healthalliance n.z. limited annual report · 2. delivery excellence 3. transformation our role...

Annual Report 2016/17

healthalliance N.Z. limited

Contents

Our Chairman and Chief Executive

Our Board of Directors

Our Executive Leadership

Our Foundations

Our Region

Our Role

Our Services

Our People

Key Highlights and Achievements

Statement of Performance

hA NZ Financial Statements

Statement of Accounting Policies

Notes to the Financial Statements

Statement of Responsibility

Independent Auditor’s Report

Statutory Information

1

3

4

5

6

7

8

11

13

20

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healthAlliance exists to provide a professional shared services1 and information systems platform for the Northern Region District Health Boards (DHBs), who in turn support the delivery of primary, secondary and community healthcare outcomes for 1.8 million New Zealanders.

Responding to Northern Region health priorities The Northern Region is New Zealand’s largest and fastest growing health region. The health landscape is changing rapidly and there is significant growth in demand for health services as a result of population growth, demographic changes, and the shifts towards preventative, consumer driven and digitally enabled healthcare.

The achievement of DHB priorities and aspirations - within a fiscally

constrained environment - demands ‘step change’ improvements in services and the regionalisation of services where it makes sense.

Regional ICT transformation healthAlliance, in partnership with the Northern Region DHBs, has led the development of the Northern Region’s Information Systems Strategic Plan (ISSP). This supports the Long Term Investment Plan (LTIP) that details the models of care, health outcomes and strategic priorities for the region.

Our Chairman and Chief ExecutiveThere is a great sense of pride within healthAlliance N.Z. Limited and a strong commitment to supporting the Northern Region District Health Boards in fulfilling their health goals and aspirations.

Myles Ward CHIEF EXECUTIVE

healthAlliance N.Z. Limited

David Clarke CHAIR

healthAlliance N.Z. Limited

1 Annual Report 2016/17

The ISSP defines a forward-looking view of the information systems landscape, information technology direction and the investment required to support the needs and vision of a connected Northern Region. The ISSP takes into account the population and service delivery dynamics expected over the next ten years, together with technology trends and our current starting point in terms of applications, technical architecture, capability, projects, performance and priorities.

The key themes of the ISSP focus on modernising and strengthening our ICT foundations; simplifying, harmonising and rationalising our layers of applications; becoming the experts on inter-operability to improve the way we share data and connect systems together; and working effectively as a ‘capable region’. The ISSP programme will be delivered over a ten year period of innovation, investment and implementation. The outcome will deliver a smart, safe, sustainable and digitally enabled healthcare system for the Northern Region.

healthAlliance also commenced planning to implement 'as a Service' models that will commoditise ICT across the region; implementation of API2 foundational investments to enable greater data sharing; as well as the utilisation of 'Cloud' based technologies. These initiatives will help transform the way our customers do business through the use of information systems.

Improving service performance outcomes healthAlliance has also delivered year-on-year improvements in services and service performance.

Our Projects & Programme teams have delivered (on behalf of the Northern Region DHBs) in excess of $43m of ICT capital investment and completed 151 projects this year. For our Customers, this has resulted in new regional mobility management systems to house clinical mobile applications, the implementation of mobile laboratory and radiology applications enabling remote consults, supporting the digitisation of secondary care, delivered a web-based patient administration system for Northland and the creation of a digital innovation hub.

We have also made significant investment in the stabilisation of ICT infrastructure (providing more resilient and reliable applications and infrastructure). This has resulted in a 60% reduction in the total number of ICT incidents across the region and the number of Service Level Agreement incidents is consistently tracking within the agreed SLA targets.

Our shared services functions have also delivered improved performance. We continue to experience significant growth in demand for core services which has been absorbed within agreed DHB funding levels. This year, healthAlliance has achieved increases in customer satisfaction (4% increase), staff engagement (6.5% increase) and service level performance (94% of SLAs achieved).

Transforming the way we work healthAlliance’s focus on transforming ourselves to become a more future focused, Customer-oriented, professional services company took a significant step forward this year.

We have continued the implementation of our ‘multi-year’ strategic priorities, developed our new target operating model, implemented a new organisational structure and strengthened capability in key areas (including enterprise architecture, commercial vendor management, project capability, financial and commercial disciplines, and cyber security).

These changes will place healthAlliance in a better position to support, evolve and deliver quality services in support of Ministry and Regional health goals and aspirations.

A successful year healthAlliance has had a successful year with improvements in all service areas; the development of more effective relationships across the region; and the strengthening of partnerships with Central Government (including Ministry of Health and the Government Chief Information Officer).

We offer our thanks to the healthAlliance Board, DHB and healthAlliance Executive, management and staff for their continued commitment to the organisation and our Customers. Finally, we express our gratitude to our Northern Region DHB shareholders for their continued support.

1. Technology Services, Project and Programme Services, Financial Services, Payroll and Human Resource Services, Customer Services and Regional Internal Audit

2. Application Programming Interface

2Annual Report 2016/17

Our Board of DirectorsThe Independent Chair and Board of healthAlliance N.Z. Limited are appointed by our shareholder DHBs. This report includes the consolidated Statement of Service Performance and Financial Statements of healthAlliance N.Z. Limited.

Paul Harper

healthAlliance N.Z. Limited from August 2011, Chair healthAlliance

(FPSC) Limited from December 2015; and healthAlliance (FPSC) Limited since

incorporation. Independent Director.

Rosalie Percival

healthAlliance N.Z. Limited and healthAlliance (FPSC) Limited from

September 2014.

David Clarke

Chair, healthAlliance N.Z. Limited from October 2014; healthAlliance N.Z.

Limited from 6 May 2013; and healthAlliance (FPSC) Limited since

incorporation. Independent Director.

Meng Cheong

healthAlliance N.Z. Limited from July 2016; healthAlliance (FPSC) Limited

from August 2016.

Russell Jones

healthAlliance N.Z. Limited from September 2016. Independent Director.

Dr Lee Mathias

healthAlliance N.Z. Limited and healthAlliance (FPSC) Limited from

September 2014. Ceased healthAlliance (FPSC) Limited June 2015.

Roger Jones

healthAlliance N.Z. Limited from September 2015. Independent Director.


Our Executive LeadershipOur Board-appointed Chief Executive is responsible for day-to-day operations, supported by an Executive Leadership team who manage each of our key service areas. The healthAlliance New Zealand Limited Executive team is comprised of:

Myles Ward

CEO healthAlliance N.Z. Limited

Trish Langridge

GM Customer

Fiona Harnett

CFO & GM Finance & Corporate

Wayne Pohe

GM Transformation

Reid McRobie

GM Project & Programme Services

Ramon Manzano

Chief Audit Executive & General Manager

(Regional Internal Audit)

Kevin Robinson

GM, Strategic Engagement & Enterprise Stabilisation

James Allison

CIO Technology Services

Dr Karl Cole

Chief Clinical Information Officer


About healthAlliance healthAlliance N.Z. Limited is a stand-alone company established in July 2000 by Counties Manukau Health and Waitemata District Health Board to provide shared services to both shareholders. In March 2011 Auckland and Northland District Health Boards became additional shareholders. As of 1 July 2017, each of the four Northern Region DHBs has a 25% shareholding. healthAlliance (FPSC) Limited is a wholly owned subsidiary of healthAlliance N.Z. Limited, incorporated in September 2013. healthAlliance (FPSC) Limited provide Procurement and Supply Chain services to the Northern Region DHBs (and other associated parties).

Status as a Crown entity healthAlliance N.Z. Limited is a Crown entity multi-parent subsidiary in terms of the Crown Entities Act 2004.

healthAlliance (FPSC) Limited is a wholly owned subsidiary of healthAlliance N.Z. Limited, and as such is also a Crown entity subsidiary in terms of the Crown Entities Act 2004.

Our customers healthAlliance’s Customers are primarily the four Northern Region DHBs and organisations within the health sector, to whom we provide shared services and lead the Region's ICT Transformation.

healthAlliance is committed to putting our customers at the centre of what we do. healthAlliance is continuing to evolve and implement, in collaboration with DHBs, ICT enabled health services that support the region’s models of care. Strengthening engagement with DHB Executives and management is paramount, as is the evolution of transparent Customer reporting.

Information and intelligence is integral in understanding our Customers, gathered through various mediums such as Customer satisfaction surveys and improvement plans, and the collaborative evolution of service performance metrics. healthAlliance is accountable for the measurement and reporting of Customer outcomes, development of our Customer strategies, and proposals for the evolution of services to meet the needs of our Customers. In addition, the gathering and assessment of Customer demands for healthAlliance services will be integral for our technologies to be scaled correctly, and for end user satisfaction to be maintained.

Our stakeholders healthAlliance operates in a large and complex eco-system.

The Minister of Health’s ‘Letter of Expectations’ and the revised New Zealand Health Strategy provide the District Health Boards, and their subsidiaries, with clear direction on

sector priorities. healthAlliance’s role is to support the DHBs to deliver on these expectations.

Critical to our success is the requirement to build and maintain strong and effective relationships with key stakeholders and to ensure compliance with statutory obligations. healthAlliance engages at a number of levels within the overall health and Central Government environment including:

• Regional Governance Groups and supporting sub-governance groups

• DHB Boards including Audit and Finance Committees

• DHB Executive Teams and DHB management

• National Advisory Groups including the Ministry of Health Services Commissioning Directorate (incl. development of the Digital Health Strategy and Electronic Health Record projects)

• Government Chief Information Officer and team

• Government Chief Privacy Officer

• Cyber Emergency Response Team

• Treasury

• Ministry of Health

• Audit NZ

Our FoundationsThe Government, the Ministry of Health, the Department of Internal Affairs, Treasury, and our Northern Region DHBs expect us to provide better, smarter, and lower cost services.


Our RegionhealthAlliance contributes to supporting the Northern Region DHBs’ strategic focus on primary, secondary and community healthcare outcomes.

COUNTIES MANUKAU

AUCKLAND

NORTHLAND

1.8m people

26,000 DHB staff

4 DHBsPlus two support agencies

18,683km2 of NZ covered

3,100 Hospital beds

14 Hospitals6 Emergency Departments

86 Operating Theatres

360 Community Health and Dental sites

WAITEMATA


Our purpose Right behind better healthcare

Providing non-clinical services to the Northern Region DHBs.

Our vision To be the recognised experts in making the health dollar go further

We will assist the health sector to operate effectively and efficiently, enabling DHBs to direct money to frontline clinical services; and that the Northern Region is investing in technology and digital solutions that support better clinical outcomes.

Key strategic priorities healthAlliance is continuing to implement its ‘multi-year’ strategy which revolves around the following three Strategic Priorities:

Our three priorities are:

1. Culture

2. Delivery Excellence

3. Transformation

Our RolehealthAlliance contributes to supporting the Northern Region DHBs’ strategic focus on primary, secondary and community healthcare outcomes.

TransformationContinuing the evolution of the operating model, workforce and

capability that supports a professional service delivery company and

Customer-centric organisation. Transforming the way our Customers

do business through the use of digital and mobile

technologies.

CultureA professional services company that puts our Customers at the centre of

what we do. Through great leadership we will support and develop our

people to be the best they can be.

Delivery ExcellenceProfessional and consistent delivery of services that make our Customers

successful. We make it easy for our Customers to engage; we are

transparent, improve performance and stability of our services, and

actively lower the cost of operating.

Our Customer


Technology Services healthAlliance deliver

sustainable IS services to customers. This includes supporting and maintaining the Northern Region's ICT systems that enable DHBs to deliver clinical and business outcomes. healthAlliance supports more than 23,000 desktop computers, 12,000 mobile devices, over 1,500 applications, and the underpinning network infrastructure (both LAN and WIFI). Key service lines include:

• Architecture and Design – managing the enterprise and domain level architecture, for both applications and network infrastructure

• Health Operations – managing the ICT infrastructure, workspaces, service operations centre, database and on-demand services, and secure communications

• Security and Risk – managing the IT cyber and security activities, providing risk and assurance service to operations and projects

• Digital and Mobility – managing health and enterprise application services, information and knowledge management

healthAlliance is also leading the work to transform the way the Northern Region DHBs provide health services through the use of technology and digital innovation. The significant programmes of work include:

• Information Systems Strategic Plan (ISSP) – developing the forward-looking view of the information systems landscape with the goal of transforming the way the Northern Region DHBs provide health services through the use of technology and digital innovation

• Data and Telecommunications as a Service – commoditising IT infrastructure and telecommunications services

• Digital Innovation Lab – identify innovative mobile and digital solutions and accelerate implementation of digital innovation opportunities

• Integration Engine Replacement – migration of legacy ICT interfaces to a more modern and higher functioning integration engine; building API1 interfaces for the most commonly used integration points to enable rapid applications development and data sharing

Our ServiceshealthAlliance enables the Northern Region DHBs through the provision of efficient and effective shared service delivery in the following areas:

1. Application Programming Interface 2. Figure includes desktops, laptops, thin client and clinical mobile devices

3,200 servers

23,300 PCs2

1,500 unique desktop applications

8 computer rooms, 450 network hub rooms


Customer Service Centres

healthAlliance operates Customer Service Centres to support the technology, finance and procurement/supply chain activities.

• IT Service Desk – 24/7/365 support for incident management, service request fulfillment, user access provisioning, major incident management and IT communications

• Staff Service Centre – managing payroll and personnel requests and incidents

• Managed Service Centre – clinical product, supply chain and master data support

• Training – delivery of training courses for the use of IT systems (clinical, patient administration and business applications)

Project and Programme Services

healthAlliance provides programme and project services for the Northern Region DHBs, to deliver the region's ICT capital investment programme (applications and infrastructure).

• Portfolio Management – integrated management framework for projects (governance and centralised budget, time, quality, issue, risk, compliance, change, stakeholder and escalation management)

• Project Management – management framework for all customer projects including facilities, infrastructure, ICT and applications projects

• Business Analysis – initial scoping, detailed analysis, implementation support and operational handover

• Organisation Change Management – managing engagement, training and support during project implementation

• Service Transition – testing (strategy, planning, execution), business case planning and costing, release management

• Project Management Office (PMO) – methodology management, resource management, contractor sourcing, project and portfolio reporting, project management toolsets and support

Financial Services

healthAlliance provides centralised financial services to safeguard financial disciplines, governance and risk management (including supporting DHBs to achieve their statutory and regulatory requirements) for the Northern Region.

• Accounts Receivable – invoicing, customer master data management, performing revenue accounting, processing receipts received, managing collection

• Accounts Payable – invoice management, invoice payments and holds, invoice queries management, month-end activities

• Eligibility – patient eligibility assessments, invoicing data

• Financial Control – general accounting and tax, financial closing and reports, asset and capital expenditure, cash and bank account management, internal control, managing of responsibility centre codes


Payroll & Human Resource Services

healthAlliance provides payroll and HR administration services to Northern Regional Alliance, Counties Manukau Health and Waitemata DHB staff.

• Payroll Processing – salary payments, management of deductions and disbursements, off-cycle payments

• Payroll Analysis – reporting and ad-hoc analysis

• Master Data Management – manage and maintain Payroll, HR and personnel records

• Self Service Kiosk – managing the staff system for accessing leave and payroll information

• HRMS – payroll system reporting

Regional Internal Audit

Regional Internal Audit (RIA) represents the third line of defence in the organisation’s Risk Management Strategy. Its role is to provide independent assurance to the Boards of Northern Region DHBs and healthAlliance, through performing the Regional Internal Audit Plan (approved by the Audit Committee of each DHB and healthAlliance).

• Audit Plan – preparation of the Internal Audit Plan (approved by healthAlliance and the DHBs' audit committees)

• Independent Assurance – assessment of DHB processes and governance, confirming risk-mitigating actions by healthAlliance and DHB management are effective


People and Culture plans healthAlliance has implemented our new operating model and organisational structure, and continues to evolve and position our capability for the future.

Our goal is to become a more commercially-focused and customer-centric organisation. We continue to invest in our leadership, disciplines and practices to ensure we have a workforce capable of delivering on current and future demands. Our People and Culture Plans are focussing on leadership and management development, talent and succession planning, and our organisational values, behaviours and culture.

We are also investigating third parties as we assess ‘Cloud’ and ‘as a Service’ offerings, accessing research and development and specialist capabilities, and ensuring we have the ability to flex and deliver on the Regional Information System Strategic Plan and Long Term Investment Plan goals. Through partnering with external providers, we are looking to alleviate internal pressure points and create great learning and development opportunities for our people.

Health, safety and wellness Every member of staff plays a key role in ensuring we have a safe and healthy work environment.

Our Safe Ways of Working policy is our formal commitment to our people. We take responsibility for maintaining a productive workplace in every part of our organisation by minimising the risk of accidents, injury and exposure to health hazards for all of our workers, contractors, associates and the public. We work collaboratively with our DHB partners on sites where our teams are based to reduce risks for our people and DHB staff. Compliance with this commitment and corresponding laws are the responsibility of all staff and contractors acting on our behalf.

Management is responsible for educating, training and motivating employees regarding health and safety. We measure our progress and report to the Board on a monthly basis.

Good employer healthAlliance promotes equal employment opportunities to ensure a culture of awareness and provide fair and equitable opportunities for all existing and potential employees. Our organisation supports the rights of all employees as a “good employer” as defined in the Crown Entities Act 2004, Employment Relations Act and the Human Rights Act.

We demonstrate our support through recruitment policies and processes, by celebrating diversity through key cultural events, and through our Employee Wellbeing Programme.

Our PeopleOur people are at the heart of everything we do.

Increased staff engagement by 6.5%

hA NZ has been lost time incident (LTI) free for over 14 months.

hA NZ has installed 3 defibrillators at Connect.

Over 20 hA NZ team members were trained as first aiders.

Over 20 hA NZ Eligibility team members were trained in security awareness and de-escalation processes.

hA NZ has supported a variety of charities including Starship, Breast Cancer Foundation, Movember, Dry July, Knights of the Blind and Kidz First. We have donated hundreds of dollars, and more than 24 units of blood to NZ blood.


Key Highlights and AchievementshealthAlliance is continuing to implement its multi-year strategy focussing on Culture, Delivery Excellence and Transformation.

Culture: healthAlliance’s Culture activities focused on the implementation of our operating model, workforce and capability to support a professional service delivery company and customer-centric organisation. Key highlights in the last year include:

• Developed and implemented our target operating model (customer service led, account executive and relationship management)

• Implemented our internal transformation changes. This includes strengthening the Executive Leadership Team with the appointment of a new Chief Financial Officer and Chief Clinical Information Officer; appointment of a new Chief Information Security Officer; implementing our new organisational structure and strengthening capability in key areas (including enterprise architecture, commercial vendor management, project capability, financial and commercial disciplines, and cyber/security)

Delivery Excellence: healthAlliance’s Delivery Excellence activities focussed on improving the region's ICT systems (data is safe/secure, increasing the reliability of ICT systems), the evolution of fiscal and commercial disciplines, the maturity of project/programme services and the implementation of key projects.

healthAlliance enables the Northern Region DHBs through the provision of effective and efficient shared services. Key highlights in the last year include:

• Increased Customer Satisfaction and delivered sustained improvements in service performance of systems availability

• Stabilised critical ICT foundations to provide more resilient and reliable applications and infrastructure, including the commencement of remediation activities for two computer rooms, 450 hub rooms, >1,000 switches and 390 power supply units (Stabilisation Programme). This work has reduced the number of total incidents by 60% across the region and the number of SLA incidents is consistently tracking within the agreed SLA targets

• Evolved regional Cyber and Security related disciplines (including the implementation of a comprehensive Cyber Security plan); and led the Northern Region’s cyber security response to the global ransomware attack ('Wannacry')

• Implementation of new Regional Service Level Agreements with the Northern Region DHBs

• Strengthened financial disciplines through the implementation of quarterly planning and longer term forecasting (incl. inputs to the Regional Long Term Investment Plan)

61% reduction in ICT Incidents1

85.9% Customer satisfaction (4.1% improvement)2

5.9% Call Centre abandonment (4.8% improvement)3

Engagement Survey increased 6.5%

Launched the ‘Got Your Back’ health and safety campaign

46 staff trained to use AEDs (defibs)

>250 staff PRIDE nominations

106 new staff inducted


5. Secure Mobility platform 6. As at 30 June 2017

1. For ICT incidents within the scope of the ICT stabilisation programme, in the last 15 months

2. FY15/16 versus FY16/17 3. Q1 versus Q4 of FY16/174. The official standard for Portfolio, Programme and Project Delivery

• Strengthened ICT processes (with a focus on ITIL incident, change and release processes)

• Accelerated and matured our programme and project delivery (utilising the P3M34 model); introduced integrated capital and applications planning

healthAlliance is also working on behalf of the Northern Region DHBs to deliver the ICT capital investment programme. Key project and programme achievements in the last year include:

• Launched the Digital Foundations programme and introduced new Regional Mobile Management systems to house clinical mobile applications (Enterprise Mobility Management / SecureHub)

• Implemented Mobile Laboratory and Radiology applications that enable the region to conduct remote consults (eLabs and eRadiology)

• Supported the Northern Region digitisation of Secondary Care (eVitals and ePrescribing)

• Delivered a new web-based patient administration system for Northland DHB (WebPAS)

• Enabling new digital healthcare technology innovations, for example Virtual Reality headsets at ADHB - see figure A (photo credit, Staples VR)

• Rolled Internet Explorer 11 out across the region

1,460 staff now enrolled on SecureHub5

151 projects completed / 261 active projects6

Figure A


Transformation: This year, healthAlliance’s activities focused on transforming the way our customers do business through the use of information systems. Key achievements in the last year include:

• Developed the Northern Region Information Systems Strategic Plan (ISSP, Version 1.0). The ISSP defines the forward-looking view of the information systems landscape, information technology direction and the investment required to support the needs and vision of a connected Northern Region

• Commenced the planning to implement 'as a Service' models that will commoditise ICT across the region; as well as utilising 'Cloud' based technologies (Data Centre & Telecommunications as a Service or DTaaS programme)

• Commenced the implementation of Application Programming Interface (API) technology that will enable the sharing of data across both the region and nationally, and accelerate the development of mobile applications (Mulsesoft / Integration Engine Platform (IEP) programme)

• Established a digital Innovation Hub to support Regional health-related innovation (hA Digital Innovation Lab)

1.8m people

26,000 DHB staff

14 hospitals

360 Community health and dental sites


New Patient Administration System for Northland DHB

“I was blown away. It is really easy to use, intuitive and easy to find your way around. WebPAS is a really positive thing for the entire organisation.” Fiona Greig – Team Leader, Customers Service, Whangarei Hospital

“Significant change management was required to match the system to the business and Northland DHB and healthAlliance staff applied themselves superbly to the task.” Neil Beney – GM, Medicine, Health of Older People, Emergency & Clinical Support, Northland DHB

Northland DHB’s legacy Patient Administration System has been brought into the 21st century.With the support of the DHB CIO and staff, healthAlliance helped replace its 25-year-old system with a new solution called WebPAS in one of the largest and most complex technology projects in the DHB’s history.Twenty five years of hospital data and 12 million patient records were migrated over a single weekend in March. The new web-based system provides staff with a more efficient, reliable and easy to use tool that helps improve the patient journey through the DHB’s hospitals and clinics.WebPAS has also brought much needed stability and reliability to a critical system used by up to 1,100 staff daily.


Enabling Digital HealthCare

Traditional clip boards have been replaced by iPads across most wards at Waitakere and North Shore Hospitals.The new technology, known as eVitals, has introduced real-time digital clinical decision support capabilities to both hospitals. Ward staff record observations electronically at the patient’s bedside, helping to save time – there is no need for hand written notes to be keyed into a computer - and increasing accuracy.Conveniently, clinicians can access patient observations via a variety of devices, and an in-built ‘Early Warning Score’ setting can prompt staff to action care if needed. That’s a big plus for patient safety.“All the ward observation and assessment charts in one place, in the iPad mini in your pocket. It’s saving ward nurses 21 minutes a shift looking for charts”.

Peter Groom, Clinical Nurse Specialist, Waitemata DHB


Delivering Mobility Solutions “It makes a huge difference to being on call, the ability to access patient images on my cell phone anywhere, anytime”.

Dr Margaret Wilsher, Chief Medical Officer - Auckland DHB

Clinical information is now available via mobile apps after the launch of Secure Hub, a state-of-the-art enterprise mobility management platform.Clinicians can now view radiology images or test results securely on the go via their smartphones or tablets, offering convenience and greater flexibility, as well as time saving benefits.The introduction of Secure Hub, coupled with the on-going roll out of WiFi across the region, offers great potential for accelerating digital health technologies to help improve clinical workflow and patient outcomes.


Statement of Performance

Our Performance Story Delivering on Government, Sector and Regional expectations.

Culture A professional services company

that puts our customers at the

centre of what we do. Through

great leadership we will support

and develop our people to be

the best they can.

New Zealand Health Strategy • People Powered

• Closer to home

• Value and high performance

• One team

• Smart systems

Government & Health Sector Outcomes

Strategic Direction to the DHBsMinistry of Health and Minister's Expectations

DHB Expectations of healthalliance via healthAlliance Board

Strategic Priorities for healthAlliance Statement of Intent and Annual Plan

Government ICT Strategy• Digital Services

• Information

• Technology

• Investment

• Leadership

CrownEntitiesActand Government Expectations• Strategicintentions

• Long-term investment plans

• Four year plans

• Performanceexpectations

DHBs to deliver on regional and individual outcomes, including: • DHBfocusareas:livingwithintheirmeans,workingacrossgovernment,achievingnationalhealthtargets,

tacklingobesity,shiftingandintegratingprimaryhealthservices,supportingtheHealthITProgramme

2015-2020,deliveringontherequirementsoftheMinister'senduringletterofexpectations,thinking

beyondnarrowdefinitionsofhealthandcollaborationgwithotherstoachievewellbeing

• Generalfocusareas:betterpublicservice,regionalcollaboration,intergratedcare,valueformoney

healthAlliance supports the Northern Region DHBs to deliver on their commitments

NorthernregionplansandRegionalInformationSystemsStrategicPlan(ISSP)

Our Vision: We are the recognised experts in making the health dollar go further

Delivery ExcellenceProfessional and consistent

delivery of services that make

our customers successful. We

make it easy for our customers

to engage; we are transparent,

andactivelylowerthecost

ofoperating.

TransformationContinuingtheevolutionofthe

operatingmodel,workforce

and capability that supports a

professional service delivery

company and customer centric

organisation.

Transforming the way our

customers do business through

the use of technology.


healthAlliance as an organisation, in addition to Customer benefits and service quality, measures itself on the achievement of our Statement of Intent and Annual Plan, which are approved by the healthAlliance Board and Shareholders.

Progress to Plan

OutputKey

Performance Indicator

Target Measure Definition Actual Comment

Customer Care Programme

Customer Satisfaction 80%

Develop new Customer survey, establish baseline (1st half of year) and exceed baseline (2nd half of year, target >80% customer satisfaction)

85.9%

healthAlliance sends a Voice of the Customer survey to defined customer groups. healthAlliance has introduced two new customer engagement surveys this year.

The first is the implementation of a new Customer Engagement Survey 1 for the IT service desk. The survey asks recipients of IT service desk services a targeted set of questions on their most recent interaction with the IT service desk. The average result for the year is 85.9% 2 against a target of 80%.

The second is the development of a new Organisational (Senior Stakeholders) Customer survey. It was planned to pilot this through the year, make any necessary adjustments and then repeat the new survey at year end. Due to the work pressures involving the development of the operating model and completing the organisation restructure the survey design was not completed in time to pilot, adjust and then resend. Instead the survey was developed and a pilot survey issued. The survey was sent to 106 senior managers and senior clinicians within our customer groups but the return rate was only 19 responses (18%). With such a low return rate the survey has been deemed as invalid (i.e. no result). The survey will be re-launched in FY1718.

Culture & People Plan

Develop and advance our Organisational Development programme

Delivery to Plan

Culture & People Plan approved and key programme milestones met

Planned Activities Completed

healthAlliance Culture and People plans were developed to evolve the organisation's operating model and develop Leadership/People capability.

The programme was delivered as part of healthAlliance internal Transformation activities. The key milestones and outcomes were: • Implementation of a new operating model (2nd quarter) • Implementation of a new organisational design (3rd quarter) • Implementation of a new organisational structure (3rd quarter) • Completion of a learning needs assessment (3rd quarter) • Implementation of Talent Management & Succession planning (4th quarter)

EngagementIncrease in Staff Engagement

5% increase

Survey result (overall engagement) from the staff engagement survey.

6.5% increase

healthAlliance uses an external agency to conduct the annual staff engagement survey.

healthAlliance achieved a result of 66.5% in the staff engagement survey. This is a 6.5% increase on the previous survey. The improvement is a result of the organisation's focus on its People & Culture plans.

Talent Retention of senior talent

80% retention

Percentage of senior staff identified as critical talent retained

100% retention

healthAlliance has a talent matrix for senior staff. All senior talent has been retained.

healthAlliance also tracks overall organisational turnover (voluntary). This metric continues to track favourably to target (average of 10.3% in Q4 FY1617, against a target of 11%).

Health & Safety

Delivery of the Health & Safety Plan

Delivery to Plan

Implementation of the Board approved Health & Safety plan


healthAlliance safety plan was approved and activities have been implemented in accordance with the plan. These activities are designed to increase awareness of Health & Safety (e.g. the launch of the organisation wide 'Got your Back' campaign to promote safety and wellness) and to ensure compliance with the relevant Health & Safety legislation.

Lost Time Injury Frequency Rate 3.85

Lost Time Injury Frequency Rate (LTIFR) result to exceed applicable industry benchmark

0

healthAlliance has assessed itself against the Business Leaders Health and Safety Forum benchmark (published on the Zero Harm website).

healthAlliance has achieved an LTIFR result of 0 against an industry benchmark of 3.85. healthAlliance has now been LTI free for over 14 months.

CU

LTU

RE

1. healthAlliance uses SurveyMonkey, a cloud based survey tool, to capture and report customer satisfaction. The survey is based on a random sample of all users of the service desk. In the 12 month period FY1617 there were 21,556 surveys issued, noting 5% are healthAlliance staff who also con sume services from the IT service desk. The results are based on 3,152 responses (15% response rate, 2% margin of error).

2. The survey results are influenced by how the survey administrator sets up the survey parameters such as number of responses per user, when and to whom the survey link is sent, and the collation of the outcome. Limitations of the survey have been identified as a) participants can complete a survey more than once and b) results may not reflect all the completed surveys.


OutputKey



Service Level Performance

Achievement of Service Level targets and delivery of consistent services

> 85%

Percentage of Northern Region Service Level Targets met or exceeded

94%

healthAlliance has a defined set of service level targets for each Service Line.

Overall, healthAlliance has met or exceeded 94% of Northern Region Service Level Targets at year-end. The improvement in the SLA performance is a result of targeted initiatives to improve IS (system availability) and customer satisfaction measures.

Stabilisationof Tier 1 (critical)ICTSystems

Stabilisation of core DHB systems (clinical and critical enterprise systems)

Delivery to Plan

ICT plan approved and key milestones met


healthAlliance has a dedicated 'Stabilisation Programme' improving the Northern Region's ICT infrastructure. This is a three year programme of work.

The ICT stabilisation was approved in March 2017 and year one milestones have been achieved. This includes the implementation of firewall upgrades, DHB hub room remediation, fibre installation, completion of IT switch replacements, regional WIFI expansion and hub room monitoring capabilities.

Stabilisation of core DHB systems (clinical and critical enterprise systems)

< 12.2

Reduction in the number of incidents (average number of incidents per DHB per month)

13.4

healthAlliance has an agreed Service Level for the number of incidents for all systems (<20 unplanned service interruptions per DHB per month).

The number of Service Level incidents has increased from an average of 12.2 incidents per DHB per month in FY1516 to an average of 13.4 in FY1617.1 The unfavourable result is primarily attributed to the high volume of outages in critical systems (e.g. WebPaS and Concerto; both of which have since undertaken significant upgrades), deferral of investment in anticipation of 'as a service' options, and the continuing growth in the number of applications and age of infrastructure. As a consequence the ability to deliver year-on-year improvements remains challenging. The investment programmes for a) ICT stabilisation and b) Information Systems Strategic Plan (incl. 'as a service' options) are designed to address these challenges.

Internally, healthAlliance also record the total number of incidents for IT applications/infrastructure within the scope of the Stabilisation Programme. The total number of incidents across the region has reduced from 163 per quarter (Q3 FY1616) to an average of 64 per quarter (Q4 FY1617).2

Cyber and Privacy Plans

Develop and implement a Cyber strategy to minimise the threat risk to systems and data

Develop and Implement

Cyber and Privacy Plan approved. Key programme milestones met

Cyber Security Plan Developed

healthAlliance has developed a comprehensive Cyber Security Plan on behalf of the Northern Region DHBs. The plan outlines the activities required to protect the privacy and security of patient and clinical data).

healthAlliance undertook a complete review of the Cyber Plan following the appointment of a new Chief Information Security Officer (CISO) in March 2017. The refreshed Cyber Strategy was approved at the July 2017 Board meeting.

Key achievements in FY1617 include the implementation of new security software, the completion of cyber exercises (Operational & Board level) and strengthening of cyber security practices (e.g. patching, new policies, increased capacity/capability within the cyber security team).

Financial Performance

Improvement of financial disciplines and performance against operational budget

<$500k variance

Operational expenditure (variance to budget)

$2k surplus

healthAlliance is required to operate within agreed funding envelopes (as approved by the healthAlliance Board and regional Shareholders).

healthAlliance N.Z. Limited full year operational expenditure was a $2k surplus which is in line with budget. This SOI measure is for healthAlliance N.Z. Limited excluding the Supply Chain and Northern Region procurement functions which are under the ‘day to day’ management of our subsidiary healthAlliance (FPSC) Limited.

Improvement of financial disciplines and performance against capital budget

$52.4m Capital expenditure (variance to budget) $43.1m

healthAlliance prepare a capital budget each year (primarily covering ICT investment). The capital budget is approved by the healthAlliance Board and Shareholders. During the year healthAlliance implemented a quarterly reprioritisation process to ensure the capital programme could be adapted as shareholder and organisational needs changed.

As a result of a customer based reprioritisation of investment plans and profiles healthAlliance’s capital expenditure plan of $52.4m was reforecast to $43.1m

The reforecast took account of efficiencies in project delivery ($1.4m saving), central government approval timeframes ($3m deferred) and deferral of projects to assist with DHB regional cashflow management ($4.9m).

As a result of these known variances healthAlliance is reporting this metric as 'substantially achieved' as the shortfall in expenditure was noted to the Board/Shareholders who supported the level of underspend.

Regional Internal Audit

Utilisation of Audit Service relative to Individual DHB funding

60 audits completed

Audit Plan delivered within the agreed timeframes and budget

76 audits completed

The Regional Audit Team prepare an Audit Plan which is approved by the relevant healthAlliance or DHB Finance, Audit & Risk Committees.

The Regional Internal Audit (RIA) team delivered the agreed Audit Plan within the agreed funding parameters. In total, the team completed 76 audits against the original plan of 60 audits. RIA completed 16 additional audits in response to changes in the risk profile and requests from Management or Boards.

DEL

IVER

Y EX

CEL

LEN

CE

1. The reporting system does not record incidents by Tier 1 (critical) and Tier 2 (non-critical). Consequently this measure is reported as total number of incidents, as reported to the Board and Northern Region stakeholders. Results exclude SLA incidents caused by events outside of healthAlliance control (e.g. fibre cuts) and excludes incidents which do not significantly impair the functionality of the system and do not significantly affect service to customers/patients; and incidents which only affect a single user. Supporting documentation for the exclusion applied are not available. This control weakness has been addressed through a rigorous control review process at management and governance level.

2. Defined as the total number of incidents within the scope of the Stabilisation Programme. Result includes SLA incidents (i.e. incidents likely to have a customer impact) as well as non-SLA incidents (i.e. internal incidents/outages).


OutputKey



Develop and advance our Internal Transformationprogramme

Future Operating Model

Delivery to Plan

Future operating model approved and programme for change milestones met

Operating Model Implemented

healthAlliance has developed a new target operating model to define how healthAlliance will interact with customers and operate internally. The operating model will also inform the development of future customer offerings and process designs.

healthAlliance developed and agreed the operating model in the second quarter of this year, which informed the organisational structure changes implemented in the third quarter.

Improve Project & Programme Delivery Frameworks (Capability and Outcomes)

Delivery to Plan

Project delivery capability model approved and programme for change milestones met

Project delivery capability model approved and programme for change milestones met

healthAlliance has been improving its Project & Programme Delivery Frameworks to ensure alignment with DHB requirements and the new Organisational Operating model. The first phase of the programme was delivered under the healthAlliance Transformation programme in the third and fourth quarter. This included the implementation of a project & capability model, consolidation of project managers under a capability manager, appointment of a services transition manager (testing and release management) and the strengthening of portfolio management (including one portfolio manager per customer group).

The second phase is to implement Project Ways of Working (improved project methodologies, for use from 1 July 2017). These methodologies will be further matured and refined as part of P3M3 and Investor Confidence Rating (ICR) requirements next year.

Develop and advance our External Transformationprogramme

Initiate the Information Systems Strategic Plan (ISSP)

Programme approved & key programme milestones met

Delivery of Information Systems Strategic Plan (ISSP) and Associated Roadmaps

Information Systems Strategic Plan Developed (Version 1)

healthAlliance is leading the development of the Northern Region's Information Systems Strategic Plan (ISSP). The plan defines a forward-looking view of the information systems landscape, information technology direction and the investment required to support the needs and vision of a connected Northern Region.

The ISSP was presented to the Programme Steering Group in June 2017. In support of the ISSP there is also a more detailed programme plan (version 1.0). This will be presented to the Steering Group and Regional stakeholders for review and endorsement in August 2017. Stakeholder feedback will then be incorporated and the work aligned with the Northern Region's Long Term Investment Plan (LTIP). Version 2.0 of the ISSP plan is expected to be completed by March 2018.

TRA

NSF

OR

MAT

ION


Revenue and Expenditure by Output Class

Group

Revenue Expenditure Net Surplus / Deficit

Actual Sol Actual Sol Actual Sol$000 $000 $000 $000 $000 $000

Regional Internal Audit 1,537 1,129 1,534 1,129 3 0Customer Services 9,169 8,124 9,048 8,124 121 0Finance and Corporate Services 13,197 17,920 20,169 17,920 (6,972) 0Project and Programme Services 1,385 9,335 3,426 9,335 (2,041) 0Technology Services 88,375 100,187 79,521 100,187 8,854 0Supply Chain 9,457 8,377 10,274 8,377 (817) 0Procurement 12,032 8,477 9,836 8,477 2,196 0

135,152 153,549 133,808 153,549 1,344 0

-TheStatementofIntentincluded"revenue"relatingtothecostofinternally-generatedsoftwareassets.Inthe presentationofactualscapitalisedtheamountswerenettedoffagainstpersonnelcostsratherthanshownas "revenue". The budgets per the SoI amount to $10.7m revenue for Technology Services, $9.5m for Project and ProgrammeServicesandallothers$0.7m.SettlementsrelatingtotheNationalProcurementfunctionamountto $3.1m. Allowing for these the overall revenue variance is $0.5m unfavourable. -TheStatementofIntentincluded"expenditure"relatingtothecostsofinternally-generatedsoftwareassets.For theactuals,thepresentationofthesehasbeenamendedandthecostsnettedoffagainstpersonnelcosts,the budgetfortheseamountedto$19.5m.TheSupplyChainandProcurementfunctionsoverallare$1.4mfavourable. The overall net expenditure variance is $1.9m favourable. -ByServiceGroup,certainprovisionsonmajorinformationsystemsprojectshavebeenaccountedforunder CorporateandProjectsandProgrammes,resultinginunfavourablevariancesthere,offsetbyfavourablevariance inTechnologyServices.ProcurementisfavourableduetotheNationalProcurementnetsettlements.


Parent

Revenue Expenditure Net Surplus / Deficit

Actual Sol Actual Sol Actual Sol$000 $000 $000 $000 $000 $000

Regional Internal Audit 1,537 1,129 1,534 1,129 3 0Customer Services 9,169 8,124 9,226 8,124 (57) 0Finance and Corporate Services 15,266 17,920 21,626 17,920 (6,360) 0Project and Programme Services 1,385 9,335 3,426 9,335 (2,041) 0Technology Services 88,375 100,187 79,847 100,187 8,528 0Supply Chain 9,457 10,320 (863) 0Procurement 533 502 31 0

125,722 136,695 126,481 136,695 (759) 0

-TheStatementofIntentwasalignedwiththeinternalmanagementreportingofthetwohealthAlliancegroup companies.NorthernRegionProcurement,SupplyChainandLogisticsfunctionswerereportedagainstthe subsidiary,healthAlliance(FPSC)Limited.Theactualsarereportedagainsttheparent,whichwastheemployerof thosestaffandwhoreceivedthefundingtoprovidethisservice. -TheStatementofIntentincluded"revenue"relatingtothecostofinternally-generatedsoftwareassets.Inthe presentationofactualscapitalisedtheamountswerenettedoffagainstpersonnelcostsratherthanshownas "revenue". The budgets per the SoI amount to $10.7m revenue for Technology Services, $9.5m for Project and | Programme Services and all others $0.7m. Allowing for these, as well as the Supply Chain and Procurement services, the overall net revenue variance is $0.1m unfavourable. -TheStatementofIntentincluded"expenditure"relatingtothecostsofinternally-generatedsoftwareassets. Fortheactuals,thepresentationofthesehasbeenamendedandthecostsnettedoffagainstpersonnelcosts, the budget for these amounted to $19.5m. There was an overspend in Supply Chain and Procurement services of $0.8m. The overall net expenditure variance is $0.7m unfavourable. -ByServiceGroup,certainprovisionsonmajorinformationsystemsprojectshavebeenaccountedforunder CorporateandProjectsandProgrammes,resultinginunfavourablevariancesthere,offsetbyfavourablevariance in Technology Services.


healthAlliance N.Z. Limited FINANCIAL

STATEMENTS

Statement of Comprehensive Revenue and Expenses For the year ended 30 June 2017

Group ParentActual

2017$000

Budget2017$000

Actual2016$000

Actual2017$000

Budget2017$000

Actual2016$000

Income Notes

Revenue 1 134,863 129,204 125,332 125,453 110,842 115,615Other income 2 272 24,345 347 255 25,854 259Finance income 5a 16 0 161 14 0 158Total Income 135,152 153,549 125,840 125,722 136,695 116,032ExpenditureEmployee benefit costs 4 47,221 59,642 51,042 43,009 45,104 45,535

Depreciation and amortisation

6, 7 31,262 37,108 28,487 30,894 36,637 28,039

Other expenses 3 55,295 56,799 47,155 52,578 54,953 43,233Finance costs 5b 30 0 56 0 0 0Total Expenditure 133,808 153,549 126,740 126,481 136,695 116,807Surplus/ (Deficit) 1,344 0 (900) (759) 0 (775)

Other Comprehensive Revenue and Expenses 0 0 0 0 0 0

TOTAL COMPREHENSIVE REVENUE AND EXPENSES 1,344 0 (900) (759) 0 (775)

The accompanying notes form part of these financial statements.Explanations of major variances against budget are provided in note 28.


StatementofFinancialPosition As at 30 June 2017

Group ParentActual

2017$000

Budget2017$000

Actual2016$000

Actual2017$000

Budget2017$000

Actual2016$000

Assets Notes

Current AssetsCash and cash equivalents 9 0 2,518 6,137 0 2,349 6,122Debtors and other receivables 10 11,034 11,460 8,017 11,663 11,580 8,010Prepayments 11 4,827 0 3,964 4,827 0 3,908

Non-current assets held for sale

12 0 0 0 203 0 0

Total Current Assets 15,861 13,978 18,118 16,693 13,929 18,040

Non-Current Assets

Property, plant, and equipment

6 68,896 102,682 59,705 66,298 100,368 56,942

Intangible assets 7 87,795 60,380 76,226 87,795 60,380 76,226Prepayments - non-current 11 86 90 153 86 90 153Total Non-Current Assets 156,777 163,152 136,084 154,179 160,838 133,321Total Assets 172,638 177,130 154,202 170,872 174,767 151,361

LiabilitiesCurrent LiabilitiesBank overdraft 9 815 0 0 1,640 0 0Creditors and other payables 13 13,268 9,640 14,839 12,938 9,160 14,190Employee entitlements 14 5,699 7,750 5,744 5,479 5,860 5,242Provisions 15 422 0 552 422 0 552Lease incentives 16 491 0 250 491 0 0Borrowings 17 0 0 975 0 0 0Total Current Liabilities 20,694 17,390 22,360 20,970 15,020 19,984

Non-current liabilitiesEmployee entitlements 14 2,913 2,780 2,981 2,793 900 2,792Lease incentives 16 3,437 900 459 3,437 2,600 0Total Non-Current Liabilities 6,350 3,680 3,440 6,230 3,500 2,792Total Liabilities 27,044 21,070 25,800 27,199 18,520 22,776Net Assets 145,594 156,060 128,402 143,674 156,247 128,585

EquityShareholders’ equity 18 144,918 156,608 129,070 144,918 156,608 129,070Retained earnings 676 (548) (668) (1,244) (361) (485)Total Equity 145,594 156,060 128,402 143,674 156,247 128,585




Statement of Changes in Equity For the year ended 30 June 2017

GroupContributed

Equity$000

Retained Earnings

$000

Total

$000

Notes

Equity at 1st July 2015 101,664 232 101,896Surplus/(deficit) 0 (900) (900)Equity issued but not called 0 Class A shares, 80 at $10,000 18 0 0 0 Class B shares, 20 at $1 18 0 0 0Capital contributions - Class C shares 18 27,406 0 27,406Equity at 30th June 2016 18 129,070 (668) 128,402

Equity at 1st July 2016 129,070 (668) 128,402Surplus/(deficit) 0 1,344 1,344Equity issued but not called 0 Class A shares, 80 at $10,000 18 0 0 0 Class B shares, 20 at $1 18 0 0 0Capital contributions - Class C shares 18 15,848 0 15,848Equity at 30th June 2017 18 144,918 676 145,594

ParentContributed

Equity$000

Retained Earnings

$000

Total

$000

Notes

Equity at 1st July 2015 101,664 290 101,954Surplus/(deficit) 0 (775) (775)Capital contributions - Class C shares 18 27,406 0 27,406Equity at 30th June 2016 18 129,070 485 128,585

Equity at 1st July 2016 129,070 (485) 128,585Surplus/(deficit) 0 (759) (759)Capital contributions - Class C shares 18 15,848 0 15,848Other Comprehensive Income 18 0 0 0Equity at 30th June 2017 18 144,918 (1,244) 143,674



Statement of Cash Flows For the year ended 30 June 2017

Group ParentActual

2017$000

Budget2017$000

Actual2016$000

Actual2017$000

Budget2017$000

Actual2016$000

Cash flows from Operating Activities

Notes

Cash receipts from services 133,023 129,139 124,623 122,927 110,842 113,094Other receipts 0 25,325 4,788 0 26,974 5,113

Proceeds from landlord incentive 3,423 0 0 3,423 0 0

Cash paid to employees and suppliers (103,711) (117,085) (100,777) (95,535) (101,338) (90,225)

Cash generated from operations 32,735 37,379 28,634 30,815 36,478 27,982

Interest received 66 100 165 64 100 162Interest paid (30) (65) (56) 0 0 0Goods and services tax (net) (647) 0 (278) (540) 0 (402)

Net Cash Flow from Operating Activities

8 32,124 37,414 28,465 30,339 36,578 27,742

Cash flows from Investing Activities

Acquisition of PP&E, Intangibles (49,063) (59,129) (48,210) (49,063) (59,129) (48,210)

Net Cash Flow from/(used in) Investing Activities (49,063) (59,129) (48,210) (49,063) (59,129) (48,210)

LiabilitiesShareholder Capital Funding 10,962 17,400 20,052 10,962 17,400 20,052Proceeds from borrowings 0 0 0 0 0 0Repayment of loans (975) (697) (648) 0 0 0

Net Cash Flow from/(used in) Financing Activities 9,987 16,703 19,404 10,962 17,400 20,052

Net increase/(decrease) in cash and cash equivalents (6,952) (5,012) (341) (7,762) (5,151) (416)

Cash and cash equivalents at the beginning of the year 6,137 7,530 6,478 6,122 7,500 6,538

Cash and cash equivalents at the end of the year

9 (815) 2,518 6,137 (1,640) 2,349 6,122


Reporting Entity healthAlliance N.Z. Limited (healthAlliance) is a company owned by the Northland, Waitemata, Auckland and Counties Manukau District Health Boards, themselves established by the New Zealand Public Health and Disability Act 2000. healthAlliance’s ultimate parent is the New Zealand Crown. healthAlliance is a crown entity in terms of the Crown Entities Act 2004, domiciled in New Zealand.

healthAlliance is a public benefit entity, as defined for financial reporting purposes. healthAlliance is incorporated under the Companies Act 1993.

healthAlliance’s activities involve delivering support services in Information Technology, Procurement, Supply Chain and Finance to health sector customers.

healthAlliance was incorporated on the 13th of November 2000.

The group financial statements include healthAlliance and its subsidiary, healthAlliance (FPSC) Ltd (hAFPSC).

hAFPSC was incorporated on the 26th of September 2013 and is wholly owned by healthAlliance and domiciled in New Zealand.

The financial statements were authorised for issue by the Board on the date the Statement of Responsibility was signed.

Basis of Preparation The financial statements have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period.

Statement of Compliance The financial statements have been prepared in accordance with the requirements of the Crown Entities Act 2004 and the Financial Reporting Act 1993 which include the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP).

The financial statements have been prepared in accordance with Tier 1 PBE accounting standards.

These financial statements comply with Public Sector PBE accounting standards.

Functional and Presentation Currency The financial statements are presented in New Zealand Dollars (NZD), rounded to the nearest thousand dollars ($000). The functional currency of healthAlliance is NZD.

Standards, Amendments and Interpretations NZ IFRS standards, amendments and interpretations issued but not yet effective that have not been early adopted and which are relevant to healthAlliance are:

• In January 2017, the XRB issued new standards for interests in other entities (PBE IPSAS 34 – 38). These new standards replace the existing standards for interests in other entities (PBE IPSAS 6 – 8). The new standards are effective for annual periods beginning on or after 1 January 2019, with early adoption permitted. healthAlliance plans to apply these new standards in preparing the 30 June 2020 financial statements. healthAlliance has not yet assessed the effects of these new standards.

• In January 2017, the XRB issued PBE IFRS 9 Financial Instruments. PBE IFRS 9 replaces PBE IPSAS 29 Financial Instruments: Recognition and Measurement. PBE IFRS 9 is effective for annual periods beginning on or after 1 January 2021, with early application permitted. The main changes affecting healthAlliance are :

- New financial asset classifications requirements for determining whether an asset is measured at fair value or amortised cost.

- A new impairment model for financial assets based on expected losses, which may result in the earlier recognition of impairments losses.

Statement of Accounting Policies


healthAlliance plans to apply this standard in preparing its 30 June 2022 financial statements. healthAlliance has not yet assessed the effects of this new standard.

Significant Accounting Policies Basis of Consolidation The consolidated financial statements are prepared adding together like items of assets, liabilities, equity, income, and expenses on a line-by-line basis. All significant intragroup balances, transactions, income, and expenses are eliminated on consolidation.

Subsidiary healthAlliance is required under the Crown Entities Act 2004 to prepare consolidated financial statements in relation to the group for each financial year.

healthAlliance consolidates in the group financial statements all entities where they have the capacity to control their financing and operating policies so as to obtain benefits from the activities of the subsidiary. This power exists where healthAlliance controls the majority voting power on the governing body or where such policies have been irreversibly predetermined by healthAlliance or where the determination of such policies is unable to materially affect the level of potential ownership benefits that arise from the activities of the subsidiary. Consistent accounting policies have been used for both healthAlliance and its subsidiary.

Subsidiaries are consolidated from the date on which control is obtained by the group and cease to be consolidated from the date on which control is transferred out of the group.

In preparing the consolidated financial statements, all intercompany balances and transactions, revenue and expenses and profit and losses resulting from intra - group transactions have been eliminated in full.

The investment in subsidiaries is carried at cost in healthAlliance’s parent entity financial statements.

Foreign Currency Transactions Transactions in foreign currencies are translated into NZD at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at balance date are translated into NZD at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the surplus or deficit. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Budget Figures The group budget figures presented in the financial statements comprise the healthAlliance parent figures that were approved by the Board and included in the Statement of Intent and the subsidiary's budget figures that were approved by its own Board. The budget figures have been prepared on a basis consistent with the accounting policies adopted by healthAlliance for the preparation of these financial statements. A separate table has been included in the accounts to reconcile the published Statement of Intent figures into the format of the actual operations of the Group over the year.

Financial Assets CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash on hand and call deposits with maturity of no more than three months from the date of acquisition. Bank overdrafts that are repayable on demand and form an integral part of healthAlliance’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

DEBTORS AND OTHER RECEIVABLES Short term receivables are recorded at their face value, less any provision for impairment.

A receivable is considered impaired when there is evidence that healthAlliance will not be able to collect the amount due. The amount of the impairment is the difference between the carrying amount of the receivable and the present value of the amounts expected to be collected.

The estimated recoverable amount of receivables carried at amortised cost is calculated as the present value of


estimated future cash flows, discounted at their original effective interest rate. Receivables with a short duration are not discounted.

All overdue receivables are assessed for impairment on an on-going basis and appropriate provisions applied to individual invoices; taking into account age of the debt and payment histories of the debtor. Individual debts that are known to be uncollectible are written off when identified. An impairment provision equal to the receivable carrying amount is recognised when there is evidence that healthAlliance has exhausted all reasonable prospects of collecting the receivable.

Other Current Assets NON-CURRENT ASSETS HELD FOR SALE A non-current asset is classified as held for sale if its carrying amount will be recovered through sale rather than continuing use. The asset is measured at the lower of its carrying amount or fair value less costs to sell.

Write-downs of the asset are recognised in the surplus or deficit. Any increase in fair values (less costs to sell) are recognised in the surplus or deficit up to the level of any impairment losses that have previously been recognised.

A non-current asset is not depreciated or amortised while classified as held for sale.

Financial Liabilities BORROWINGS Borrowings are initially recognised at their fair value plus transaction costs. After initial recognition, all borrowings are measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless healthAlliance or the group has an unconditional right to defer settlement of the liability for at least 12 months after balance date.

CREDITORS AND OTHER PAYABLES Creditors and other payables are initially measured at fair value and subsequently stated at amortised cost using the effective interest rate.

Property, Plant and Equipment

CLASSES OF PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following asset classes:

• Leasehold Improvements • Plant & Equipment • Vehicles • IT Equipment

OWNED ASSETS Property, plant and equipment are stated at cost, less accumulated depreciation. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of direct overheads.

Where material parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate components of property, plant and equipment.

ADDITIONS OF PROPERTY, PLANT AND EQUIPMENT The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential will flow to the group and the cost can be measured reliably.

Work in progress is recognised at cost less impairment, and is not depreciated.

DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT Where an item of plant and equipment is disposed of, the gain or loss recognised in the surplus or deficit is calculated as the difference between the net sales price and the carrying amount of the asset.


DEPRECIATION Depreciation is recognised in the surplus or deficit using the straight line method.

Depreciation is set at rates that will write off the cost of the assets, less their estimated residual values, over their useful lives. These rates are reviewed annually. The estimated useful lives of major classes of assets and resulting rates are as follows:

CLASS OF ASSET ESTIMATED LIFE DEPRECIATION RATE

Leasehold Improvements 3 to 10 years 10 to 33.3%

Plant & Equipment 5 to 20 years 5 to 20%

Vehicles 5 to 8 years 12.5 to 20%

IT Equipment 3 to 8 years 12.5 to 33.3%

The residual value and useful life of an asset are reviewed, and adjusted if applicable, at each financial year end.

The total cost of a project is transferred to the appropriate class of asset on its completion and then depreciated.

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter.

SUBSEQUENT COSTS Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to healthAlliance and the cost of the item can be measured reliably.

The costs of day-to-day servicing of property, plant, and equipment are recognised in the surplus or deficit as they are incurred.

Leases FINANCE LEASES A finance lease is a lease that transfers to the lessee substantially all the risks and rewards incidental to ownership of an asset, whether or not title is eventually transferred.

At the commencement of the lease term, finance leases where healthAlliance is the lessee, are recognised as assets and liabilities in the statement of financial position at the lower of the fair value of the leased item or the present value of the minimum lease payments.

The finance charge is charged to the surplus or deficit over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability.

The amount recognised as an asset is depreciated over its useful life. If there is no reasonable certainty as to whether healthAlliance will obtain ownership at the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life.

OPERATING LEASES An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset to the lessee.

Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.

Lease incentives received are recognised in the surplus or deficit as a reduction of rental expense over the lease term.

Intangible Assets SOFTWARE Software that is acquired by healthAlliance is stated at cost less accumulated amortisation. healthAlliance also develops and modifies software and the cost of internal staff time is added to the value of the software where future economic benefits of this will flow to healthAlliance.


Costs associated with the development and maintenance of healthAlliance’s website are recognised as an expense when incurred.

Costs associated with maintaining computer software are recognised as an expense when incurred.

Staff training costs are recognised as an expense when incurred.

AMORTISATION Amortisation is recognised in the surplus or deficit on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

TYPE OF ASSET ESTIMATED LIFE AMORTISATION RATE

Software

Work in progress is not amortised 2 to 10 years 10 to 50%

Impairment of Property, Plant and Equipment and Intangible Assets healthAlliance does not hold any cash-generating assets. Assets are considered cash-generating where their primary objective is to generate a commercial return.

IMPAIRMENT The carrying amounts of healthAlliance’s assets are reviewed at each balance date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.

If the estimated recoverable amount of an asset is less than its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the surplus or deficit.

The reversal of an impairment loss is recognised in the surplus or deficit.

REVERSALS OF IMPAIRMENT Impairment losses are reversed when there is a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Employee Entitlements Obligations for contributions to defined contribution plans are recognised as an expense in the surplus or deficit as incurred.

SHORT TERM EMPLOYEE ENTITLEMENTS Employee benefits that are due to be settled within 12 months after the end of the period in which the employee renders the related service are measured at nominal values based on accrued entitlements at current rates of pay.

These include salaries and wages accrued up to balance date, annual leave earned up to but not yet taken at balance date, sick leave, long service leave and retirement gratuities.

A liability for sick leave is recognised to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that it will be used by staff to cover those future absences.

LONG TERM EMPLOYEE ENTITLEMENTS Employee benefits that are due to be settled beyond 12 months after the end of the period in which the employee renders the related service, such as long service leave and retirement gratuities, have been calculated on an actuarial basis. The calculations are based on: • likely future entitlements accruing to staff based on years of service, years to entitlement and • the likelihood that staff will reach the point of entitlement and contractual entitlement information; and • the present value of the estimated future cash flows.


Provisions A provision is recognised for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that an outflow of future economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

RESTRUCTURING Provisions for restructuring are recognised when healthAlliance has approved a detailed and formal restructuring plan and the restructure has been publicly announced or commenced. Future operating costs are not provided for.

ACC Partnership Programme healthAlliance belongs to the ACC Accredited Employers Programme (the “Full Self Cover Plan”) whereby healthAlliance accepts the management and financial responsibility for employee work-related illnesses and accidents. Under the programme, healthAlliance is liable for all claim costs for a period of 2 years after the end of the cover period in which the injury occurred. At the end of the two-year period, healthAlliance pays a premium to ACC for the value of residual claims, and from that point the liability for ongoing claims passes to ACC.

The liability for the ACC Partnership Programme is measured using actuarial techniques at the present value of expected future payments to be made in respect of employee injuries and claims that occurred up to balance date. Consideration is given to anticipated future wage and salary levels and experience of employee claims and injuries. Expected future payments are discounted using market yields on New Zealand Government bonds at balance date with terms to maturity that match, as closely as possible, the estimated future cash outflows.

Superannuation Schemes DEFINED CONTRIBUTION SCHEMES Employer contributions to KiwiSaver are accounted for as relating to defined contribution schemes and are recognised as an expense in the surplus or deficit as incurred.

DEFINED BENEFIT SCHEMES Employer contributions to KiwiSaver are accounted for as defined contribution schemes and are recognised as an expense in the surplus or deficit as incurred.

Income Tax healthAlliance NZ Ltd and healthAlliance (FPSC) Ltd are both exempt from income tax under section CW38 of the Income Tax Act 2007.

Goods and Services Tax All amounts are shown exclusive of Goods and Services Tax (GST), except for receivables and payables that are stated inclusive of GST. Where GST is irrecoverable as an input tax, it is recognised as part of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of receivables or payables in the statement of financial position.

The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as a net operating cash flow in the statement of cash flows.

Commitments and contingencies are disclosed exclusive of GST.

Revenue SERVICES RENDERED Revenue from services is recognised, to the proportion that a transaction is complete, when it is probable that the payment associated with the transaction will flow to healthAlliance and that payment can be measured or estimated reliably, and to the extent that any obligations and all conditions have been satisfied by healthAlliance.

All services are provided on commercial terms and are considered to be exchange transactions.


INTEREST Interest received and receivable on funds invested is recognised as interest accrues using the effective interest method, allocating the interest income over the relevant period.

Expenses BORROWING COSTS Borrowing costs are recognised as an expense in the financial year in which they are incurred.

Equity Equity is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified into the following components: • Accumulated Surpluses; and • Shares Issued

Critical Accounting Estimates and Assumptions In preparing these financial statements, healthAlliance has made estimates and assumptions concerning the future.

These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are mainly related to the lease make good provision where an estimate has been made of the future “make good” costs. (Refer to Note 13 for further information).

RETIREMENT AND LONG SERVICE LEAVE Note 14 provides an analysis of the exposure in relation to estimates and uncertainties surrounding retirement and long service leave liabilities.

The present value of retirement and long service leave obligations depend on a number of factors that are determined on an actuarial basis. The two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will affect the carrying amount of the liability.

Expected future payments are discounted using forward discount rates derived from the yield curve of New Zealand Government bonds. The discount rates used have maturities that match, as closely as possible, the estimated future cash outflows. The salary inflation factor has been determined after considering historical salary inflation patterns and after obtaining advice from an independent actuary. The discount rates used this year range from 1.87% for the first projection year to 4.75% from the 31st projection year (2016: 2.04 – 5.50%). Salary inflation has been valued at 2% (2016: 1%).

ESTIMATING USEFUL LIVES OF PLANT AND EQUIPMENT AND IT HARDWARE ASSETS At each balance date, the useful lives and residual values (if any) of the plant and equipment and IT hardware assets are reviewed. Assessing the appropriateness of the useful lives and residual values requires a number of factors to be considered such as the physical condition of the assets, expected period of use of the asset by healthAlliance, potential disposal proceeds from future sale of the asset or changes in business practice where such assets may be sold and leased back or the service provided by a third party on contract.

An incorrect estimate of the useful life or residual value will affect the depreciation expense recognised in the surplus or deficit and carrying amount of the asset in the statement of financial position. healthAlliance minimises the risk of this estimation uncertainty through a regular asset replacement programme and review of high net book value items.

ESTIMATING USEFUL LIVES OF INTANGIBLE ASSETS At each balance date, the useful lives and residual values (if any) of the intangible assets are reviewed. Assessing the appropriateness of the useful lives requires a number of factors to be considered such as the expected period of use of the software by healthAlliance, technological changes in systems and platforms and the expected timeframe for development or acquisition of replacement systems and platforms.


An incorrect estimate of the useful life or residual value will affect the amortisation expense recognised in the surplus or deficit and carrying amount of the intangible assets in the statement of financial position.

healthAlliance has a standard software life expectancy of 5 years unless specific terms or external evidence (for example, software provided by Microsoft or Oracle) indicate a longer life is reasonable. There are currently no indicators that the expected lifetimes adopted will be materially in error.

Critical Judgements in Applying Accounting Policies

Management discussed with the Board the development, selection and disclosure of healthAlliance’s critical accounting policies and estimates and the application of these policies and estimates. The following critical judgements have been exercised in applying accounting policies:

CLASSIFICATION OF LEASES Determining whether a lease agreement is a finance or an operating lease requires judgement as to whether the agreement transfers substantially all the risks and rewards of ownership to healthAlliance.

Judgement is required on various aspects that include, but are not limited to, the fair value of the leased asset, the economic life of the leased asset, whether or not to include renewal options in the lease term, and determining an appropriate discount rate to calculate the present value of the minimum lease payments. Classification as a finance lease means the asset is recognised in the statement of financial position as property, plant, and equipment, whereas for an operating lease no such asset is recognised.

healthAlliance entered into several historical leases which are combined leases of land and buildings. It was not possible to obtain a reliable estimate of the split of the fair values of the lease interest between land and buildings at inception of the lease. Therefore, in determining lease classification healthAlliance evaluated whether both parts are clearly operating leases or finance leases. Firstly, land title does not pass. Secondly, because the rent paid to the landlord for the building is increased to market rent at regular intervals, and healthAlliance does not participate in the residual value of the building it is judged that substantially all the risks and rewards of the building are with the landlord. Based on these qualitative factors it is concluded that the leases are operating leases.

COMPARATIVE FIGURES Comparative information has been reclassified as appropriate to achieve consistency in disclosure with the current year.

Statement of Service PerformanceCost of Service The cost of service statements, as reported in the statement of service performance, report the net cost of services for the outputs of healthAlliance and are represented by the cost of providing the output less all the revenue that can be allocated to these activities.

Cost Allocation healthAlliance has arrived at the net cost of service for each significant activity using the cost allocation system outlined below.

Cost Allocation Policy Direct costs are charged directly to output classes. Indirect costs are charged to output classes based on cost drivers and related activity and usage information.

Criteria for Direct and Indirect Costs Direct costs are those costs directly attributable to an output class. Indirect costs are those costs that cannot be identified in an economically feasible manner with a specific output class.

Cost Drivers for Allocation of Indirect Costs The cost of internal services not directly charged to outputs is allocated as overheads apportioned based on a proportion of total expenditure.


1. RevenueGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Professional services to shareholders 120,097 110,336 120,097 110,336Other services to shareholders 476 841 476 841Software solutions to shareholders (0) 0 (0) 0Professional services to other Crown health entities 13,986 13,936 2,507 2,565Other services to other related parties 303 219 2,372 1,873

134,863 125,332 125,453 115,615

Revenuefromshareholdersisdisaggregatedtodifferentiatebetweenrevenuefortheprovisionofservicescontractedatthestartoftheyear,as"professionalservices",andrevenueforotheroradditionalservicesprovided,as"otherservices".

2. Other IncomeGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Other 272 347 255 259272 347 255 259

Notes to the Financial Statements


3. Other ExpensesGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Outsourced personnel 8,933 6,528 7,925 4,777

Software licences 25,169 23,275 25,116 23,027

Computer hardware maintenance 4,013 3,986 4,013 3,985

Telecommunications 4,548 4,445 4,521 4,363

Infrastructure and non-clinical expenses 7,577 4,257 7,165 3,775

Other expenses 1,088 1,283 30 218

Audit fees (for the audit of the 2016 financial statements) 8 133 0 115

Audit fees (for the audit of the 2017 financial statements) 129 0 109 0

Audit fees (other services) 0 0 0 0

Property leases 3,141 2,547 3,060 2,334

Board members' fees 150 145 102 82

Operating lease expenses 537 556 537 557

55,295 47,155 52,578 43,233NoadditionalfeeshavebeenpaidtoAuditNewZealandforotherservices.

4.EmployeeBenefitCostsGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Wages and salaries 45,660 49,348 41,484 43,992Contributions to defined contribution plans 1,311 1,248 1,204 1,113Increase/(decrease) in employee benefit provisions 250 446 321 430

47,221 51,042 43,009 45,535

5. FinanceGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

a. Finance IncomeInterest received 16 161 14 158

16 161 14 158

b. Finance CostsInterest expense 30 56 0 0

30 56 0 0


6. Property, Plant and EquipmentGroup

Leasehold Improvements

$000

Plant & Equipment

$000

Vehicles

$000

IT Equipment

$000

Work in Progress

$000

Total

$000CostBalance at 1 July 2015 3,139 2,353 374 148,198 12,476 166,540Additions 0 0 0 0 28,140 28,140Assets Contributed by Shareholders 0 0 0 3,417 0 3,417

Disposals (77) (460) (130) (80,093) 0 (80,760)Transfer to additions PP&E 1,573 369 83 24,414 (26,439) 0Balance at 30 June 2016 4,635 2,262 327 95,936 14,177 117,337

Balance at 1 July 2016 4,635 2,262 327 95,936 14,177 117,337Additions 0 0 0 0 22,062 22,062Assets Contributed by Shareholders 0 0 0 1,086 0 1,086

Disposals 0 0 0 0 0 0Transfer to additions PP&E 2,767 902 87 2,983 (6,739) 0Transfer to Assets Held for Sale 0 0 0 0 0 0Balance at 30 June 2017 7,402 3,164 414 100,005 29,500 140,485

Depreciation and impairment lossesBalance at 1 July 2015 1,117 916 341 123,324 0 125,698Depreciation charge for the year 438 250 11 11,955 0 12,653Disposals (37) (460) (130) (80,093) 0 (80,720)Balance at 30 June 2016 1,518 706 222 55,186 0 57,632

Balance at 1 July 2016 1,518 706 222 55,186 0 57,632Depreciation charge for the year 735 349 36 12,837 0 13,957Transfer to Assets Held for Sale 0 0 0 0 0 0 Disposals 0 0 0 0 0 0Balance at 30 June 2017 2,253 1,055 258 68,023 0 71,589

Carrying amounts - GroupAt 30 June 2016 3,117 1,556 105 40,750 14,177 59,705At 30 June 2017 5,149 2,109 156 31,982 29,500 68,896

hAreviewedthelifeofitscomputersystemshardwaretakingintoconsiderationtechnologicaladvancesandtheprospectofoutsourcingthedatacentreoperations.Asaresultofthisafurtherdepreciationchargewastakenup in this year of $2.6 million. Duetoinherentuncertaintiesintheoutcomeofevaluatingoutsourcingoptions,itisnotpracticaltoestimatethefutureeffects.WorkinProgressrelatingtoITequipmentis$29.5m.Nootherassetclasseshaveassetsinthecourseofconstruction.Thereareanumberofassetsbeingtransferredbetweentheparentandsubsidiarywhichthegroupwillcontinue to use.


6. Property, Plant and EquipmentParent

Leasehold Improvements

$000

Plant & Equipment

$000

Vehicles

$000

IT Equipment

$000

Work in Progress

$000

Total

$000CostBalance at 1 July 2015 807 893 374 148,198 12,476 162,748Additions 0 0 0 0 28,140 28,140Assets Contributed by Shareholders 0 0 0 3,417 0 3,417

Disposals (77) (460) (130) (80,093) 0 (80,760)Transfer to additions PP&E 1,573 369 83 24,414 (26,439) 0Balance at 30 June 2016 2,303 802 327 95,936 14,177 113,545

Balance at 1 July 2016 2,303 802 327 95,936 14,177 113,545Additions 0 0 0 0 22,062 22,062Assets Contributed by Shareholders 0 0 0 1,086 0 1,086

Disposals 0 0 0 0 0 0Transfer to additions PP&E 2,767 902 87 2,983 (6,739) 0Transfer to Assets Held for Sale 0 (50) (300) 0 0 (350)Balance at 30 June 2017 5,070 1,654 114 100,005 29,500 136,343

Depreciation and impairment lossesBalance at 1 July 2015 756 696 341 123,324 0 125,117Depreciation charge for the year 186 54 11 11,955 0 12,206Disposals (37) (460) (130) (80,093) 0 (80,720)Balance at 30 June 2016 905 290 222 55,186 0 56,603

Balance at 1 July 2016 905 290 222 55,186 0 56,603Depreciation charge for the year 563 153 36 12,837 0 13,589Transfer to Assets Held for Sale 0 (2) (145) 0 0 (147)Disposals 0 0 0 0 0 0Balance at 30 June 2017 1,468 441 113 68,023 0 70,045

Carrying amounts - ParentAt 30 June 2016 1,398 512 105 40,750 14,177 56,942At 30 June 2017 3,602 1,213 1 31,982 29,500 66,298

hAreviewedthelifeofitscomputersystemshardwaretakingintoconsiderationtechnologicaladvancesandtheprospectofoutsourcingthedatacentreoperations.Asaresultofthisafurtherdepreciationchargewastakenupinthis year of $2.6 million. Duetoinherentuncertaintiesintheoutcomeofevaluatingoutsourcingoptions,itisnotpracticaltoestimatethefutureeffects.WorkinProgressrelatingtoITequipmentis$29.5m.Nootherassetclasseshaveassetsinthecourseofconstruction.


7. Intangible AssetsGroup

Software Assets$000

Work in Progress$000

Total Software$000

CostBalance at 1 July 2015 211,487 13,219 224,706 Additions 0 22,672 22,672 Assets Contributed by Shareholders 3,936 0 3,936 Transfer from work in progress 6,753 (6,753) 0Disposals (110,302) 0 (110,302)Balance at 30 June 2016 111,874 29,138 141,012

Balance at 1 July 2016 111,874 29,138 141,012Additions 0 25,755 25,755Assets Contributed by Shareholders 3,119 0 3,119Transfer from work in progress 15,306 (15,306) 0Disposals (389) 0 (389)Balance at 30 June 2017 129,910 39,587 169,497

Amortisation and impairment lossesBalance at 1 July 2015 159,255 0 159,255Amortisation charge for the year 15,833 0 15,833Disposals (110,302) 0 (110,302)Balance at 30 June 2016 64,786 0 64,786

Balance at 1 July 2016 64,786 0 64,786Amortisation charge for the year 17,305 0 17,305Disposals (389) 0 (389)Balance at 30 June 2017 81,702 0 81,702

Carrying amounts - GroupAt 30 June 2016 47,088 29,138 76,226At 30 June 2017 48,208 39,587 87,795

WorkinProgressrelatingtosoftwareis$39.587m.Nootherassetclasseshaveassetsinthecourseofconstruction.


7. Intangible AssetsParent

SoftwareAssets

$000

Work inProgress

$000

TotalSoftware

$000CostBalance at 1 July 2015 211,487 13,219 224,706 Additions 0 22,672 22,672 Assets Contributed by Shareholders 3,936 0 3,936 Transfer from work in progress 6,753 (6,753) 0Disposals (110,302) 0 (110,302)Balance at 30 June 2016 111,874 29,138 141,012

Balance at 1 July 2016 111,874 29,138 141,012Additions 0 25,755 25,755Assets Contributed by Shareholders 3,119 0 3,119Transfer from work in progress 15,306 (15,306) 0Disposals (389) 0 (389)Balance at 30 June 2017 129,910 39,587 169,497

Amortisation and impairment lossesBalance at 1 July 2015 159,255 0 159,255Amortisation charge for the year 15,833 0 15,833Disposals (110,302) 0 (110,302)Balance at 30 June 2016 64,786 0 64,786

Balance at 1 July 2016 64,786 0 64,786Amortisation charge for the year 17,305 0 17,305Disposals (389) 0 (389)Balance at 30 June 2017 81,702 0 81,702

Carrying amounts - ParentAt 30 June 2016 47,088 29,138 76,226At 30 June 2017 48,208 39,587 87,795

WorkinProgressrelatingtosoftwareis$39.587m.Nootherassetclasseshaveassetsinthecourseofconstruction.


8.Reconciliationofsurplusfortheperiodwithnetcashflows fromoperatingactivities

Group ParentActual

2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Surplus for the period 1,344 (900) (759) (775)Add back non cash items Depreciation and amortisation 31,262 28,487 30,894 28,039Movements in working capital (Increase)/decrease in trade and other receivables (2,336) 1,025 (2,972) 508 (Increase)/decrease in prepayments (796) (1,633) (852) (1,652) Increase/(decrease) in trade and other payables (325) 2,055 (7) 2,278 Increase/(decrease) in employee entitlements (113) (511) 238 (348) Increase/(decrease) in provisions (130) (308) (130) (308) Increase/(decrease) in lease incentives 3,219 250 3,928 0Net movement in working capital (482) 878 205 478Net cash inflow/(outflow) from operating activities 32,124 28,465 30,339 27,742

9. Cash and cash equivalents

Group ParentActual

2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Bank balances 0 0 0 0NZ Health Partnerships Limited (formerly Health Benefits Limited) 0 6,137 0 6,122

Cash and cash equivalents 0 6,137 0 6,122Bank overdrafts (815) 0 (1,640) 0Cash and cash equivalents in the statement of cash flows (815) 6,137 (1,640) 6,122

Thecarryingvalueofcashatbankandtermdepositswithmaturitieslessthanthreemonthsapproximatestheirfairvalue.healthAllianceisapartytothe"DHBTreasuryServicesAgreement"betweenNZHealthPartnerships(NZHP)(formerlyHealthBenefitsLimited(HBL))andparticipatinghealthsectorentities,joiningonthe8thJanuary2015.ThisagreementenablesNZHPtosweepbankaccountsandinvestsurplusfundsforthecollectivebenefit.


10. Debtors and other receivablesGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Trade receivables 3,568 1,049 2,713 1,027Other receivables 807 309 2,291 324Other receivables from related parties, non-commercial terms 6,659 6,659 6,659 6,659

11,034 8,017 11,663 8,010

The carrying value of debtors and other receivables approximates their fair value.Theageingprofileofreceivablesatyearendisdetailedbelow:

Group Parent

Gross Receivable

2017$000

Impairment

2017$000

Gross Receivable

2016$000

Impairment

2016$000

Gross Receivable

2017$000

Impairment

2017$000

Gross Receivable

2016$000

Impairment

2016$000

Not past due 9,744 0 7,760 0 10,424 0 7,725 0Past due 0-30 days 49 0 158 0 42 0 158 0Past due 31-90 days 286 0 15 0 242 0 14 0Past due more than 91 days 1,182 (226) 84 0 1,182 (226) 113 0

Total 11,261 (226) 8,017 0 11,890 (226) 8,010 0

All receivables greater than 30 days in age are considered to be past due.Theprovisionforimpairmenthasbeencalculatedbasedonareviewofsignificantdebtorbalancesandacollectiveassessmentofalldebtors(otherthanthosedeterminedtobeindividuallyimpaired)forimpairment.Thecollectiveimpairmentassessmentisbasedonananalysisofpastcollectionhistoryandwrite-offs.Certaindebtorsasat30June2017areconsideredtobenon-collectibleandasaresultanimpairmentvalueof$226,467hasbeenrecognised(2016:$0)

Movements in the provision for impairment of receivables are as follows:

Group ParentActual

2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Trade receivables Gross receivables 11,261 8,017 11,890 8,010Individual impairment (226) 0 (226) 0Net total receivables 11,034 8,017 11,663 8,010


11. PrepaymentsGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Prepayments - Current 4,827 3,964 4,827 3,908Prepayments - Non current 86 153 86 153

12. Non-Current assets held for saleGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Leasehold improvements 0 0 0 0Plant and equipment 0 0 48 0Motor Vehicles 0 0 155 0

0 0 203 0

healthAllianceGroupcompanieshaveagreed,effective1July2017,toselltooneanother,atnetbookvalue,certainassetsthatareusedinthefurtheranceoftheothercompanysbusinessactivities.healthAlliancewillselltosubsidiarycompanyvehiclesandequipmentusedintheSupplyChainandLogisticsfunctions.

13. Creditors and other payablesGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Trade payables 7,928 7,228 7,871 7,063Other payables 4,237 6,012 4,142 5,785ACC levy payable 279 264 249 220GST and PAYE payable 260 870 111 656Income in advance relating to contracts with specific performance obligations 564 465 564 465

13,268 14,839 12,938 14,190

Creditorsandotherpayablesarenon-interestbearingandarenormallysettledon30-dayterms.Therefore,thecarryingvalueofcreditors and other payables approximates their fair value.


14.EmployeeEntitlementsGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Current LiabilitiesLiability for long service leave 91 85 88 79Liability for retirement gratuities 445 209 443 209Liability for annual leave 3,820 4,265 3,655 3,846Liability for sick leave 98 22 98 22Liability for other leave 130 137 130 136Salary and wages accrual 947 729 947 729Liability for other employee entitlements 168 297 118 221

5,699 5,744 5,479 5,242Non-current LiabilitiesLiability for long service leave 839 941 799 861Liability for retirement gratuities 1,820 1,755 1,742 1,656Liability for other employee entitlements 254 285 252 275

2,913 2,981 2,793 2,792

15. ProvisionsGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Current LiabilitiesRestructuring provision 130 0 130 0Lease make good provision 292 552 292 552

422 552 422 552

Opening balance 552 959 552 860Additional Provision made (130) (407) (130) (308)Closing balance 422 552 422 552

In respect of a number of its leased premises, healthAlliance is required at the expiry of the lease term to make good any damage causedtothepremisesandtoremoveanyfixturesorfittingsinstalledbyhealthAlliance.InmanycaseshealthAlliancehastheoptiontorenewtheleases,whichaffectsthetimingoftheexpectedcashoutflowstomake-goodthepremises.Thecashflowsassociatedwiththecurrentportionoftheleasemake-goodprovisionsareexpectedtooccurinApril2018.


16.LeaseincentivesGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Current LiabilitiesLease incentives received 491 250 491 0

491 250 491 0

Non-current LiabilitiesLease incentives received 3,437 459 3,437 0

3,437 459 3,437 03,928 709 3,928 0

Opening balance 709 860 0 0Additional Provision made 3,219 (151) 3,928 0Closing balance 3,928 709 3,928 0

17. BorrowingsGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Current PortionTerm Loan 0 975 0 0

0 975 0 0

healthAlliance(FPSC)Ltdenteredintoa'multioptioncreditfacility'withWestpacNZ.UndertheagreementwithWestpacNZ,thefacilityisreducedby$250,000perquarter.Asat30June2017thefacilitylimitwas$2,000,000(2016:$2,750,000)and$0(2016:$975,000)hadbeendrawndown.Thefacilitywasrenegotiatedinthisyearandnowexpireson30April2018. ThefairvalueofWestpacloanborrowingsis$0(2016$975,000).Fairvaluehasbeendeterminedbasedonmarketborrowingratesatbalancedateof3.60%(20163.60%)andthetotalcosttorepaythedebtasatbalancedate.Theborrowingsareoncall tosuitthegroupscashflowprofile.


18. Shareholders EquityThesharesareheldbythe4shareholders,Northland,Waitemata,AucklandandCountiesManukauDistrictHealthBoards;holdingClassAshares.ClassCsharesareof$1eachandconfer-norightstoappointdirectors;norightsastodistributionsofcapitalorincome;norightsastodividends;novotingrights,butotherwisehavethesamerightsandprivilegesasothershares.AClassBsharewasheldbyHealthBenefitsLimitedupuntilthiscompanyceasedtoexiston30June2015;thissharewascancelledatthattime.Thisshare only had rights to appoint a director and to vote.

Group ParentActual

2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Issued but uncalled80 Class A shares of $10,000 each uncalled 800 800 800 800

800 800 800 800Class C shares Waitemata DHB 36,368 32,938 36,368 32,938 Northland DHB 14,159 10,704 14,159 10,704 Auckland DHB 57,736 52,903 57,736 52,903 Counties Manukau DHB 35,855 31,725 35,855 31,725

144,118 128,270 144,118 128,270144,918 129,070 144,918 129,070

ClassCshareshavebeenissuedasaresultofITassetstransferredfromeachoftheDHBshareholdersandinrelationtotheircontributionstowardsongoingITcapitalinvestment.

Capital Management healthAlliance'scapitalisitsequity,whichcomprisesaccumulatedfundsandrevaluationreserves.Equityisrepresentedbyitsnetassets.healthAllianceissubjecttothefinancialmanagementandaccountabilityprovisionsoftheCrownEntitiesAct2004,whichimposerestrictionsinrelationtoborrowings,acquisitionofsecurities,issuingguaranteesandindemnitiesandtheuseofderivatives.healthAlliancehascompliedwiththefinancialmanagementrequirementsoftheCrownEntitiesAct2004duringtheyear.healthAlliancemanagesitsequityasaby-productofprudentlymanagingrevenues,expenses,assets,liabilities,investmentsandgeneralfinancialdealingstoensurethathealthAllianceeffectivelyachievesitsobjectivesandpurposeswhileremainingagoingconcern.

19. CommitmentsGroup Parent

Actual2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Non-lease commitmentsCapital commitments 121 490 121 490

Non-cancellable - operating lease commitmentsNot more than one year 2,988 3,126 2,927 3,010Later than one year and not more than five years 10,758 11,076 10,707 10,957Later than five years 10,707 13,384 10,707 13,384

24,453 27,586 24,341 27,351

healthAllianceleasesanumberofbuildings,vehiclesandofficeequipment(mainlyphotocopiersandcomputers)underoperatingleases.Theleasestypicallyrunforaperiodofupto5years(forbuildings)and3years(forvehiclesandofficeequipment),withanoptiontorenewtheleaseafterthatdate.healthAlliancesub-leasespremisesat650GreatSouthRoadtoGoCarFinancingLimited.


20. Financial Instruments - Financial instrument categories2017 Actual Group

Notes

Held forTrading

$000

Designated at fair value through

profit & loss$000

Loans and Receivables

$000

Financial liabilities at

amortised cost$000

Debtor and other receivables 10 0 0 11,034 0Cash and cash equivalents 9 0 0 (815) 0

Creditor and other payables (excl. Taxes and Income in Advance)

12 0 0 0 (12,444)

Borrowings 15 0 0 0 00 0 10,220 (12,444)

2016 Actual Group

NotesHeld for Trading

$000


profit & loss$000


$000


amortised cost$000

Debtor and other receivables 10 0 0 8,017 0Cash and cash equivalents 9 0 0 6,137 0


12 0 0 0 (13,504)

Borrowings 15 0 0 0 (975)0 0 14,154 (14,479)

2017 Actual Parent


$000


profit & loss$000


$000


amortised cost$000

Debtor and other receivables 10 0 0 11,663 0Cash and cash equivalents 9 0 0 (1,640) 0

Creditor and other payables (excl.Taxes and Income in Advance)

12 0 0 0 (12,262)

Borrowings 15 0 0 0 00 0 10,023 (12,262)

2016 Actual Parent


$000


profit & loss$000


$000


amortised cost$000

Debtor and other receivables 10 0 0 8,010 0Cash and cash equivalents 9 0 0 6,122 0


12 0 0 0 (13,069)

Borrowings 15 0 0 0 00 0 14,132 (13,069)


Estimation of fair values analysis Thefollowingsummarisesthemajormethodsandassumptionsusedinestimatingthefairvaluesoffinancialinstrumentsreflectedinthetable. Interest-bearing loans and borrowings Fairvalueiscalculatedbasedondiscountedexpectedfutureprincipalandinterestcashflows. Trade and other receivables / payables Forreceivables/payableswitharemaininglifeoflessthanoneyear,thenotionalamountisdeemedtoreflectthefairvalue.Allother receivables / payables are discounted to determine the fair value. Other Receivables Otherreceivablesincludeaccruedrevenue,recoveriesforsoftwareitemsindevelopmentandforthevalueofcertainemployeerelatedentitlements.ThesereceivablesarewithotherCrownownedentitiesandareassessedtobelowriskandhighqualitydue to their ownership and funding. Financial investment risks Exposuretocredit,interestrateandcurrencyrisksariseinthenormalcourseofhealthAlliance'soperations. Credit Risk Financialinstruments,whichpotentiallysubjecthealthAlliancetoconcentrationsofrisk,consistprincipallyofcash,shorttermdeposits and accounts receivable. healthAllianceisapartytothe"DHBTreasuryServicesAgreement"betweenNZHealthPartnerships("NZHP")(formerlyHealthBenefitsLimited)andallNewZealandDistrictHealthBoardsaswellasotherapprovedCrownownedhealthsectorentities.ThisagreementenablesNZHPto"sweep"theparticipantingentitiesbankaccountsovernightandinvestsurplusfundsontheirbehalfwithregisteredbanksthathaveaStandardandPoor'screditratingofatleastA+. Concentrationsofcreditriskfromaccountsreceivablearelimitedduetothenumberandnatureofthecustomers.Theshareholders,Northland,Waitemata,AucklandandCountiesManukauDistrictHealthBoardsarethelargestdebtors.Theyareassessedtobelowriskandhighqualityentitiesduetotheirnatureasthegovernment'sfundedprovidersofhealthanddisabilitysupport services. ThecreditqualityoffinancialassetsthatareneitherpastduenorimpairedcanbeassessedbyreferencetoStandardandPoor’screditratings(ifavailable)ortohistoricalinformationaboutcounterpartydefaultrates.

Group ParentActual

2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Counterparties with Credit RatingsCash and cash equivalents and investmentsAA- (815) 6,137 (1,640) 6,122

Counterparties without Credit RatingsDebtors and other receivablesExisting counterparty with no defaults in the past 11,034 8,017 11,663 8,010


Liquidity riskLiquidityriskrepresentshealthAlliance’sabilitytomeetitscontractualobligations.healthAllianceevaluatesitsliquidityrequirementsonanongoingbasis.Ingeneral,healthAlliancegeneratessufficientcashflowsfromitsoperatingactivitiestomeetitsobligationsarisingfromitsfinancialliabilitiesandhascreditlinesinplacetocoverpotentialshortfalls.

Thefollowingtablesetsoutthecontractualcashflowsfortheprincipalportionofallfinancialliabilitieswhichhaveanegativefairvalueorthataresettledonagrosscashflowbasis.

GroupStatement

of Financial Position

$000

Contractual Cash Flow

$000

6 mthsor less

$000

6-12mths

$000

1-2years

$000

2-5years

$000

More than 5 years

$0002017Trade and other payables 12,444 (12,444) (12,444)Borrowing 0 0 0 0 0 0 0

12,444 (12,444) (12,444) 0 0 0 0

2016Trade and other payables 13,504 (13,504) (13,504)Borrowing 975 (975) (975) 0 0 0 0

14,479 (14,479) (14,479) 0 0 0 0

ParentStatement

of Financial Position

$000

Contractual Cash Flow

$000

6 mthsor less

$000

6-12mths

$000

1-2years

$000

2-5years

$000

More than 5 years

$0002017Trade and other payables 12,262 (12,262) (12,262)

12,262 (12,262) (12,262) 0 0 0 0

2016Trade and other payables 13,069 (13,069) (13,069) 0 0 0 0

13,069 (13,069) (13,069) 0 0 0 0

Effective interest rates and repricing analysis Inrespectofinterest-earningfinancialassetsandinterest-bearingfinancialliabilities,allinvestmentsandloansareoncallandpricing is based on current day bank rates. Cash flow interest rate risk Cashflowinterestrateriskistheriskthatthecashflowsfromafinancialinstrumentwillfluctuatebecauseofchangesinmarketinterestrates.healthAlliance’sexposuretocashflowinterestrateriskislimitedtoon-calldeposits.Thisexposureisnotconsideredsignificantandisnotactivelymanaged. Sensitivity analysis Asat30June2017,iffloatinginterestrateshadbeen100basispointshigher/lower,withallothervariablesheldconstant,theGroupsurplusfortheyearwouldhavebeen$2,856lower/higher(2016$35,241)onthefloatingrateborrowings,theParentwouldhavebeen$5,366lower/higher(2016$48,302).


21. Key Management PersonnelKeymanagementpersonnelincludeallboardmembers,theChiefExecutive,andmembersofthehealthAllianceExecutiveTeam. Duetothedifficultyindeterminingthefull-timeequivalentforBoardmembers,thefull-timeequivalentfigureistakenasthecount of Board members.

Group ParentActual

2017$000

Actual2016$000

Actual2017$000

Actual2016$000

(a) Executive Leadership TeamTotal value of benefits 2,741 2,280 2,260 1,992Full-time equivalent members 10 9 9 8

(b) Board Member's RemunerationDavid Clarke 50,652 63,641 34,416 40,319 Paul Harper 49,680 45,320 17,208 20,160Anthony Norman (resigned 1 July 2016) - 36,321 - 20,160Lee Mathias 17,208 20,160 17,208 20,160Roger Jones 17,208 12,910 17,208 12,910Russell Jones (from 23 August 2016) 15,774 - 15,774 -Rosalie Percival - - - -Andrew Brant (resigned 23 August 2016) - - - -Meng Cheong (from 23 August 2016) - - - -

Ronald Pearson (healthAlliance FPSC Ltd director only) - - - -

150,522 178,352 101,814 113,709Full-time equivalent members 8 8 7 7

TherehavebeennopaymentsmadetocommitteemembersappointedbytheBoardwhoarenotBoardmembersduringthefinancialyear. BoardMembersRosaliePercival,AndrewBrant,MengCheongandRonaldPearsonareexecutivesofAucklandDHB,WaitemataDHB,NorthlandDHBandCountiesManukauDHBrespectively.TheyarenotpaidtoactasBoardmembersnoraretheiremployingDHB'sreimbursedfortheircostswhenactingasBoardmembers. healthAlliancehaseffectedDirectors’andOfficers’LiabilityandProfessionalIndemnityinsurancecoverduringthefinancialyearin respect of the liability or costs of Board members and employees. NoBoardmembersreceivedcompensationorotherbenefitsinrelationtocessation(2016$nil).


22.TransactionswithRelatedPartieshealthAllianceisanentitywhollyownedbyother,wholly-ownedCrownentities.TheseentitesaretheNorthland,Waitemata,AucklandandCountiesManukauDistrictHealthBoardsandHealthBenefitsLimited. Relatedpartydisclosureshavenotbeenmadefortransactionswithrelatedpartiesthatarewithinanormalsupplierorclient/recipientrelationshipontermsandconditionsnomoreorlessfavourablethanthoseitisreasonabletoexpecthealthAlliancetohaveadoptedindealingwiththecounter-partyatarm'slengthinthesamecircumstances.Further,transactionswithothergovernmentagencies(forexample,otherdistricthealthboards,GovernmentdepartmentsorotherCrownagencies)arenotdisclosedasrelatedpartytransactionswhentheyareconsistentwiththenormaloperatingarrangementsbetweengovernmentagenciesandundertakenonthenormaltermsandconditionsforsuchtransactions.

Non-Commercial Balances Owed by Related Parties Group ParentActual

2017$000

Actual2016$000

Actual2017$000

Actual2016$000

Related by shareholdingNorthland DHB 1,326 1,326 1,326 1,326Waitemata DHB 534 534 534 534Auckland DHB 4,452 4,452 4,452 4,452Counties Manukau Health 347 347 347 347

6,659 6,659 6,659 6,659

The non-commercial balances owed by the DHB shareholders to the parent company are for items related to uncalled share capital,certainstaffentitlementsowingwhenstafftransferredtohAandforchargesrelatingtoassettransfers.Thesearepayable to hA on call.


23.EmployeeRemunerationGroup Parent

Remuneration Range 2017 2016 2017 2016

$100,000 - $110,000 36 33 33 32$110,001 - $120,000 34 33 31 32$120,001 - $130,000 29 21 24 21$130,001 - $140,000 11 18 10 15$140,001 - $150,000 7 10 7 7$150,001 - $160,000 5 6 4 3$160,001 - $170,000 3 5 2 5$170,001 - $180,000 4 5 2 5$180,001 - $190,000 2 1 2 1$190,001 - $200,000 1 4 0 2$200,001 - $210,000 1 1 0 1$210,001 - $220,000 1 0 1 0$220,001 - $230,000 1 1 0 1$230,001 - $240,000 1 1 1 1$240,001 - $250,000 0 1 0 1$270,001 - $280,000 0 2 0 2$280,001 - $290,000 2 1 2 0$290,001 - $300,000 1 0 1 0$310,001 - $320,000 0 1 0 0$320,001 - $330,000 1 0 0 0$410,001 - $420,000 1 1 1 1

CessationorterminationpaymentsorcompensationtothosethatceasedemploymentduringtheyearwerepaidintheyeartoGroup39staff$1,142,776(2016:7payments,$393,338).FortheParentpaymentsintheyearwere21staff$515,158(2016:6payments,$309,005)

24. Investment in SubsidiaryActual

2017Actual

2016healthAlliance N.Z. Limited’s ownership interest 100% 100%

25.ContingentLiabilitieshealthAlliancegrouphascontingentliabilitiesrelatingtobankguaranteesissuedundertheparentcompanyhealthAllianceNZ LImited by Westpac New Zealand Ltd in favour of Goodman Nominess for $2,894,367 for the future lease payments on its premisesinPenrose,Auckland(2016:$3,029,249).SubsidiarycompanyhealthAlliance(FPSC)Limitedalsohadabankguaranteeby Westpac New Zealand Ltd in favour of Goodman Nominees for the future lease payments on its premises in Penrose, Auckland;theparenttookoverasleadleaseeinthecurrentyearsoatyearendthesubsidiaryowed$0(2016:$1,428,592); asatotalgroup$2,894,367(2016:$4,457,841).

26.ContingentAssetshealthAllianceGrouphasnoknownpotentialcontingentassetsasat30June2017(2016:$nil)


27. Subsequent EventsByresolutionoftheBoardsofboththehealthAlliancegroupofcompanies,onthe1stofJuly2017thefollowingintercompanytransactionsoccurred: -theassetsandliabilities,includingservicecontractswithcustomersandtheemployedstaffengagedintheNorthernRegion Procurement and Supply Chain services, were transferred from parent company healthAlliance NZ Limited to subsidiary companyhealthAlliance(FPSC)Limited. -theleaseholdbuildingimprovementsandfurnitureandotherequipmentofsubsidiarycompanyhealthAlliance(FPSC)Limited was transferred at book value to parent company healthAlliance NZ Limited. The major movements between the two companies are as follows : Leaseholdimprovements,furnitureandfittingsfromsubsidiarytoparent,atnetbookvalue,$2,394,911 Motor vehicles and other equipment from parent to subsidiary, at net book value, $203,517 Annual leave and days in lieu balances owed to employees from parent to subsidiary, $678,295 Employeeentitlementstogratuities,longserviceandsickleavefromparenttosubsidiary,$766,000

28.ExplanationofBudgetVariancesRevenue During the year, the parent and its main customers, the 4 Northern Region DHBs, agreed to further service provisions from healthAllianceNZLimited.Thesubsidiary,healthAlliance(FPSC)Limited,negotiatedasettlementwithitsmaincustomerNZHealthPartnershipstoceaseprovidingtheNationalProcurementserviceonthe1stofMay2017.The"Otherincome"asstatedinthebudgetincluded$19.5mintheparentinrelationtotheinternalconstructionofintangibleassets,theactualsarenetofthisfigure.TheparentactualsalsoincludetherevenuefromtheNorthernRegionProcurementandSupplyChainfunctions,thebudget prepared by the healthAlliance group of companies had included this revenue in the subsidiary thus the parent actuals and budget have a $10.3m variance.

Expenditure Intheparent,thebudgetincluded$19.5mrelatingtothecostsoftheinternalconstructionofintangibleassets.Oncethisisexcluded,theparentsemployeebenefitcostsexceededbudgetduetocostincreases,additionalservicesprovidedtotheDHBs,theimpactofrestructuringtheInformationandTechnologyServicesgroupandtheimpactoftheNorthernRegionProcurementandSupplyChainfunctionswherethebudgetassumedthiscostwouldbeincludedinthesubsidiaryaccounts.ThegroupvarianceincludestheparentaswellascostsincurredbythesubsidiarywheretheNationalProcurementservicewasterminatedandtherewereexitcostsincurred.Depreciationandamortisationcostswerelowerthanbudgetasanticipatedprogress(approvalprocessaswellascompletion)withinformationtechnologyprojectsintheparentwasslowerthanwasexpectedduringthebudgetpreparationperiod.Parent(andthereforegroup)otherexpenseswereunderbudgetpartlyduetolowerthanexpectedoutsourcedstaffcosts,despitetheexpensingofcostsincurredonprojectsintendedforcapitalisationwhichwerenotproceeded with.

Assets Non-currentassetsdidnotachievebudgetexpectationsastheparent(andthereforegroup)capitalprogrammewasnotasadvanced as expected when the Statement of Intent budget was completed.

Liabilities Creditorsintheparent(andthereforegroup)exceededthebudgetasreflectedinthehigherthanbudgetoperatingexpensesincurred,ProvisionsexceededbudgetduetoadditionalincentivesprovidedbythelandlordwhenhealthAllianceleasedtheremaining areas of the Connect building.


David Clarke Rosalie Percival

Date Date

30 October 2017 30 October 2017

Statement of ResponsibilityFor the year ended 30 June 20171 The Board accept responsibility for the preparation of the Annual Financial Statements, Statement of Performance and the judgements used in them;

2 The Board accept responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting; and

3 In the opinion of the Board of healthAlliance N.Z. Limited, the Annual Financial Statements and the Statement of Performance fairly reflect the financial position and operations of healthAlliance N.Z. Limited for the year ended 30 June 2017.

For and on behalf of the healthAlliance N.Z. Limited Board


Independent Auditor’s ReportTo the readers of healthAlliance N.Z Limited and group’s financial statements and performance information for the year ended 30 June 2017.

The Auditor-General is the auditor of healthAlliance N.Z Limited (healthAlliance) and group. The Auditor-General has appointed me, JR Smaill, using the staff and resources of Audit New Zealand, to carry out the audit of the financial statements and the performance information, of healthAlliance and group on his behalf.

Opinion We have audited:

• the financial statements of healthAlliance and group on pages 28 to 58, that comprise the statement of financial position as at 30 June 2017, the statement of comprehensive revenue and expenses, statement of changes in equity and statement of cash flows for the year ended on that date and the notes to the financial statements including a summary of significant accounting policies; and

• the performance information of healthAlliance and group on pages 13 to 18 and 20 to 26.

In our opinion:

• the financial statements of healthAlliance and group on pages 28 to 58:

º present fairly, in all material respects:

• its financial position as at 30 June 2017; and

• its financial performance and cash flows for the year then ended; and

º comply with generally accepted accounting practice in New Zealand in accordance with Public Benefit Entity accounting standards.

• the performance information on pages 13 to 18 and 20 to 26:

º presents fairly, in all material respects, healthAlliance and group’s performance for the year ended 30 June 2017, including:

• for each class of reportable outputs:

• its standards of delivery performance achieved as compared with forecasts included in the statement of performance expectations for the financial year; and

• its actual revenue and output expenses as compared with the forecasts included in the statement of performance expectations for the financial year; and

º complies with generally accepted accounting practice in New Zealand.

Our audit was completed on 30 October 2017. This is the date at which our opinion is expressed.

The basis for our opinion is explained below. In addition, we outline the responsibilities of the Board and our responsibilities relating to the financial statements and the performance information, we comment on other information, and we explain our independence.

Basis for our opinionWe carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the Professional and Ethical Standards and the International Standards on Auditing (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Responsibilities of the auditor section of our report.

We have fulfilled our responsibilities in accordance with the Auditor-General’s Auditing Standards.

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

Responsibilities of the Board for the financial statements and the performance information The Board is responsible on behalf of healthAlliance and group for preparing financial statements and performance information that are fairly presented and comply with generally accepted accounting practice in New Zealand. The Board is responsible for such internal control as it determines is necessary to enable it to prepare financial statements and performance information that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements and the performance information, the Board is responsible on behalf of healthAlliance and group for assessing healthAlliance and group’s ability to continue as a going concern. The Board is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless there is an intention to merge or to terminate the activities of healthAlliance and group, or there is no realistic alternative but to do so.

The Board’s responsibilities arise from the Crown Entities Act 2004 and the Public Finance Act 1989.

Responsibilities of the auditor for the audit of the financial statements and the performance information Our objectives are to obtain reasonable assurance about whether the financial statements and the performance information, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit carried out in accordance with the Auditor-General’s Auditing Standards will always detect a material misstatement when it exists. Misstatements are differences or omissions of amounts or disclosures, and can arise from fraud or error. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of readers, taken on the basis of these financial statements and the performance information.


For the budget information reported in the financial statements and the performance information, our procedures were limited to checking that the information agreed to healthAlliance and group’s statement of performance expectations.

We did not evaluate the security and controls over the electronic publication of the financial statements and the performance information.

As part of an audit in accordance with the Auditor-General’s Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. Also:

• We identify and assess the risks of material misstatement of the financial statements and the performance information, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of healthAlliance and group’s internal control.

• We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board.

• We evaluate the appropriateness of the reported performance information within healthAlliance and group’s framework for reporting its performance.

• We conclude on the appropriateness of the use of the going concern basis of accounting by the Board and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on healthAlliance and group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements and the performance information or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause healthAlliance and group to cease to continue as a going concern.

• We evaluate the overall presentation, structure and content of the financial statements and the performance information, including the disclosures, and whether the financial statements and the performance information represent the underlying transactions and events in a manner that achieves fair presentation.

• We obtain sufficient appropriate audit evidence regarding the financial statements and the performance information of the entities or business activities within healthAlliance and group to express an opinion on the consolidated financial statements and the consolidated performance information. We are responsible for the direction, supervision and performance of healthAlliance and group audit. We remain solely responsible for our audit opinion.

We communicate with the Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Our responsibilities arise from the Public Audit Act 2001.

Other informationThe Board is responsible for the other information. The other information comprises the information included on pages 1 to 12, page 59 and pages 62 and 63 but does not include the financial statements and the performance information, and our auditor’s report thereon.

Our opinion on the financial statements and the performance information does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.

In connection with our audit of the financial statements and the performance information, our responsibility is to read the other information. In doing so, we consider whether the other information is materially inconsistent with the financial statements and the performance information or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on our work, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

IndependenceWe are independent of healthAlliance and group in accordance with the independence requirements of the Auditor-General’s Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board.

Other than the audit, we have no relationship with or interests in healthAlliance or its subsidiary.

JR Smaill

Audit New Zealand

On behalf of the Auditor-General

Auckland, New Zealand


Statutory InformationThe Directors of healthAlliance N.Z. Limited present the Financial Statements for the year ended 30 June 2017.

Principal Activities The principal activity of the healthAlliance group of companies during this year was the operation of shared services for District Health Boards and New Zealand health organisations. healthAlliance’s Corporate Address Connect Business Park, 581-585 Great South Road, Penrose, Auckland

healthAlliance N.Z. Limited Board of Directors' Register of Interests as at June 2017

BOARD MEMBER INVOLVEMENT WITH OTHER ORGANISATIONS

David Clarke

• Chairman of The Skin Institute Limited• Director & Shareholder of Skin Institute Holding Company Limited• Shareholder of TRG Group Limited• Director, Hynds Limited• Shareholder in Ormiston Hospital• Chair of The Jucy Group• Shareholder of Orion Health Group Limited• Chair of MBIE Precision Driven Health research programme• Interim Chair for Eye Institute• Chair of Canopy Cancer Care

Meng Cheong

• GM, Finance Funding and Commercial Services, Northland DHB.• Chair, Kaipara Joint Venture Trust. (Property Owner - Dargaville Hospital)• Director, Usher Consulting and Services Ltd• Tender Evaluation Group, NZHPL Shared Banking • Business Advisory Group, NZHPL NIP Programme• Business Case Working Group, NEHR Programme• NDHB Lead Contact, NZHPL National Procurement Programme

Paul Harper

• Director, Pacific Link Ltd• Director, Lodestar Enterprises Ltd• Director, Northgate Logistics Ltd• Shareholder, Director, Netlogix Ltd• Director, Kiwi Rail

Lee Mathias

• Member – Auckland District Health Board• Chair, Unitec• Chair, Health Innovation Hub Limited• Chair of Health Promotion Agency • Director/Shareholder, Pictor Limited• Director, Lee Mathias Limited• Director, John Seabrook Holdings Limited• Trustee, Lee Mathias Family Trust• Trustee Awamoana Family Trust• Trustee Mathias Martin Family Trust

Rosalie Percival• Trustee, A+ Trust• Chief Financial Officer of Auckland DHB

Roger Jones

• Director - Corporate Apartments Limited• Advisory Board member – Hewlett Parkard (HP) Asia Pacific Customer Advisory Board • Chief Technology Officer – Auckland Transport• Member – Microsoft Services Board

Russell Jones• Shareholder, Commonwealth Bank of Australia• Director, Paymark• Director, Payments NZ


healthAlliance Executive Team Register of Interests as at June 2017EXECUTIVE INVOLVEMENT WITH OTHER ORGANISATIONS

Myles Ward – Chief Executive Officer

• Nil

Fiona Harnett – Chief Financial Officer

• Trustee, World Association of Girl Guides and Girl Scouts• Trustee, Girl Guiding New Zealand

Trish Langridge – General Manager Clinical & Customer Service

• Nil

Reid McRobie – GM Project & Programme Services

• Trustee, Gerald Trust• Director, Rocksugar Catering, t/a Charlie & George cafe

Kevin Robinson – Chief Information Officer

• Nil

Wayne Pohe – Sponsor Major Projects

• Trustee, WKP Whanau Trust• Director, WKP Consulting Limited• Director, GreenBaum NZ Limited• Director, Tarawera Property Development Limited

James Allison – IT Advisor

• Nil

AuditorThe Auditor-General is appointed under section 14 of the Public Audit Act 2001. Audit New Zealand has been contracted to provide these services.


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