CONTENTS
ORION HEALTH TODAY 2 FY2014 HIGHLIGHTS 4 NZ HI TECH COMPANY OF THE YEAR 8 DIRECTION & LEADERSHIP 10 CHAIRMAN’S LETTER 12 A FUNDAMENTAL CHANGE IN HEALTHCARE 14 OVERVIEW OF FY2014 FINANCIAL RESULTS 20 MANAGING GROWTH 32 EXPANDING CHRISTCHURCH OPERATIONS 36 INDEPENDENT AUDITORS’ REPORT 38 DIRECTORS’ RESPONSIBILITY STATEMENT 40 FINANCIAL STATEMENTS 41 NOTES TO THE FINANCIAL STATEMENTS 50 CORPORATE GOVERNANCE 91 SHAREHOLDER INFORMATION 92 DIRECTORY 96
ORION HEALTH ANNUAL REPORT | CONTENTS 1 ORION HEALTH TODAY
Orion Health is a privately owned global health software company founded in 1993 by Chief Executive Officer, Ian McCrae. Today our products are sold in over 30 countries, used by thousands of clinicians and help to improve healthcare outcomes for millions of people. Our headquarters have always been in Auckland, New Zealand but we have grown to have over 1,000 employees in 24 locations around the world.
Home MARKET SEGMENTS
INTELLIGENT INTEGRATION
SMARTER HOSPITALS
HEALTHIER POPULATIONS
2 ORION HEALTH ANNUAL REPORT | ORION HEALTH TODAY INTELLIGENT SMARTER HEALTHIER INTEGRATION HOSPITALS POPULATIONS
Our Intelligent Integration segment primarily Our Smarter Hospitals segment represents Orion Our Healthier Populations segment represents sales represents standalone sales of our best-of-breed Health products used within the four walls of a of care coordination tools to public and private Rhapsody Integration Engine. Hospitals, healthcare hospital. This includes two main solutions. Firstly, our organisations who are responsible for managing the organisations, governments and regional bodies often full suite of applications to manage and automate healthcare needs of a population. It utilises some have many different software systems from different a hospital. Secondly, a subset of this which can sit of the same technology as our Smarter Hospitals vendors. Each system might interact with a person or on top of third party software within a hospital. We segment but in a community wide setting rather than patient independently. Rhapsody Integration Engine aggregate data from all the systems in a hospital in within a single hospital. enables those systems to talk to each other. It acts a single database using our Rhapsody Integration as a hub to collect, translate and route messages Engine and provide a combined view of patient data We aggregate data from different healthcare between disparate systems. For example, an update to clinicians in our Clinical Portal. This is referred to as organisations within a region into a single database to a patient’s personal details in one system would be an Electronic Medical Record or EMR solution. using our Rhapsody Integration Engine. This enables pushed to all other systems via Rhapsody. us to create a complete electronic patient record, We can also add further modules that allow hospital which can be accessed by clinicians or patients Intelligent Integration is a mature segment and we clinicians to electronically refer patients to other through our Clinical Portal and Patient Portal. With all have a market leading product which is easy to healthcare providers, enrol patients on healthcare re l eva nt i nfo r m ati o n i n o n e p l a ce , h e a lth c a re p rovi d e r s install and requires relatively low ongoing research plans to manage chronic conditions and provide are better able to coordinate, make informed care and development investment and maintenance. It patients with access to their own electronic medical decisions and improve patient outcomes. is a reliable and profitable segment for us, which is record through our Patient Portal. Smarter Hospitals expected to continue growing. is a fast growing segment for Orion Health. We With pressure rising globally to deliver better currently focus our Smarter Hospitals efforts on health outcomes at lower cost, population health Europe and Asia Pacific. management software is in increasing demand. We expect this segment to undergo a data- driven revolution over the next decade. We have a leadership position in Healthier Populations and see huge opportunity to grow further by enhancing our existing products.
ORION HEALTH ANNUAL REPORT | ORION HEALTH TODAY 3 FY2014 HIGHLIGHTS
OPERATING ANNUALISED EMPLOYEE REVENUE RECURRING REVENUE NUMBERS $153m $44m 1,042 39% GROWTH 43% GROWTH 42% GROWTH ON FY2013 ON FY2013 ON FY2013
SUMMARY FINANCIAL PERFORMANCE FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
OPERATING REVENUE 152,992 109,780 39% OTHER INCOME 10,168 12,146 -16% TOTAL INCOME 163,160 121,926 34%
ANNUALISED RECURRING REVENUE 44,300 31,000 43%
NET (LOSS) / PROFIT BEFORE TAX (1,733) 7,409 -
EMPLOYEE NUMBERS 1,042 733 42%
4 ORION HEALTH ANNUAL REPORT | FY2014 HIGHLIGHTS NEW
NEW
NEW
NEW NEW
DEVELOPMENT CENTRES REGIONAL OFFICES
STAFF NUMBERS FY2013 FY2014
NORTH AMERICA 187 322 EUROPE MIDDLE EAST 60 88 OVER 1,000 EMPLOYEES ASIA 61 70 OCEANIA 425 562 IN 24 GLOBAL LOCATIONS TOTAL 733 1,042
ORION HEALTH ANNUAL REPORT | FY2014 HIGHLIGHTS 5 WE BELIEVE NEW GENERATION TECHNOLOGY WILL GIVE EVERYONE HEALTHIER, HAPPIER, LONGER LIVES
NZ HI TECH COMPANY OF THE YEAR
The NZ Hi-Tech Awards celebrated their 20th market and amazing international diversification. edition in 2014 with a gala event in Christchurch that Orion Health is simply a standout example of a New saw over 600 guests from New Zealand’s leading Zealand company.” technology companies, all vying to be chosen as winners across 12 categories. We were judged winners, by a panel of local and international technology leaders, ahead of a number In what was a landmark achievement, Orion Health of other exceptional companies, including Fisher reconfirmed its status as the leading technology and Paykel Healthcare, Serko, Vista Entertainment company in New Zealand, by being named and Xero. Company of the Year and Exporter of the Year (over $5 million). In doing so we became the first To be recognised as the supreme technology multiple winner of the Company of the Year Award, business in New Zealand on two occasions is an following our first win in that category back in 2001. outstanding achievement. To achieve this over a span of 13 years is remarkable. Undoubtedly The judges commended us for “demonstrating this continued excellence over the past 22 years outstanding year on year growth, substantial business is testament to all the hard work and ongoing acumen in a terribly complex and competitive dedication of our wonderful staff.
“Given the calibre of the finalists, we are obviously immensely proud to be named as the leading Hi-Tech Company for 2014 - the companies we were up against are not just leading New Zealand businesses, but are well on their way to becoming global leaders in their respective industries.” – Orion Health CEO, Ian McCrae
8 ORION HEALTH ANNUAL REPORT | NZ HI TECH COMPANY OF THE YEAR
DIRECTION & LEADERSHIP
PAUL SHEARER ANDREW FERRIER ANDREW CLEMENTS Director Director Chairman
Paul is Senior Vice President of Sales & Marketing for Andrew currently runs his own investment company, Andrew, known as Clem, is an investor and director. Fisher & Paykel Healthcare (FPH), a global leader in Canz Capital Ltd, is Chairman of New Zealand Trade Clem was managing director of Emerald Capital respiratory medical devices. and Enterprise, sits as a Member of the University of Limited, a Canadian-owned investment company. Auckland Council, a Director of Bunge Ltd in New His prior experience includes nine years with Joining FPH in 1990, Paul has extensive international York, and sits on several other boards. Goodman Fielder Wattie in various financial and experience in the healthcare industry. He has general management positions in New Zealand and held various positions in the US, UK and France From 2003 to 2011, Andrew was CEO of Fonterra Asia, following corporate money market and foreign establishing FPH sales offices. He is currently Cooperative Group Limited in New Zealand. Prior to exchange positions in New Zealand and London. responsible for over 350 offshore staff and director Fonterra, Andrew served as the President and Chief of various FPH subsidiaries. Executive Officer of GSW Inc. of Toronto, President In addition to Orion Health, Clem is currently a director and CEO of Tate & Lyle North America Sugars Inc, of of Ryman Healthcare and Genesis Energy Limited. Clem His prior experience includes positions at ICL Ltd and New York and President of Redpath Sugars in Toronto. is also a shareholder and Director of Jacon Investments Computercorp. Paul holds a Bachelor of Commerce Limited. He is a trustee of various trusts, including from University of Canterbury, New Zealand. Andrew holds a Bachelor of Business Administration Chairman of the New Zealand Football Foundation from University of New Brunswick and a Master of and The Mt Wellington Stadium Charitable Trust. Business Administration from Concordia University. Clem is standing down from the Orion Health board following this year’s Annual General Meeting.
10 ORION HEALTH ANNUAL REPORT | DIRECTION & LEADERSHIP IAN McCRAE ROGER FRANCE NEIL CULLIMORE CEO and Managing Director Director Director
Founder of Orion Health. Roger was the Chief Financial Officer of two listed Neil has 40 years’ experience in the IT industry. companies for ten years followed by 15 years as Prior to Orion Health Ian worked as a a partner in PwC and one of its predecessor firms, Prior to 1993, he was CEO and Director of Paxus telecommunications consultant for Ernst Young, Coopers & Lybrand. He was Managing Partner of Corporation, an Australian publicly listed IT company. specialising in message standards and connectivity Coopers & Lybrand Auckland for five years. Following the merger in 1993 of Paxus with The of data network systems and infrastructures. Continuum Company in Texas, he moved to become He is a director of Air New Zealand Ltd and Fisher Executive Vice President of Continuum. In 1996 Ian has also worked as a Senior Business Analyst & Paykel Healthcare Corporation Ltd and a trustee Continuum was acquired by Computer Sciences for the London Stock Exchange and a Scientist of the University of Auckland Foundation and the Corporation (CSC) and he became Executive Vice with the NZ DSIR (Department of Scientific and Dilworth Trust Board. He is a member of The Treasury President of CSC’s Financial Services Group. Industrial Research). Commercial Operations Advisory Board. Since 1999 Neil has participated in a number of Ian holds a Masters in Engineering Sciences and Roger holds a Bachelor of Commerce and is a Fellow public and private companies in the IT industry both Bachelor of Engineering (Honors) from University of both the Institute of Chartered Accountants as an investor and director in NZ and Australia. of Auckland. Australia and New Zealand and the Institute of Directors in New Zealand. Neil holds a Bachelor of Science (Maths) from University of Auckland.
ORION HEALTH ANNUAL REPORT | DIRECTION & LEADERSHIP 11 CHAIRMAN’S LETTER
Building Momentum Orion Health achieved Operating Revenue growth company’s success. During FY2014 we made a of 39% in FY2014. This is a significant step-up from major investment in our PEOPLE team, bringing FY2013 and reflects the building momentum of the in dedicated human resources, remuneration, company. In previous years we have always sought to recruitment and organisational development experts. grow both revenue and profitability: we now believe They have partnered with the rest of the business to that significant investment in products, people and develop effective recruitment, onboarding, training processes is necessary to make the most of what and mentoring processes and tools. This sets us up will become possibly the most fundamental shift in well for continuing our growth trajectory. health information in a generation. As such, the global opportunities facing Orion Health are bigger today In a company like ours where people are so important, than we’ve ever seen before and we believe we need we want them to share in our growth journey. to significantly increase our capability and capacity to Consistent with this principle, the Board of Directors take advantage of these. The investment will result in introduced a long term share incentive scheme for losses in the short term but we believe it puts us on the senior staff in mid 2013. path to future scale and higher profitability. Smarter Hospitals Progress During the year we increased our employee base Our Smarter Hospitals segment includes the hospital from 733 to 1,042. Growing this fast is not without automation software acquired from Microsoft in challenges and has reinforced how important strong February 2012 as well as our Electronic Medical Record leadership is. With more staff, we need more leaders. solution. The acquired business is now seamlessly Thankfully, high calibre leaders are attracted to the integrated. FY2014 saw significant progress in terms exciting opportunities at Orion Health. We have been of product features and functionality, as well as able to attract several new subject matter leaders into with key reference customers. In addition to several the fields of product development, implementation reference sites in Asia, we are working with the South services, software-as-a-service operations, human Island of New Zealand and a premiere private hospital resources and marketing. group in Turkey.
This business has always been powered by people. Strategically we focus our Smarter Hospitals efforts Our people create innovative health software, they in Asia and EMEA where customers are looking for sell it, implement it and maintain it. Attracting a fully featured solution but at a lower price tag and retaining talented people is critical to the than the solutions offered by our North American competitors. Longer term we see an opportunity Orion Health is on a journey. We believe that new generation technology will give everyone healthier, happier, longer lives. We are entering a decade of once-in-a-generation change in healthcare.
to sell our hospital solutions together with our foundation. This is a very exciting area for Orion Health million revenue business to the $153 million revenue community wide Healthier Populations solutions, over the next few years. business we have just reported. However, all good creating a complete health software solution for things must come to an end. I am retiring from all of regions or countries. Healthlink Sale my board positions, including Orion Health, to focus Orion Health owned a majority stake in Healthlink on my own interests. After 12 years on the Orion Opportunities in the United States International Limited since its inception in the mid- Health Board I will be stepping down as Chairman at Orion Health established its first US of fice in 20 02 . Our 1990s. In recent years the strategic vision of our two the Annual General Meeting in September 2014. The US business has grown to an NZ$88 million operation companies began to diverge. In July 2013 we agreed Board has chosen Andrew Ferrier to be my successor in FY2014 with over 285 employees. Strong growth to sell our interest to Healthlink management for $8 as Chairman. Andrew joined the Board in December in recent years is largely attributable to success with million and this transaction settled in November 2013. 2011 and will continue to guide the company with our Health Information Exchange solution (part of our This sale allowed us to invest the capital in our own his breadth of international experience. I am also Healthier Populations segment). Our market share strategic initiatives, accelerating our product roadmap pleased to report that Dr Lester Levy has agreed to in this area now serves as an important strategic and expanding our implementation capabilities. join the Board. Dr Lester Levy is a highly regarded advantage for what we believe is the next wave of Professor of Leadership and Chairman of both the growth in the US market – the ‘payer’ market. In the Capital Raising Auckland District Health Board and Waitemata US over 50% of healthcare expenditure is funded In May 2014 the Board of Directors sought to raise District health Board. by the private sector. These ‘payers’ are essentially $20 million of additional equity funding from existing insurance companies. eligible shareholders. We received strong demand Exciting Times Ahead and the placement was over-subscribed. As a result Orion Health is on a journey. We believe that new The US has the highest per capita healthcare costs we raised a further $5.5 million from Pioneer Capital, generation technology will give everyone healthier, in the world but still has lower life expectancy and the Accident Compensation Corporation and Aspiring happier, longer lives . We are entering a decade of once - higher infant mortality rates than other developed Asset Management. The $25.5 million of new equity in-a-generation change in healthcare. The company is nations. In fact it is estimated that over 30% of US gives the company the interim working capital well positioned to be a leader of this change and I look health expenditure is wasted. It is no surprise then flexibility to immediately pursue the accelerated forward to sharing in its journey as a shareholder. that regulatory reforms are driving change in the US growth strategy. healthcare sector. The ‘payers’, as a major source of healthcare funding, are highly motivated to reduce Board Changes waste in the system. Healthcare software can help My involvement with Orion Health began in 2001 address many areas of waste. Our existing Healthier when CEO Ian McCrae approached me to consider Populations solution set is the foundation for this. We becoming an independent director. I joined the Board are working closely with a number of payers to build of Directors in April 2002 and have since shared in Andrew Clements the next generation of technology on top of our sound the company’s growth from what was then a $10 CHAIRMAN
ORION HEALTH ANNUAL REPORT | CHAIRMAN’S LETTER 13 A FUNDAMENTAL CHANGE IN HEALTHCARE
Healthcare throughout history has been punctuated only 60-70% will be utilised efficiently, the rest wasted by a number of significant advancements that have through failures in care delivery, care coordination, forever changed the landscape of how we perceive over treatment, administrative complexity, fraud and health and healthy living. abuse.2 This massive waste equates to US$910 billion each year in the United States alone.2 These advancements we typically associate with the natural discovery of new and improved medicines, The current healthcare delivery model and its the application of bold new techniques and the resulting cost trajectory is unsustainable adventurous manipulation of science. If we closely assess history, what we find is that every generation Much of the developed world has already begun enjoyed a revolutionary healthcare moment that to conceive new models for healthcare. Models changed the world irreversibly. where care is centred around the patient and aimed at delivering positive outcomes, irrespective of We believe that the health industry currently sits where treatment occurs. Where payment is directly right on the cusp of the next revolutionary shift. associated to the provision of quality care that results A shift that will be driven by maths and delivered in positive outcomes, instead of merely treatment. through the precise application of new generation Where accountability is now rewarded and shared technology to allow people to live healthier, happier across both those that provide care and those whom and longer lives. fund care.
We are calling this shift The Health Data Revolution The onus to arrest rising costs is now being placed back onto insurance companies in the healthcare market in This once in a generation change will occur in order the United States as they realise they can no longer to combat the economically crippling ill effects of offset rising costs by raising member premiums. These an aging global population in combination with ‘payers’ are responsible for over 50% of all healthcare inefficient global healthcare practices. expenditure and therefore within their spend resides considerable amounts of provider inefficiency and Estimates out of the United States suggest that a waste.3 To try and combat this, payers are now whopping 20% of total Gross Domestic Product will exclusively partnering with providers and looking to be spent on healthcare by 2021.1 Of this expenditure provide fully integrated software systems to ensure
14 ORION HEALTH ANNUAL REPORT | A FUNDAMENTAL CHANGE IN HEALTHCARE
that care is provided to their members as efficiently begin to proliferate into all aspects of everyday as possible. A common occurrence has seen payers life, so too arrives another significant abundance acquire a number of competing eHealth software of data, this time relevant to lifestyle. The amount vendors in order to ensure that their systems are fully of healthcare information that is expected to be customised to their needs. available worldwide is tipped to grow by a factor of 50 in only the next eight years. 4 The accumulation, At Orion Health we have spent the last 10 years consolidation, intersection and structuring of all this enabling health information to be exchanged data, will finally provide the blueprint for precise outside the walls of a single hospital, connecting and individual care plans. healthcare across a region. The focus of our community based Healthier Populations solutions We are building the capability to enable this shift. An has always been to improve the coordination of care, open data platform for health that will take all available reduce costs and improve patient wellbeing. This information connected to an individual, structure it expertise in managing population data, yet providing and display it back to the people who can influence accurate and consolidated individual patient an individual’s health, when and where they need it information, gives us a core competency that is going most. A software solution that will help make informed to set the foundation for the future of healthcare. decisions by reasoning across millions of seemingly unconnected pieces of data in order to derive true However, chronological clinical data is only a small meaning and not just a reflection of information. portion of the data that will contribute to a patient medical record in years to come. Within 10 years The ability to provide thinking software that will the ability for all individuals to have their genome deliver efficient and precise care to individuals that mapped will be a reality and with that comes a is garnered from population knowledge is what will volume of individually specific data never before differentiate the leading eHealth software providers seen in our industry. As personal monitoring devices in the coming decade.
“We are confident we are in a prime position to enable the next generational change in health.” - Orion Health CEO, Ian McCrae
References: 1. Centers for Medicare and Medicaid Services, National Health Expenditure Projections 2012-2022. 2. “Eliminating Waste in US Health Care”; Donald M Berwick & Andrew D Hackbarth; April 2012. 3. Organisation for Economic Co-operation and Development, 2011 data. 4. “Clouds Roll in to Handle Stratospheric Capacity Needs” Healthcare IT News, October 2011.
ORION HEALTH ANNUAL REPORT | A FUNDAMENTAL CHANGE IN HEALTHCARE 17
OUR PURPOSE IS TO REVOLUTIONISE GLOBAL HEALTHCARE BY OPTIMISING THE ALGORITHMS OF LIFE OVERVIEW OF FY2014 FINANCIAL RESULT
OPERATING FY2014 was another strong year of growth for Orion Our Revenue Model Explained REVENUE Health. Total Income for FY2014 was $163 million, up 34% from FY2013. Operating Revenue was $153 Orion Health reports five revenue types: $153m million, up 39% from FY2013. Other income of $10 million included $3.5 million of R&D grant funding and Licence Revenue 39% GROWTH a $6.4 million gain on the sale of our 52.4% interest in One-off licence fees from perpetual licence sales. ON FY2013 Healthlink International Limited. Professional Implementation Services Revenue During FY2014, Management and the Board Fees for Orion Health staff to implement our software consciously decided to invest in expanding our for clients. This is the process of analysing the product development and implementation capability client’s requirements, agreeing scope, installing and to accelerate our pursuit of growth opportunities, configuring the software, integrating systems, user particularly in the US Healthier Populations market. testing and training. Where a third party component is This investment was predominantly in people and used in our software, Orion Health receives revenue for the infrastructure to support them. As a result, our that component and passes it through to the third party. employee numbers increased by 309 people (42%) This third party revenue is included in Professional over the year to 1,042 at 31 March 2014. By growing Implementation Services Revenue. our capability in this way we are establishing a sound base for further company growth. However, there is a Client Support Services Revenue: natural lag between making new hires and achieving Recurring fees for technical product support for incremental revenue. This was the main driver behind perpetual licence customers. Orion Health recording a loss before tax of $1.7 million for FY2014. Global Managed Services Revenue Recurring fees from subscription licence sales. This includes software licencing, provision of infrastructure to host and manage the software, and ongoing technical product support and upgrades.
Other Revenue Fees from training users of our software.
20 ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT Traditionally Orion Health has sold software solutions Perpetual Licence Model Subscription Licence Model under a perpetual licence model. A key objective of • One-off licence fee • Recurring subscription fee which covers software our Strategic Plan is to increase our Recurring Revenue • Licence Revenue is recognised in conjunction with licensing, provision of infrastructure to host and by moving to a subscription licence model. Regardless implementation of the solution. This is typically as manage the software and ongoing technical of the licence model our solutions still need to be a percentage of completion (if the implementation support and upgrades installed, configured and activated (Implementation). project is 50% complete then 50% of the license • Orion Health is responsible for hosting and Similarly, all clients receive ongoing technical support. fees are recognisable as revenue) managing the software environment • Client support fees invoiced in advance • Subscription fees are invoiced annually or The different licence models are explained to the right. for a typical initial term of three to five years, with quarterly in advance for a typical initial term of renewal terms thereafter three to five years, with renewal terms thereafter • Client support revenue is recognised monthly as it • All fees are classified as Global Managed is earned Services Revenue • The customer hosts our software on-premise using customer-controlled infrastructure and is responsible for managing the software environment
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 21 Annualised Recurring Revenue
+43% Increasing Recurring Revenue 50,000
44,300 Recurring Revenue includes Support Revenue Consistent with our strategy, Annualised Recurring 40,000 +76% from perpetual licence clients and Global Managed Revenue at the end of FY2014 was $44 million, up Services Revenue (GMS). Recurring Revenue 43% from the end of FY2013. This represents average 31,000 30,000 builds over time as more customers are added. R e c u r r i n g R e ve n u e f o r t h e t h r e e m o n t h s to M a r c h 2 0 1 4 , The benefits are a higher base of contracted revenue annualised. We continue to see customer preferences NZ$ 000 20,000 at the beginning of the financial year and a smoother shift towards the subscription licence model to avoid 17,600 revenue profile – avoiding the peaks and troughs that large capital outlay, and therefore expect Recurring characterise the traditional perpetual licence model. Revenue to increase over time, both in absolute dollar 10,000 terms and as a percentage of revenue.
0
131 APRIL MAR 12 1 APRIL31 MAR 13 1 APRIL31 MAR 14 2012 2013 2014
As at 31 March
BREAKDOWN OF ANNUALISED RECURRING REVENUE FY2012 (NZ$m) FY2013 (NZ$m) FY2014 (NZ$m)
Client Support Services Revenue 13.2 22.8 26.7 Global Managed Services Revenue 4.4 8.2 17.5 ANNUALISED RECURRING REVENUE 17.6 31.0 44.3
22 ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT Revenue Mix Continues to Evolve REVENUE MIX FY2012 (NZ$m) FY2013 (NZ$m) FY2014 (NZ$m)
Consistent with our strategy, licence revenue as a Licenses 46.2 42.0 46.6 proportion of total revenue continues to decline as we Professional Implementation Services 28.6 37.8 60.9 shift towards a recurring subscription licence model, Client Support Services 16.9 21.7 28.0 particularly in the US market. GMS revenue grew Global Managed Services 4.0 7.1 16.4 Other 0.9 1.2 1.1 131% from FY2013 to FY2014 and now represents 11% of total revenue. Implementation Services revenue increased from 35% of total revenue in FY2013 to 40% in FY2014. Revenue Mix % Completing an implementation under a perpetual licence model enables recognition of a one-off licence fee. In comparison, completing an implementation under a subscription licence model only allows us to begin recognition of subscription fees. With many new GMS subscription customers added during FY2014, we received implementation revenue but much of the associated licence revenue will be FY2012 FY2013 FY2014 received in future periods as subscription fees are collected. This dynamic contributes to the growing proportion of implementation revenue. However, we expect the proportion to peak and decline over time as our recurring subscription revenue base grows and we invest in making our products easier to implement.
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 23 Regional Performance
At the beginning of FY2014 we moved to managing The UK & Ireland had a relatively flat year, recording Australia had a disappointing year, with several the company on the basis of eight geographical just 3% operating revenue growth. However, the opportunities taking longer to pursue than regions. In previous years we had a three region FY2013 result included a large one-off perpetual anticipated and implementation project challenges. structure, being North America, Asia Pacific and licence fee from delivering an Electronic Care However, performance improvement is a major focus Europe Middle East. By breaking these down into Record for Health and Social Care Northern for this region and we are optimistic of a better result eight regions we have created greater alignment Ireland. A large deal such as this is difficult to for FY2015. and accountability for performance. The model replicate every year. We are enjoying success with has proven successful in FY2014 and will continue National Health Service Trusts, which are divisions EMEA, North Asia and South East Asia are all in FY2015. of the English National Health Service and are emerging markets for us currently, collectively in effect public corporations that serve a given making up 6% of total operating revenue for Our United States business continues to be our geographical area or a specialised function. During FY2014. Our main focus in EMEA is successfully largest market by some margin, now making the year we secured several new NHS customers, deploying our Smarter Hospitals Enterprise solution up 58% of all Operating Revenue, compared to including St George’s NHS Healthcare Trust, NHS at American Hospital in Istanbul (a premiere private 49% in FY2013. The US also delivered impressive East City & London, East Lancashire Hospitals hospital) and delivering our Healthier Populations revenue growth of 63% for the year. Contributing NHS Trust and NHS Greater Glasgow & Clyde. The chronic disease management solution for the to this success was a large contract with Highmark UK region has a strong pipeline of opportunities Spanish Ministry of Health. During the year we Inc, our first US “Payer” customer, and 15 Health and we believe we are well positioned for future appointed two new leaders in Asia – Andrew van Information Exchange sales. success in this market. Dort in South East Asia and Simon Gong in North Asia. This dedicated leadership is expected to Canada had a solid year with growth of 10%. Several New Zealand delivered 53% revenue growth, and help us grow the region. At present North Asia is new customers were secured and an implementation also served as the benchmark for implementation primarily focused on Rhapsody Integration Engine of our Electronic Referrals software has recently been services margins and regional profitability. The key sales and South East Asia focussed on Smarter completed for the province of Alberta, providing a contributors to this result were our deployment Hospitals sales or upgrades. great reference site for further sales in Canada. of a single Clinical Information System across the Central Region’s six District Health Boards (DHBs), our ongoing Smarter Hospitals work with the South Island Alliance and the Waikato DHB.
24 ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT OPERATING REVENUE BY REGION FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
United States 87,981 53,878 63% Canada 12,622 11,469 10% UK / Ireland 14,783 14,329 3% New Zealand 14,158 9,250 53% Australia 13,301 14,177 -6% EMEA 5,307 3,327 60% North Asia 952 1,122 -15% South East Asia 3,599 1,996 80% Corporate / Development 289 232 25% TOTAL OPERATING REVENUE 152,992 109,780 39%
Regional Revenue Mix
FY2013 FY2014
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 25 Market Segments
Orion Health has three market segments, the of Rhapsody Integration Engine as access to Healthier Populations revenue of $76 million is boundaries of which are defined by the nature of the integrated data is vital for Healthier Populations primarily made up of sales of Electronic Health customer and nature of the software solution. For and Smarter Hospitals. However, for the purposes Record solutions (also referred to as Health FY2014 we have introduced an operating revenue of management reporting only external standalone Information Exchange or HIE in the North American split by Solution Group. sales of Rhapsody Integration Engine are included market) to public or private organisations who in the Intelligent Integration segment. manage the health of a population – the solution Operating revenue for Intelligent Integration of is deployed in a community setting rather than $35 million primarily represents standalone sales Smarter Hospitals revenue of $33 million includes within the four walls of a hospital. The 58% revenue of our Rhapsody Integration Engine product. The sales of our hospital automation software and increase in FY2014 was driven largely by the US FY2014 result was 8% down on FY2013, however, sales of our Electronic Medical Record to hospital and Canada regions. 15 new HIE customers were FY2013 revenue of $38 million included two customers. Strong revenue growth of 87% was driven secured in FY2014. The FY2014 result also benefited large transactions which accounted for almost by our success with NHS Trusts in the UK and our from recurring subscription revenue from customers $8 million alone. Rhapsody is a market leader, is ongoing deployments for the South Island of New brought on in FY2013. Our existing products in this straightforward to implement and support, and Zealand and American Hospital in Istanbul, Turkey. Healthier Populations area are the foundation for requires relatively low ongoing R&D investment. Momentum continues to build in this segment. Early Population Health Management and The Health Data Therefore whilst this segment is not growing as in FY2015 we secured a new hospital automation Revolution. We expect this segment to continue fast as our other segments, it is a reliable revenue deployment with The Medical City in the Philippines. growing strongly. source with good margins. Note that many of We continue to target South East Asia, Australasia our sales in other segments include an element and EMEA with our Smarter Hospitals solutions.
26 ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT OPERATING REVENUE BY MARKET SEGMENT FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
Intelligent Integration 35,071 37,949 -8% Healthier Populations 75,536 47,755 58% Smarter Hospitals 33,356 17,803 87% Other 9,029 6,273 44% TOTAL OPERATING REVENUE 152,992 109,780 39%
Market Segment Revenue Mix
FY2013 FY2014
ORION HEALTH ANNUAL REPORT |OVERVIEW OF FY2014 FINANCIAL RESULT 27 Operating Expenses
Research & Development expense was 22% of Sales & Marketing, Professional Services and General GMS costs increased 163% to $12.2 million. This Operating Revenue in FY2014, down from 24% in & Administration all held relatively steady year on includes direct costs such as software hosting and FY2013. The nature of our research and development year as a percentage of revenue. The increases in third party software purchases. During the year we is such that not all of the criteria for capitalisation of absolute terms reflect the company’s growth and added 21 staff in this area, taking the department these costs as an intangible asset under NZ IFRS have are largely attributable to increased headcount in to a total of 50 staff at 31 March 2014. Expenses been met, and hence all research and development these areas. We have invested in building capability, have increased as a percentage of GMS revenue, costs are expensed. Over the year we added 84 particularly in our People team (Human Resources, from 65% in FY2013 to 74% in FY2014. This in part Product Development staff, taking this department Recruitment and Organisational Development). reflects the investment required in establishing a to a total of 363 staff at the end of March 2014. Global premise costs have also risen with the addition client’s software environment before subscription of new leases as we expand our global footprint in fees are earned. readiness to scale further.
OPERATING EXPENSES BY FUNCTION FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
Research & Development 34,268 26,739 28% % of group operating revenue 22% 24% Sales & Marketing 36,292 27,103 34% % of group operating revenue 24% 25% Support Services 4,526 5,569 -19% % of support services revenue 16% 26% Professional Implementation Services 42,393 26,125 62% % of implementation services revenue 70% 69% Global Managed Services 12,186 4,629 163% % of managed services revenue 74% 65% General & Administration 35,589 24,478 45% % of group operating revenue 23% 22% TOTAL OPERATING EXPENSES 165,254 114,643 44% % of group operating revenue 108% 104%
28 ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT Cash Flow and Balance Sheet
Operating Cash Flow for FY2014 was negative $8.8 Capital Expenditure was $9.3 million for the year. Closing cash at 31 March 2014 was negative $0.9 million, impacted by our investment in product This included the fit out of several new buildings million. However, we maintain operational flexibility via development and implementation capability, as well (leasehold improvements of $2.4 million and fixtures our working capital facility and have also raised $25.5 as lease costs from new premises around the world. of $1.3 million) and computer equipment ($4.3 million of new equity funding since balance date. million) to allow for an infrastructure that handles Payments to Suppliers includes costs for third party over 1,000 employees globally. This investment Orion Health’s balance sheet lacks complexity, with components used in our solutions, hosting fees from leaves us with capacity for further headcount growth a limited number of items over which management our GMS data center provider, premise lease costs without additional premises and IT assets. judgement is required. Trade Receivables have and $11 million of payments related to employee increased from $46 million to $53 million at 31 benefits and pensions. We received $8 million cash from the sale of our March 2014, reflecting the higher level of invoicing interest in Healthlink International Limited which being undertaken. Accrued Revenue increased settled in November 2013. significantly from $9 million to $21 million. This in part reflects extended payment terms with some customers whereby we have earned revenue with Opening to Closing Cash Bridge (All figures in NZ$’000) invoicing to follow at a later date. Revenue in Advance of $41 million relates primarily to Support 9,276 (8,774) and Implementation engagements that have been invoiced in advance of work being completed. 8,008 (9,304) Outlook FY2014 was a successful year for Orion Health and we are proud of the growth achieved. However, fast growth needs to be managed carefully. To this end we have invested in our capability and leadership. We are confident we have the people and processes in place to continue growing successfully. This will serve us well as we enter what we expect to be the most exciting decade in the company’s history. The next few years will be critical, as we enhance our Healthier Populations solution to meet the needs (928) of US payer customers. This is the beginning of The (134) Health Data Revolution.
OPENING NET OPERATING HEALTHLINK CAPITAL FINANCING CLOSING CASH CASHFLOW SALE EXPENDITURE AND FX CASH
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 29
WE ARE OPEN-MINDED CHALLENGERS IN A RELENTLESS PURSUIT OF A HEALTHIER WORLD MANAGING GROWTH
Orion Health’s Chief Executive Officer, Ian McCrae, is well supported by a management team with deep product, regional and functional expertise.
Corporate Leaders
GRAEME WILSON Graeme joined Orion Health in 2014 following his sucessful management of a technology focussed investment firm. Auckland He has been widely involved in the IT industry for the past 30 years and has experience with a number of eHealth Chief Operating Officer companies. Graeme holds a Bachelor of Commerce from the University of Auckland.
RODNEY HYDE A CIMA qualified management accountant (UK), Rodney joined Orion Health in July 2011 from Navico, the Auckland market leader in marine electronics. He holds a Bachelor of Commerce from University of Auckland. Chief Financial Officer
BRETT MORRIS Brett joined Orion Health in July 2013 from Air New Zealand. He has over ten years of Human Resources experience. Auckland Brett holds a Bachelor of Arts and a Masters of Business Administration from Auckland University. Vice President, People
LUKE FACER Luke has been with Orion Health since 2010. He has over 10 years of legal experience, including six years in private Auckland practice in Auckland and New York. Luke holds a Bachelor of Commerce and a Bachelor of Laws (Hons) from Vice President, General Counsel Auckland University.
ANNEMARIE BROWNE Annemarie joined Orion Health in January 2014 as VP Marketing. She has over 20 years sales and marketing Auckland experience in the media industry, most recently as GM Marketing at TVNZ, and prior to that as GM New Zealand Vice President, Marketing for SEEK. Annemarie holds a Bachelor of Commerce from Auckland University and completed the Senior Leadership programme at The Melbourne School of Business.
HELEN ROBINSON Helen joined Orion Health in 2012 after six years in investment banking working on M&A and capital markets Auckland transactions. She holds a Bachelor of Commerce and Bachelor of Laws (Hons) from Victoria University. Corporate Strategy Director
32 ORION HEALTH ANNUAL REPORT | CORPORATE LEADERS Product & Development Leaders
DAVID BENNETT In 2013, David joined Orion Health as EVP of Healthier Populations. His focus is to build out the Healthier Scottsdale Populations business including a new North American Development Center. This center will focus on advancing Executive Vice President, Healthier Populations the core Orion Health platform and providing new advancements in analytics and care coordination. He holds a B.S. degree in computer science from DeVry University.
WAYNE OXENHAM Wayne joined Orion Health in 2003 and has since held roles in sales, product and development. He is now Auckland responsible for our Smarter Hospitals segment. Wayne holds a Bachelor of Science in Mathematics, Bachelor of Executive Vice President, Smarter Hospitals Management Studies and completed the Advanced Management Program at Harvard Business School.
JAN BEHRENS Jan joined Orion Health at the start of 2013 as a Product Development Director. He has since transitioned Auckland into EVP of Engineering. He is responsible for Development methodology and delivery across all Development Executive Vice President, Engineering Centres. Previously Jan has worked in leadership roles for House of Travel and PayGlobal. He has a background in logistics and software R&D.
GREG BALLA Greg joined Orion Health in early 2014 after spending seven years as an executive at Auckland District Health Auckland Board. He has responsibility for Orion Health’s Clinical Workflow Business as well as spearheading ongoing Executive Vice President, Clinical Workflow process improvement. Greg has a Masters of Business Administration from Deakin University and Bachelor of Engineering (Hons) from the University of Technology, Sydney. Greg is a Member of the Institute of Directors.
DAVID LEACH David Leach is responsible for Orion Health’s Intelligent Integration segment. Having joined Orion Health in 2007, Auckland he has held previous leadership roles in the company in Professional Implementation and Sales, both in New Vice President, Intelligent Integration Zealand and the United States.
ORION HEALTH ANNUAL REPORT | PRODUCT & DEVELOPMENT LEADERS 33 MANAGING GROWTH (CONT)
Sales & Service Leaders
PAUL VISKOVICH Paul launched Orion Health’s North American business in 2002 and now runs Sales globally. He is supported by Santa Monica regional sales leaders in each of our geographies. Prior to joining Orion Health he held various sales, marketing Global President, Sales and management roles in the IT industry.
GARY WHITE Gary joined Orion Health in 2014 as EVP Global Services following his previous role as Head of Healthcare Boston and Life Sciences Information Software and Services for the APAC and MEA region at CSC. Gary has Executive Vice President, Global Services worked across the healthcare sector for 15 years and is highly skilled in managing large development and operations teams across multiple geographies.
SARAH THOMPSON Sarah joined Orion Health in early 2013, as Global Resource Centre Director, and added Global PMO to her Auckland responsibilities in July 2013. She has worked in the healthcare industry since 2000 and spent much of this time Global Resource Centre Director at Vielife in London where she oversaw product delivery and client implementation. Sarah holds a Bachelor of Design and is both Scrum and Prince 2 qualified.
RAFI BROSCH In his role as VP SaaS Operations, Rafi is responsible for the company’s Global Managed Services business. Boston Rafi joined Orion Health in 2014 from RSA Security (the security division of EMC), industry-leading solutions in Vice President, SaaS Operations financial markets identity assurance and access control, encryption and key management.
34 ORION HEALTH ANNUAL REPORT | SALES & SERVICE LEADERS
EXPANDING CHRISTCHURCH OPERATIONS
Orion Health opened its first Christchurch office only eight days before the devastating earthquake of February 22nd, 2011. The decision to keep investing in Christchurch is an easy one.
In the three years since this initial office opening we The attitude in Canterbury towards innovation and the desire have grown operations from four full time staff to now boast a development centre housing more than to challenge the status quo is exactly the environment we like 64 employees. This exceptional growth, combined to be part of. The products and solutions being developed out with a clear direction to continue growing to over 100 full time staff within the next 18 months, is of this office are not only changing the healthcare landscape what led us to seek a new office location within the Hazeldean business park. in the South Island, but also are highly applicable throughout Asia and Europe as well. In setting up the new space, full renovations were undertaken over six months to create an atmosphere that is collaborative, fosters creativity and promotes our innovative culture. This is in line with our global approach to all offices, however, among our development teams and co-creating with to partake in the celebration alongside a number of in Christchurch we wanted to take this a step us to deliver exceptional results that will ultimately guests from CDHB, Pegasus, Nurse Maude, The South further and develop an office that would help drive shape how healthcare is delivered throughout the Island Alliance and University of Canterbury. our partnership with Canterbury District Health entire South Island. Board (CDHB). We are extremely proud of our ongoing commitment The culmination of all this effort was realised when to the Canterbury region and inspired to be part of To achieve this we granted CDHB staff access to our we were delighted to welcome the Honourable the transformation that is occurring in Christchurch offices, where they are empowered to work alongside Amy Adams – Minister for Communications and itself. The obvious hunger and spirit for collaboration our development teams to create clinically meaningful Information Technology – to officially open our new is truly great to see and we are extremely excited for solutions. A typical week now sees between four office in early 2014. In what was a fantastic day, the positive impact that this office is going to have – eight rotating CDHB staff taking up residence family and friends of Orion Health staff were invited on our future growth.
36 ORION HEALTH ANNUAL REPORT | EXPANDING CHRITCHURCH OPERATIONS
INDEPENDENT AUDITORS’ REPORT to the shareholders of Orion Corporation Limited
Report on the Financial Statements Auditors’ Responsibility We have audited the financial statements of Orion Our responsibility is to express an opinion on in the circumstances, but not for the purpose of Corporation Limited on pages 41 to 90, which these financial statements based on our audit. expressing an opinion on the effectiveness of the comprise the balance sheets as at 31 March 2014, the We conducted our audit in accordance with Company and Group’s internal control. An audit statements of comprehensive income, statements of International Standards on Auditing (New Zealand) also includes evaluating the appropriateness of changes in equity and statements of cash flows for and International Standards on Auditing. These accounting policies used and the reasonableness the year then ended, and the notes to the financial standards require that we comply with relevant of accounting estimates, as well as evaluating the statements that include a summary of significant ethical requirements and plan and perform the overall presentation of the financial statements. accounting policies and other explanatory audit to obtain reasonable assurance about information for both the Company and the Group. whether the financial statements are free from We believe that the audit evidence we have obtained The Group comprises the Company and the entities material misstatement. is sufficient and appropriate to provide a basis for it controlled at 31 March 2014 or from time to time our audit opinion. during the financial year. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures We have no relationship with, or interests in, Orion Directors’ Responsibility for the Financial Statements in the financial statements. The procedures selected Corporation Limited or any of its subsidiaries other The Directors are responsible for the preparation depend on the auditors’ judgement, including the than in our capacities as auditors and through the of these financial statements in accordance with assessment of the risks of material misstatement provision of other assignments for the Company in generally accepted accounting practice in New of the financial statements, whether due to fraud the area of advisory services. Zealand and that give a true and fair view of the or error. In making those risk assessments, the matters to which they relate and for such internal auditor considers the internal controls relevant controls as the Directors determine are necessary to to the Company and Group’s preparation of enable the preparation of financial statements that financial statements that give a true and fair view are free from material misstatement, whether due to of the matters to which they relate, in order to fraud or error. design audit procedures that are appropriate
38 ORION HEALTH ANNUAL REPORT | INDEPENDENT AUDITOR’S REPORT Opinion Restriction on Use of Our Report In our opinion, the financial statements on pages 41 This report is made solely to the Company’s to 90: shareholders, as a body, in accordance with • comply with generally accepted accounting Section 205(1) of the Companies Act 1993. practice in New Zealand; Our audit work has been undertaken so that • comply with International Financial we might state to the Company’s shareholders Reporting Standards; and those matters which we are required to state • give a true and fair view of the financial to them in an auditors’ report and for no other position of the Company and the Group as at purpose. To the fullest extent permitted by law, we do 31 March 2014, and their financial performance not accept or assume responsibility to anyone other and cash flows for the year then ended. than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for R e p o r t o n O t h e r L e g a l a n d R e g u l a t o r y R e q u i r e m e n t s the opinions we have formed. We also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act 1993. In relation to our audit of the financial statements for the year ended 31 March 2014: • we have obtained all the information and explanations that we have required; and • in our opinion, proper accounting records have been kept by the Company as far as Chartered Accountants appears from an examination of those records. Auckland | 21 July 2014
ORION HEALTH ANNUAL REPORT | INDEPENDENT AUDITOR’S REPORT 39 DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are responsible for the preparation, in integrity and reliability of the financial reporting. For and on behalf of the Board, 21 July 2014 accordance with New Zealand generally accepted The Directors consider that adequate steps have accounting practice, of the financial statements been taken to safeguard the assets of the Company which give a true and fair view of the financial and Group and to prevent and detect fraud and position of Orion Corporation Limited and Group as other irregularities. at 31 March 2014 and the results of their operations and cash flows for the year ended 31 March 2014. The Directors are pleased to present the financial statements of Orion Corporation Limited and Group The Directors consider that the financial statements for the year ended 31 March 2014. Ian McCrae of the Company and the Group have been prepared DIRECTOR and CHIEF EXECUTIVE OFFICER using accounting policies appropriate to the The annual report is dated 21 July 2014 and is Company and Group’s circumstances, consistently signed in accordance with a resolution of the applied and supported by reasonable and prudent Directors made pursuant to section 211(1) (k) of the judgements and estimates, and that all applicable Companies Act 1993. New Zealand equivalents to International Financial Reporting Standards and Financial Reporting Standards have been followed. Roger France The Directors have responsibility for ensuring that DIRECTOR 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 with the Financial Reporting Act 1993.
The Directors have responsibility for the maintenance of a system of internal control designed to provide reasonable assurance as to the
40 ORION HEALTH ANNUAL REPORT | DIRECTORS’ RESPONSIBILITY STATEMENT FINANCIAL STATEMENTS
ORION HEALTH ANNUAL REPORT | FINANCIAL STATEMENTS 41 STATEMENTS OF COMPREHENSIVE INCOME for the years ended 31 March
The accompanying notes form an integral part of these financial statements.
42 ORION HEALTH ANNUAL REPORT | STATEMENTS OF COMPREHENSIVE INCOME INCOME Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000) Operating Revenue 4 152,992 109,780 - 310 Other income 5 10,168 12,146 11,770 - TOTAL INCOME 163,160 121,926 11,770 310
EXPENSES
Direct operating costs and expenses (27,344) (12,190) - - Employee benefits expense (109,159) (85,173) - - Marketing expenses (2,387) (2,496) - (16) Administration and other expenses (11,920) (6,853) (344) (288) Occupancy expenses (8,897) (5,074) - - Depreciation and amortisation expense (3,710) (2,443) - - Other operating gains/(losses) (1,837) (414) (1) (1) TOTAL EXPENSES 6 (165,254) (114,643) (345) (305)
OPERATING (LOSS)/PROFIT
Total operating (loss)/profit (2,094) 7,283 11,425 5 Finance income 7 333 285 20 - Finance costs 7 (117) (523) - - Finance income/(costs) – net 216 (238) 20 - Share of profit of investments accounted for using the 13 145 364 - - equity method (Loss)/Profit before income tax (1,733) 7,409 11,445 5 Income tax credit/(expense) 8 596 341 11 (2) (LOSS)/PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY (1,137) 7,750 11,456 3 HOLDERS OF PARENT
OTHER COMPREHENSIVE INCOME FOR ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS Currency translation differences (954) (285) - - Total other comprehensive loss (954) (285) - - Total comprehensive (loss)/income attributable to equity (2,091) 7,465 11,456 3 holders of parent
EARNINGS PER SHARE Basic and diluted (loss)/earnings per share (cents) 22 (0.9) 5.9
ORION HEALTH ANNUAL REPORT | STATEMENTS OF COMPREHENSIVE INCOME 43 BALANCE SHEETS as at 31 March
For and on behalf of the Board, 21 July 2014
Ian McCrae DIRECTOR and CHIEF EXECUTIVE OFFICER
Roger France The accompanying notes form an integral part of these financial statements. DIRECTOR
44 ORION HEALTH ANNUAL REPORT | BALANCE SHEETS ASSETS Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Current assets Cash and cash equivalents 9 12,655 9,278 - - Trade and other receivables 10 52,781 45,597 26,714 12,984 Accrued revenue 11 16,921 8,788 - - Current income tax asset 66 - 18 25 Total Current Assets 82,423 63,663 26,732 13,009 Non-current assets Accrued revenue 11 4,026 - - - Deferred tax assets 8 9,970 3,818 28 17 Investment in subsidiaries 12 - - 310 1 Investment in associates 13 - 1,494 - - Property, plant and equipment 14 11,700 6,750 - - Intangibles 15 1,100 922 - - Total Non-current assets 26,796 12,984 338 18 TOTAL ASSETS 109,219 76,647 27,070 13,027
LIABILITIES
Current liabilities Bank overdraft 9 13,583 2 - - Trade and other payables 16 11,902 10,030 400 371 Current income tax payable 1,186 655 - - Employee benefits 17 10,992 5,293 - - Revenue in advance 19 40,554 29,883 - - Provisions for other liabilities 18 1,241 - - - Total current liabilities 79,458 45,863 400 371 Non-current liabilities Provisions for other liabilities 18 579 - - - Total non-current liabilities 579 - - - TOTAL LIABILITIES 80,037 45,863 400 371 NET ASSETS 29,182 30,784 26,670 12,656
EQUITY
Share capital 20 14,777 12,528 14,777 12,528 Treasury shares 21 (2,069) - - - Share-based payment reserve 21 309 - 309 - Retained earnings 18,018 19,155 11,584 128 Foreign currency translation reserve (1,853) (899) - - TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT 29,182 30,784 26,670 12,656
ORION HEALTH ANNUAL REPORT | BALANCE SHEETS 45 STATEMENTS OF CHANGES IN EQUITY for the years ended 31 March
The accompanying notes form an integral part of these financial statements.
46 ORION HEALTH ANNUAL REPORT | STATEMENTS OF CHANGES IN EQUITY Shared-based Foreign currency Issued capital Treasury shares Retained earnings Total equity Note payment reserve translation reserve GROUP NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 Balance at 1 April 2012 12,527 - - 11,405 (614) 23,318 Profit for the year - - - 7,750 - 7,750 Other comprehensive loss for the year - - - - (285) (285)
Total comprehensive income/(loss) for the year ended 31 - - - 7,750 (285) 7,465 March 2013 Issue of share capital 20 1 - - - - 1 Total transactions with owners in their capacity as owners 1 - - - - 1 Balance at 31 March 2013 12,528 - - 19,155 (899) 30,784 Balance at 1 April 2013 12,528 - - 19,155 (899) 30,784 Loss for the year - - - (1,137) - (1,137) Other comprehensive loss for the year - - - - (954) (954) Total comprehensive loss for the year ended 31 March 2014 - - - (1,137) (954) (2,091) Issue of share capital 21 180 - - - - 180 Issue of share capital – employee share schemes 21 2,069 (2,069) - - - - Accrual of share-based employee benefits 21 - - 309 - - 309 Total transactions with owners 2,249 (2,069) 309 - - 489 Balance at 31 March 2014 14,777 (2,069) 309 18,018 (1,853) 29,182
PARENT
Balance at 1 April 2012 12,527 - - 125 - 12,652 Profit for the year - - - 3 - 3 Total comprehensive income for the - - - 3 - 3 year ended 31 March 2013 Issue of share capital 20 1 - - - - 1 Total transactions with owners 1 - - - - 1 Balance at 31 March 2013 12,528 - - 128 - 12,656 Balance at 1 April 2013 12,528 - - 128 - 12,656 Profit for the year - - - 11,456 - 11,456 Total comprehensive income for the year ended 31 - - - 11,456 - 11,456 March 2014 Issue of share capital 21 180 - - - - 180 Issue of share capital – employee share schemes 21 2,069 - - - - 2,069 Accrual of share-based employee benefits 21 - - 309 - - 309 Total transactions with owners 2,249 - 309 - - 2,558 Balance at 31 March 2014 14,777 - 309 11,584 - 26,670
ORION HEALTH ANNUAL REPORT | STATEMENTS OF CHANGES IN EQUITY 47 STATEMENTS OF CASH FLOWS for the years ended 31 March
The accompanying notes form an integral part of these financial statements.
48 ORION HEALTH ANNUAL REPORT | STATEMENTS OF CASH FLOWS CASHFLOW FROM OPERATING ACTIVITIES Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash provided from: Receipts from customers 147,025 113,184 - - Interest received 333 279 - - 147,358 113,463 Cash applied to: Payment to suppliers (54,020) (25,727) - - Payment to employees (97,534) (85,490) - - Interest paid (117) (643) - - Taxation paid (4,461) (1,876) - - (156,132) (113,736) - - NET CASH OUTFLOW FROM OPERATING ACTIVITIES 27 (8,774) (273) - -
CASHFLOW FROM INVESTING ACTIVITIES
Cash provided from: Disposal of associate 13 8,008 - - - Property, plant and equipment – disposals - 21,037 - - Cash applied to: Property, plant and equipment – additions (8,434) (7,781) - - Intangibles (870) (633) - - NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES (1,296) 12,623 - -
CASHFLOW FROM FINANCING ACTIVITIES
Cash provided from: Issue of shares 21 180 1 - - Dividend received 5 262 - - - Bank borrowings - 500 - - 442 501 - - Cash applied to: Repayment of bank borrowings - (9,000) - - Net cash inflow/(outflow) from financing activities 442 (8,499) - - TOTAL NET CASH (OUTFLOW)/INFLOW (9,628) 3,851 - -
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
9,276 5,479 - - Effect of exchange rate on foreign currency balances (576) (54) - - Net cash (outflow)/inflow (9,628) 3,851 - - Cash and cash equivalents at the end of period 9 (928) 9,276 - - Composition of cash and cash equivalents Cash and cash equivalents 12,655 9,278 - - Bank overdraft (13,583) (2) - - 9 (928) 9,276 - -
ORION HEALTH ANNUAL REPORT | STATEMENTS OF CASH FLOWS 49 NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 March 2014
1 REPORTING ENTITY 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements for the ‘Group’ (a) Basis of preparation of financial statements (b) Changes in accounting policies and estimates are for the economic entity comprising Orion The financial statements have been prepared in New standards, amendments, and interpretations Corporation Limited (‘Parent’ or ‘Company’) and accordance with the requirements of the Companies effective in 2014. its subsidiaries, (together referred to as the Group Act 1993 and the Financial Reporting Act 1993. and individually as ‘Group entities’) and the Group’s During the year the Group adopted Standard XRB interest in associates. The financial statements have been prepared in A1 ‘Accounting Standards Framework’ issued by the accordance with New Zealand Generally Accepted External Reporting Board. XRB A1 establishes a Orion Corporation Limited is incorporated and Accounting Practice (‘NZ GAAP’). They comply for-profit tier structure and outlines which suite of domiciled in New Zealand and registered under the with New Zealand equivalents to International accounting standards entities in different tiers must New Zealand Companies Act 1993. The registered Financial Reporting Standards (‘NZ IFRS’), and follow. The group is a Tier 1 entity. There was no impact office is 181 Grafton Road, Grafton, Auckland 1010, other applicable Financial Reporting Standards, on the current or prior year financial statements. New Zealand. as appropriate for profit-oriented entities. They comply with International Financial Reporting The Group has adopted the following new and The Parent and Group are designated as profit Standard (‘IFRS’). amended NZ IFRSs of relevance to the Group and oriented entities for financial reporting purposes. The Company as of 1 April 2013: Parent and Group are primarily involved in the sale, The financial statements have been prepared on the support and implementation of software with a focus basis of historical cost, except when specific items - Amendment to NZ IAS 1, ‘Financial on the healthcare IT market. are carried at fair value as identified in specific statement presentation’ regarding other accounting policies below. comprehensive income. The main change These financial statements were approved by the resulting from these amendments is a Directors on 21 July 2014. requirement for entities to group items presented in ‘other comprehensive income’ The principal accounting policies adopted in the on the basis of whether they are potentially preparation of these financial statements are set out reclassifiable to profit or loss subsequently below. These policies have been consistently applied (reclassification adjustments). to all the years presented, unless otherwise stated.
50 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS - NZ IFRS 10, ‘Consolidated financial New standards, amendments and interpretations There are no other standards, amendments or statements’ builds on existing principles issued by the International Accounting Standards interpretations that are not yet effective that would by identifying the concept of control as the Board (IASB) and the External Reporting Board be expected to have a material impact on the Group. determining factor in whether an entity (XRB) have been published that will be mandatory should be included within the consolidated for the Group’s accounting periods beginning Changes in estimates – depreciation and financial statements of the parent company. on or after 1 April 2014. None of these standards amortisation methods and rates The standard provides additional guidance have been early adopted by the Group. These During the year a review has been undertaken across to assist in the determination of control new standards, amendments and interpretations the Group of the basis of depreciation of property, where this is difficult to assess. potentially impacting the group include: plant and equipment and the basis of amortisation of intangible assets, specifically software. As a - NZ IFRS 12, ‘Disclosures of interests - NZ IFRS 9, ‘Financial Instruments’, result of this review, some changes have been made in other entities’, includes the disclosure addresses the classification, measurement to rates and methods used to align the policy for requirements for all forms of interests in and recognition of financial assets and entities within the Group and to provide consistency. other entities, including joint arrangements, financial liabilities and replaces the parts of The rates and methods now used will allow for a associates, special purpose vehicles and NZ IAS 39 that relate to the classification and more accurate representation of the cost of utilising other off balance sheet vehicles. measurement of financial instruments and property, plant and equipment and intangible hedge accounting. The Group is yet to assess assets over their useful lives. The changes have not - NZ IFRS 13, ‘Fair value measurement’, NZ IFRS 9’s full impact and has not yet decided had a material impact on the Group’s result in the aims to improve consistency and reduce when to adopt the standard. The standard current period. The change in methods and rates complexity by providing a precise definition must be adopted for the period beginning 1 have been accounted for as changes in estimates of fair value and a single source of fair value April 2017 but allows for early adoption. with effect from 1 April 2013 in accordance with NZ measurement and disclosure requirements IAS 8 ‘Accounting Policies, Changes in Accounting for use across IFRSs. The requirements, - NZ IFRS 15, ‘Revenue from contracts with Estimates and Errors’ and therefore the comparative which are largely aligned between IFRSs and customers’, addresses recognition of revenue period has not been restated. US GAAP, do not extend the use of fair value from contracts with customers. It replaces the accounting but provide guidance on how it current revenue recognition guidance in NZ should be applied where its use is already IAS 18 Revenue and NZ IAS 11 Construction required or permitted by other standards Contracts and is applicable to all entities within IFRSs. with revenue. It sets out a five step model for revenue recognition to depict the transfer The adoption of these amendments and standards of promised goods or services to customers has not resulted in material accounting or disclosure in an amount that reflects the consideration changes for the Group or Company. to which the entity expects to be entitled in exchange for those goods or services. The New standards, amendments and interpretations Group has yet to assess NZ IFRS 15’s full issued but not effective for the financial year impact. The Group will apply this standard beginning 1 April 2013 and not early adopted. from 1 April 2017.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 51 (c) Basis of consolidation If the cost of acquisition is less than the Group’s share plus the Group’s share of the profit or loss and other of the fair value of the identifiable net assets of the comprehensive income of equity accounted investees, Subsidiaries subsidiary acquired, the difference is recognised from the date that significant influence commences Subsidiaries are all entities over which the Group has directly in the Statement of Comprehensive Income. until the date that significant influence ceases. control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from Investments in associates Dividends receivable from associates are recognised its involvement with the entity and has the ability to An associate is an entity over which the Group has in the Parent entity’s profit or loss, while in the affect those returns through its power over the entity. significant influence and that is neither a subsidiary consolidated financial statements they reduce the Subsidiaries are fully consolidated from the date on nor an interest in a joint venture. Significant influence is carrying amount of the investment. which control is transferred to the Group. They are the power to participate in the financial and operating deconsolidated from the date that control ceases. policy decisions of the investee but is not control or (d) Foreign currency translation joint control over those policies. Intra-group balances and transactions and any Functional and presentation currency unrealised income and expenses arising from intra- The Group’s investment in its associates is accounted Both the functional and presentation currency of Orion group transactions are eliminated in preparing the for using the equity method of accounting in the Corporation Limited and its New Zealand subsidiaries consolidated financial statements. consolidated financial statements. Investments in are New Zealand dollars ($). associates held by the Parent are accounted for at Investments in subsidiaries held by the Parent are cost less impairment losses in the separate financial The functional currencies of other subsidiaries are accounted for at cost less impairment losses in the statements of the Parent entity. as follows: separate financial statements of the parent entity. Under the equity method, investments in the associates Business Combinations are carried on the consolidated Balance Sheets at cost The acquisition method of accounting is used to account for the acquisition of subsidiaries by the
Group. The consideration transferred for an acquisition Subsidiary Country of Incorporation Functional Currency
is measured as the fair value of the assets transferred, Orion Health Inc. United States of America United States dollar (USD) equity instruments issued and liabilities incurred Orion Health Limited Canada Canadian dollar (CAD) or assumed at the date of exchange. Costs directly Orion Health Limited United Kingdom Great Britain pound (GBP) attributable to the acquisition are expensed in the Orion Health Pty Limited Australia Australian dollar (AUD) Statement of Comprehensive Income. Identifiable Orion Health S.L.U. Spain Euro (EUR) assets acquired and liabilities and contingent liabilities Orion Health SAS France Euro (EUR) Orion Health Pte. Limited Singapore dollar (SGD) assumed in a business combination are measured Orion Health K.K. Japan Japanese yen (JPY) initially at their fair values at the acquisition date, Orion Health Systems FZ-LLC United Arab Emirates United Arab Emirates dirham (AED) irrespective of the extent of any non-controlling Orion Health Limited Thailand Thai baht (THB) interest. The excess of the cost of acquisition over the Orion Sağlık ve Bilgi Sistemleri Turkey United States dollar (USD) fair value of the Group’s share of the identifiable net Limited Şirketi assets acquired is recorded as goodwill. Orion Health Software Technology China Chinese renminbi (RMB) Consulting (Shenzhen) Co., Limited
52 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS Transactions and balances Translation of Group Companies’ functional When an item of property, plant and equipment is Foreign currency transactions are translated currency to presentation currency disposed of the difference between net disposal into the functional currency using the exchange T h e G r o u p t r a n s l a t e s t h e r e s u l t s , a s s e t s a n d l i a b i l i t i e s o f proceeds and the carrying amount is recognised as a rates prevailing at the dates of the transactions. its foreign operations from their functional currencies gain, or loss, in the Statement of Comprehensive Income. Foreign exchange gains and losses resulting from to New Zealand dollars using the closing exchange Depreciation of property, plant and equipment is the settlement of such transactions and from rate at reporting date for assets and liabilities and the calculated to allocate the difference between the the translation of monetary assets and liabilities monthly exchange rates for income and expenses. original cost of the assets and their residual values denominated in foreign currencies at reporting date The difference arising from the translation of the over their estimated useful lives on a straight line exchange rates are recognised in the Statement Balance Sheet at the closing rates and the Statement basis as follows: of Comprehensive Income within General and of Comprehensive Income at the monthly rates are Administration expenses. recorded within the foreign currency translation Leasehold improvements term of lease reserve (‘FCTR’) in other comprehensive income. Furniture and fittings 7 years Non-monetary items that are measured in terms of Office and café equipment 3 – 7 years h i s t o r i c a l c o s t i n a f o r e i g n c u r r e n c y a r e t r a n s l a t e d u s i n g (e) Segment reporting Computer equipment 3 years t h e e x c h a n g e r a t e a s a t t h e d a t e o f t h e i n i t i a l t r a n s a c t i o n . Non-monetary items measured at fair value in a Operating segments are reported in a manner As referred to in note 2(b) some changes have been foreign currency are translated using the exchange consistent with the internal reporting provided to made to rates and methods of depreciation with effect rates at the date when the fair value was determined. the Chief Operating Decision Maker (‘CODM’). The from 1 April 2013. All the Group’s property, plant and CODM, who is responsible for allocating resources e q u i p m e n t i s n o w d e p r e c i a t e d o n a s t r a i g h t l i n e b a s i s f o r and assessing performance of the operating accounting purposes. In prior periods, the diminishing segments, has been identified as the Executive value and capital cost allowances bases were used Leadership Team (‘ELT’). for some assets. The changes have not had a material impact on the Group’s result in the current period. (f) Property, plant and equipment The assets’ residual values, depreciation methods and All items of property, plant and equipment are useful lives are reviewed, and adjusted if appropriate, stated at cost, including costs directly attributable at each reporting date. 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.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 53 (g) Intangible assets Subsequent expenditure is capitalised only when it criteria and are therefore expensed as incurred. in cre a se s th e f utu re e co n o mic b e n e fit s e m b o die d in th e Development expenditure directed towards Software specific asset to which it relates. All other expenditure incremental improvements in existing products Software assets acquired separately are initially is recognised in the Statements of Comprehensive does not qualify for recognition as an intangible measured at cost, software assets acquired in a Income as incurred. asset. Development costs previously recognised business combination are initially measured at as expenses are not recognised as assets in a fair value. Following initial recognition, software is Research and development costs subsequent period. carried at cost less any accumulated amortisation Research costs and costs associated with maintaining and any accumulated impairment losses. software products are expensed as incurred. (h) Impairment of non-financial assets
The useful lives of software assets are assessed to be C o s t s t h a t a r e d i r e c t l y a s s o c i a t e d w i t h t h e d e v e l o p m e n t At each reporting date, the Group assesses finite. Intangible assets with finite lives are amortised over of new or substantially improved software products whether there is any indication that an asset may the useful life and tested for impairment whenever there controlled by the Group are recognised as intangible be impaired. Where an indicator of impairment is an indication that the intangible asset may be impaired. assets only where the following criteria can all be met: exists, the Group makes a formal estimate of the An assessment of indicators of impairment is carried out recoverable amount. Where the carrying value at each reporting date. The amortisation period and the - it is technically feasible to complete the of an asset exceeds its recoverable amount, the amortisation method for a software asset with a finite product so that it will be available for sale; asset is considered impaired and is written down useful life are reviewed at least at each financial year-end. - management intends to complete the to its recoverable amount. product and sell it; Changes in the expected useful life or the expected - there is an ability to sell the product; Recoverable amount is the greater of fair value pattern of consumption of future economic benefits - it can be demonstrated how the product will less costs to sell or the asset’s value in use. For embodied in the asset are accounted for prospectively generate future economic benefits; the purposes of assessing impairment, assets by changing the amortisation period or method, as - adequate technical, financial and other are grouped at the lowest levels for which there appropriate, which is a change in accounting estimate. resources to complete the development and are separately identifiable cash flows (cash- The amortisation expense on intangible assets to sell the product are available; and generating units). Non-financial assets that have with finite lives is recognised in the Statements of - the expenditure attributable to the been written down are reviewed for possible Comprehensive Income. Amortisation is calculated on product during its development can be reversal of the impairment at each reporting date. a straight line basis across a useful life of three years. reliably measured.
As referred to in note 2(b) some changes have been At the time of development work being performed there made to rates and methods of amortisation with is uncertainty as to meeting one or more of these criteria, effect from 1 April 2013. All the Group’s software particularly with respect to the technical feasibility, the assets are now depreciated on a straight line basis ability to sell the software products or to generate for accounting purposes. In prior periods, the future economic benefits. These uncertainties co ntin u e diminishing value basis was used for some software to exist until shortly before products are deployed assets. The changes have not had a material impact and configured at customer sites. Development on the Group’s result in the current period. costs incurred have not met all of the above
54 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS (i) Revenue recognition Professional services Dividend income Time and materials contracts are generally billed Dividend income from investments is recognised Revenue is recognised to the extent that it is monthly in the month in which the service is when the shareholder’s right to receive payment has probable that the economic benefits will flow provided. Provided a legitimate arrangement is in been established. to the Group and the revenue can be reliably place, the revenue is recognised in the month of measured. Revenue is measured at the fair value billing, as services are provided. Interest income of the consideration received or receivable Interest income is accrued on a time-proportion and is recorded net of sales taxes, value added Fixed price contracts are typically designed on basis, by reference to the principal outstanding and taxes, discounts and after eliminating sales milestone achievement. Normally invoicing is aligned at the effective interest rate applicable, which is the within the Group. When deferred payment terms to these milestones. Revenue recognition, however, is rate that exactly discounts estimated future cash have a significant impact on the calculation of aligned to the percentage of work completed. receipts through the expected life of the financial the fair value of revenue, it is accounted for by asset to that asset’s net carrying amount. discounting future payments. The following Where a loss is expected to occur it is recognised specific recognition criteria must also be met immediately and is made for both work in progress When revenue and receivables are discounted before revenue is recognised: completed to date and for future work required to to fair value to reflect deferred payment terms, complete the contract. future cash flows are discounted at the prevailing Licenses interest rate for a similar instrument. The discount License revenue is recognised only where a Global managed services is unwound and recognised as interest income over contractual arrangement is in place. Revenue Global managed service revenue is generally billed the deferral period. from ‘off-the-shelf’ software (or non ‘off-the-shelf’ quarterly or annually in advance. Revenue is deferred software sold without a professional services and recognised on a straight line basis over the term Revenue in advance implementation contract) is recognised in the of the contract billing period, as services are provided. Revenue invoiced but not able to be recognised month of billing. For non ‘off-the-shelf’ software is recorded on the Balance Sheets as ‘Revenue sold with a professional services implementation Government grants in advance’. contract, the revenue is deferred and recognised Government grants are recognised at their fair value in proportion to the percentage completed of the where there is reasonable assurance that the grants Accrued revenue associated professional services contract. will be received and all attached conditions will be Revenue recognised but not able to be invoiced to complied with. When a grant relates to a specified customers under the contract is recorded on the Support and Maintenance expense item, it is recognised as income over the Balance Sheets as ‘Accrued Revenue’. Support and maintenance services are generally period necessary to match the grant on a systematic billed in advance for a fixed term. Revenue is basis to the cost that it is intended to compensate. deferred and recognised on a straight line basis When the grant does not relate to a specified expense over the term of the contract billing period, as item, it is recognised as income in the period it is services are provided. received or becomes receivable.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 55 (j) Cash flows contributions to publicly or privately administered - when the deferred income tax liability arises pension insurance plans on a mandatory or from an asset or liability in a transaction that For the purpose of the statements of cash flows, cash contractual basis. The Group has no further payment is not a business combination and that, at the and cash equivalents are defined in note 2(o). Principal obligations once the contributions have been paid. time of the transaction, affects neither the draw down and repayment of Bank term credit The contributions are recognised as an employee accounting profit nor taxable profit or loss; or facilities are shown as part of financing activities. entitlement expense when they are due. - when the taxable temporary difference is associated with investments in subsidiaries or (k) Employee benefits Short-term and long-term incentive plans associates, and the timing of the reversal of the The Group operates both short-term and long-term temporary difference can be controlled and it Short term benefits incentive plans. Employee incentive obligations is probable that the temporary difference will Accruals for wages, salaries, including non-monetary are measured at the amounts expected to be paid not reverse in the foreseeable future. benefits, commissions and annual leave expected when the liability is settled and are expensed as the to be settled within 12 months of the reporting date related service is provided. The Group operates an Deferred income tax assets are recognised for all are recognised in respect of employees’ services up equity-settled, share-based compensation plan, deductible temporary differences, carry-forward to the reporting date. They are measured at their under which employees render services in exchange of unused tax credits and unused tax losses, to the nominal values using the remuneration rate expected for shares. The fair value of the employee services extent that it is probable that taxable profit will be to apply at the time of settlement, on an undiscounted rendered for the grant of shares is recognised as an available against which the deductible temporary basis. Expenses for non-accumulating sick leave are expense over the vesting period, and the amount differences and the carry-forward of unused tax recognised when the leave is taken and are measured is determined by reference to the fair value of the credits and unused tax losses can be utilised, except: at the rates paid or payable. shares granted. - when the deferred income tax asset relating Long service leave (l) Income tax to the deductible temporary difference arises The liability for long service leave is recognised from the initial recognition of goodwill, or an and measured as the present value of expected Current tax assets and liabilities are measured at asset or liability in a transaction that is not a future payments to be made in respect of services the amount expected to be recovered from or paid business combination and, at the time of the provided by employees up to the reporting date to the taxation authorities based on the period’s transaction affects neither the accounting using an actuarial method. Consideration is given to taxable income. The tax rates and tax laws used to profit nor taxable profit or loss; or expected future salary levels, experience of employee compute the amount are those that are enacted or - when the deductible temporary difference departures, and periods of service. Expected future substantively enacted by the reporting date. is associated with investments in subsidiaries payments are discounted using market yields at the or associates, in which case a deferred tax reporting date on national government bonds with Deferred income tax is provided on all temporary asset is only recognised to the extent that it terms to maturity and currencies that match, as closely differences at the reporting date between the tax is probable that the temporary difference will as possible, the estimated future cash outflows. bases of assets and liabilities and their carrying reverse in the foreseeable future and taxable amounts for financial reporting purposes. profit will be available against which the Pension obligations temporary difference can be utilised. The Group has pension obligations in respect of Deferred income tax liabilities are recognised for all various defined contribution plans. The Group pays taxable temporary differences except:
56 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS The carrying amount of deferred income tax assets Cash flows are included in the cash flow statements that there is a measurable decrease in the estimated is reviewed at each reporting date and reduced to and the sales tax component of cash flows arising cash flows, such as changes in arrears or economic the extent that it is no longer probable that sufficient from investing and financing activities, which conditions that correlate with defaults. Impairment taxable profit will be available to allow all or part of the is recoverable from, or payable to, the taxation testing of receivables is described in note 2(p). deferred income tax asset to be utilised. Unrecognised authority is classified as part of operating cash flows. deferred income tax assets are reassessed at each Regular purchases and sales of financial assets are reporting date and are recognised to the extent that Commitments and contingencies are disclosed net recognised on the trade-date, being the date on which it has become probable that future taxable profit will of sales tax. the Group commits to purchase or sell the asset. allow the deferred tax asset to be recovered. (n) Financial assets Financial assets are derecognised when the rights to Deferred income tax assets and liabilities are receive cash flows from the investments have expired measured at the tax rates that are expected to apply The Group classifies its financial assets as loans or have been transferred and the Group has transferred to the year when the asset is realised or the liability and receivables. Management determines the substantially all risks and rewards of ownership. is settled, based on tax rates (and tax laws) that classification of its financial assets at initial have been enacted or substantively enacted at the recognition. The Group’s loans and receivables (o) Cash and cash equivalents reporting date. are non-derivative financial assets with fixed or determinable payments that are not quoted in an Cash and cash equivalents comprise cash balances Deferred tax assets and deferred tax liabilities are active market. They are included in current assets, and call deposits. Bank overdrafts that are repayable offset only if a legally enforceable right exists to set except for those with maturities greater than 12 on demand and form an integral part of the Group’s off current tax assets against current tax liabilities months after the reporting date. These are classified cash management are included as a component of and the deferred tax assets and liabilities relate to the as non-current assets. cash and cash equivalents for the purpose of the same taxable entity and the same taxation authority. statements of cash flows. The carrying value of The Group’s loans and receivables comprise trade cash and cash equivalents approximates the fair (m) Other taxes receivables, related party receivables, cash and value of the asset. cash equivalents and accrued revenue in the Revenues, expenses and assets are recognised net of Balance Sheets. Loans and receivables are carried at (p) Trade and other receivables sales tax (and other similar taxes), except; amortised cost using the effective interest method. Trade and other receivables are recognised - when the sales tax incurred on a purchase of The Group assesses at each reporting date initially at fair value and subsequently measured at goods and services is not recoverable from the whether there is objective evidence that a amortised cost, less provision for impairment. taxation authority, in which case the sales tax financial asset or a group of financial assets is is recognised as part of the cost of acquisition impaired. Evidence of impairment may include Collectability of trade receivables is reviewed on of the asset or as part of the expense item as indications that the debtors or a group of debtors an on-going basis. A provision for impairment is applicable; and is experiencing significant financial difficulty, established when there is objective evidence that - for receivables and payables, which are default or delinquency in payments, the probability the Group will not be able to collect all amounts due stated with the amount of sales tax included. that they will enter bankruptcy or other financial according to the original terms of the receivables. reorganisation, and where observable data indicate The amount of the provision is the difference
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 57 between the asset’s carrying amount and the present expenditures expected to be required to settle the (u) Share capital value of estimated future cash flows, discounted obligation using a pre-tax rate that reflects current at the assets original effective interest rate. The market assessments of the time value of money and Ordinary shares are classified as equity. Incremental carrying amount is a reasonable approximation the risks specific to the obligation. costs directly attributable to the issue of new of fair value. When a receivable is uncollectible it shares are shown in equity as a deduction, net of is written off against the provision. The amount (s) Bank overdraft tax, from the proceeds. Where any Group company of the provision is recognised in the Statement of purchases the Company’s share capital (treasury Comprehensive Income. Subsequent recoveries of Bank overdrafts are interest-bearing liabilities shares), the consideration paid is deducted from amounts previously written off are credited against and are designated as non-derivative financial equity attributable to the Company’s equity holders the Statement of Comprehensive Income. instruments. They are recognised initially at fair until the shares are cancelled or transferred outside value plus any directly attributable transaction the Group. Trade and other receivables are included in current costs, which for the purposes of these financial assets, except for those with maturities greater statements represents initial cost. Subsequent to than 12 months after the reporting date, which are initial recognition, interest-bearing liabilities are classified as non-current assets. measured at amortised cost using the effective interest rate method. They are classified as current (q) Trade and other payables liabilities unless the Group has an unconditional right to defer settlement of the liability for at least Trade and other payables are recognised initially at one year after the balance date. fair value net of transaction costs and subsequently measured at amortised cost using the effective Borrowing costs are expensed as incurred. interest method. They represent liabilities for goods and services provided to the Group prior to the end (t) Leased assets of the reporting period that remain unpaid. The amounts are unsecured, non-interest bearing and Operating leases are classified in current liabilities if payment is due Leases in which a significant portion of risk and within one year or less. rewards of ownership are retained by the lessor are classified as operating leases. Payments made under (r) Provisions operating leases are recognised as an expense in the Statements of Comprehensive Income on a straight- The Group recognises provisions when it has a line basis over the lease term. Any lease incentives present, legal or constructive obligation as a result are recognised as a liability. The aggregate benefit of past events, it is probable that an outflow of of incentives is recognised as a reduction of rental resources will be required to settle the obligation, expense on a straight-line basis, except where and the amount has been reliably estimated. another systematic basis is more representative of the time pattern in which economic benefits from Provisions are measured at the present value of the the leased asset are consumed.
58 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 3 CRITICAL JUDGEMENTS IN APPLYING be estimated by the persons managing the project. tax legislation. These judgements and assumptions THE ACCOUNTING POLICIES This process uses estimations of time required are subject to risk and uncertainty, hence there to complete the project and is based on detailed is a possibility that changes in circumstances will information on hours worked to date, prior experience alter expectations, which may impact the amount The preparation of the financial statements requires and project scheduling tools. The Group employs of deferred tax assets and deferred tax liabilities management to make judgements, estimates and experienced project managers who are required recognised on the balance sheets and the amount of assumptions that affect the reported amounts in to provide regular information to management on other tax losses and temporary differences not yet the financial statements. Management continually the progress of projects. All estimates are reviewed recognised. In such circumstances, some or all of the evaluates its judgements and estimates in relation by senior management as part of project review carrying amounts of recognised deferred tax assets to assets, liabilities, contingent liabilities, revenue meetings held monthly. and liabilities may require adjustment, resulting in a and expenses. corresponding credit or charge to the Statements of Taxation and deferred tax Comprehensive Income. Management bases its judgements and estimates The Group’s accounting policy for taxation requires on historical experience and on other various management’s judgement as to the types of The Group is subject to income taxes in numerous factors it believes to be reasonable under the arrangements considered to be a tax on income jurisdictions. Judgement is required in determining the circumstances, the result of which form the basis in contrast to an operating cost. Judgement is also worldwide provision for income taxes. In the ordinary of the carrying values of assets and liabilities that required in assessing whether deferred tax assets and course of business there are some transactions for are not readily apparent from other sources. Actual certain deferred tax liabilities are recognised on the which the ultimate tax determination is uncertain. results may differ from these estimates under balance sheets. Deferred tax assets, including those The Group recognises liabilities for anticipated tax different assumptions and conditions. arising from carried forward tax losses, capital losses audit issues based on estimates of whether additional and temporary differences, are recognised only where taxes will be due. Where the final tax outcome of Management has identified the following critical it is considered more likely than not that they will be these matters is different from the amounts that were balances and transactions for which significant recovered, which is dependent on the generation of initially recorded, such differences will impact the judgements, estimates and assumptions are made. sufficient future taxable profits. Deferred tax liabilities income tax and deferred tax provisions in the period Actual results may dif fer from these estimates under arising from temporary differences in investments, in which such determinations are finalised. different assumptions and conditions and may caused principally by retained earnings held in foreign materially affect financial results or the financial tax jurisdictions, are recognised unless repatriation position reported in future periods. of retained earnings can be controlled and are not expected to occur in the foreseeable future. Further details of the nature of these assumptions and conditions may be found in the relevant notes Assumptions about the generation of future taxable to the financial statements. profits and repatriation of retained earnings depend on management’s estimates of future cash flows. Revenue recognition These depend on estimates of future sales volumes, As part of deriving operating revenue, revenue operating costs, capital expenditure, dividends and in advance and accrued revenue on projects, the other capital management transactions. Judgements percentage completion of services contracts must are also required about the application of income
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 59 4 SEGMENT INFORMATION comprising the ‘NZ’ and ‘Corp/Dev’ segments. No single customer accounted for more than 10% of the Group’s third party operating revenue.
The Group has nine reportable segments, eight Inter-segment revenue transactions are conducted of which are the regions of the Group’s business consistent with those negotiated at arm’s length operations in the sale, support and implementation between unrelated parties. of software, in the Healthcare IT market and one is for Corporate and Development. For each reportable Total segment operating profit reported below segment the ‘ELT’ (Executive Leadership Team, our equates to the Group’s operating profit. Consequently Chief Operating Decision Maker) reviews internal the reconciliation of the segment result to the management reports on at least a monthly basis. Group’s profit before income tax is shown in the Statement of Comprehensive Income. Information regarding the results of each reportable segment, which reconciles to the financial Abbreviations used below are defined as follows: statements and notes to the financial statements, is included below. Performance is measured based - US: United States of America region on segment operating profit, as included in the - CA: Canada region internal management reports that are reviewed - NZ: New Zealand region by the ELT. Segment operating profit is used to - AU: Australia region measure performance as management believes that - Nth Asia: North Asia (Japan, China and such information is the most relevant in evaluating other close territories) region reportable segment results relative to other entities - SE Asia: South-East Asia that also operate within these reportable segments. (Singapore, Thailand and other close The assets and liabilities of the Group are reported to territories) region and reviewed by the ELT in total and are not allocated - UK/I: United Kingdom and Ireland region by operating segment. Therefore, operating segment - EMEA: Europe, Middle East and assets and liabilities are not disclosed. Africa region - Corp/Dev: Corporate Head Office, Product During the year, a segmental division took place Development and related entities from a reporting and decision making perspective. This increased the reportable segments from six to The total of non-current assets other than financial nine. The comparatives have been restated to align instruments and deferred tax assets located in New with the new reporting structure. Zealand is $6,432,000 (2013: $5,794,000), located in the USA is $4,105,000 (2013: $1,826,000) and Segment revenue is based on customer location, the total located in other countries is $2,263,000 with revenue from the Group’s country of domicile (2013: $1,546,000).
60 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS REGIONAL SEGMENTATION BY CATEGORY OF PRODUCT/SERVICE 31 MARCH 2014
US CA NZ AU Nth Asia SE Asia UK/I EMEA Corp/Dev Total REVENUE: THIRD PARTY 2014 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000
License revenue 27,554 2,681 4,803 3,154 675 44 6,110 1,527 3 46,551 Professional implementation services 33,237 5,889 6,927 5,572 - 1,561 5,630 2,062 - 60,878 Client support services 11,202 4,007 2,269 4,375 262 1,989 2,254 1,703 - 28,061 Global managed services 15,347 - 120 190 - - 745 - - 16,402 Other revenue 641 45 39 10 15 5 44 15 286 1,100 OPERATING REVENUE 87,981 12,622 14,158 13,301 952 3,599 14,783 5,307 289 152,992
REVENUE: INTER-SEGMENT US CA NZ AU Nth Asia SE Asia UK/I EMEA Corp/Dev Total NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000
License and support contract fee (9,628) (3,679) (5,291) 636 191 675 (2,316) 884 18,528 - Development service fee 833 - - 2,032 - 7,799 - - (10,664) - Management service fee (8,789) (1,294) (1,465) (1,518) (10) (982) (1,615) (368) 16,041 - TOTAL SEGMENT 70,397 7,649 7,402 14,451 1,133 11,091 10,852 5,823 24,194 152,992 OPERATING REVENUE SEGMENT OPERATING PROFIT 3,662 351 744 606 (32) 1,124 1,331 (817) (9,063) (2,094)
SIGNIFICANT NON-CASH US CA NZ AU Nth Asia SE Asia UK/I EMEA Corp/Dev Total ITEMS RECOGNISED IN NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 SEGMENT PROFIT Depreciation and amortisation (1,339) (121) (79) (253) (2) (328) (132) (23) (1,433) (3,710) Share of profit of investments accounted ------145 145 for using the equity method
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 61 REGIONAL SEGMENTATION BY CATEGORY OF PRODUCT/SERVICE 31 MARCH 2013
REVENUE: THIRD PARTY 2013 US CA NZ AU Nth Asia SE Asia UK/I EMEA Corp/Dev Total NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 License revenue 25,047 1,990 2,951 1,933 818 24 7,242 1,956 - 41,961 Professional implementation services 13,060 6,105 3,975 8,325 - 1,242 4,536 542 - 37,785 Client support services 8,592 3,355 2,095 3,789 157 729 2,187 822 - 21,726 Global managed services 6,488 - 216 116 - - 276 - - 7,096 Other revenue 691 19 13 14 147 1 88 7 232 1,212 OPERATING REVENUE 53,878 11,469 9,250 14,177 1,122 1,996 14,329 3,327 232 109,780
US CA NZ AU Nth Asia SE Asia UK/I EMEA Corp/Dev Total REVENUE: INTER-SEGMENT NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000
License and support contract fee (9,891) (2,364) (2,928) (1,410) 168 1,879 (4,476) 1,126 17,896 - Development service fee - - - 1,472 - 6,910 - - (8,382) - Management service fee (6,792) (1,446) (1,314) (1,972) (77) (941) (2,071) (155) 14,768 -
TOTAL SEGMENT OPERATING REVENUE 37,195 7,659 5,008 12,267 1,213 9,844 7,782 4,298 24,514 109,780
SEGMENT OPERATING PROFIT 2,022 699 861 757 - 737 45 492 1,670 7,283
SIGNIFICANT NON-CASH ITEMS RECOGNISED IN US CA NZ AU Nth Asia SE Asia UK/I EMEA Corp/Dev Total SEGMENT PROFIT NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 Depreciation and amortisation (491) (58) (52) (184) (3) (259) (99) (18) (1,279) (2,443) Share of profit of investments accounted ------364 364 for using the equity method
62 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS SEGMENTATION OF OPERATING REVENUE BY SOLUTION GROUP
REVENUE: THIRD PARTY Group 2014 NZ$’000 Group 2013 NZ$’000
Intelligent integration 35,071 37,949 Healthier populations 75,536 47,755 Smarter hospitals 33,356 17,803 Other revenue 9,029 6,273 OPERATING REVENUE 152,992 109,780
5 OTHER INCOME
OTHER INCOME Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Gain on sale of land and buildings 14 - 9,059 - - Gain on sale of investments accounted for using the 13 6,369 - 8,008 - equity method Government grants 3,537 3,087 - - Dividend income 13, 23 262 - 3,762 - 10,168 12,146 11,770 -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 63 6 OPERATING EXPENSES The following disclosure provides additional information in relation to expenses included within the Statement of Comprehensive Income and other items where specific disclosure is required.
EXPENSES: BY FUNCTION Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Research and development 34,268 26,739 - - Sales and marketing 36,292 27,103 - 16 Support services 4,526 5,569 - - Consulting services 42,393 26,125 - - Managed services 12,186 4,629 - - General and administration 35,589 24,478 345 289 165,254 114,643 345 305
OTHER REQUIRED DISCLOSURES:
EMPLOYEE BENEFITS
Wages and salaries 97,951 72,567 - - Other employee costs 6,610 9,590 - - Share based payments 21 309 - - - Contributions to defined contribution 4,289 3,016 - - pension schemes 109,159 85,173 - -
OTHER
Donations paid 3 - - - Directors’ fees 270 196 270 196 Net foreign exchange losses 1,518 85 1 - Bad debts written off 10 265 173 - - Provision for trade receivable impairment 10 (47) 55 - - Operating lease payments 7,428 5,345 -
AUDITORS’ REMUNERATION
Audit fees 167 125 - - Taxation services - 229 - - Treasury advisory services 12 - - - IT security consulting services 5 - - - Payroll services - 12 - -
Auditors’ remuneration was payable to PricewaterhouseCoopers in the current year and BDO Auckland in the prior year.
64 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 7 FINANCE INCOME AND FINANCE COSTS
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Interest income – loans and receivables 255 263 - - Interest income – cash and cash equivalents 61 16 - - Interest income – other 17 6 20 - 333 285 20 - Interest expense – cash and cash equivalents (117) (523) - - NET FINANCE INCOME/(COSTS) 216 (238) 20 -
Interest income on loans and receivables results from the unwinding of the discounting of certain trade receivables and accrued revenue balances.
8 INCOME TAX
(A) INCOME TAX (CREDIT)/EXPENSE
Current tax 5,701 1,563 - 19 Deferred tax (6,297) (1,904) (11) (17) (596) (341) (11) 2
The tax on the Group’s and Parent’s result before tax differs from the amount that would arise using the statutory tax rate applicable to the results of the Parent as follows:
(LOSS)/PROFIT BEFORE INCOME TAX
Tax calculated at the Parent’s income tax rate of 28% (485) 2,075 3,205 1 Foreign tax rate differences 129 (254) - - Expenses not deductible 125 143 8 - Non-taxable income (1,738) (2,439) (2,244) - Intercompany dividend received - - (980) - Other adjustments 251 26 - - Prior period adjustments 1,132 113 - 1 Tax losses for which no deferred income tax asset was recognised (10) (5) - - Income tax (credit)/expense (596) (341) (11) 2
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 65 (B) RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
DEFERRED TAX ASSETS AND LIABILITIES Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Deferred tax assets to be recovered after more than 12 months 4,334 2,034 - - Deferred tax assets to be recovered within 12 months 5,636 1,784 28 17 Expenses not deductible NET DEFERRED TAX ASSETS 9,970 3,818 28 17
The gross movement on the deferred income tax accounts is as follows:
Opening balance 3,818 1,944 17 - Credited to income 6,297 1,904 11 17 Foreign exchange differences (145) (30) - - CLOSING BALANCE 9,970 3,818 28 17
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same jurisdiction, is as follows:
Property, plant & Doubtful debts Employee benefits Other Future income tax benefit Total GROUP equipment NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000
At 1 April 2012 6 201 1,112 447 178 1,944 (Charged)/credited to income statement (10) 224 57 (271) 1,904 1,904 Foreign exchange differences 4 - (13) (8) (13) (30) At 31 March 2013 - 425 1,156 168 2,069 3,818 (Charged)/credited to income statement (21) (226) 1,564 1,227 3,753 6,297 Foreign exchange differences - - (38) (14) (93) (145) At 31 March 2014 (21) 199 2,682 1,381 5,729 9,970
PARENT
At 1 April 2012 ------Credited to income statement - - - 17 - 17 At 31 March 2013 - - - 17 - 17 Credited to income statement - - - 11 - 11 At 31 March 2014 - - - 28 - 28
The utilisation of the future income tax benefit is dependent on the generation of future taxable profits in the Group’s New Zealand entities. The Group has strategic plans in place which support the generation of these future taxable profits.
66 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS (C) UNRECOGNISED TEMPORARY DIFFERENCES
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets of EUR 278,000 (2013: EUR 285,000) in respect of losses amounting to EUR 1,112,000 (2013: EUR 1,137,000) based on judgement that there is too much uncertainty over future performance to determine that it is probable that future taxable profit will be available against which the unused tax losses can be utilised. These losses have no expiry date.
(D) IMPUTATION CREDIT ACCOUNT
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Imputation credits available for use in subsequent reporting periods 4,164 4,220 - -
9 CASH AND CASH EQUIVALENTS
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash at bank and on hand 12,655 9,278 - -
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash at bank and on hand 12,655 9,278 - - Bank overdraft (13,583) (2) - - CASH AND CASH EQUIVALENTS (928) 9,276 - -
The carrying amounts of the Group’s cash and overdraft facilities approximate their fair value, all of which are on demand.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 67 10 TRADE AND OTHER RECEIVABLES
Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Trade receivables 50,692 43,215 - - Less allowance for impairment (710) (1,517) - - Net trade receivables 49,982 41,698 - - Sundry receivables 574 72 - - Prepayments 2,125 3,587 - - Government Grants receivable 100 240 - - Intra-group receivables 23 - - 26,714 12,984 52,781 45,597 26,714 12,984
Trade receivables are non-interest bearing and are generally on 30-60 day terms. For these receivables, due to the short term nature, 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 2014, trade receivables of the Group: $29,093,000 (2013: $25,146,000) were fully performing. None of the financial assets that are fully performing have been re-negotiated.
As of 31 March 2014, trade receivables of Group: $20,889,000 (2013: $16,350,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of trade receivables past due but not impaired is as follows:
RECEIVABLES PAST DUE BUT NOT IMPAIRED Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
1-60 days 16,420 12,221 - - 61-90 days 667 789 - - 91-180 days 2,650 2,344 - - Over 180 days 1,152 996 - - 20,889 16,350 - -
68 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS As of 31 March 2014, trade receivables of the Group: $710,000 (2013: $1,719,000) were impaired and provided for. The amount of the provision was Group: $710,000 (2013: $1,517,000). The impaired receivables mainly relate to customers who are in financial difficulty or dispute. In the prior period, it was assessed that a portion of the receivables were expected to be recovered.
The aging analysis of receivables past due and impaired is as follows:
RECEIVABLES PAST DUE AND IMPAIRED Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Current 20 762 - - 1-60 days 89 - - - 61-90 days 18 11 - - 91-180 days 190 133 - - Over 180 days 393 813 - - 710 1,719 - -
Movements on the Group impairment allowance of trade receivables are as follows:
GROUP IMPAIRMENT MOVEMENTS Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Opening balance 1,517 716 - - Receivable written off during the year (1,027) (15) - - Increase/(reduction) in provision 218 818 - - Foreign exchange movement 2 (2) - - 710 1,517 - -
Receivables written off during the year include amounts due from Healthlink Limited – refer to note 23. Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 28.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 69 11 ACCRUED REVENUE
ACCRUED REVENUE Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Licenses 10,190 3,474 - - Professional implementation services 9,307 5,234 - - Client support services 121 - - - Global managed services 126 - - - Other 1,203 80 - - 20,947 8,788 - -
Analysis of total accrued revenue: Current 16,921 8,788 - - Non-current 4,026 - - - TOTAL 20,947 8,788 - -
Where accrued revenue balances are short term in nature, their carrying value is assumed to approximate their fair value. In situations where the term is longer, a fair value assessment is made with reference to an implied interest rate based on an equivalent credit risk and term.
70 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 12 INVESTMENT IN SUBSIDIARIES AT COST Interest held Interest held by Group (%) by Parent (%)
Name of entity Nature of business Country of incorporation 2014 2013 2014 2013
Orion Systems International Limited Management services New Zealand 100 100 100 100 Orchestral Developments Limited Software development New Zealand 100 100 100 100 Orchestral Developments International Limited Holding company New Zealand 100 100 - - Orion Health Asia Pacific Limited Software development New Zealand 100 100 - - Orion Health Asia Holdings Limited Holding company New Zealand 100 100 - - Orion Health Corporate Trustee Limited Holding company New Zealand 100 100 100 100 Orion Health Hosting Limited Dormant New Zealand 100 100 100 100 Orion Health Services Limited Dormant New Zealand 100 100 - - Orion Health Limited Sales and support New Zealand 100 100 - - Orion Health Properties Limited Property owner New Zealand 100 100 100 100 Orion Health Pty. Limited Software development, sales and support Australia 100 100 - - Orion Health Limited Sales and support Canada 100 100 - - Orion Health SAS Sales and support France 100 100 - - Orion Health K.K. Sales and support Japan 100 100 - - Orion Health Pte. Limited Sales and support Singapore 100 100 - - Orion Health S.L.U. Sales and support Spain 100 100 - - Orion Health Limited Software development, sales and support Thailand 100 100 - - Orion Sağlık ve Bilgi Sistemleri Limited Şirketi Sales and support Turkey 100 - - - Orion Health Systems FZ-LLC Sales and support United Arab Emirates 100 100 - - Orion Health Limited Sales and support United Kingdom 100 100 - - Orion Health Inc. Software development, sales and support USA 100 100 - - Orion Health China Limited Sales and support New Zealand 100 100 - - Orion Health Software Technology Consulting (Shenzhen) Sales and support China 100 - - - Co., Limited
The financial year end of all subsidiaries is 31 March. During the period new subsidiaries were established and incorporated by a subsidiary of the Parent Company. None of them were acquired in relation to business combination transactions.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 71 13 INVESTMENT IN ASSOCIATE
MOVEMENTS IN THE CARRYING VALUE OF EQUITY Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000) ACCOUNTED INVESTEE Carrying value as at 1 April 1,494 1,130 - - Share of current year profit 145 364 - - Dividends received (262) - - - Disposals (1,377) - - - CARRYING VALUE AS AT 31 MARCH - 1,494 - -
Orion Corporation Limited had a 52.4% shareholding in HealthLink International Limited (2013: 52.4%). Orion Corporation Limited did not have the power to appoint any further directors as 75% shareholder approval would have been required under article 15.2 of the HealthLink Constitution. Orion Corporation Limited held one of two current Director positions and therefore “control” did not exist.
The Parent’s carrying amount on this investment in associate was less than $1,000.
HealthLink International Limited declared a dividend on 2 October 2013 and Orion Corporation Limited’s share was $262,000. This is recognised in Other Income in the Statements of Comprehensive Income.
The Group sold its share in HealthLink International Limited on 29 November 2013 for $8,008,000 and recorded a gain on sale of $6,369,000 (Parent: $8,008,000) as a result of this transaction.
The share of profit of investments accounted for using the equity method in the period to 29 November 2013 amounted to $145,000 and is included within the Statements of Comprehensive Income.
72 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 14 PROPERTY, PLANT AND EQUIPMENT
GROUP Land & Buildings Leaehold improvements Furniture & fittings Office & Cafe Computer equipment Assets under Total NZ$’000 NZ$’000 NZ$’000 equipment NZ$’000 NZ$’000 construction NZ$’000 NZ$’000
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 Disposals (21,037) - (289) (35) (3) - (21,364) Gain/(loss) on sale 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
AS 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
YEAR ENDED 31 MARCH 2014
Opening net book amount 1,512 927 1,580 371 2,360 - 6,750 Additions - 2,364 1,364 246 4,276 - 8,250 Disposals - (105) (382) (36) (85) - (608) Depreciation charge - (497) (372) (149) (2,055) - (3,073) Depreciation on disposals - 41 356 17 49 - 463 FX movement - (32) (20) (3) (27) - (82) CLOSING NET BOOK AMOUNT 1,512 2,698 2,526 446 4,518 - 11,700
AS AT 31 MARCH 2014
Cost 1,512 4,361 3,532 1,071 10,411 - 20,887 Accumulated depreciation - (1,663) (1,006) (625) (5,893) - (9,187) NET BOOK AMOUNT 1,512 2,698 2,526 446 4,518 - 11,700
No property, plant or equipment was held by the Parent (2013: nil).
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 73 15 INTANGIBLE ASSETS
GROUP Computer Software NZ$’000 Total NZ$’000
Cost 1,554 1,554 Accumulated amortisation (816) (816) NET BOOK AMOUNT 738 738
YEAR ENDED 31 MARCH 2013
Opening net book amount 738 738 Additions 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 amortisation (1,257) (1,257) NET BOOK AMOUNT 922 922
YEAR ENDED 31 MARCH 2014
Opening net book amount 922 922 Additions 840 840 Disposals (4) (4) Amortisation charge (637) (637) FX movement (21) (21) CLOSING NET BOOK AMOUNT 1,100 1,100
AT 31 MARCH 2014
Cost 2,947 2,947 Accumulated amortisation (1,847) (1,847) NET BOOK AMOUNT 1,100 1,100
All intangibles assets are acquired and have finite lives. No intangible assets were held by the Parent (2013: nil).
74 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 16 TRADE AND OTHER PAYABLES
TRADE AND OTHER PAYABLES Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Trade payables 4,161 4,449 - - Accrued expenses 2,791 3,142 - - Deferred lease incentive 1,244 - - - Other payables 3,706 2,439 - 30 Intra-group payables - - 400 341 11,902 10,030 400 371
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 carrying amount of trade and other payables approximates their fair value due to their short term nature.
The Group’s and Company’s exposures to currency and liquidity risk related to non-monetary assets, including trade and other payables, is disclosed in note 28.
17 EMPLOYEE BENEFITS
EMPLOYEE BENEFITS Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Wages and salaries 499 - - - Annual leave 5,214 3,616 - - Commissions payable 2,067 1,174 - - Bonuses 2,636 26 - - Long service leave 576 477 - - 10,992 5,293 - -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 75 18 PROVISIONS FOR OTHER LIABILITIES
GROUP Lease make-good (NZ$’000) Loss-making contracts (NZ$’000) Total (NZ$’000)
At 1 April 2012 - - - Amount provided - - - Amount utilised - - - At 31 March 2013 - - -
At 1 April 2013 - - - Amount provided 579 1,241 1,820 Amount utilised - - - At 31 March 2014 579 1,241 1,820
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Current 1,241 - - - Non-current 579 - - - TOTAL PROVISIONS 1,820 - - -
76 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 19 REVENUE IN ADVANCE
REVENUE IN ADVANCE Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Licenses 5,225 2,932 - - Professional implementation services 12,411 7,953 - - Client support services 16,486 16,318 - - Global managed services 6,432 2,680 - - 40,554 29,883 - -
20 SHARE CAPITAL
SHARE CAPITAL Group 2014 (No. shares) Group 2013 (No. shares)
Balance at 1 April 134,450,360 13,181,408 Issue of ordinary shares - 263,628 Shares cancelled (2,073,583) - Share split - 121,005,324 Ordinary Shares on issue at 31 March 132,376,777 134,450,360 Treasury shares (1,034,637) (2,636,280) NET ORDINARY SHARES ON ISSUE AT 31 MARCH 131,342,140 131,814,080
At 31 March 2014 the total authorised number of ordinary shares, including treasury shares is 132,376,777 shares (2013: 134,450,360):
- 131,217,140 are fully paid shares (2013:131,117,140) - 125,000 partly paid ($0.09) restricted ordinary shares (2013: 696,940) - 1,034,637 fully paid restricted ordinary shares held by Orion Health Corporate Trustee Limited (2013: 2,636,280)
On 31 March 2013 each of the Fully Paid Shares, Partly Paid Shares and Incentive Shares were subdivided into 10 ordinary shares (the “share split”).
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Some of the restricted ordinary shares do not carry voting rights. All shares rank equally with regard to the Parent company’s residual assets.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 77 21 SHARE-BASED PAYMENTS
Orion Health Senior Executive Partly Paid Share Scheme Parent 2014 (No. shares) Parent 2013 (No. shares)
The Orion Health Senior Executive Partly Paid Share Unvested shares at 1 April – allocated to employees 225,000 22,500 Scheme (“Partly Paid Scheme”) was introduced for Awarded pursuant to Orion Health Senior Executive Partly Paid - - selected Senior Executives of the Group. Under the Share Scheme Partly Paid Scheme, ordinary shares in the Company Share split - 202,500 Vested and exercised (100,000) - were issued to participants at $1.80 per share UNVESTED SHARES AT 31 MARCH – ALLOCATED TO EMPLOYEES 125,000 225,000 (adjusted to reflect a 10:1 share split during FY13). The initial payment towards the issue price and three Shares not yet allocated at 1 April – held by Trustee 471,940 471,940 subsequent annual payments of 2.5% of the issue Shares cancelled (471,940) - price are then required and a final 90% balance four SHARES NOT YET ALLOCATED AT 31 MARCH – HELD BY TRUSTEE - 471,940 years after date of issue. The issue price represents the fair value of the shares at grant date.
During the year the Company received $180,000 in respect of the partly paid shares. Until the shares are fully paid they are not able to be sold, charged or transferred. If a participant ceases employment prior to the shares being fully paid that participant can make full payment of the remaining balance of the issue price or the Company may sell the shares. This scheme is no longer used by the Company; however, two current employees remain on the scheme with unvested shares as at 31 March 2014.
78 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS Orion Health Long Term Share Incentive Scheme original invitation price to repay the loan on unvested (c) Restricted Stock Purchase Agreement (RSPA) The Orion Health Long Term Share Incentive shares. Alternatively, the Board of Directors may at Scheme (“LTI Scheme”) was introduced for selected its discretion determine a new performance test The participant is advanced an interest bearing, executives and employees of the Group. Under the during a newly specified period. The shares would limited recourse loan by the Company to purchase LTI Scheme, ordinary shares in Orion Corporation then vest upon achieving the subsequent financial restricted shares that vest in six tranches subject Limited are issued to a trustee, Orion Health Corporate performance test and completing the subsequent to Operating Revenue conditions. Each tranche Trustee Limited, a wholly-owned subsidiary, and retention period. Participants are entitled to vests in full at the time the hurdle is assessed by the allocated to participants, on grant date. Under the dividends on unvested shares although they are not Board of the Company as having been achieved. To LTI Scheme, the shares are beneficially owned by the entitled to the voting rights. Upon transfer of legal the extent that the Operating Revenue conditions participants, subject to vesting conditions based on title to the participant the shares will have the same are not achieved by 31 March 2022 the associated Operating Revenue targets and retention periods. rights as and will rank equally with all other shares tranches will never vest. The loan principal and The number of shares awarded is determined by on issue. accrued interest is fully repayable by the participant the Board of Directors taking into account the on or before 31 March 2022. The participant may put recommendations of the Remuneration Committee (b) Restricted Stock Award Agreement (RSAA) unvested shares back to the Company at the lesser of of the Board. (i) the issue price plus accrued interest on the loan; The participant is allocated fully paid restricted and (ii) market value of the shares as determined by The Group has no legal or constructive obligation shares that vest in equal tranches over three annual the Board of Directors. If the participant leaves the to repurchase the shares or settle the LTI Scheme vesting periods if an Operating Revenue condition is Company, the Company has the option to call any for cash. achieved relating to the financial year in which the unvested shares at the lesser of (i) fair market value of award is made. If the participant leaves the Company, the shares on the date of repurchase, as determined There are three variants of this scheme driven by the the Company can call any unvested shares. by the Board of Directors; and (ii) the issue price requirements of local law in different countries: without any accrued interest attached on the loan. The The participant is entitled to dividends and voting participant is entitled to dividends and voting rights on (a) Share Awards Scheme (SAS) rights on any unvested shares. Upon transfer of legal any unvested shares. Upon transfer of legal title to the title to the participant the shares will have the same participant the shares will have the same rights as, and The participant is advanced an interest-free loan rights as and will rank equally with all other shares will rank equally, with all other shares on issue. by the Company to purchase the restricted shares on issue. that vest in equal tranches over three annual vesting periods if an Operating Revenue condition is achieved relating to the financial year in which the award is made. To the extent the shares vest, the participant can elect to repay the loan at which time the Company will pay the participant a cash bonus covering that portion of the loan and the shares will be transferred to the participant. If the shares do not vest the Company can call the shares (or the participant can put the shares to the Company) at the
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 79 Movements in the total number of shares held by the Trustee in relation to the LTI Scheme are as follows:
Parent 2014 (No. shares) Parent 2013 (No. shares)
Unvested shares at 1 April – allocated to employees - - Awarded pursuant to the LTI Scheme 1,034,637 - UNVESTED SHARES AT 31 MARCH – ALLOCATED TO EMPLOYEES 1,034,637 -
Shares not yet allocated at 1 April – held by Trustee 2,636,280 2,636,280 Shares issued but not yet allocated - - Shares cancelled (1,601,643) - Awarded pursuant to the LTI scheme (1,034,637) - SHARES NOT YET ALLOCATED AT 31 MARCH – HELD BY TRUSTEE - 2,636,280
The shares awarded during the year under the LTI Scheme were issued by the Parent to the Trustee at $2.00 per share, a total of $2,069,000 (2013: nil). Movements in the number of share awards outstanding are as follows: SAS (No. shares) RSAA (No. shares) RSPA (No. shares) Total (No. shares)
Unvested shares at 31 March 13 – allocated to employees - - - Awarded pursuant to the LTI Scheme 272,500 12,137 750,000 1,034,637 Forfeited - - - - Vested - - - - Cancelled - - - - Unvested shares at 31 March 14 – allocated to employees 272,500 12,137 750,000 1,034,637
The unvested RSPA share awards at 31 March 2014 trading data of the Parent’s shares, trading The volatility measure is the standard deviation of have an exercise price of $2.10 and a weighted average multiples of comparable listed companies and continuously compounded returns of comparable remaining contractual life of 8 years. The expected equity issuance multiples. listed companies. Expected volatility is based on life of the RSPA share awards may differ to the the implied volatilities on statistical analysis on daily contractual end of the award life because of the timing The weighted average fair value of the share awards share prices over the last four years using comparable of achievement of Operating Revenue targets. granted during the year under the RSPA, determined traded companies. using the Binomial Option Pricing model, was $0.97. Fair value of awards granted No share awards were exercised during the year (2013: The weighted average fair value of the share awards The significant inputs into the model under the RSPA nil). No shares vested during the year (2013: nil). granted during the year under the SAS and RSAA, variant were the fair value of the share price at grant were $2.14 and $2.20, respectively. date of $2.25, the exercise price of $2.10, the expected Refer to note 6 for the expense recognised in the annualized volatility of between 40% and 43%, a Statements of Comprehensive Income for share The fair values of shares granted were determined dividend yield of 0%, an expected life of the share awards granted. using a combination of the preceding six month awards of between 2.0 and 8.0 years and an annualized VWAP (variable weighted average price) historical risk free interest rate of between 3.5% and 4.6%.
80 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 22 EARNINGS PER SHARE Group 2014 (No. shares) Group 2013 (No. shares)
(Loss)/Profit for the year attributable to equity holders of parent (NZ$’000) (1,137) 7,750 Number of issued ordinary shares (refer note 20) 131,342,140 131,814,080 Weighted average number of issued ordinary shares 131,786,927 131,814,080 Basic and diluted (loss)/earnings per share (cents) (0.9) 5.9
23 RELATED PARTIES
(a) Subsidiaries
All related party transactions were completed at arm’s length on normal trade terms. Balances are on demand and attract no interest. There have been no impairments or write-offs of related party balances during the year (2013: nil). Balances outstanding as at reporting date are shown below:
INTRA-GROUP RECEIVABLES/(PAYABLES) Note Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Orchestral Developments Limited (335) (335) Orion Systems International Limited 23,263 11,602 Orion Health Corporate Trustee Limited 2,071 - Orion Health Limited (NZ) 1,327 1,332 Other Group entities – receivables 53 50 Other Group entities – payables (65) (6) 26,314 12,643
Transactions between the Parent and subsidiaries during the year are as follows:
Dividends received 5 3,500 - Administration recoveries - 310 Share-based payments 6 309 - Shares issued 21 2,069 -
(b) Key management compensation Key management includes Directors (executive and non-executive) and members of the Executive Leadership Team. The compensation paid or payable to key management personnel for employee services is as follows:
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Short-term employee benefits 1,894 2,300 - - Share-based payments 230 - - Directors’ fees 270 196 270 196 2,394 2,496 270 196
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 81 (c) Transactions with related parties
McCrae Limited The Group is controlled by McCrae Limited, which owned 62% of the shares in the Parent as at 31 March 2014 (2013: 61%). The remaining shares are widely held. McCrae Limited is the Group’s ultimate parent. The Group’s ultimate controlling party is Mr Ian Richard McCrae. There have been no transactions with this company during the year (2013: nil).
Healthlink International Limited Healthlink Limited (a subsidiary of Healthlink International Limited, an equity accounted associate, refer also to note 13) provides e-referral services to Group entities as well as purchasing licenses from Group entities. These transactions were at arm’s length on normal trade terms as part of a wider transaction involving the sale of Orion Health’s shares in Healthlink International Limited.
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 on normal trade terms.
Pioneer Capital Partners Neil Cullimore, Director, is an Operating Partner at Pioneer Capital which provided professional services to the Group. These transactions were at arm’s length on normal trade terms.
New Zealand Trade and Enterprise Andrew Ferrier, Director, is Chairman of New Zealand Trade and Enterprise. During the prior year, the Group won the Supreme Award at the 2012 NZTE NZ International Business Awards. The prize entitled the Group to claim $100,000 in cost reimbursement from NZTE. In addition to this, the Group has been receiving cost reimbursements from NZTE for cost incurred in expanding into Japan and China.
(d) Trading transactions
During the period, Group entities entered into the following transactions with related parties:
Sale of software, services and Government grants Purchase of goods or services
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Healthlink Limited 126 863 2 59 Revera Limited - - 11 61 New Zealand Trade and Enterprise (4) 573 1 - Pioneer Capital Partners - - 2 93
A provision of $45,000 (2013: $788,000) was recognised in the year and deducted from related revenue in respect of provision made against amounts owed from Healthlink Limited. The balances were cleared at the date of disposal.
82 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 24 CONTINGENT LIABILITIES
The Group had outstanding letters of credit of $577,470 The Group has lease bonds in favour of: (2013: $2,120,000). • Kintella Pty Ltd for AUD 18,775 (NZD 20,028) The Group has a standby letter of credit in place with • Perpetual Trustee Company Ltd for AUD 58,400 (NZD 62,297) ASB Bank Limited for GBP 150,000 effective 28 July • Concessionaire des Immeubles for EUR 32,550 (NZD 51,591) 2009. This was put in place to cover the issue of Visa • Bumrungrad Hospital Public Company Limited for THB 1,737,780 (NZD 61,504) corporate credit cards by HSBC Bank Plc. to Orion • HSBC Institutional Trust for SGD 38,428 (NZD 35,166) Health employees based in the United Kingdom used • Maria Enterprises Pty Ltd, Gaddka Pty Ltd and JPK Pty Ltd for AUD 55,550 (NZD 59,257) for purposes of normal business and travel expenses. • Broadway 10-Ten PO Fee LLC for USD 200,336 (NZD 230,903)
25 EVENTS AFTER REPORTING DATE
On 9 May 2014, the Combined Trade Facility that the were issued at NZ$4.00 per share, for total Group holds with ASB Bank (refer note 28(v)) was consideration of NZ$5,503,520. The shareholders, at extended from $15,000,000 to $25,000,000. a special meeting dated 6 June 2014, voted in favour of an ordinary resolution to authorise the Board of the The Board of the Company resolved to issue, subject Company to issue such shares. The shares were issued to shareholders’ approval by ordinary resolution, on or about 10 June 2014. 5,000,000 ordinary shares in the Company at NZ$4.00 per share, for total consideration of NZ$20,000,000. The shareholders, at a special meeting dated 6 May 2014, voted in favour of an ordinary resolution to authorise the Board of the Company to issue such shares. The shares were issued on or about 6 June 2014.
In addition to the above, the Board of the Company resolved to take oversubscriptions to the share issue. Subject to shareholders’ approval by ordinary resolution, 1,375,880 ordinary shares in the Company
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 83 26 COMMITMENTS
(i) Leasing commitments
Operating lease commitments – Group as lessee The Group has entered into commercial leases on certain premises and office equipment. The original lease terms are between 1 and 15 years. There are no restrictions of entry placed upon the lessee. Future minimum rentals payable under non-cancellable operating leases as at 31 March are as follows:
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
No later than 1 year 6,046 4,466 - - Later than 1 year and no later than 5 years 20,127 12,201 - - Later than 5 years 18,532 19,238 - - 44,705 35,905 - -
(ii) Capital commitments - The Group has no capital commitments as at 31 March 2014 (2013: nil).
27 RECONCILIATION OF NET (LOSS)/PROFIT FOR THE YEAR WITH NET CASH FLOWS FROM OPERATING ACTIVITIES
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
NET (LOSS)/PROFIT AFTER INCOME TAX (1,137) 7,750 11,456 3 Adjusted for: Non-cash items Depreciation and amortisation 3,710 2,443 - - Loss/(profit) on disposal of property, plant and equipment 99 (8,960) - - Impairment allowance – trade receivables 218 230 - - Deferred tax (6,297) 32 (11) - Net loss on foreign exchange 1,518 66 (1) (1) Share of profit of equity accounted investment (145) (364) - - Share based payments 309 - - - Gain on sale of investments accounted for using the equity method (6,369) - (8,008) - Dividend income (262) - (3,762) - Impact of changes in working capital items Increase/(decrease) in trade and other payables 2,645 2,808 - - Increase/(decrease) in employee entitlements payable 4,727 (313) - - Increase/(decrease) in revenue in advance 14,567 (2,271) - - Increase/(decrease) in provisions for other liabilities 1,244 - - - (Increase)/decrease in trade and other receivables (11,283) 610 - - (Increase)/decrease in accrued revenue (13,507) - - - (Increase)/decrease in taxation payable 1,189 (2,304) - (294) (Increase)/decrease in intercompany payable - - 326 292 NET CASH FLOW FROM OPERATING ACTIVITIES (8,774) (273) - -
84 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 28 FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risks from its If deemed necessary by management the Group financial risks rests with senior management under the use of financial instruments: and Parent may enter into derivative transactions, authority of the Board. The Board reviews and agrees principally interest rate swaps and forward currency policies for managing each of the risks identified - Credit risk contrac t s , although no such transac tions were entered below, including the setting of limits for trading in - Liquidity risk into in the current year or prior year. The purpose is derivatives, hedging cover of foreign currency and - Market risk to manage the interest rate, currency, and credit risks interest rate risk, credit allowances, and future cash arising from the Group and Parent’s operations and flow forecast projections. This note presents information about the Group’s its sources of finance. The main risks arising from the exposure to each of the above risks, the Group’s Group and Parents’ financial instruments are interest objectives, policies and processes for measuring rate risk, foreign currency risk, credit risk and liquidity and managing risks, and the Group’s management risk. The Group and Parent use different methods to of capital. measure and manage different types of risks to which they are exposed. These include monitoring levels of Financial risk management objectives and policies exposure to interest rate and foreign exchange risk The principal financial instruments of the Group and and assessments of market forecasts for interest rate Parent comprise receivables, payables, overdrafts and foreign exchange. and cash. Ageing analysis and monitoring of specific credit The Group and Parent manages their exposure to allowances are undertaken to manage credit risk. key financial risks, including interest rate, currency Liquidity risk is monitored through the development risk, and credit risk in accordance with the Group’s of future rolling cash flow forecasts. financial risk management policies. The objective of these policies is to support the delivery of the Group The Board reviews and agrees policies for managing and Parent’s financial targets whilst protecting future each of these risks as summarised on the next page. financial security. Primary responsibility for identification and control of
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 85 (i) Financial instruments by category
FINANCIAL ASSETS – LOANS AND RECEIVABLES Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash and cash equivalents 12,655 9,278 - - Trade receivables 49,982 41,698 - - Related party receivables - - 26,714 12,984 Accrued revenue 20,947 8,788 - - 83,584 59,764 26,714 12,984
FINANCIAL LIABILITIES – MEASURED AT AMORTISED COST Bank overdraft (13,583) (2) - - Trade payables and accruals (6,952) (7,591) - (30) Related party payables - - (400) (341) (20,535) (7,593) (400) (371)
(ii) Market risk
Interest rate risk The exposure to market interest rates relates primarily to the Group debt obligations. The level of debt is disclosed in note 9. At reporting date, the Group had the following mix of financial assets and liabilities exposed to New Zealand variable interest rate risk that are not designated in cash flow hedges:
FINANCIAL ASSETS Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash and cash equivalents 12,655 9,278 - - 12,655 9,278 - - Financial Liabilities Bank overdrafts (13,583) (2) - - (13,583) (2) - - NET EXPOSURE (928) 9,276 - -
At 31 March 2014, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows;
Post tax profit higher/(lower) Equity
GROUP 2014 (NZ$’000) 2013 (NZ$’000) 2014 (NZ$’000) 2013 (NZ$’000)
+1% (100 basis points) (68) (67) (68) (67) -0.5% (50 basis points) 47 33 47 33
86 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS Foreign currency risk Orion Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies arising from normal trading activities. The foreign currencies in which the Orion Group primarily transacts are Arab Emirate Dirhams, Australian Dollars, Canadian Dollars, Euros, Great British Pounds, Japanese Yen, Singapore Dollars, Thai Baht and United States Dollars. Where exposures are certain, it is the Orion Group’s policy to evaluate the risk and hedge these risks if necessary as they arise.
The following significant exchange rates applied during the year:
Average Rate Reporting date mid-spot rate NZD 2014 2013 2014 2013
AED 3.01423 2.9944 3.1876 3.0788 AUD 0.8866 0.7897 0.9374 0.8040 CAD 0.8691 0.8182 0.9599 0.8531 EUR 0.6099 0.6334 0.6309 0.6539 GBP 0.5142 0.5165 0.5215 0.5517 JPY 82.3899 67.9072 89.2096 78.9831 SGD 1.0344 1.0119 1.0928 1.0396 THB 25.9266 25.1574 28.2549 24.7330 USD 0.8204 0.8151 0.8676 0.8380
The table below summarises the material foreign exchange exposure on the net monetary assets of each Group entity against its respective functional currency, expressed in NZD:
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
AUD (951) - - - CAD 1,694 - - - EUR 1,278 533 - - GBP 2,251 731 - - USD 6,115 1,341 - -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 87 Sensitivity analysis Based on the net exposure on the previous page, the table below outlines the sensitivity of profit and equity to movements of that currency to the NZD.
Post tax profit higher/(lower) Other comprehensive income higher/(lower) GROUP 2014 (NZ$’000) 2013 (NZ$’000) 2014 (NZ$’000) 2013 (NZ$’000)
10% weakening in NZD AUD (76) - (76) - CAD 136 - 136 - EUR 102 43 102 43 GBP 180 58 180 58 USD 489 107 489 107 5% strengthening in NZD AUD 33 - 33 - CAD (58) - (58) - EUR (44) (18) (44) (18) GBP (77) (25) (77) (25) USD (210) (46) (210) (46)
(iii) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade receivables, accrued revenue and related party receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at reporting date is addressed in each applicable note.
The credit risk on cash and cash equivalents is limited because counterparties are banks with high credit ratings assigned by international credit-rating agencies.
The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country, in which customers operate, has less influence on credit risk.
Receivable balances are monitored on an on-going basis with the result that the Group’s experience of bad debts has not been significant.
CREDIT QUALITY OF FINANCIAL ASSETS S&P rating BB+ and above NZ$’000 Total (NZ$’000)
At 31 March 2014 Cash and cash equivalents 12,655 12,655 12,655 12,655 At 31 March 2013 Cash and cash equivalents 9,278 9,278 9,278 9,278 The S&P rating represents the rating of the counterparty with whom the financial asset is held rather than the rating of the financial asset itself.
88 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS (iv) Fair value
The methods for estimating fair value of the applicable financial instruments of the Group and Parent, being accrued revenue subject to extended payment terms, are outlined in note 11 to the financial statements.
(v) Liquidity risk
Liquidity risk arises from the financial liabilities of the The facility is sufficiently flexible that amounts can Group and the Group’s subsequent ability to meet be drawn down and repaid within overall limits their obligations to repay their financial liabilities as without need for prior approval from the bank. and when they fall due. The facility is subject to a number of external bank The Group’s objective is to maintain a balance covenants. These covenants are calculated and between continuity of funding and flexibility through reported either quarterly or annually. As part of the use of available credit lines. the amendment to the facility, including the facility limit, in April 2014 it was agreed not to test the The Group manages its liquidity risk by monitoring interest cover ratio as at 31 March 2014. The Group the total cash inflows and outflows expected on a has complied with all tested covenants during the monthly basis. current and prior years. Refer to note 25 for detail regarding the extension to the facility subsequent to The Group maintains the following lines of credit: year end.
Current and prior year Cash balances of $12,655,000 (2013: $9,278,000) - NZD15.0 million interchangeable facilities and bank overdrafts of $13,583,000 (2013: $2,000) overdraft and/or combined trade facility. held with ASB are subject to a netting arrangement. Overdraft interest is payable at the ASB This allows for settlement on a net basis in the event Corporate Indicator Rate plus applicable of default. margin. Foreign currency overdraft interest in payable at the ASB Bank’s offer rate for the relevant currency plus applicable margin. This facility is secured by a general security deed over all the present and future assets and undertakings of the Group.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 89 The following are the contractual undiscounted cash flow maturities of net monetary assets, including interest payments and excluding the impact of netting agreements:
Carrying amount Total cashflow 6 months or less 6-12 months 1-2 years 2-5 years GROUP NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000 NZ$’000
Cash and cash equivalents 12,655 12,655 12,655 - - - Trade receivables 49,982 49,982 49,982 - - - Accrued revenue 20,947 21,333 15,675 1,399 2,705 1,554 Bank overdraft (13,583) (13,583) (13,583) - - - Trade and other payables (6,952) (6,952) (6,952) - - - TOTAL AS AT 31 MARCH 2014 63,049 63,435 57,777 1,399 2,705 1,554 At 31 March 2013 Cash and cash equivalents 9,278 9,278 9,278 - - - Trade receivables 41,698 41,698 41,698 - - - Accrued revenue 8,788 8,788 7,679 1,109 - - Bank overdraft (2) (2) (2) - - - Trade and other payables (7,591) (7,591) (7,591) - - - TOTAL AS AT 31 MARCH 2013 52,171 52,171 51,062 1,109 - -
(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.
90 ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS CORPORATE GOVERNANCE the role of the board
The Board has ultimate responsibility for the The Board currently comprises six Directors: a non- • Audit and Risk Management Committee strategic direction of Orion Corporation Limited and executive Chairman, one executive Director and four The Audit and Risk Management Committee is oversight of the management of Orion Corporation non-executive Directors. responsible for overseeing the risk, insurance, Limited for the benefit of Shareholders. Specifically, accounting and audit activities of Orion the responsibilities of the Board include: Board members have an appropriate range of Health, and reviewing the adequacy and proficiencies, experience and skills to ensure that effectiveness of internal controls, meeting with - working with management to establish all governance responsibilities are fulfilled and to and reviewing the performance of external the strategic direction of the Orion achieve the best possible management of resources. auditors, reviewing the consolidated financial Health Group; statements, and making recommendations on - monitoring management and Directors’ meetings financial and accounting policies. financial performance; The Board formally schedule to meet at least four - monitoring compliance and risk management; times during any financial year including sessions to • Remuneration Committee - establishing and monitoring the health and consider the strategic direction of Orion Health and The Remuneration Committee is responsible safety policies of the Orion Health Group; Orion Health’s forward-looking business plans. Video for overseeing management succession - establishing and ensuring implementation and/or phone conferences are also used as required. planning, establishing employee incentive of succession plans for senior For the year ended 31 March 2014 five Board Meetings schemes, reviewing and approving the management; and were held. compensation arrangements for the - ensuring effective disclosure policies executive Directors and senior management, and procedures. Board committees and recommending to the full Board the Committees have been established by the Board to compensation of Directors. In discharging their duties, Directors have direct review and analyse policies and strategies, usually access to and may rely upon Orion Health’s senior developed by management, which are within their management and external advisers. Directors have terms of reference. They examine proposals and, the right, with the approval of the Chairman or by where appropriate, make recommendations to the resolution of the Board, to seek independent legal full Board. Committees do not take action or make or financial advice at the expense of Orion for the decisions on behalf of the Board unless specifically proper performance of their duties. mandated by prior Board authority to do so. The Committees are as follows:
ORION HEALTH ANNUAL REPORT | CORPORATE GOVERNANCE 91 SHAREHOLDER INFORMATION
Directors Non-executive Directors receive fees determined by the Board on the recommendation of the Remuneration Committee plus reasonable travelling, accommodation and other expenses incurred in the course of performing duties or exercising powers as Directors.
Ian McCrae is employed as CEO and receives salary and other remuneration and benefits in respect of his employment.
The following people held office as a Director during the year and received the following remuneration including benefits during the year. The Executive Director’s remuneration includes incentive payments pertaining to the 2013 financial year.
Name Category Remuneration 2014 Remuneration 2013
Andrew Clements (via Zeus Management Limited) Independent Chairman $90,000 $90,000 Neil Cullimore (via The Culloden Trading Trust) Non-executive director $45,000 $45,000 Andrew Ferrier (via FCS Limited) Non-executive director (appointed 9 December 2011) $45,000 $45,000 Roger France Non-executive director (appointed 15 February 2013) $45,000 $7,250 Paul Shearer Non-executive director (appointed 15 February 2013) $45,000 $7,250 Ian McCrae Executive director – CEO $417,409 $407,424
Directors’ interests As permitted by the Companies Act 1993, the Company has granted certain indemnities to the Directors and specified 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/or employees of the Company or any related company. As permitted by the Companies Act 1993, the Company has arranged a policy of Directors’ and Officers’ Liability Insurance which insures those persons indemnified for certain liabilities and costs.
92 ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION In accordance with Section 140(2) of the Companies Act Andrew Clements: 1993, the Directors named below have made a general Antipodes Wing Limited Director Genesis Energy Limited Director disclosure of interest during the period 1 April 2013 to 31 R D G P LimitedRDGP Director March 2014 by a general notice disclosed to the Board Ryman Healthcare Limited Director and entered in the Company’s interests register: Jacon Investments Limited Principal (Director and Shareholder) Zeus Management Limited Principal (Director and Shareholder) New Zealand Football Foundation Chairman The Mt Wellington Stadium Charitable Trust Trustee Optima Corporation Limited Shareholder
Andrew Ferrier: Bunge Ltd (New York) Director Lufa Farms Limited (Montreal) Director CANZ Capital Director & Owner Ferrier Consulting Services Limited Director & Owner New Zealand Trade and Enterprise Chairman Play It Strange Foundation Trustee University of Auckland Council Member
Ian McCrae: M c Cra e LimitedMcCrae Director
Neil Cullimore: Culloden Investments Limited Director and Shareholder HealthNet Investments Pty Limited Director and Shareholder Heartland Investments Limited and subsidiaries Director and/or Shareholder Pioneer Capital II Operating Partner The North and South Trust Limited Shareholder
Paul Shearer: Fisher & Paykel Healthcare Limited (NZ) Director and Senior Vice President - Sales & Marketing Fisher & Paykel Healthcare Corporation Limited Director of various subsidiary companies
Roger France: Air New Zealand Limited Director Dilworth Trust Board Trustee Fisher & Paykel Healthcare Corporation Limited Director Tappenden Holdings Limited Director Tappenden Management Limited Director The University of Auckland Foundation Trustee Treasury Commercial Operations Advisory Board Member
ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION 93 Directors’ shareholdings Directors’ shareholdings are shown as at balance date.
31 March 2014 Andrew Clements - Shares held with beneficial interest 2,550,000 Ian McCrae - Shares held with beneficial interest 81,953,250 Neil Cullimore - Shares held with beneficial interest 100,000 Andrew Ferrier - Shares held with beneficial interest 1,350,000 Paul Shearer - Shares held with beneficial interest 1,000,000 Roger France - Shares held with beneficial interest -
Employees’ remuneration During the year the number of employees or former employees not being Directors of Orion Corporation Limited received remuneration including the value of other benefits in excess of $100,000 in the following bands:
Remuneration (NZD) Number of employees Remuneration (NZD) Number of employees
$100,000 - $110,000 54 $270,001 - $280,000 2 $110,001 - $120,000 39 $280,001 - $290,000 3 $120,001 - $130,000 50 $290,001 - $300,000 3 $130,001 - $140,000 46 $310,001 - $320,000 1 $140,001 - $150,000 32 $320,001 - $330,000 1 $150,001 - $160,000 23 $340,001 - $350,000 1 $160,001 - $170,000 14 $350,001 - $360,000 1 $170,001 - $180,000 10 $360,001 - $370,000 2 $180,001 - $190,000 9 $370,001 - $380,000 1 $190,001 - $200,000 7 $380,001 - $390,000 1 $200,001 - $210,000 4 $390,001 - $400,000 1 $210,001 - $220,000 6 $410,001 - $420,000 1 $220,001 - $230,000 3 $530,001 - $540,000 1 $230,001 - $240,000 2 $640,001 - $650,000 1 $240,001 - $250,000 4 $730,001 - $740,000 1 $260,001 - $270,000 2
The numbers above include 91 New Zealand based current and former employees and 235 overseas-based current and former employees.
94 ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION Top Twenty Shareholders at 11 June 2014
Name Number of shares % of Ordinary Shares
MCCRAE LIMITED 81,862,250 59.0% PIONEER CAPITAL I NOMINEES LIMITED 13,370,900 9.6% GEOFFREY A CUMMING 13,100,000 9.4% TEA CUSTODIANS LIMITED 3,331,250 2.4% JACON INVESTMENTS LIMITED 2,550,000 1.8% MARK JAMES THOMSON & DEBORAH MARY THOMSON & STUART ALEXANDER MCRAE PERRY 1,765,000 1.3% CANZ CAPITAL LIMITED 1,537,500 1.1% DAVID JOHN CLARKE & BELINDA MARIA CLARKE & KEVIN JAFFE 1,514,640 1.1% EDWIN WENG KIT NG 1,297,000 0.9% JOHN HAROLD DUNN 1,292,520 0.9% MICHAEL BRIAN CLEGG & KYLIE ANNE CLEGG 1,175,000 0.8% NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED 1,125,000 0.8% ORION HEALTH CORPORATE TRUSTEE LIMITED 1,034,637 0.7% K ONE W ONE (NO 2) LIMITED 1,000,000 0.7% PAUL NIGEL SHEARER & SONYA MAREE SHEARER & MARK EDGAR WILSON 1,000,000 0.7% PAUL AUGUSTIN VISKOVICH & PATRICK JAMES KENNELLY 968,670 0.7% MARK STEWART CAPILL 950,000 0.7% HIRVI LIMITED 850,000 0.6% GORDON STANLEY MCCRAE 741,500 0.5% GORDON STANLEY MCCRAE & MALCOLM STUART BOYD 481,530 0.3%
ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION 95 DIRECTORY
Registered Office Orion House 181 Grafton Road Grafton Auckland New Zealand
Incorporated in New Zealand.
Bankers ASB Bank Limited HSBC Bank
Auditors PricewaterhouseCoopers
Share registrar Computershare Investor Services Limited
96 ORION HEALTH ANNUAL REPORT | DIRECTORY