset itself. Closely monitored customers are those customers with whom the Group are currently experiencing collection delays with. (iv) Fair value The methods for estimating fair value of the applicable financial instruments of the Group and Parent are outlined in the relevant notes to the financial statements.

(vi) Liquidity risk Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to repay their financial liabilities as and when they fall due. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of available credit lines. The Group manages its liquidity risk by monitoring the total cash inflows and outflows expected on a monthly basis The Group maintains the following lines of credit: Orion Health Annual Report 2013 62

Current year ä NZD15.0 million interchangeable facilities overdraft and/or combined trade facility. Overdraft interest is payable at the ASB Corporate Indicator Rate plus applicable margin. Foreign currency overdraft interest in payable at the ASB Bank’s oﬀer rate for the relevant currency plus applicable margin. This facility is secured by a general security deed over all the present and future assets and undertakings of the Group.

Prior year ä NZD9.0 million committed revolving cash advances facility. The interest rate is reset every 30-90 days and interest is payable based on the ASB’s bank bill bid rate for that interest period, the term funding premium and the applicable margin. The facility expiry date is July 2014. This facility is secured by a general security deed over all the present and future assets and undertakings of the Orion Health Properties Limited and a first registered mortgage over the property located at 181 Grafton Road, Auckland. ä NZD10.0 million interchangeable facilities overdraft and/or combined trade facility. Overdraft interest is payable at the ASB Corporate Indicator Rate plus applicable margin. Foreign currency overdraft interest in payable at the ASB Bank’s offer rate for the relevant currency plus applicable margin. This facility is secured by a general security deed over all the present and future assets and undertakings of the Group. The facility is sufficiently flexible that amounts can be drawn down and repaid within overall limits without need for prior approval from the bank. The following are the contractual undiscounted cash flow maturities of net monetary assets, including interest payments and excluding the impact of netting agreements:

Carrying Total 6 months or 6-12 1-2 2-5 amount cash ﬂow less months years years

GROUP NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000

At 31 March 2013

Cash and cash equivalents 9,278 9,278 9,278 - - -

Trade receivables 43,215 43,424 42,315 1,109 - -

Bank overdraft (2) (2) (2) - - -

Trade and other payables (10,030)(10,030)(10,030) - - -

42,461 42,670 41,561 1,109 - -

At 31 March 2012

Cash and cash equivalents 7,293 7,293 7,293 - - -

Trade receivables 45,517 45,773 42,165 2,509 1,099 -

Bank overdraft (1,814)(1,814)(1,814) - - -

Trade and other payables (7,454)(7,454)(7,454) - - -

Bank borrowings (8,500)(9,341)(187)(187)(374)(8,593)

35,042 34,457 40,003 2,322 725 (8,593)

(vi) Capital risk management The main objective of capital risk management is to ensure the Group operates as a going concern, meets debts as they fall due, maintains the best possible capital structure and reduces the cost of capital. Group capital consists of share capital, other reserves and retained earnings. To maintain or alter the capital structure, the Group has the ability to review if dividends are paid to shareholders, return capital or issue new shares, reduce or increase debt or sell assets. There has been no change in Group policies or objectives in relation to capital risk management since the prior year. 63 Orion Health Annual Report 2013

INDEPENDENT AUDITOR’S REPORT To the Shareholders of Orion Corporation Limited

Report on the Financial Statements We have audited the financial statements of Orion Corporation Limited (“the Company”) and its subsidiaries (together referred to as “the Group”), on pages 27 to 62, which comprise the consolidated statements of financial position as at 31 March 2013, the consolidated and separate statements of changes in equity, statements of comprehensive income, and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

This report is made solely to the Company’s shareholders, as a body, in accordance with Section 205(1) of the Companies Act 1993. Our audit has been undertaken so that we might state to the Company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders as a body, for our audit work, for this report, or for the opinion we have formed.

Directors’ Responsibility for the Financial Statements The directors are responsible for the preparation of these ﬁnancial statements in accordance with generally accepted accounting practice in New Zealand and that give a true and fair view of the matters to which they relate and for such internal control as the directors determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these ﬁnancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the ﬁnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view of the matters to which they relate in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is suﬃcient and appropriate to provide a basis for our audit opinion.

In addition to audit services, our ﬁrm provides other services in the areas of taxation and other accounting services. We have no other relationship with or interests in Orion Corporation Limited or any of its subsidiaries.

Opinion In our opinion, the financial statements on pages 27 to 62: ä comply with generally accepted accounting practice in New Zealand; ä comply with International Financial Reporting Standards; ä give a true and fair view of the financial position of the Group as at 31 March 2013, its financial performance and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements In accordance with the Financial Reporting Act 1993 we report that: ä We have obtained all the information and explanations that we have required. ä In our opinion, proper accounting records have been kept by the Group as far as appears from our examination of those records.

BDO AUCKLAND 28 June 2013 Auckland Orion Health Annual Report 2013 64

Corporate Governance

THE ROLE OF THE BOARD DIRECTORS’ MEETINGS The Board has ultimate responsibility for the strategic The Board plan to meet not less than four times during any direction of Orion Corporation Limited and oversight of the financial year including sessions to consider the strategic management of Orion Corporation Limited for the benefit of direction of Orion Health and Orion Health’s forward-looking Shareholders. Specifically, the responsibilities of the Board business plans. Video and/or phone conferences are also used include: as required. For the year ended 31 March 2013 four Board Meetings were held. ä working with management to establish the strategic direction of the Orion Health Group; BOARD COMMITTEES ä monitoring management and financial performance; Committees have been established by the Board to review ä monitoring compliance and risk management; and analyze policies and strategies, usually developed by management, which are within their terms of reference. ä establishing and monitoring the health and safety They examine proposals and, where appropriate, make policies of the Orion Health Group; recommendations to the full Board. Committees do not ä establishing and ensuring implementation of succession take action or make decisions on behalf of the Board unless plans for senior management; and ensuring effective specifically mandated by prior Board authority to do so. The disclosure policies and procedures. Committees are as follows: In discharging their duties, Directors have direct access to ä Audit and Risk Management Committee and may rely upon Orion Health’s senior management and The Audit and Risk Management Committee is external advisers. Directors have the right, with the approval responsible for overseeing the risk, insurance, of the Chairman or by resolution of the Board, to seek accounting and audit activities of Orion Health, and independent legal or financial advice at the expense of Orion reviewing the adequacy and effectiveness of internal Health for the proper performance of their duties. controls, meeting with and reviewing the performance of external auditors, reviewing the consolidated financial The Board currently comprises six Directors: a non-executive statements, and making recommendations on financial Chairman, one executive Director and four non-executive and accounting policies. Directors. ä Remuneration Committee Board members have an appropriate range of proficiencies, The Remuneration Committee is responsible for experience and skills to ensure that all governance overseeing management succession planning, responsibilities are fulfilled and to achieve the best possible establishing employee incentive schemes, reviewing management of resources. and approving the compensation arrangements for the executive Directors and senior management, and recommending to the full Board the compensation of Directors. 65 Orion Health Annual Report 2013

Shareholder Information

DIRECTORS or employees of the Company or any related company. As Non-executive Directors receive fees determined by permitted by the Companies Act 1993, the Company has the Board on the recommendation of the Remuneration arranged a policy of Directors’ and Officers’ Liability Insurance Committee plus reasonable travelling, accommodation and which insures those persons indemnified for certain liabilities other expenses incurred in the course of performing duties or and costs. exercising powers as Directors. In accordance with Section 140(2) of the Companies Act Ian McCrae is employed as CEO and receives salary and other 1993, the Directors named below have made a general remuneration and benefits in respect of his employment. disclosure of interest during the period 1 April 2012 to 31 March 2013 by a general notice disclosed to the Board and The following people held office as a Director during the year entered in the Company’s interests register: and received the following remuneration including benefits during the year. The Executive Director’s remunerations Andrew Clements includes any incentive payments pertaining to the 2013 ä Director of: financial year. Appointed as Director of Genesis Power Limited on 16 July 2012

NAME CATEGORY 2013 2012 Andrew Ferrier ä Chairman of: Andrew Clements (via Independent $90,000 $60,000 Appointed as Chairman of New Zealand Trade and Zeus Management Chairman Limited) Enterprise effective 1 November 2012 Matthew Crockett Non-executive - $23,077 ä Director of: director (ceased 9 Appointed as Director of Lufa Farms Ltd (Montreal) December 2011) effective 15 November 2012 Neil Cullimore (via The Non-executive $45,000 $30,000 Appointed as Director of Bunge Ltd (New York) effective 5 Culloden Trading Trust) director December 2012 Andrew Ferrier (via FCS Non-executive $45,000 $9,250 ä Member of: Limited) director University of Auckland Council (appointed 9 Roger France December 2011) ä Director of: Roger France Non-executive $7,250 - Air New Zealand Limited director Fisher & Paykel Healthcare Corporation Limited (appointed 15 February 2013) Tappenden Holdings Limited Tappenden Management Limited Peter Maire Non-executive - $20,750 director (ceased 9 ä Trustee of: December 2011) Dilworth Trust Board Ian McCrae Executive director $407,424 $640,497 ä Member of: – CEO University of Auckland Council Paul Shearer Paul Shearer Non-executive $7,250 - director ä Director of: (appointed 15 Fisher & Paykel Healthcare Treasury Limited February 2013) Fisher & Paykel Healthcare Limited Fisher & Paykel Healthcare Properties Limited DIRECTOR’S INTERESTS Fisher & Paykel Healthcare Asia Limited As permitted by the Companies Act 1993, the Company has Fisher & Paykel Healthcare America Investments Limited granted certain indemnities to the Directors and specified Fisher & Paykel Healthcare Asia Investments Limited employees of the Company or any related company in respect of liability and legal costs incurred by those Directors and specified employees in their capacity as Directors and/ Orion Health Annual Report 2013 66

DIRECTORS’ SHAREHOLDINGS The numbers above include 83 New Zealand based current Directors’ shareholdings are shown as at balance date. and former employees and 190 overseas-based current and former employees. 31 March 2013 PRINCIPAL SHAREHOLDERS AT 30 MAY 2013 Andrew Clements 2,550,000 ä Shares held with beneﬁcial interest Name Shareholding %

Ian McCrae McCrae Limited 81,862,250 60.9 ä Shares held with beneﬁcial interest 81,862,250 ä Held by associated persons Geoﬀrey A Cumming 12,800,000 9.5

Neil Cullimore TEA Custodians (Pioneer Capital) 10,477,400 7.7 100,000 Limited ä Shares held with beneﬁcial interest Orion Health Corporate Trustee 3,108,220 2.3 Andrew Ferrier Limited 1,350,000 ä Shares held with beneﬁcial interest TEA Custodians Limited 2,831,250 2.1

Paul Shearer Jacon Investments Limited 2,550,000 1.9 1,000,000 ä Shares held with beneficial interest Mark James Thomson & Deborah 1,715,000 1.3 Mary Thomson & Stuart Alexander EMPLOYEES’ REMUNERATION McCrae Perry During the year the number of employees or former John Harold Dunn 1,697,270 1.3 employees not being Directors of Orion Corporation Limited David John Clarke & Belinda Maria 1,514,640 1.1 who received remuneration including the value of other Clarke & Kevin Jaffe benefits in excess of $100,000 are shown in the following Edwin Weng Kit Ng 1,370,000 1.0 bands: CANZ Capital Limited 1,350,000 1.0 Remuneration Number of Remuneration Number of (NZD) employees (NZD) employees Mark Stewart Capill 1,250,000 0.9 K One W One (No 2) Limited 1,000,000 0.7 $100,000 - $110,000 37 $260,001 - $270,000 1 Paul Nigel Shearer & Sonya Maree 1,000,000 0.7 $110,001 - $120,000 47 $270,001 - $280,000 1 Shearer & Mark Edgar Wilson $120,001 - $130,000 34 $290,001 - $300,000 4 Paul Augustin Viskovich & Patrick 993,670 0.7 Kennelly $130,001 - $140,000 29 $300,001 - $310,000 5 Michael Biran Clegg $ Kylie Anne 965,000 0.7 $140,001 - $150,000 30 $310,001 - $320,000 1 Clegg $150,001 - $160,000 23 $330,001 - $340,000 1 William Edward Paul Davidson & 700,000 0.5 Jones Law Trustee Services Limited $160,001 - $170,000 14 $360,001 - $370,000 1 Gordon Stanley McCrae 604,000 0.4 $170,001 - $180,000 7 $370,001 - $380,000 1 Gordon Stanley McCrae & Malcolm 481,530 0.4 $180,001 - $190,000 9 $390,001 - $400,000 2 Stuart Boyd

$190,001 - $200,000 3 $400,001 - $410,000 1 Wayne Alan Oxenham & Lynne 470,000 0.3 Oxenham & Oxenham Trusts $200,001 - $210,000 4 $420,001 - $430,000 2 Limited

$210,001 - $220,000 2 $530,001 - $540,000 1

$220,001 - $230,000 1 $560,001 - $570,000 1

$230,001 - $240,000 3 $590,001 - $600,000 1

$240,001 - $250,000 2 $730,001 - $740,000 1

$250,001 - $260,000 4 67 Orion Health Annual Report 2013

Company Directory

REGISTERED OFFICE Orion House 181 Grafton Road, Grafton Auckland 1010, New Zealand

PO Box 8273, Symonds Street Auckland 1150, New Zealand Phone: +64 9 638 0600 Fax: +64 9 638 0699 Incorporated in New Zealand

WEBSITE www.orionhealth.com

SHARE REGISTRAR Computershare Investor Services Limited Private Bag 92119, Auckland 1142 Phone + 64 9 488 8777 Fax +64 9 488 8787 E-mail [email protected]

BANKERS ASB Bank Limited HSBC Bank

AUDITOR BDO Auckland Orion Health Annual Report 2013 68 www.orionhealth.com

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