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ORION HEALTH ANNUAL REPORT | CONTENTS 1
ORION HEALTH TODAY
FY2014 HIGHLIGHTS
NZ HI TECH COMPANY OF THE YEAR
DIRECTION & LEADERSHIP
CHAIRMAN’S LETTER
A FUNDAMENTAL CHANGE IN HEALTHCARE
OVERVIEW OF FY2014 FINANCIAL RESULTS
MANAGING GROWTH
EXPANDING CHRISTCHURCH OPERATIONS
INDEPENDENT AUDITORS’ REPORT
DIRECTORS’ RESPONSIBILITY STATEMENT
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
SHAREHOLDER INFORMATION
DIRECTORY
CONTENTS
2
4
8
10
12
14
20
32
36
38
40
41
50
91
92
96
Orion Health is a privately owned global health software company founded in 1993 by Chief Executive Officer, Ian McCrae. Today our products are sold in over 30 countries,
used by thousands of clinicians and help to improve healthcare outcomes for millions of people. Our headquarters have always been in Auckland, New Zealand but we have
grown to have over 1,000 employees in 24 locations around the world.
ORION HEALTH TODAY
ORION HEALTH ANNUAL REPORT | ORION HEALTH TODAY2
INTELLIGENT INTEGRATION
SMARTER HOSPITALS
HEALTHIER POPULATIONS
MARKET SEGMENTSHome
Our Intelligent Integration segment primarily
represents standalone sales of our best-of-breed
Rhapsody Integration Engine. Hospitals, healthcare
organisations, governments and regional bodies often
have many different software systems from different
vendors. Each system might interact with a person or
patient independently. Rhapsody Integration Engine
enables those systems to talk to each other. It acts
as a hub to collect, translate and route messages
between disparate systems. For example, an update
to a patient’s personal details in one system would be
pushed to all other systems via Rhapsody.
Intelligent Integration is a mature segment and we
have a market leading product which is easy to
install and requires relatively low ongoing research
and development investment and maintenance. It
is a reliable and profitable segment for us, which is
expected to continue growing.
Our Smarter Hospitals segment represents Orion
Health products used within the four walls of a
hospital. This includes two main solutions. Firstly, our
full suite of applications to manage and automate
a hospital. Secondly, a subset of this which can sit
on top of third party software within a hospital. We
aggregate data from all the systems in a hospital in
a single database using our Rhapsody Integration
Engine and provide a combined view of patient data
to clinicians in our Clinical Portal. This is referred to as
an Electronic Medical Record or EMR solution.
We can also add further modules that allow hospital
clinicians to electronically refer patients to other
healthcare providers, enrol patients on healthcare
plans to manage chronic conditions and provide
patients with access to their own electronic medical
record through our Patient Portal. Smarter Hospitals
is a fast growing segment for Orion Health. We
currently focus our Smarter Hospitals efforts on
Europe and Asia Pacific.
Our Healthier Populations segment represents sales
of care coordination tools to public and private
organisations who are responsible for managing the
healthcare needs of a population. It utilises some
of the same technology as our Smarter Hospitals
segment but in a community wide setting rather than
within a single hospital.
We aggregate data from different healthcare
organisations within a region into a single database
using our Rhapsody Integration Engine. This enables
us to create a complete electronic patient record,
which can be accessed by clinicians or patients
through our Clinical Portal and Patient Portal. With all
relevant information in one place, healthcare providers
are better able to coordinate, make informed care
decisions and improve patient outcomes.
With pressure rising globally to deliver better
health outcomes at lower cost, population health
management software is in increasing demand.
We expect this segment to undergo a data-
driven revolution over the next decade. We have a
leadership position in Healthier Populations and see
huge opportunity to grow further by enhancing our
existing products.
ORION HEALTH ANNUAL REPORT | ORION HEALTH TODAY 3
INTELLIGENT INTEGRATION
SMARTER HOSPITALS
HEALTHIER POPULATIONS
FY2014 HIGHLIGHTS
SUMMARY FINANCIAL PERFORMANCE FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
OPERATING REVENUE 152,992 109,780 39%
OTHER INCOME 10,168 12,146 -16%
TOTAL INCOME 163,160 121,926 34%
NET (LOSS) / PROFIT BEFORE TAX (1,733) 7,409 -
OPERATING
REVENUE
$153m39% GROWTH
ON FY2013
ANNUALISED
RECURRING REVENUE
$44m43% GROWTH
ON FY2013
EMPLOYEE
NUMBERS
1,04242% GROWTH
ON FY2013
ORION HEALTH ANNUAL REPORT | FY2014 HIGHLIGHTS4
ANNUALISED RECURRING REVENUE 44,300 31,000 43%
EMPLOYEE NUMBERS 1,042 733 42%
STAFF NUMBERS FY2013 FY2014
NORTH AMERICA 187 322
EUROPE MIDDLE EAST 60 88
ASIA 61 70
OCEANIA 425 562
TOTAL 733 1,042
OVER 1,000 EMPLOYEES IN 24 GLOBAL LOCATIONS
NEW
NEW
NEW
NEW
NEW
DEVELOPMENT CENTRES
REGIONAL OFFICES
ORION HEALTH ANNUAL REPORT | FY2014 HIGHLIGHTS 5
WE BELIEVENEW GENERATION TECHNOLOGYWILL GIVE EVERYONE HEALTHIER, HAPPIER,LONGER LIVES
NZ HI TECH COMPANY OF THE YEAR
The NZ Hi-Tech Awards celebrated their 20th
edition in 2014 with a gala event in Christchurch that
saw over 600 guests from New Zealand’s leading
technology companies, all vying to be chosen as
winners across 12 categories.
In what was a landmark achievement, Orion Health
reconfirmed its status as the leading technology
company in New Zealand, by being named
Company of the Year and Exporter of the Year
(over $5 million). In doing so we became the first
multiple winner of the Company of the Year Award,
following our first win in that category back in 2001.
The judges commended us for “demonstrating
outstanding year on year growth, substantial business
acumen in a terribly complex and competitive
“Given the calibre of the finalists, we are obviously immensely
proud to be named as the leading Hi-Tech Company for 2014 - the
companies we were up against are not just leading New Zealand
businesses, but are well on their way to becoming global leaders
in their respective industries.” – Orion Health CEO, Ian McCrae
market and amazing international diversification.
Orion Health is simply a standout example of a New
Zealand company.”
We were judged winners, by a panel of local and
international technology leaders, ahead of a number
of other exceptional companies, including Fisher
and Paykel Healthcare, Serko, Vista Entertainment
and Xero.
To be recognised as the supreme technology
business in New Zealand on two occasions is an
outstanding achievement. To achieve this over
a span of 13 years is remarkable. Undoubtedly
this continued excellence over the past 22 years
is testament to all the hard work and ongoing
dedication of our wonderful staff.
ORION HEALTH ANNUAL REPORT | NZ HI TECH COMPANY OF THE YEAR8
DIRECTION & LEADERSHIP
Paul is Senior Vice President of Sales & Marketing for
Fisher & Paykel Healthcare (FPH), a global leader in
respiratory medical devices.
Joining FPH in 1990, Paul has extensive international
experience in the healthcare industry. He has
held various positions in the US, UK and France
establishing FPH sales offices. He is currently
responsible for over 350 offshore staff and director
of various FPH subsidiaries.
His prior experience includes positions at ICL Ltd and
Computercorp. Paul holds a Bachelor of Commerce
from University of Canterbury, New Zealand.
Andrew, known as Clem, is an investor and director.
Clem was managing director of Emerald Capital
Limited, a Canadian-owned investment company.
His prior experience includes nine years with
Goodman Fielder Wattie in various financial and
general management positions in New Zealand and
Asia, following corporate money market and foreign
exchange positions in New Zealand and London.
In addition to Orion Health, Clem is currently a director
of Ryman Healthcare and Genesis Energy Limited. Clem
is also a shareholder and Director of Jacon Investments
Limited. He is a trustee of various trusts, including
Chairman of the New Zealand Football Foundation
and The Mt Wellington Stadium Charitable Trust.
Clem is standing down from the Orion Health board
following this year’s Annual General Meeting.
ANDREW CLEMENTS Chairman
PAUL SHEARER Director
ANDREW FERRIER Director
Andrew currently runs his own investment company,
Canz Capital Ltd, is Chairman of New Zealand Trade
and Enterprise, sits as a Member of the University of
Auckland Council, a Director of Bunge Ltd in New
York, and sits on several other boards.
From 2003 to 2011, Andrew was CEO of Fonterra
Cooperative Group Limited in New Zealand. Prior to
Fonterra, Andrew served as the President and Chief
Executive Officer of GSW Inc. of Toronto, President
and CEO of Tate & Lyle North America Sugars Inc, of
New York and President of Redpath Sugars in Toronto.
Andrew holds a Bachelor of Business Administration
from University of New Brunswick and a Master of
Business Administration from Concordia University.
ORION HEALTH ANNUAL REPORT | DIRECTION & LEADERSHIP10
Founder of Orion Health.
Prior to Orion Health Ian worked as a
telecommunications consultant for Ernst Young,
specialising in message standards and connectivity
of data network systems and infrastructures.
Ian has also worked as a Senior Business Analyst
for the London Stock Exchange and a Scientist
with the NZ DSIR (Department of Scientific and
Industrial Research).
Ian holds a Masters in Engineering Sciences and
Bachelor of Engineering (Honors) from University
of Auckland.
IAN McCRAE CEO and Managing Director
NEIL CULLIMORE Director
ROGER FRANCE Director
Roger was the Chief Financial Officer of two listed
companies for ten years followed by 15 years as
a partner in PwC and one of its predecessor firms,
Coopers & Lybrand. He was Managing Partner of
Coopers & Lybrand Auckland for five years.
He is a director of Air New Zealand Ltd and Fisher
& Paykel Healthcare Corporation Ltd and a trustee
of the University of Auckland Foundation and the
Dilworth Trust Board. He is a member of The Treasury
Commercial Operations Advisory Board.
Roger holds a Bachelor of Commerce and is a Fellow
of both the Institute of Chartered Accountants
Australia and New Zealand and the Institute of
Directors in New Zealand.
Neil has 40 years’ experience in the IT industry.
Prior to 1993, he was CEO and Director of Paxus
Corporation, an Australian publicly listed IT company.
Following the merger in 1993 of Paxus with The
Continuum Company in Texas, he moved to become
Executive Vice President of Continuum. In 1996
Continuum was acquired by Computer Sciences
Corporation (CSC) and he became Executive Vice
President of CSC’s Financial Services Group.
Since 1999 Neil has participated in a number of
public and private companies in the IT industry both
as an investor and director in NZ and Australia.
Neil holds a Bachelor of Science (Maths) from
University of Auckland.
ORION HEALTH ANNUAL REPORT | DIRECTION & LEADERSHIP 11
CHAIRMAN’S LETTER
Building Momentum
Orion Health achieved Operating Revenue growth
of 39% in FY2014. This is a significant step-up from
FY2013 and reflects the building momentum of the
company. In previous years we have always sought to
grow both revenue and profitability: we now believe
that significant investment in products, people and
processes is necessary to make the most of what
will become possibly the most fundamental shift in
health information in a generation. As such, the global
opportunities facing Orion Health are bigger today
than we’ve ever seen before and we believe we need
to significantly increase our capability and capacity to
take advantage of these. The investment will result in
losses in the short term but we believe it puts us on the
path to future scale and higher profitability.
During the year we increased our employee base
from 733 to 1,042. Growing this fast is not without
challenges and has reinforced how important strong
leadership is. With more staff, we need more leaders.
Thankfully, high calibre leaders are attracted to the
exciting opportunities at Orion Health. We have been
able to attract several new subject matter leaders into
the fields of product development, implementation
services, software-as-a-service operations, human
resources and marketing.
This business has always been powered by people.
Our people create innovative health software, they
sell it, implement it and maintain it. Attracting
and retaining talented people is critical to the
company’s success. During FY2014 we made a
major investment in our PEOPLE team, bringing
in dedicated human resources, remuneration,
recruitment and organisational development experts.
They have partnered with the rest of the business to
develop effective recruitment, onboarding, training
and mentoring processes and tools. This sets us up
well for continuing our growth trajectory.
In a company like ours where people are so important,
we want them to share in our growth journey.
Consistent with this principle, the Board of Directors
introduced a long term share incentive scheme for
senior staff in mid 2013.
Smarter Hospitals Progress
Our Smarter Hospitals segment includes the hospital
automation software acquired from Microsoft in
February 2012 as well as our Electronic Medical Record
solution. The acquired business is now seamlessly
integrated. FY2014 saw significant progress in terms
of product features and functionality, as well as
with key reference customers. In addition to several
reference sites in Asia, we are working with the South
Island of New Zealand and a premiere private hospital
group in Turkey.
Strategically we focus our Smarter Hospitals efforts
in Asia and EMEA where customers are looking for
a fully featured solution but at a lower price tag
than the solutions offered by our North American
competitors. Longer term we see an opportunity
foundation. This is a very exciting area for Orion Health
over the next few years.
Healthlink Sale
Orion Health owned a majority stake in Healthlink
International Limited since its inception in the mid-
1990s. In recent years the strategic vision of our two
companies began to diverge. In July 2013 we agreed
to sell our interest to Healthlink management for $8
million and this transaction settled in November 2013.
This sale allowed us to invest the capital in our own
strategic initiatives, accelerating our product roadmap
and expanding our implementation capabilities.
Capital Raising
In May 2014 the Board of Directors sought to raise
$20 million of additional equity funding from existing
eligible shareholders. We received strong demand
and the placement was over-subscribed. As a result
we raised a further $5.5 million from Pioneer Capital,
the Accident Compensation Corporation and Aspiring
Asset Management. The $25.5 million of new equity
gives the company the interim working capital
flexibility to immediately pursue the accelerated
growth strategy.
Board Changes
My involvement with Orion Health began in 2001
when CEO Ian McCrae approached me to consider
becoming an independent director. I joined the Board
of Directors in April 2002 and have since shared in
the company’s growth from what was then a $10
million revenue business to the $153 million revenue
business we have just reported. However, all good
things must come to an end. I am retiring from all of
my board positions, including Orion Health, to focus
on my own interests. After 12 years on the Orion
Health Board I will be stepping down as Chairman at
the Annual General Meeting in September 2014. The
Board has chosen Andrew Ferrier to be my successor
as Chairman. Andrew joined the Board in December
2011 and will continue to guide the company with
his breadth of international experience. I am also
pleased to report that Dr Lester Levy has agreed to
join the Board. Dr Lester Levy is a highly regarded
Professor of Leadership and Chairman of both the
Auckland District Health Board and Waitemata
District health Board.
Exciting Times Ahead
Orion Health is on a journey. We believe that new
generation technology will give everyone healthier,
happier, longer lives. We are entering a decade of once-
in-a-generation change in healthcare. The company is
well positioned to be a leader of this change and I look
forward to sharing in its journey as a shareholder.
to sell our hospital solutions together with our
community wide Healthier Populations solutions,
creating a complete health software solution for
regions or countries.
Opportunities in the United States
Orion Health established its first US office in 2002. Our
US business has grown to an NZ$88 million operation
in FY2014 with over 285 employees. Strong growth
in recent years is largely attributable to success with
our Health Information Exchange solution (part of our
Healthier Populations segment). Our market share
in this area now serves as an important strategic
advantage for what we believe is the next wave of
growth in the US market – the ‘payer’ market. In the
US over 50% of healthcare expenditure is funded
by the private sector. These ‘payers’ are essentially
insurance companies.
The US has the highest per capita healthcare costs
in the world but still has lower life expectancy and
higher infant mortality rates than other developed
nations. In fact it is estimated that over 30% of US
health expenditure is wasted. It is no surprise then
that regulatory reforms are driving change in the US
healthcare sector. The ‘payers’, as a major source of
healthcare funding, are highly motivated to reduce
waste in the system. Healthcare software can help
address many areas of waste. Our existing Healthier
Populations solution set is the foundation for this. We
are working closely with a number of payers to build
the next generation of technology on top of our sound
ORION HEALTH ANNUAL REPORT | CHAIRMAN’S LETTER 13
Orion Health is on a journey. We believe that new generation technology will give everyone healthier,
happier, longer lives. We are entering a decade of once-in-a-generation change in healthcare.
Andrew Clements
CHAIRMAN
A FUNDAMENTAL CHANGE IN HEALTHCARE
only 60-70% will be utilised efficiently, the rest wasted
through failures in care delivery, care coordination,
over treatment, administrative complexity, fraud and
abuse.2 This massive waste equates to US$910 billion
each year in the United States alone.2
The current healthcare delivery model and its
resulting cost trajectory is unsustainable
Much of the developed world has already begun
to conceive new models for healthcare. Models
where care is centred around the patient and aimed
at delivering positive outcomes, irrespective of
where treatment occurs. Where payment is directly
associated to the provision of quality care that results
in positive outcomes, instead of merely treatment.
Where accountability is now rewarded and shared
across both those that provide care and those whom
fund care.
The onus to arrest rising costs is now being placed back
onto insurance companies in the healthcare market in
the United States as they realise they can no longer
offset rising costs by raising member premiums. These
‘payers’ are responsible for over 50% of all healthcare
expenditure and therefore within their spend resides
considerable amounts of provider inefficiency and
waste.3 To try and combat this, payers are now
exclusively partnering with providers and looking to
provide fully integrated software systems to ensure
Healthcare throughout history has been punctuated
by a number of significant advancements that have
forever changed the landscape of how we perceive
health and healthy living.
These advancements we typically associate with the
natural discovery of new and improved medicines,
the application of bold new techniques and the
adventurous manipulation of science. If we closely
assess history, what we find is that every generation
enjoyed a revolutionary healthcare moment that
changed the world irreversibly.
We believe that the health industry currently sits
right on the cusp of the next revolutionary shift.
A shift that will be driven by maths and delivered
through the precise application of new generation
technology to allow people to live healthier, happier
and longer lives.
We are calling this shift The Health Data Revolution
This once in a generation change will occur in order
to combat the economically crippling ill effects of
an aging global population in combination with
inefficient global healthcare practices.
Estimates out of the United States suggest that a
whopping 20% of total Gross Domestic Product will
be spent on healthcare by 2021.1 Of this expenditure
ORION HEALTH ANNUAL REPORT | A FUNDAMENTAL CHANGE IN HEALTHCARE14
that care is provided to their members as efficiently
as possible. A common occurrence has seen payers
acquire a number of competing eHealth software
vendors in order to ensure that their systems are fully
customised to their needs.
At Orion Health we have spent the last 10 years
enabling health information to be exchanged
outside the walls of a single hospital, connecting
healthcare across a region. The focus of our
community based Healthier Populations solutions
has always been to improve the coordination of care,
reduce costs and improve patient wellbeing. This
expertise in managing population data, yet providing
accurate and consolidated individual patient
information, gives us a core competency that is going
to set the foundation for the future of healthcare.
However, chronological clinical data is only a small
portion of the data that will contribute to a patient
medical record in years to come. Within 10 years
the ability for all individuals to have their genome
mapped will be a reality and with that comes a
volume of individually specific data never before
seen in our industry. As personal monitoring devices
ORION HEALTH ANNUAL REPORT | A FUNDAMENTAL CHANGE IN HEALTHCARE 17
begin to proliferate into all aspects of everyday
life, so too arrives another significant abundance
of data, this time relevant to lifestyle. The amount
of healthcare information that is expected to be
available worldwide is tipped to grow by a factor of
50 in only the next eight years.4 The accumulation,
consolidation, intersection and structuring of all this
data, will finally provide the blueprint for precise
and individual care plans.
We are building the capability to enable this shift. An
open data platform for health that will take all available
information connected to an individual, structure it
and display it back to the people who can influence
an individual’s health, when and where they need it
most. A software solution that will help make informed
decisions by reasoning across millions of seemingly
unconnected pieces of data in order to derive true
meaning and not just a reflection of information.
The ability to provide thinking software that will
deliver efficient and precise care to individuals that
is garnered from population knowledge is what will
differentiate the leading eHealth software providers
in the coming decade.
“We are confident we are in a prime position to enable the next generational change in health.” - Orion Health CEO, Ian McCrae
References: 1. Centers for Medicare and Medicaid Services, National Health Expenditure Projections 2012-2022. 2. “Eliminating Waste in US Health Care”; Donald M Berwick & Andrew D
Hackbarth; April 2012. 3. Organisation for Economic Co-operation and Development, 2011 data. 4. “Clouds Roll in to Handle Stratospheric Capacity Needs” Healthcare IT News, October 2011.
OUR PURPOSE ISTO REVOLUTIONISEGLOBAL HEALTHCAREBY OPTIMISING THEALGORITHMS OF LIFE
OVERVIEW OF FY2014 FINANCIAL RESULT
Our Revenue Model Explained
Orion Health reports five revenue types:
Licence Revenue
One-off licence fees from perpetual licence sales.
Professional Implementation Services Revenue
Fees for Orion Health staff to implement our software
for clients. This is the process of analysing the
client’s requirements, agreeing scope, installing and
configuring the software, integrating systems, user
testing and training. Where a third party component is
used in our software, Orion Health receives revenue for
that component and passes it through to the third party.
This third party revenue is included in Professional
Implementation Services Revenue.
Client Support Services Revenue:
Recurring fees for technical product support for
perpetual licence customers.
Global Managed Services Revenue
Recurring fees from subscription licence sales. This
includes software licencing, provision of infrastructure
to host and manage the software, and ongoing
technical product support and upgrades.
Other Revenue
Fees from training users of our software.
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT20
FY2014 was another strong year of growth for Orion
Health. Total Income for FY2014 was $163 million,
up 34% from FY2013. Operating Revenue was $153
million, up 39% from FY2013. Other income of $10
million included $3.5 million of R&D grant funding and
a $6.4 million gain on the sale of our 52.4% interest in
Healthlink International Limited.
During FY2014, Management and the Board
consciously decided to invest in expanding our
product development and implementation capability
to accelerate our pursuit of growth opportunities,
particularly in the US Healthier Populations market.
This investment was predominantly in people and
the infrastructure to support them. As a result, our
employee numbers increased by 309 people (42%)
over the year to 1,042 at 31 March 2014. By growing
our capability in this way we are establishing a sound
base for further company growth. However, there is a
natural lag between making new hires and achieving
incremental revenue. This was the main driver behind
Orion Health recording a loss before tax of $1.7 million
for FY2014.
OPERATING
REVENUE
$153m39% GROWTH
ON FY2013
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 21
Traditionally Orion Health has sold software solutions
under a perpetual licence model. A key objective of
our Strategic Plan is to increase our Recurring Revenue
by moving to a subscription licence model. Regardless
of the licence model our solutions still need to be
installed, configured and activated (Implementation).
Similarly, all clients receive ongoing technical support.
The different licence models are explained to the right.
Perpetual Licence Model
• One-off licence fee
• Licence Revenue is recognised in conjunction with
implementation of the solution. This is typically as
a percentage of completion (if the implementation
project is 50% complete then 50% of the license
fees are recognisable as revenue)
• Client support fees invoiced in advance
for a typical initial term of three to five years, with
renewal terms thereafter
• Client support revenue is recognised monthly as it
is earned
• The customer hosts our software on-premise
using customer-controlled infrastructure and is
responsible for managing the software environment
Subscription Licence Model
• Recurring subscription fee which covers software
licensing, provision of infrastructure to host and
manage the software and ongoing technical
support and upgrades
• Orion Health is responsible for hosting and
managing the software environment
• Subscription fees are invoiced annually or
quarterly in advance for a typical initial term of
three to five years, with renewal terms thereafter
• All fees are classified as Global Managed
Services Revenue
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT22
Increasing Recurring Revenue
Recurring Revenue includes Support Revenue
from perpetual licence clients and Global Managed
Services Revenue (GMS). Recurring Revenue
builds over time as more customers are added.
The benefits are a higher base of contracted revenue
at the beginning of the financial year and a smoother
revenue profile – avoiding the peaks and troughs that
characterise the traditional perpetual licence model.
1 APRIL 12 1 APRIL 13 1 APRIL 14
17,600
+76%
+43%
31,000
44,300
50,000
40,000
30,000
20,000
10,000
0
NZ
$ 0
00
BREAKDOWN OF ANNUALISED RECURRING REVENUE FY2012 (NZ$m) FY2013 (NZ$m) FY2014 (NZ$m)
Client Support Services Revenue 13.2 22.8 26.7
Global Managed Services Revenue 4.4 8.2 17.5
ANNUALISED RECURRING REVENUE 17.6 31.0 44.3
Consistent with our strategy, Annualised Recurring
Revenue at the end of FY2014 was $44 million, up
43% from the end of FY2013. This represents average
Recurring Revenue for the three months to March 2014,
annualised. We continue to see customer preferences
shift towards the subscription licence model to avoid
large capital outlay, and therefore expect Recurring
Revenue to increase over time, both in absolute dollar
terms and as a percentage of revenue.
31 MAR2012
31 MAR2013
31 MAR2014
As at 31 March
Annualised Recurring Revenue
Revenue Mix Continues to Evolve
Consistent with our strategy, licence revenue as a
proportion of total revenue continues to decline as we
shift towards a recurring subscription licence model,
particularly in the US market. GMS revenue grew
131% from FY2013 to FY2014 and now represents 11%
of total revenue. Implementation Services revenue
increased from 35% of total revenue in FY2013 to
40% in FY2014.
Completing an implementation under a perpetual
licence model enables recognition of a one-off licence
fee. In comparison, completing an implementation
under a subscription licence model only allows us to
begin recognition of subscription fees. With many
new GMS subscription customers added during
FY2014, we received implementation revenue but
much of the associated licence revenue will be
received in future periods as subscription fees are
collected. This dynamic contributes to the growing
proportion of implementation revenue. However, we
expect the proportion to peak and decline over time
as our recurring subscription revenue base grows and
we invest in making our products easier to implement.
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 23
Revenue Mix %
REVENUE MIX FY2012 (NZ$m) FY2013 (NZ$m) FY2014 (NZ$m)
Licenses 46.2 42.0 46.6
Professional Implementation Services 28.6 37.8 60.9
Client Support Services 16.9 21.7 28.0
Global Managed Services 4.0 7.1 16.4
Other 0.9 1.2 1.1
FY2012 FY2013 FY2014
Regional Performance
At the beginning of FY2014 we moved to managing
the company on the basis of eight geographical
regions. In previous years we had a three region
structure, being North America, Asia Pacific and
Europe Middle East. By breaking these down into
eight regions we have created greater alignment
and accountability for performance. The model
has proven successful in FY2014 and will continue
in FY2015.
Our United States business continues to be our
largest market by some margin, now making
up 58% of all Operating Revenue, compared to
49% in FY2013. The US also delivered impressive
revenue growth of 63% for the year. Contributing
to this success was a large contract with Highmark
Inc, our first US “Payer” customer, and 15 Health
Information Exchange sales.
Canada had a solid year with growth of 10%. Several
new customers were secured and an implementation
of our Electronic Referrals software has recently been
completed for the province of Alberta, providing a
great reference site for further sales in Canada.
The UK & Ireland had a relatively flat year, recording
just 3% operating revenue growth. However, the
FY2013 result included a large one-off perpetual
licence fee from delivering an Electronic Care
Record for Health and Social Care Northern
Ireland. A large deal such as this is difficult to
replicate every year. We are enjoying success with
National Health Service Trusts, which are divisions
of the English National Health Service and are
in effect public corporations that serve a given
geographical area or a specialised function. During
the year we secured several new NHS customers,
including St George’s NHS Healthcare Trust, NHS
East City & London, East Lancashire Hospitals
NHS Trust and NHS Greater Glasgow & Clyde. The
UK region has a strong pipeline of opportunities
and we believe we are well positioned for future
success in this market.
New Zealand delivered 53% revenue growth, and
also served as the benchmark for implementation
services margins and regional profitability. The key
contributors to this result were our deployment
of a single Clinical Information System across the
Central Region’s six District Health Boards (DHBs),
our ongoing Smarter Hospitals work with the South
Island Alliance and the Waikato DHB.
Australia had a disappointing year, with several
opportunities taking longer to pursue than
anticipated and implementation project challenges.
However, performance improvement is a major focus
for this region and we are optimistic of a better result
for FY2015.
EMEA, North Asia and South East Asia are all
emerging markets for us currently, collectively
making up 6% of total operating revenue for
FY2014. Our main focus in EMEA is successfully
deploying our Smarter Hospitals Enterprise solution
at American Hospital in Istanbul (a premiere private
hospital) and delivering our Healthier Populations
chronic disease management solution for the
Spanish Ministry of Health. During the year we
appointed two new leaders in Asia – Andrew van
Dort in South East Asia and Simon Gong in North
Asia. This dedicated leadership is expected to
help us grow the region. At present North Asia is
primarily focused on Rhapsody Integration Engine
sales and South East Asia focussed on Smarter
Hospitals sales or upgrades.
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT24
OPERATING REVENUE BY REGION FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
United States 87,981 53,878 63%
Canada 12,622 11,469 10%
UK / Ireland 14,783 14,329 3%
New Zealand 14,158 9,250 53%
Australia 13,301 14,177 -6%
EMEA 5,307 3,327 60%
North Asia 952 1,122 -15%
South East Asia 3,599 1,996 80%
Corporate / Development 289 232 25%
TOTAL OPERATING REVENUE 152,992 109,780 39%
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 25
Regional Revenue Mix
FY2013 FY2014
Market Segments
Orion Health has three market segments, the
boundaries of which are defined by the nature of the
customer and nature of the software solution. For
FY2014 we have introduced an operating revenue
split by Solution Group.
Operating revenue for Intelligent Integration of
$35 million primarily represents standalone sales
of our Rhapsody Integration Engine product. The
FY2014 result was 8% down on FY2013, however,
FY2013 revenue of $38 million included two
large transactions which accounted for almost
$8 million alone. Rhapsody is a market leader, is
straightforward to implement and support, and
requires relatively low ongoing R&D investment.
Therefore whilst this segment is not growing as
fast as our other segments, it is a reliable revenue
source with good margins. Note that many of
our sales in other segments include an element
of Rhapsody Integration Engine as access to
integrated data is vital for Healthier Populations
and Smarter Hospitals. However, for the purposes
of management reporting only external standalone
sales of Rhapsody Integration Engine are included
in the Intelligent Integration segment.
Smarter Hospitals revenue of $33 million includes
sales of our hospital automation software and
sales of our Electronic Medical Record to hospital
customers. Strong revenue growth of 87% was driven
by our success with NHS Trusts in the UK and our
ongoing deployments for the South Island of New
Zealand and American Hospital in Istanbul, Turkey.
Momentum continues to build in this segment. Early
in FY2015 we secured a new hospital automation
deployment with The Medical City in the Philippines.
We continue to target South East Asia, Australasia
and EMEA with our Smarter Hospitals solutions.
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT26
Healthier Populations revenue of $76 million is
primarily made up of sales of Electronic Health
Record solutions (also referred to as Health
Information Exchange or HIE in the North American
market) to public or private organisations who
manage the health of a population – the solution
is deployed in a community setting rather than
within the four walls of a hospital. The 58% revenue
increase in FY2014 was driven largely by the US
and Canada regions. 15 new HIE customers were
secured in FY2014. The FY2014 result also benefited
from recurring subscription revenue from customers
brought on in FY2013. Our existing products in this
Healthier Populations area are the foundation for
Population Health Management and The Health Data
Revolution. We expect this segment to continue
growing strongly.
OPERATING REVENUE BY MARKET SEGMENT FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
Intelligent Integration 35,071 37,949 -8%
Healthier Populations 75,536 47,755 58%
Smarter Hospitals 33,356 17,803 87%
Other 9,029 6,273 44%
TOTAL OPERATING REVENUE 152,992 109,780 39%
ORION HEALTH ANNUAL REPORT |OVERVIEW OF FY2014 FINANCIAL RESULT 27
FY2013 FY2014
Market Segment Revenue Mix
Operating Expenses
Research & Development expense was 22% of
Operating Revenue in FY2014, down from 24% in
FY2013. The nature of our research and development
is such that not all of the criteria for capitalisation of
these costs as an intangible asset under NZ IFRS have
been met, and hence all research and development
costs are expensed. Over the year we added 84
Product Development staff, taking this department
to a total of 363 staff at the end of March 2014.
Sales & Marketing, Professional Services and General
& Administration all held relatively steady year on
year as a percentage of revenue. The increases in
absolute terms reflect the company’s growth and
are largely attributable to increased headcount in
these areas. We have invested in building capability,
particularly in our People team (Human Resources,
Recruitment and Organisational Development).
Global premise costs have also risen with the addition
of new leases as we expand our global footprint in
readiness to scale further.
OPERATING EXPENSES BY FUNCTION FY2014 (NZ$’000) FY2013 (NZ$’000) % Change
Research & Development 34,268 26,739 28%
% of group operating revenue 22% 24%
Sales & Marketing 36,292 27,103 34%
% of group operating revenue 24% 25%
Support Services 4,526 5,569 -19%
% of support services revenue 16% 26%
Professional Implementation Services 42,393 26,125 62%
% of implementation services revenue 70% 69%
Global Managed Services 12,186 4,629 163%
% of managed services revenue 74% 65%
General & Administration 35,589 24,478 45%
% of group operating revenue 23% 22%
TOTAL OPERATING EXPENSES 165,254 114,643 44%
% of group operating revenue 108% 104%
GMS costs increased 163% to $12.2 million. This
includes direct costs such as software hosting and
third party software purchases. During the year we
added 21 staff in this area, taking the department
to a total of 50 staff at 31 March 2014. Expenses
have increased as a percentage of GMS revenue,
from 65% in FY2013 to 74% in FY2014. This in part
reflects the investment required in establishing a
client’s software environment before subscription
fees are earned.
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT28
OPENINGCASH
9,276 (8,774)
8,008 (9,304)
(928)
(134)
NET OPERATING CASHFLOW
HEALTHLINKSALE
CAPITALEXPENDITURE
FINANCINGAND FX
CLOSINGCASH
Cash Flow and Balance Sheet
Operating Cash Flow for FY2014 was negative $8.8
million, impacted by our investment in product
development and implementation capability, as well
as lease costs from new premises around the world.
Payments to Suppliers includes costs for third party
components used in our solutions, hosting fees from
our GMS data center provider, premise lease costs
and $11 million of payments related to employee
benefits and pensions.
Capital Expenditure was $9.3 million for the year.
This included the fit out of several new buildings
(leasehold improvements of $2.4 million and fixtures
of $1.3 million) and computer equipment ($4.3
million) to allow for an infrastructure that handles
over 1,000 employees globally. This investment
leaves us with capacity for further headcount growth
without additional premises and IT assets.
We received $8 million cash from the sale of our
interest in Healthlink International Limited which
settled in November 2013.
Closing cash at 31 March 2014 was negative $0.9
million. However, we maintain operational flexibility via
our working capital facility and have also raised $25.5
million of new equity funding since balance date.
Orion Health’s balance sheet lacks complexity, with
a limited number of items over which management
judgement is required. Trade Receivables have
increased from $46 million to $53 million at 31
March 2014, reflecting the higher level of invoicing
being undertaken. Accrued Revenue increased
significantly from $9 million to $21 million. This in
part reflects extended payment terms with some
customers whereby we have earned revenue with
invoicing to follow at a later date. Revenue in
Advance of $41 million relates primarily to Support
and Implementation engagements that have been
invoiced in advance of work being completed.
Outlook
FY2014 was a successful year for Orion Health and
we are proud of the growth achieved. However, fast
growth needs to be managed carefully. To this end
we have invested in our capability and leadership.
We are confident we have the people and processes
in place to continue growing successfully. This will
serve us well as we enter what we expect to be the
most exciting decade in the company’s history. The
next few years will be critical, as we enhance our
Healthier Populations solution to meet the needs
of US payer customers. This is the beginning of The
Health Data Revolution.
Opening to Closing Cash Bridge (All figures in NZ$’000)
ORION HEALTH ANNUAL REPORT | OVERVIEW OF FY2014 FINANCIAL RESULT 29
WE AREOPEN-MINDED CHALLENGERSIN A RELENTLESS PURSUIT OF A HEALTHIER WORLD
MANAGING GROWTH
ORION HEALTH ANNUAL REPORT | CORPORATE LEADERS32
Orion Health’s Chief Executive Officer, Ian McCrae, is well supported by a management team with deep product, regional and functional expertise.
Annemarie joined Orion Health in January 2014 as VP Marketing. She has over 20 years sales and marketing
experience in the media industry, most recently as GM Marketing at TVNZ, and prior to that as GM New Zealand
for SEEK. Annemarie holds a Bachelor of Commerce from Auckland University and completed the Senior
Leadership programme at The Melbourne School of Business.
ANNEMARIE BROWNEAucklandVice President, Marketing
Brett joined Orion Health in July 2013 from Air New Zealand. He has over ten years of Human Resources experience.
Brett holds a Bachelor of Arts and a Masters of Business Administration from Auckland University.BRETT MORRISAucklandVice President, People
Helen joined Orion Health in 2012 after six years in investment banking working on M&A and capital markets
transactions. She holds a Bachelor of Commerce and Bachelor of Laws (Hons) from Victoria University.HELEN ROBINSONAucklandCorporate Strategy Director
Luke has been with Orion Health since 2010. He has over 10 years of legal experience, including six years in private
practice in Auckland and New York. Luke holds a Bachelor of Commerce and a Bachelor of Laws (Hons) from
Auckland University.
LUKE FACERAucklandVice President, General Counsel
A CIMA qualified management accountant (UK), Rodney joined Orion Health in July 2011 from Navico, the
market leader in marine electronics. He holds a Bachelor of Commerce from University of Auckland.RODNEY HYDEAuckland Chief Financial Officer
Graeme joined Orion Health in 2014 following his sucessful management of a technology focussed investment firm.
He has been widely involved in the IT industry for the past 30 years and has experience with a number of eHealth
companies. Graeme holds a Bachelor of Commerce from the University of Auckland.
GRAEME WILSONAucklandChief Operating Officer
Corporate Leaders
ORION HEALTH ANNUAL REPORT | PRODUCT & DEVELOPMENT LEADERS 33
David Leach is responsible for Orion Health’s Intelligent Integration segment. Having joined Orion Health in 2007,
he has held previous leadership roles in the company in Professional Implementation and Sales, both in New
Zealand and the United States.
DAVID LEACHAucklandVice President, Intelligent Integration
Wayne joined Orion Health in 2003 and has since held roles in sales, product and development. He is now
responsible for our Smarter Hospitals segment. Wayne holds a Bachelor of Science in Mathematics, Bachelor of
Management Studies and completed the Advanced Management Program at Harvard Business School.
WAYNE OXENHAMAucklandExecutive Vice President, Smarter Hospitals
In 2013, David joined Orion Health as EVP of Healthier Populations. His focus is to build out the Healthier
Populations business including a new North American Development Center. This center will focus on advancing
the core Orion Health platform and providing new advancements in analytics and care coordination. He holds a
B.S. degree in computer science from DeVry University.
DAVID BENNETTScottsdaleExecutive Vice President, Healthier Populations
Jan joined Orion Health at the start of 2013 as a Product Development Director. He has since transitioned
into EVP of Engineering. He is responsible for Development methodology and delivery across all Development
Centres. Previously Jan has worked in leadership roles for House of Travel and PayGlobal. He has a background
in logistics and software R&D.
JAN BEHRENSAucklandExecutive Vice President, Engineering
Product & Development Leaders
Greg joined Orion Health in early 2014 after spending seven years as an executive at Auckland District Health
Board. He has responsibility for Orion Health’s Clinical Workflow Business as well as spearheading ongoing
process improvement. Greg has a Masters of Business Administration from Deakin University and Bachelor of
Engineering (Hons) from the University of Technology, Sydney. Greg is a Member of the Institute of Directors.
GREG BALLAAucklandExecutive Vice President, Clinical Workflow
In his role as VP SaaS Operations, Rafi is responsible for the company’s Global Managed Services business.
Rafi joined Orion Health in 2014 from RSA Security (the security division of EMC), industry-leading solutions in
financial markets identity assurance and access control, encryption and key management.
RAFI BROSCHBostonVice President, SaaS Operations
Gary joined Orion Health in 2014 as EVP Global Services following his previous role as Head of Healthcare
and Life Sciences Information Software and Services for the APAC and MEA region at CSC. Gary has
worked across the healthcare sector for 15 years and is highly skilled in managing large development and
operations teams across multiple geographies.
GARY WHITEBostonExecutive Vice President, Global Services
Sarah joined Orion Health in early 2013, as Global Resource Centre Director, and added Global PMO to her
responsibilities in July 2013. She has worked in the healthcare industry since 2000 and spent much of this time
at Vielife in London where she oversaw product delivery and client implementation. Sarah holds a Bachelor of
Design and is both Scrum and Prince 2 qualified.
SARAH THOMPSONAuckland Global Resource Centre Director
Paul launched Orion Health’s North American business in 2002 and now runs Sales globally. He is supported by
regional sales leaders in each of our geographies. Prior to joining Orion Health he held various sales, marketing
and management roles in the IT industry.
PAUL VISKOVICHSanta MonicaGlobal President, Sales
MANAGING GROWTH (CONT)
ORION HEALTH ANNUAL REPORT | SALES & SERVICE LEADERS34
Sales & Service Leaders
EXPANDING CHRISTCHURCH OPERATIONS
ORION HEALTH ANNUAL REPORT | EXPANDING CHRITCHURCH OPERATIONS36
among our development teams and co-creating with
us to deliver exceptional results that will ultimately
shape how healthcare is delivered throughout the
entire South Island.
The culmination of all this effort was realised when
we were delighted to welcome the Honourable
Amy Adams – Minister for Communications and
Information Technology – to officially open our new
office in early 2014. In what was a fantastic day,
family and friends of Orion Health staff were invited
Orion Health opened its first Christchurch office only
eight days before the devastating earthquake of
February 22nd, 2011.
In the three years since this initial office opening we
have grown operations from four full time staff to
now boast a development centre housing more than
64 employees. This exceptional growth, combined
with a clear direction to continue growing to over
100 full time staff within the next 18 months, is
what led us to seek a new office location within the
Hazeldean business park.
In setting up the new space, full renovations
were undertaken over six months to create an
atmosphere that is collaborative, fosters creativity
and promotes our innovative culture. This is in line
with our global approach to all offices, however,
in Christchurch we wanted to take this a step
further and develop an office that would help drive
our partnership with Canterbury District Health
Board (CDHB).
To achieve this we granted CDHB staff access to our
offices, where they are empowered to work alongside
our development teams to create clinically meaningful
solutions. A typical week now sees between four
– eight rotating CDHB staff taking up residence
The decision to keep investing in Christchurch is an easy one.
The attitude in Canterbury towards innovation and the desire
to challenge the status quo is exactly the environment we like
to be part of. The products and solutions being developed out
of this office are not only changing the healthcare landscape
in the South Island, but also are highly applicable throughout
Asia and Europe as well.
to partake in the celebration alongside a number of
guests from CDHB, Pegasus, Nurse Maude, The South
Island Alliance and University of Canterbury.
We are extremely proud of our ongoing commitment
to the Canterbury region and inspired to be part of
the transformation that is occurring in Christchurch
itself. The obvious hunger and spirit for collaboration
is truly great to see and we are extremely excited for
the positive impact that this office is going to have
on our future growth.
INDEPENDENT AUDITORS’ REPORT
Report on the Financial Statements
We have audited the financial statements of Orion
Corporation Limited on pages 41 to 90, which
comprise the balance sheets as at 31 March 2014, the
statements of comprehensive income, statements of
changes in equity and statements of cash flows for
the year then ended, and the notes to the financial
statements that include a summary of significant
accounting policies and other explanatory
information for both the Company and the Group.
The Group comprises the Company and the entities
it controlled at 31 March 2014 or from time to time
during the financial year.
Directors’ Responsibility for the Financial Statements
The Directors are responsible for the preparation
of these financial statements in accordance with
generally accepted accounting practice in New
Zealand and that give a true and fair view of the
matters to which they relate and for such internal
controls as the Directors determine are necessary to
enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with
International Standards on Auditing (New Zealand)
and International Standards on Auditing. These
standards require that we comply with relevant
ethical requirements and plan and perform the
audit to obtain reasonable assurance about
whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures
in the financial statements. The procedures selected
depend on the auditors’ judgement, including the
assessment of the risks of material misstatement
of the financial statements, whether due to fraud
or error. In making those risk assessments, the
auditor considers the internal controls relevant
to the Company and Group’s preparation of
financial statements that give a true and fair view
of the matters to which they relate, in order to
design audit procedures that are appropriate
in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the
Company and Group’s internal control. An audit
also includes evaluating the appropriateness of
accounting policies used and the reasonableness
of accounting estimates, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our audit opinion.
We have no relationship with, or interests in, Orion
Corporation Limited or any of its subsidiaries other
than in our capacities as auditors and through the
provision of other assignments for the Company in
the area of advisory services.
ORION HEALTH ANNUAL REPORT | INDEPENDENT AUDITOR’S REPORT38
to the shareholders of Orion Corporation Limited
ORION HEALTH ANNUAL REPORT | INDEPENDENT AUDITOR’S REPORT 39
Opinion
In our opinion, the financial statements on pages 41
to 90:
• comply with generally accepted accounting
practice in New Zealand;
• comply with International Financial
Reporting Standards; and
• give a true and fair view of the financial
position of the Company and the Group as at
31 March 2014, and their financial performance
and cash flows for the year then ended.
Report on Other Legal and Regulatory Requirements
We also report in accordance with Sections 16(1)(d)
and 16(1)(e) of the Financial Reporting Act 1993. In
relation to our audit of the financial statements for
the year ended 31 March 2014:
• we have obtained all the information and
explanations that we have required; and
• in our opinion, proper accounting records
have been kept by the Company as far as
appears from an examination of those records.
Restriction on Use of Our Report
This report is made solely to the Company’s
shareholders, as a body, in accordance with
Section 205(1) of the Companies Act 1993.
Our audit work has been undertaken so that
we might state to the Company’s shareholders
those matters which we are required to state
to them in an auditors’ report and for no other
purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other
than the Company and the Company’s shareholders,
as a body, for our audit work, for this report or for
the opinions we have formed.
Chartered Accountants
Auckland | 21 July 2014
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are responsible for the preparation, in
accordance with New Zealand generally accepted
accounting practice, of the financial statements
which give a true and fair view of the financial
position of Orion Corporation Limited and Group as
at 31 March 2014 and the results of their operations
and cash flows for the year ended 31 March 2014.
The Directors consider that the financial statements
of the Company and the Group have been prepared
using accounting policies appropriate to the
Company and Group’s circumstances, consistently
applied and supported by reasonable and prudent
judgements and estimates, and that all applicable
New Zealand equivalents to International Financial
Reporting Standards and Financial Reporting
Standards have been followed.
The Directors have responsibility for ensuring that
proper accounting records have been kept which
enable, with reasonable accuracy, the determination
of the financial position of the Company and Group
and enable them to ensure that the financial
statements comply with the Financial Reporting
Act 1993.
The Directors have responsibility for the
maintenance of a system of internal control
designed to provide reasonable assurance as to the
integrity and reliability of the financial reporting.
The Directors consider that adequate steps have
been taken to safeguard the assets of the Company
and Group and to prevent and detect fraud and
other irregularities.
The Directors are pleased to present the financial
statements of Orion Corporation Limited and Group
for the year ended 31 March 2014.
The annual report is dated 21 July 2014 and is
signed in accordance with a resolution of the
Directors made pursuant to section 211(1) (k) of the
Companies Act 1993.
Ian McCrae
DIRECTOR and CHIEF EXECUTIVE OFFICER
Roger France
DIRECTOR
For and on behalf of the Board, 21 July 2014
ORION HEALTH ANNUAL REPORT | DIRECTORS’ RESPONSIBILITY STATEMENT40
FINANCIALSTATEMENTS
ORION HEALTH ANNUAL REPORT | FINANCIAL STATEMENTS 41
The accompanying notes form an integral part of these financial statements.
ORION HEALTH ANNUAL REPORT | STATEMENTS OF COMPREHENSIVE INCOME42
STATEMENTS OF COMPREHENSIVE INCOME
for the years ended 31 March
OPERATING (LOSS)/PROFIT
Total operating (loss)/profit (2,094) 7,283 11,425 5
Finance income 7 333 285 20 -
Finance costs 7 (117) (523) - -
Finance income/(costs) – net 216 (238) 20 -
Share of profit of investments accounted for using the equity method
13 145 364 - -
(Loss)/Profit before income tax (1,733) 7,409 11,445 5
Income tax credit/(expense) 8 596 341 11 (2)
(LOSS)/PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF PARENT
(1,137) 7,750 11,456 3
OTHER COMPREHENSIVE INCOME FOR ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Currency translation differences (954) (285) - -
Total other comprehensive loss (954) (285) - -
Total comprehensive (loss)/income attributable to equity holders of parent
(2,091) 7,465 11,456 3
EARNINGS PER SHAREBasic and diluted (loss)/earnings per share (cents) 22 (0.9) 5.9
ORION HEALTH ANNUAL REPORT | STATEMENTS OF COMPREHENSIVE INCOME 43
INCOME Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Operating Revenue 4 152,992 109,780 - 310
Other income 5 10,168 12,146 11,770 -
TOTAL INCOME 163,160 121,926 11,770 310
EXPENSES
Direct operating costs and expenses (27,344) (12,190) - -
Employee benefits expense (109,159) (85,173) - -
Marketing expenses (2,387) (2,496) - (16)
Administration and other expenses (11,920) (6,853) (344) (288)
Occupancy expenses (8,897) (5,074) - -
Depreciation and amortisation expense (3,710) (2,443) - -
Other operating gains/(losses) (1,837) (414) (1) (1)
TOTAL EXPENSES 6 (165,254) (114,643) (345) (305)
ORION HEALTH ANNUAL REPORT | BALANCE SHEETS44
BALANCE SHEETSas at 31 March
Ian McCrae
DIRECTOR and CHIEF EXECUTIVE OFFICER
Roger France
DIRECTOR
For and on behalf of the Board, 21 July 2014
The accompanying notes form an integral part of these financial statements.
LIABILITIES
Current liabilities
Bank overdraft 9 13,583 2 - -
Trade and other payables 16 11,902 10,030 400 371
Current income tax payable 1,186 655 - -
Employee benefits 17 10,992 5,293 - -
Revenue in advance 19 40,554 29,883 - -
Provisions for other liabilities 18 1,241 - - -
Total current liabilities 79,458 45,863 400 371
Non-current liabilities
Provisions for other liabilities 18 579 - - -
Total non-current liabilities 579 - - -
TOTAL LIABILITIES 80,037 45,863 400 371
NET ASSETS 29,182 30,784 26,670 12,656
EQUITY
Share capital 20 14,777 12,528 14,777 12,528
Treasury shares 21 (2,069) - - -
Share-based payment reserve 21 309 - 309 -
Retained earnings 18,018 19,155 11,584 128
Foreign currency translation reserve (1,853) (899) - -
TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT 29,182 30,784 26,670 12,656
ORION HEALTH ANNUAL REPORT | BALANCE SHEETS 45
ASSETS Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Current assets
Cash and cash equivalents 9 12,655 9,278 - -
Trade and other receivables 10 52,781 45,597 26,714 12,984
Accrued revenue 11 16,921 8,788 - -
Current income tax asset 66 - 18 25
Total Current Assets 82,423 63,663 26,732 13,009
Non-current assets
Accrued revenue 11 4,026 - - -
Deferred tax assets 8 9,970 3,818 28 17
Investment in subsidiaries 12 - - 310 1
Investment in associates 13 - 1,494 - -
Property, plant and equipment 14 11,700 6,750 - -
Intangibles 15 1,100 922 - -
Total Non-current assets 26,796 12,984 338 18
TOTAL ASSETS 109,219 76,647 27,070 13,027
ORION HEALTH ANNUAL REPORT | STATEMENTS OF CHANGES IN EQUITY46
STATEMENTS OF CHANGES IN EQUITY
for the years ended 31 March
The accompanying notes form an integral part of these financial statements.
PARENT
Balance at 1 April 2012 12,527 - - 125 - 12,652
Profit for the year - - - 3 - 3
Total comprehensive income for the year ended 31 March 2013
- - - 3 - 3
Issue of share capital 20 1 - - - - 1
Total transactions with owners 1 - - - - 1
Balance at 31 March 2013 12,528 - - 128 - 12,656
Balance at 1 April 2013 12,528 - - 128 - 12,656
Profit for the year - - - 11,456 - 11,456
Total comprehensive income for the year ended 31 March 2014
- - - 11,456 - 11,456
Issue of share capital 21 180 - - - - 180
Issue of share capital – employee share schemes 21 2,069 - - - - 2,069
Accrual of share-based employee benefits 21 - - 309 - - 309
Total transactions with owners 2,249 - 309 - - 2,558
Balance at 31 March 2014 14,777 - 309 11,584 - 26,670
ORION HEALTH ANNUAL REPORT | STATEMENTS OF CHANGES IN EQUITY 47
GROUP NoteIssued capital
NZ$’000Treasury shares
NZ$’000
Shared-based payment reserve
NZ$’000
Retained earnings NZ$’000
Foreign currency translation reserve
NZ$’000
Total equity NZ$’000
Balance at 1 April 2012 12,527 - - 11,405 (614) 23,318
Profit for the year - - - 7,750 - 7,750
Other comprehensive loss for the year - - - - (285) (285)
Total comprehensive income/(loss) for the year ended 31 March 2013
- - - 7,750 (285) 7,465
Issue of share capital 20 1 - - - - 1
Total transactions with owners in their capacity as owners 1 - - - - 1
Balance at 31 March 2013 12,528 - - 19,155 (899) 30,784
Balance at 1 April 2013 12,528 - - 19,155 (899) 30,784
Loss for the year - - - (1,137) - (1,137)
Other comprehensive loss for the year - - - - (954) (954)
Total comprehensive loss for the year ended 31 March 2014 - - - (1,137) (954) (2,091)
Issue of share capital 21 180 - - - - 180
Issue of share capital – employee share schemes 21 2,069 (2,069) - - - -
Accrual of share-based employee benefits 21 - - 309 - - 309
Total transactions with owners 2,249 (2,069) 309 - - 489
Balance at 31 March 2014 14,777 (2,069) 309 18,018 (1,853) 29,182
ORION HEALTH ANNUAL REPORT | STATEMENTS OF CASH FLOWS48
STATEMENTS OF CASH FLOWS
for the years ended 31 March
The accompanying notes form an integral part of these financial statements.
ORION HEALTH ANNUAL REPORT | STATEMENTS OF CASH FLOWS 49
CASHFLOW FROM OPERATING ACTIVITIES Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash provided from:
Receipts from customers 147,025 113,184 - -
Interest received 333 279 - -
147,358 113,463
Cash applied to:
Payment to suppliers (54,020) (25,727) - -
Payment to employees (97,534) (85,490) - -
Interest paid (117) (643) - -
Taxation paid (4,461) (1,876) - -
(156,132) (113,736) - -
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 27 (8,774) (273) - -
CASHFLOW FROM INVESTING ACTIVITIES
Cash provided from:
Disposal of associate 13 8,008 - - -
Property, plant and equipment – disposals - 21,037 - -
Cash applied to:
Property, plant and equipment – additions (8,434) (7,781) - -
Intangibles (870) (633) - -
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES (1,296) 12,623 - -
CASHFLOW FROM FINANCING ACTIVITIES
Cash provided from:
Issue of shares 21 180 1 - -
Dividend received 5 262 - - -
Bank borrowings - 500 - -
442 501 - -
Cash applied to:
Repayment of bank borrowings - (9,000) - -
Net cash inflow/(outflow) from financing activities 442 (8,499) - -
TOTAL NET CASH (OUTFLOW)/INFLOW (9,628) 3,851 - -
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
9,276 5,479 - -
Effect of exchange rate on foreign currency balances (576) (54) - -
Net cash (outflow)/inflow (9,628) 3,851 - -
Cash and cash equivalents at the end of period 9 (928) 9,276 - -
Composition of cash and cash equivalents
Cash and cash equivalents 12,655 9,278 - -
Bank overdraft (13,583) (2) - -
9 (928) 9,276 - -
The consolidated financial statements for the ‘Group’
are for the economic entity comprising Orion
Corporation Limited (‘Parent’ or ‘Company’) and
its subsidiaries, (together referred to as the Group
and individually as ‘Group entities’) and the Group’s
interest in associates.
Orion Corporation Limited is incorporated and
domiciled in New Zealand and registered under the
New Zealand Companies Act 1993. The registered
office is 181 Grafton Road, Grafton, Auckland 1010,
New Zealand.
The Parent and Group are designated as profit
oriented entities for financial reporting purposes. The
Parent and Group are primarily involved in the sale,
support and implementation of software with a focus
on the healthcare IT market.
These financial statements were approved by the
Directors on 21 July 2014.
The principal accounting policies adopted in the
preparation of these financial statements are set out
below. These policies have been consistently applied
to all the years presented, unless otherwise stated.
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2014
(a) Basis of preparation of financial statements
The financial statements have been prepared in
accordance with the requirements of the Companies
Act 1993 and the Financial Reporting Act 1993.
The financial statements have been prepared in
accordance with New Zealand Generally Accepted
Accounting Practice (‘NZ GAAP’). They comply
with New Zealand equivalents to International
Financial Reporting Standards (‘NZ IFRS’), and
other applicable Financial Reporting Standards,
as appropriate for profit-oriented entities. They
comply with International Financial Reporting
Standard (‘IFRS’).
The financial statements have been prepared on the
basis of historical cost, except when specific items
are carried at fair value as identified in specific
accounting policies below.
(b) Changes in accounting policies and estimates
New standards, amendments, and interpretations
effective in 2014.
During the year the Group adopted Standard XRB
A1 ‘Accounting Standards Framework’ issued by the
External Reporting Board. XRB A1 establishes a
for-profit tier structure and outlines which suite of
accounting standards entities in different tiers must
follow. The group is a Tier 1 entity. There was no impact
on the current or prior year financial statements.
The Group has adopted the following new and
amended NZ IFRSs of relevance to the Group and
Company as of 1 April 2013:
- Amendment to NZ IAS 1, ‘Financial
statement presentation’ regarding other
comprehensive income. The main change
resulting from these amendments is a
requirement for entities to group items
presented in ‘other comprehensive income’
on the basis of whether they are potentially
reclassifiable to profit or loss subsequently
(reclassification adjustments).
1 REPORTING ENTITY 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS50
New standards, amendments and interpretations
issued by the International Accounting Standards
Board (IASB) and the External Reporting Board
(XRB) have been published that will be mandatory
for the Group’s accounting periods beginning
on or after 1 April 2014. None of these standards
have been early adopted by the Group. These
new standards, amendments and interpretations
potentially impacting the group include:
- NZ IFRS 9, ‘Financial Instruments’,
addresses the classification, measurement
and recognition of financial assets and
financial liabilities and replaces the parts of
NZ IAS 39 that relate to the classification and
measurement of financial instruments and
hedge accounting. The Group is yet to assess
NZ IFRS 9’s full impact and has not yet decided
when to adopt the standard. The standard
must be adopted for the period beginning 1
April 2017 but allows for early adoption.
- NZ IFRS 15, ‘Revenue from contracts with
customers’, addresses recognition of revenue
from contracts with customers. It replaces the
current revenue recognition guidance in NZ
IAS 18 Revenue and NZ IAS 11 Construction
Contracts and is applicable to all entities
with revenue. It sets out a five step model for
revenue recognition to depict the transfer
of promised goods or services to customers
in an amount that reflects the consideration
to which the entity expects to be entitled in
exchange for those goods or services. The
Group has yet to assess NZ IFRS 15’s full
impact. The Group will apply this standard
from 1 April 2017.
- NZ IFRS 10, ‘Consolidated financial
statements’ builds on existing principles
by identifying the concept of control as the
determining factor in whether an entity
should be included within the consolidated
financial statements of the parent company.
The standard provides additional guidance
to assist in the determination of control
where this is difficult to assess.
- NZ IFRS 12, ‘Disclosures of interests
in other entities’, includes the disclosure
requirements for all forms of interests in
other entities, including joint arrangements,
associates, special purpose vehicles and
other off balance sheet vehicles.
- NZ IFRS 13, ‘Fair value measurement’,
aims to improve consistency and reduce
complexity by providing a precise definition
of fair value and a single source of fair value
measurement and disclosure requirements
for use across IFRSs. The requirements,
which are largely aligned between IFRSs and
US GAAP, do not extend the use of fair value
accounting but provide guidance on how it
should be applied where its use is already
required or permitted by other standards
within IFRSs.
The adoption of these amendments and standards
has not resulted in material accounting or disclosure
changes for the Group or Company.
New standards, amendments and interpretations
issued but not effective for the financial year
beginning 1 April 2013 and not early adopted.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 51
There are no other standards, amendments or
interpretations that are not yet effective that would
be expected to have a material impact on the Group.
Changes in estimates – depreciation and
amortisation methods and rates
During the year a review has been undertaken across
the Group of the basis of depreciation of property,
plant and equipment and the basis of amortisation
of intangible assets, specifically software. As a
result of this review, some changes have been made
to rates and methods used to align the policy for
entities within the Group and to provide consistency.
The rates and methods now used will allow for a
more accurate representation of the cost of utilising
property, plant and equipment and intangible
assets over their useful lives. The changes have not
had a material impact on the Group’s result in the
current period. The change in methods and rates
have been accounted for as changes in estimates
with effect from 1 April 2013 in accordance with NZ
IAS 8 ‘Accounting Policies, Changes in Accounting
Estimates and Errors’ and therefore the comparative
period has not been restated.
(c) Basis of consolidation
Subsidiaries
Subsidiaries are all entities over which the Group has
control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to
affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Intra-group balances and transactions and any
unrealised income and expenses arising from intra-
group transactions are eliminated in preparing the
consolidated financial statements.
Investments in subsidiaries held by the Parent are
accounted for at cost less impairment losses in the
separate financial statements of the parent entity.
Business Combinations
The acquisition method of accounting is used to
account for the acquisition of subsidiaries by the
Group. The consideration transferred for an acquisition
is measured as the fair value of the assets transferred,
equity instruments issued and liabilities incurred
or assumed at the date of exchange. Costs directly
attributable to the acquisition are expensed in the
Statement of Comprehensive Income. Identifiable
assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured
initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling
interest. The excess of the cost of acquisition over the
fair value of the Group’s share of the identifiable net
assets acquired is recorded as goodwill.
If the cost of acquisition is less than the Group’s share
of the fair value of the identifiable net assets of the
subsidiary acquired, the difference is recognised
directly in the Statement of Comprehensive Income.
Investments in associates
An associate is an entity over which the Group has
significant influence and that is neither a subsidiary
nor an interest in a joint venture. Significant influence is
the power to participate in the financial and operating
policy decisions of the investee but is not control or
joint control over those policies.
The Group’s investment in its associates is accounted
for using the equity method of accounting in the
consolidated financial statements. Investments in
associates held by the Parent are accounted for at
cost less impairment losses in the separate financial
statements of the Parent entity.
Under the equity method, investments in the associates
are carried on the consolidated Balance Sheets at cost
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS52
plus the Group’s share of the profit or loss and other
comprehensive income of equity accounted investees,
from the date that significant influence commences
until the date that significant influence ceases.
Dividends receivable from associates are recognised
in the Parent entity’s profit or loss, while in the
consolidated financial statements they reduce the
carrying amount of the investment.
(d) Foreign currency translation
Functional and presentation currency
Both the functional and presentation currency of Orion
Corporation Limited and its New Zealand subsidiaries
are New Zealand dollars ($).
The functional currencies of other subsidiaries are
as follows:
Orion Health Inc. United States of America United States dollar (USD)
Orion Health Limited Canada Canadian dollar (CAD)
Orion Health Limited United Kingdom Great Britain pound (GBP)
Orion Health Pty Limited Australia Australian dollar (AUD)
Orion Health S.L.U. Spain Euro (EUR)
Orion Health SAS France Euro (EUR)
Orion Health Pte. Limited Singapore dollar (SGD)
Orion Health K.K. Japan Japanese yen (JPY)
Orion Health Systems FZ-LLC United Arab Emirates United Arab Emirates dirham (AED)
Orion Health Limited Thailand Thai baht (THB)
Orion Sağlık ve Bilgi Sistemleri Limited ğirketi
Turkey United States dollar (USD)
Orion Health Software Technology Consulting (Shenzhen) Co., Limited
China Chinese renminbi (RMB)
Subsidiary Country of Incorporation Functional Currency
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 53
Translation of Group Companies’ functional
currency to presentation currency
The Group translates the results, assets and liabilities of
its foreign operations from their functional currencies
to New Zealand dollars using the closing exchange
rate at reporting date for assets and liabilities and the
monthly exchange rates for income and expenses.
The difference arising from the translation of the
Balance Sheet at the closing rates and the Statement
of Comprehensive Income at the monthly rates are
recorded within the foreign currency translation
reserve (‘FCTR’) in other comprehensive income.
(e) Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to
the Chief Operating Decision Maker (‘CODM’). The
CODM, who is responsible for allocating resources
and assessing performance of the operating
segments, has been identified as the Executive
Leadership Team (‘ELT’).
(f) Property, plant and equipment
All items of property, plant and equipment are
stated at cost, including costs directly attributable
to bringing the asset to its working condition
as intended by management, less accumulated
depreciation and accumulated impairment losses.
Any subsequent expenditure that increases
the economic benefits derived from an asset is
capitalised. Expenditure on repairs and maintenance
that does not increase the economic benefits of an
asset is expensed in the period it is incurred.
When an item of property, plant and equipment is
disposed of the difference between net disposal
proceeds and the carrying amount is recognised as a
gain, or loss, in the Statement of Comprehensive Income.
Depreciation of property, plant and equipment is
calculated to allocate the difference between the
original cost of the assets and their residual values
over their estimated useful lives on a straight line
basis as follows:
Leasehold improvements term of lease
Furniture and fittings 7 years
Office and café equipment 3 – 7 years
Computer equipment 3 years
As referred to in note 2(b) some changes have been
made to rates and methods of depreciation with effect
from 1 April 2013. All the Group’s property, plant and
equipment is now depreciated on a straight line basis for
accounting purposes. In prior periods, the diminishing
value and capital cost allowances bases were used
for some assets. The changes have not had a material
impact on the Group’s result in the current period.
The assets’ residual values, depreciation methods and
useful lives are reviewed, and adjusted if appropriate,
at each reporting date.
Transactions and balances
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from
the settlement of such transactions and from
the translation of monetary assets and liabilities
denominated in foreign currencies at reporting date
exchange rates are recognised in the Statement
of Comprehensive Income within General and
Administration expenses.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a
foreign currency are translated using the exchange
rates at the date when the fair value was determined.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS54
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure
is recognised in the Statements of Comprehensive
Income as incurred.
Research and development costs
Research costs and costs associated with maintaining
software products are expensed as incurred.
Costs that are directly associated with the development
of new or substantially improved software products
controlled by the Group are recognised as intangible
assets only where the following criteria can all be met:
- it is technically feasible to complete the
product so that it will be available for sale;
- management intends to complete the
product and sell it;
- there is an ability to sell the product;
- it can be demonstrated how the product will
generate future economic benefits;
- adequate technical, financial and other
resources to complete the development and
to sell the product are available; and
- the expenditure attributable to the
product during its development can be
reliably measured.
At the time of development work being performed there
is uncertainty as to meeting one or more of these criteria,
particularly with respect to the technical feasibility, the
ability to sell the software products or to generate
future economic benefits. These uncertainties continue
to exist until shortly before products are deployed
and configured at customer sites. Development
costs incurred have not met all of the above
criteria and are therefore expensed as incurred.
Development expenditure directed towards
incremental improvements in existing products
does not qualify for recognition as an intangible
asset. Development costs previously recognised
as expenses are not recognised as assets in a
subsequent period.
(h) Impairment of non-financial assets
At each reporting date, the Group assesses
whether there is any indication that an asset may
be impaired. Where an indicator of impairment
exists, the Group makes a formal estimate of the
recoverable amount. Where the carrying value
of an asset exceeds its recoverable amount, the
asset is considered impaired and is written down
to its recoverable amount.
Recoverable amount is the greater of fair value
less costs to sell or the asset’s value in use. For
the purposes of assessing impairment, assets
are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-
generating units). Non-financial assets that have
been written down are reviewed for possible
reversal of the impairment at each reporting date.
(g) Intangible assets
Software
Software assets acquired separately are initially
measured at cost, software assets acquired in a
business combination are initially measured at
fair value. Following initial recognition, software is
carried at cost less any accumulated amortisation
and any accumulated impairment losses.
The useful lives of software assets are assessed to be
finite. Intangible assets with finite lives are amortised over
the useful life and tested for impairment whenever there
is an indication that the intangible asset may be impaired.
An assessment of indicators of impairment is carried out
at each reporting date. The amortisation period and the
amortisation method for a software asset with a finite
useful life are reviewed at least at each financial year-end.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are accounted for prospectively
by changing the amortisation period or method, as
appropriate, which is a change in accounting estimate.
The amortisation expense on intangible assets
with finite lives is recognised in the Statements of
Comprehensive Income. Amortisation is calculated on
a straight line basis across a useful life of three years.
As referred to in note 2(b) some changes have been
made to rates and methods of amortisation with
effect from 1 April 2013. All the Group’s software
assets are now depreciated on a straight line basis
for accounting purposes. In prior periods, the
diminishing value basis was used for some software
assets. The changes have not had a material impact
on the Group’s result in the current period.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 55
Professional services
Time and materials contracts are generally billed
monthly in the month in which the service is
provided. Provided a legitimate arrangement is in
place, the revenue is recognised in the month of
billing, as services are provided.
Fixed price contracts are typically designed on
milestone achievement. Normally invoicing is aligned
to these milestones. Revenue recognition, however, is
aligned to the percentage of work completed.
Where a loss is expected to occur it is recognised
immediately and is made for both work in progress
completed to date and for future work required to
complete the contract.
Global managed services
Global managed service revenue is generally billed
quarterly or annually in advance. Revenue is deferred
and recognised on a straight line basis over the term
of the contract billing period, as services are provided.
Government grants
Government grants are recognised at their fair value
where there is reasonable assurance that the grants
will be received and all attached conditions will be
complied with. When a grant relates to a specified
expense item, it is recognised as income over the
period necessary to match the grant on a systematic
basis to the cost that it is intended to compensate.
When the grant does not relate to a specified expense
item, it is recognised as income in the period it is
received or becomes receivable.
Dividend income
Dividend income from investments is recognised
when the shareholder’s right to receive payment has
been established.
Interest income
Interest income is accrued on a time-proportion
basis, by reference to the principal outstanding and
at the effective interest rate applicable, which is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to that asset’s net carrying amount.
When revenue and receivables are discounted
to fair value to reflect deferred payment terms,
future cash flows are discounted at the prevailing
interest rate for a similar instrument. The discount
is unwound and recognised as interest income over
the deferral period.
Revenue in advance
Revenue invoiced but not able to be recognised
is recorded on the Balance Sheets as ‘Revenue
in advance’.
Accrued revenue
Revenue recognised but not able to be invoiced to
customers under the contract is recorded on the
Balance Sheets as ‘Accrued Revenue’.
(i) Revenue recognition
Revenue is recognised to the extent that it is
probable that the economic benefits will flow
to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value
of the consideration received or receivable
and is recorded net of sales taxes, value added
taxes, discounts and after eliminating sales
within the Group. When deferred payment terms
have a significant impact on the calculation of
the fair value of revenue, it is accounted for by
discounting future payments. The following
specific recognition criteria must also be met
before revenue is recognised:
Licenses
License revenue is recognised only where a
contractual arrangement is in place. Revenue
from ‘off-the-shelf’ software (or non ‘off-the-shelf’
software sold without a professional services
implementation contract) is recognised in the
month of billing. For non ‘off-the-shelf’ software
sold with a professional services implementation
contract, the revenue is deferred and recognised
in proportion to the percentage completed of the
associated professional services contract.
Support and Maintenance
Support and maintenance services are generally
billed in advance for a fixed term. Revenue is
deferred and recognised on a straight line basis
over the term of the contract billing period, as
services are provided.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS56
contributions to publicly or privately administered
pension insurance plans on a mandatory or
contractual basis. The Group has no further payment
obligations once the contributions have been paid.
The contributions are recognised as an employee
entitlement expense when they are due.
Short-term and long-term incentive plans
The Group operates both short-term and long-term
incentive plans. Employee incentive obligations
are measured at the amounts expected to be paid
when the liability is settled and are expensed as the
related service is provided. The Group operates an
equity-settled, share-based compensation plan,
under which employees render services in exchange
for shares. The fair value of the employee services
rendered for the grant of shares is recognised as an
expense over the vesting period, and the amount
is determined by reference to the fair value of the
shares granted.
(l) Income tax
Current tax assets and liabilities are measured at
the amount expected to be recovered from or paid
to the taxation authorities based on the period’s
taxable income. The tax rates and tax laws used to
compute the amount are those that are enacted or
substantively enacted by the reporting date.
Deferred income tax is provided on all temporary
differences at the reporting date between the tax
bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all
taxable temporary differences except:
- when the deferred income tax liability arises
from an asset or liability in a transaction that
is not a business combination and that, at the
time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
- when the taxable temporary difference is
associated with investments in subsidiaries or
associates, and the timing of the reversal of the
temporary difference can be controlled and it
is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward
of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
- when the deferred income tax asset relating
to the deductible temporary difference arises
from the initial recognition of goodwill, or an
asset or liability in a transaction that is not a
business combination and, at the time of the
transaction affects neither the accounting
profit nor taxable profit or loss; or
- when the deductible temporary difference
is associated with investments in subsidiaries
or associates, in which case a deferred tax
asset is only recognised to the extent that it
is probable that the temporary difference will
reverse in the foreseeable future and taxable
profit will be available against which the
temporary difference can be utilised.
(j) Cash flows
For the purpose of the statements of cash flows, cash
and cash equivalents are defined in note 2(o). Principal
draw down and repayment of Bank term credit
facilities are shown as part of financing activities.
(k) Employee benefits
Short term benefits
Accruals for wages, salaries, including non-monetary
benefits, commissions and annual leave expected
to be settled within 12 months of the reporting date
are recognised in respect of employees’ services up
to the reporting date. They are measured at their
nominal values using the remuneration rate expected
to apply at the time of settlement, on an undiscounted
basis. Expenses for non-accumulating sick leave are
recognised when the leave is taken and are measured
at the rates paid or payable.
Long service leave
The liability for long service leave is recognised
and measured as the present value of expected
future payments to be made in respect of services
provided by employees up to the reporting date
using an actuarial method. Consideration is given to
expected future salary levels, experience of employee
departures, and periods of service. Expected future
payments are discounted using market yields at the
reporting date on national government bonds with
terms to maturity and currencies that match, as closely
as possible, the estimated future cash outflows.
Pension obligations
The Group has pension obligations in respect of
various defined contribution plans. The Group pays
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 57
Cash flows are included in the cash flow statements
and the sales tax component of cash flows arising
from investing and financing activities, which
is recoverable from, or payable to, the taxation
authority is classified as part of operating cash flows.
Commitments and contingencies are disclosed net
of sales tax.
(n) Financial assets
The Group classifies its financial assets as loans
and receivables. Management determines the
classification of its financial assets at initial
recognition. The Group’s loans and receivables
are non-derivative financial assets with fixed or
determinable payments that are not quoted in an
active market. They are included in current assets,
except for those with maturities greater than 12
months after the reporting date. These are classified
as non-current assets.
The Group’s loans and receivables comprise trade
receivables, related party receivables, cash and
cash equivalents and accrued revenue in the
Balance Sheets. Loans and receivables are carried at
amortised cost using the effective interest method.
The Group assesses at each reporting date
whether there is objective evidence that a
financial asset or a group of financial assets is
impaired. Evidence of impairment may include
indications that the debtors or a group of debtors
is experiencing significant financial difficulty,
default or delinquency in payments, the probability
that they will enter bankruptcy or other financial
reorganisation, and where observable data indicate
that there is a measurable decrease in the estimated
cash flows, such as changes in arrears or economic
conditions that correlate with defaults. Impairment
testing of receivables is described in note 2(p).
Regular purchases and sales of financial assets are
recognised on the trade-date, being the date on which
the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to
receive cash flows from the investments have expired
or have been transferred and the Group has transferred
substantially all risks and rewards of ownership.
(o) Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and call deposits. Bank overdrafts that are repayable
on demand and form an integral part of the Group’s
cash management are included as a component of
cash and cash equivalents for the purpose of the
statements of cash flows. The carrying value of
cash and cash equivalents approximates the fair
value of the asset.
(p) Trade and other receivables
Trade and other receivables are recognised
initially at fair value and subsequently measured at
amortised cost, less provision for impairment.
Collectability of trade receivables is reviewed on
an on-going basis. A provision for impairment is
established when there is objective evidence that
the Group will not be able to collect all amounts due
according to the original terms of the receivables.
The amount of the provision is the difference
The carrying amount of deferred income tax assets
is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised. Unrecognised
deferred income tax assets are reassessed at each
reporting date and are recognised to the extent that
it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply
to the year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the
reporting date.
Deferred tax assets and deferred tax liabilities are
offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities
and the deferred tax assets and liabilities relate to the
same taxable entity and the same taxation authority.
(m) Other taxes
Revenues, expenses and assets are recognised net of
sales tax (and other similar taxes), except;
- when the sales tax incurred on a purchase of
goods and services is not recoverable from the
taxation authority, in which case the sales tax
is recognised as part of the cost of acquisition
of the asset or as part of the expense item as
applicable; and
- for receivables and payables, which are
stated with the amount of sales tax included.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS58
expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current
market assessments of the time value of money and
the risks specific to the obligation.
(s) Bank overdraft
Bank overdrafts are interest-bearing liabilities
and are designated as non-derivative financial
instruments. They are recognised initially at fair
value plus any directly attributable transaction
costs, which for the purposes of these financial
statements represents initial cost. Subsequent to
initial recognition, interest-bearing liabilities are
measured at amortised cost using the effective
interest rate method. They are classified as current
liabilities unless the Group has an unconditional
right to defer settlement of the liability for at least
one year after the balance date.
Borrowing costs are expensed as incurred.
(t) Leased assets
Operating leases
Leases in which a significant portion of risk and
rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under
operating leases are recognised as an expense in the
Statements of Comprehensive Income on a straight-
line basis over the lease term. Any lease incentives
are recognised as a liability. The aggregate benefit
of incentives is recognised as a reduction of rental
expense on a straight-line basis, except where
another systematic basis is more representative of
the time pattern in which economic benefits from
the leased asset are consumed.
(u) Share capital
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of
tax, from the proceeds. Where any Group company
purchases the Company’s share capital (treasury
shares), the consideration paid is deducted from
equity attributable to the Company’s equity holders
until the shares are cancelled or transferred outside
the Group.
between the asset’s carrying amount and the present
value of estimated future cash flows, discounted
at the assets original effective interest rate. The
carrying amount is a reasonable approximation
of fair value. When a receivable is uncollectible it
is written off against the provision. The amount
of the provision is recognised in the Statement of
Comprehensive Income. Subsequent recoveries of
amounts previously written off are credited against
the Statement of Comprehensive Income.
Trade and other receivables are included in current
assets, except for those with maturities greater
than 12 months after the reporting date, which are
classified as non-current assets.
(q) Trade and other payables
Trade and other payables are recognised initially at
fair value net of transaction costs and subsequently
measured at amortised cost using the effective
interest method. They represent liabilities for goods
and services provided to the Group prior to the end
of the reporting period that remain unpaid. The
amounts are unsecured, non-interest bearing and
are classified in current liabilities if payment is due
within one year or less.
(r) Provisions
The Group recognises provisions when it has a
present, legal or constructive obligation as a result
of past events, it is probable that an outflow of
resources will be required to settle the obligation,
and the amount has been reliably estimated.
Provisions are measured at the present value of the
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 59
be estimated by the persons managing the project.
This process uses estimations of time required
to complete the project and is based on detailed
information on hours worked to date, prior experience
and project scheduling tools. The Group employs
experienced project managers who are required
to provide regular information to management on
the progress of projects. All estimates are reviewed
by senior management as part of project review
meetings held monthly.
Taxation and deferred tax
The Group’s accounting policy for taxation requires
management’s judgement as to the types of
arrangements considered to be a tax on income
in contrast to an operating cost. Judgement is also
required in assessing whether deferred tax assets and
certain deferred tax liabilities are recognised on the
balance sheets. Deferred tax assets, including those
arising from carried forward tax losses, capital losses
and temporary differences, are recognised only where
it is considered more likely than not that they will be
recovered, which is dependent on the generation of
sufficient future taxable profits. Deferred tax liabilities
arising from temporary differences in investments,
caused principally by retained earnings held in foreign
tax jurisdictions, are recognised unless repatriation
of retained earnings can be controlled and are not
expected to occur in the foreseeable future.
Assumptions about the generation of future taxable
profits and repatriation of retained earnings depend
on management’s estimates of future cash flows.
These depend on estimates of future sales volumes,
operating costs, capital expenditure, dividends and
other capital management transactions. Judgements
are also required about the application of income
tax legislation. These judgements and assumptions
are subject to risk and uncertainty, hence there
is a possibility that changes in circumstances will
alter expectations, which may impact the amount
of deferred tax assets and deferred tax liabilities
recognised on the balance sheets and the amount of
other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the
carrying amounts of recognised deferred tax assets
and liabilities may require adjustment, resulting in a
corresponding credit or charge to the Statements of
Comprehensive Income.
The Group is subject to income taxes in numerous
jurisdictions. Judgement is required in determining the
worldwide provision for income taxes. In the ordinary
course of business there are some transactions for
which the ultimate tax determination is uncertain.
The Group recognises liabilities for anticipated tax
audit issues based on estimates of whether additional
taxes will be due. Where the final tax outcome of
these matters is different from the amounts that were
initially recorded, such differences will impact the
income tax and deferred tax provisions in the period
in which such determinations are finalised.
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in
the financial statements. Management continually
evaluates its judgements and estimates in relation
to assets, liabilities, contingent liabilities, revenue
and expenses.
Management bases its judgements and estimates
on historical experience and on other various
factors it believes to be reasonable under the
circumstances, the result of which form the basis
of the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual
results may differ from these estimates under
different assumptions and conditions.
Management has identified the following critical
balances and transactions for which significant
judgements, estimates and assumptions are made.
Actual results may differ from these estimates under
different assumptions and conditions and may
materially affect financial results or the financial
position reported in future periods.
Further details of the nature of these assumptions
and conditions may be found in the relevant notes
to the financial statements.
Revenue recognition
As part of deriving operating revenue, revenue
in advance and accrued revenue on projects, the
percentage completion of services contracts must
3 CRITICAL JUDGEMENTS IN APPLYINGTHE ACCOUNTING POLICIES
comprising the ‘NZ’ and ‘Corp/Dev’ segments. No
single customer accounted for more than 10% of the
Group’s third party operating revenue.
Inter-segment revenue transactions are conducted
consistent with those negotiated at arm’s length
between unrelated parties.
Total segment operating profit reported below
equates to the Group’s operating profit. Consequently
the reconciliation of the segment result to the
Group’s profit before income tax is shown in the
Statement of Comprehensive Income.
Abbreviations used below are defined as follows:
- US: United States of America region
- CA: Canada region
- NZ: New Zealand region
- AU: Australia region
- Nth Asia: North Asia (Japan, China and
other close territories) region
- SE Asia: South-East Asia
(Singapore, Thailand and other close
territories) region
- UK/I: United Kingdom and Ireland region
- EMEA: Europe, Middle East and
Africa region
- Corp/Dev: Corporate Head Office, Product
Development and related entities
The total of non-current assets other than financial
instruments and deferred tax assets located in New
Zealand is $6,432,000 (2013: $5,794,000), located
in the USA is $4,105,000 (2013: $1,826,000) and
the total located in other countries is $2,263,000
(2013: $1,546,000).
The Group has nine reportable segments, eight
of which are the regions of the Group’s business
operations in the sale, support and implementation
of software, in the Healthcare IT market and one is
for Corporate and Development. For each reportable
segment the ‘ELT’ (Executive Leadership Team, our
Chief Operating Decision Maker) reviews internal
management reports on at least a monthly basis.
Information regarding the results of each reportable
segment, which reconciles to the financial
statements and notes to the financial statements,
is included below. Performance is measured based
on segment operating profit, as included in the
internal management reports that are reviewed
by the ELT. Segment operating profit is used to
measure performance as management believes that
such information is the most relevant in evaluating
reportable segment results relative to other entities
that also operate within these reportable segments.
The assets and liabilities of the Group are reported to
and reviewed by the ELT in total and are not allocated
by operating segment. Therefore, operating segment
assets and liabilities are not disclosed.
During the year, a segmental division took place
from a reporting and decision making perspective.
This increased the reportable segments from six to
nine. The comparatives have been restated to align
with the new reporting structure.
Segment revenue is based on customer location,
with revenue from the Group’s country of domicile
4 SEGMENT INFORMATION
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS60
SIGNIFICANT NON-CASH ITEMS RECOGNISED IN SEGMENT PROFIT
USNZ$’000
CANZ$’000
NZNZ$’000
AUNZ$’000
Nth AsiaNZ$’000
SE AsiaNZ$’000
UK/I NZ$’000
EMEANZ$’000
Corp/Dev NZ$’000
Total NZ$’000
Depreciation and amortisation (1,339) (121) (79) (253) (2) (328) (132) (23) (1,433) (3,710)
Share of profit of investments accounted for using the equity method
- - - - - - - - 145 145
REVENUE: THIRD PARTY 2014US
NZ$’000CA
NZ$’000NZ
NZ$’000AU
NZ$’000Nth Asia
NZ$’000SE Asia
NZ$’000UK/I
NZ$’000EMEA
NZ$’000Corp/Dev NZ$’000
Total NZ$’000
License revenue 27,554 2,681 4,803 3,154 675 44 6,110 1,527 3 46,551
Professional implementation services 33,237 5,889 6,927 5,572 - 1,561 5,630 2,062 - 60,878
Client support services 11,202 4,007 2,269 4,375 262 1,989 2,254 1,703 - 28,061
Global managed services 15,347 - 120 190 - - 745 - - 16,402
Other revenue 641 45 39 10 15 5 44 15 286 1,100
OPERATING REVENUE 87,981 12,622 14,158 13,301 952 3,599 14,783 5,307 289 152,992
REVENUE: INTER-SEGMENT USNZ$’000
CANZ$’000
NZNZ$’000
AUNZ$’000
Nth AsiaNZ$’000
SE AsiaNZ$’000
UK/I NZ$’000
EMEANZ$’000
Corp/Dev NZ$’000
Total NZ$’000
License and support contract fee (9,628) (3,679) (5,291) 636 191 675 (2,316) 884 18,528 -
Development service fee 833 - - 2,032 - 7,799 - - (10,664) -
Management service fee (8,789) (1,294) (1,465) (1,518) (10) (982) (1,615) (368) 16,041 -
TOTAL SEGMENT OPERATING REVENUE
70,397 7,649 7,402 14,451 1,133 11,091 10,852 5,823 24,194 152,992
SEGMENT OPERATING PROFIT 3,662 351 744 606 (32) 1,124 1,331 (817) (9,063) (2,094)
REGIONAL SEGMENTATION BY CATEGORY OF PRODUCT/SERVICE 31 MARCH 2014
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 61
REVENUE: THIRD PARTY 2013 USNZ$’000
CANZ$’000
NZNZ$’000
AUNZ$’000
Nth AsiaNZ$’000
SE AsiaNZ$’000
UK/I NZ$’000
EMEANZ$’000
Corp/Dev NZ$’000
Total NZ$’000
License revenue 25,047 1,990 2,951 1,933 818 24 7,242 1,956 - 41,961
Professional implementation services 13,060 6,105 3,975 8,325 - 1,242 4,536 542 - 37,785
Client support services 8,592 3,355 2,095 3,789 157 729 2,187 822 - 21,726
Global managed services 6,488 - 216 116 - - 276 - - 7,096
Other revenue 691 19 13 14 147 1 88 7 232 1,212
OPERATING REVENUE 53,878 11,469 9,250 14,177 1,122 1,996 14,329 3,327 232 109,780
REGIONAL SEGMENTATION BY CATEGORY OF PRODUCT/SERVICE 31 MARCH 2013
REVENUE: INTER-SEGMENTUS
NZ$’000CA
NZ$’000NZ
NZ$’000AU
NZ$’000Nth Asia
NZ$’000SE Asia
NZ$’000UK/I
NZ$’000EMEA
NZ$’000Corp/Dev NZ$’000
Total NZ$’000
License and support contract fee (9,891) (2,364) (2,928) (1,410) 168 1,879 (4,476) 1,126 17,896 -
Development service fee - - - 1,472 - 6,910 - - (8,382) -
Management service fee (6,792) (1,446) (1,314) (1,972) (77) (941) (2,071) (155) 14,768 -
TOTAL SEGMENT OPERATING REVENUE 37,195 7,659 5,008 12,267 1,213 9,844 7,782 4,298 24,514 109,780
SEGMENT OPERATING PROFIT 2,022 699 861 757 - 737 45 492 1,670 7,283
SIGNIFICANT NON-CASH ITEMS RECOGNISED IN SEGMENT PROFIT
USNZ$’000
CANZ$’000
NZNZ$’000
AUNZ$’000
Nth AsiaNZ$’000
SE AsiaNZ$’000
UK/I NZ$’000
EMEANZ$’000
Corp/Dev NZ$’000
Total NZ$’000
Depreciation and amortisation (491) (58) (52) (184) (3) (259) (99) (18) (1,279) (2,443)
Share of profit of investments accounted for using the equity method
- - - - - - - - 364 364
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS62
REVENUE: THIRD PARTY Group 2014 NZ$’000 Group 2013 NZ$’000
Intelligent integration 35,071 37,949
Healthier populations 75,536 47,755
Smarter hospitals 33,356 17,803
Other revenue 9,029 6,273
OPERATING REVENUE 152,992 109,780
SEGMENTATION OF OPERATING REVENUE BY SOLUTION GROUP
5 OTHER INCOME
OTHER INCOME Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Gain on sale of land and buildings 14 - 9,059 - -
Gain on sale of investments accounted for using the equity method
13 6,369 - 8,008 -
Government grants 3,537 3,087 - -
Dividend income 13, 23 262 - 3,762 -
10,168 12,146 11,770 -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 63
6 OPERATING EXPENSES The following disclosure provides additional information in relation to expenses included within the Statement of Comprehensive
Income and other items where specific disclosure is required.
EXPENSES: BY FUNCTION Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Research and development 34,268 26,739 - -
Sales and marketing 36,292 27,103 - 16
Support services 4,526 5,569 - -
Consulting services 42,393 26,125 - -
Managed services 12,186 4,629 - -
General and administration 35,589 24,478 345 289
165,254 114,643 345 305
EMPLOYEE BENEFITS
Wages and salaries 97,951 72,567 - -
Other employee costs 6,610 9,590 - -
Share based payments 21 309 - - -
Contributions to defined contribution pension schemes
4,289 3,016 - -
109,159 85,173 - -
OTHER REQUIRED DISCLOSURES:
OTHER
Donations paid 3 - - -
Directors’ fees 270 196 270 196
Net foreign exchange losses 1,518 85 1 -
Bad debts written off 10 265 173 - -
Provision for trade receivable impairment 10 (47) 55 - -
Operating lease payments 7,428 5,345 -
AUDITORS’ REMUNERATION
Audit fees 167 125 - -
Taxation services - 229 - -
Treasury advisory services 12 - - -
IT security consulting services 5 - - -
Payroll services - 12 - -
Auditors’ remuneration was payable to PricewaterhouseCoopers in the current year and BDO Auckland in the prior year.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS64
7 FINANCE INCOME AND FINANCE COSTS
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Interest income – loans and receivables 255 263 - -
Interest income – cash and cash equivalents 61 16 - -
Interest income – other 17 6 20 -
333 285 20 -
Interest expense – cash and cash equivalents (117) (523) - -
NET FINANCE INCOME/(COSTS) 216 (238) 20 -
8 INCOME TAX
Current tax 5,701 1,563 - 19
Deferred tax (6,297) (1,904) (11) (17)
(596) (341) (11) 2
(A) INCOME TAX (CREDIT)/EXPENSE
The tax on the Group’s and Parent’s result before tax differs from the amount that would arise using the statutory tax rate applicable to the results of the Parent as follows:
(LOSS)/PROFIT BEFORE INCOME TAX
Tax calculated at the Parent’s income tax rate of 28% (485) 2,075 3,205 1
Foreign tax rate differences 129 (254) - -
Expenses not deductible 125 143 8 -
Non-taxable income (1,738) (2,439) (2,244) -
Intercompany dividend received - - (980) -
Other adjustments 251 26 - -
Prior period adjustments 1,132 113 - 1
Tax losses for which no deferred income tax asset was recognised (10) (5) - -
Income tax (credit)/expense (596) (341) (11) 2
Interest income on loans and receivables results from the unwinding of the discounting of certain trade receivables and accrued revenue balances.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 65
DEFERRED TAX ASSETS AND LIABILITIES Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Deferred tax assets to be recovered after more than 12 months 4,334 2,034 - -
Deferred tax assets to be recovered within 12 months 5,636 1,784 28 17
Expenses not deductible
NET DEFERRED TAX ASSETS 9,970 3,818 28 17
The gross movement on the deferred income tax accounts is as follows:
Opening balance 3,818 1,944 17 -
Credited to income 6,297 1,904 11 17
Foreign exchange differences (145) (30) - -
CLOSING BALANCE 9,970 3,818 28 17
(B) RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
GROUPProperty, plant &
equipment NZ$’000Doubtful debts
NZ$’000Employee benefits
NZ$’000Other
NZ$’000Future income tax benefit
NZ$’000Total
NZ$’000
At 1 April 2012 6 201 1,112 447 178 1,944
(Charged)/credited to income statement (10) 224 57 (271) 1,904 1,904
Foreign exchange differences 4 - (13) (8) (13) (30)
At 31 March 2013 - 425 1,156 168 2,069 3,818
(Charged)/credited to income statement (21) (226) 1,564 1,227 3,753 6,297
Foreign exchange differences - - (38) (14) (93) (145)
At 31 March 2014 (21) 199 2,682 1,381 5,729 9,970
PARENT
At 1 April 2012 - - - - - -
Credited to income statement - - - 17 - 17
At 31 March 2013 - - - 17 - 17
Credited to income statement - - - 11 - 11
At 31 March 2014 - - - 28 - 28
The utilisation of the future income tax benefit is dependent on the generation of future taxable profits in the Group’s New Zealand entities. The Group has strategic plans in place
which support the generation of these future taxable profits.
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same jurisdiction, is as follows:
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS66
(D) IMPUTATION CREDIT ACCOUNT
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Imputation credits available for use in subsequent reporting periods 4,164 4,220 - -
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash at bank and on hand 12,655 9,278 - -
9 CASH AND CASH EQUIVALENTS
The carrying amounts of the Group’s cash and overdraft facilities approximate their fair value, all of which are on demand.
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash at bank and on hand 12,655 9,278 - -
Bank overdraft (13,583) (2) - -
CASH AND CASH EQUIVALENTS (928) 9,276 - -
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable.
The Group did not recognise deferred income tax assets of EUR 278,000 (2013: EUR 285,000) in respect of losses amounting to EUR 1,112,000 (2013: EUR 1,137,000) based
on judgement that there is too much uncertainty over future performance to determine that it is probable that future taxable profit will be available against which the unused
tax losses can be utilised. These losses have no expiry date.
(C) UNRECOGNISED TEMPORARY DIFFERENCES
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 67
10 TRADE AND OTHER RECEIVABLES
Trade receivables are non-interest bearing and are generally on 30-60 day terms. For these receivables, due to the short term nature, their carrying value is assumed to
approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer
(on-sell) receivables.
As of 31 March 2014, trade receivables of the Group: $29,093,000 (2013: $25,146,000) were fully performing. None of the financial assets that are fully performing have
been re-negotiated.
Note Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Trade receivables 50,692 43,215 - -
Less allowance for impairment (710) (1,517) - -
Net trade receivables 49,982 41,698 - -
Sundry receivables 574 72 - -
Prepayments 2,125 3,587 - -
Government Grants receivable 100 240 - -
Intra-group receivables 23 - - 26,714 12,984
52,781 45,597 26,714 12,984
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS68
As of 31 March 2014, trade receivables of Group: $20,889,000 (2013: $16,350,000) were past due but not impaired. These relate to a number of independent customers for
whom there is no recent history of default. The aging analysis of trade receivables past due but not impaired is as follows:
RECEIVABLES PAST DUE BUT NOT IMPAIRED Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
1-60 days 16,420 12,221 - -
61-90 days 667 789 - -
91-180 days 2,650 2,344 - -
Over 180 days 1,152 996 - -
20,889 16,350 - -
RECEIVABLES PAST DUE AND IMPAIRED Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Current 20 762 - -
1-60 days 89 - - -
61-90 days 18 11 - -
91-180 days 190 133 - -
Over 180 days 393 813 - -
710 1,719 - -
Movements on the Group impairment allowance of trade receivables are as follows:
GROUP IMPAIRMENT MOVEMENTS Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Opening balance 1,517 716 - -
Receivable written off during the year (1,027) (15) - -
Increase/(reduction) in provision 218 818 - -
Foreign exchange movement 2 (2) - -
710 1,517 - -
Receivables written off during the year include amounts due from Healthlink Limited – refer to note 23. Detail regarding foreign exchange and interest rate risk exposure is
disclosed in note 28.
The aging analysis of receivables past due and impaired is as follows:
As of 31 March 2014, trade receivables of the Group: $710,000 (2013: $1,719,000) were impaired and provided for. The amount of the provision was Group: $710,000 (2013:
$1,517,000). The impaired receivables mainly relate to customers who are in financial difficulty or dispute. In the prior period, it was assessed that a portion of the receivables
were expected to be recovered.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 69
11 ACCRUED REVENUE
Where accrued revenue balances are short term in nature, their carrying value is assumed to approximate their fair value. In situations where the term is longer, a fair value
assessment is made with reference to an implied interest rate based on an equivalent credit risk and term.
ACCRUED REVENUE Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Licenses 10,190 3,474 - -
Professional implementation services 9,307 5,234 - -
Client support services 121 - - -
Global managed services 126 - - -
Other 1,203 80 - -
20,947 8,788 - -
Analysis of total accrued revenue:
Current 16,921 8,788 - -
Non-current 4,026 - - -
TOTAL 20,947 8,788 - -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS70
12 INVESTMENT IN SUBSIDIARIES AT COST
2014 2013 2014 2013
Orion Systems International Limited Management services New Zealand 100 100 100 100
Orchestral Developments Limited Software development New Zealand 100 100 100 100
Orchestral Developments International Limited Holding company New Zealand 100 100 - -
Orion Health Asia Pacific Limited Software development New Zealand 100 100 - -
Orion Health Asia Holdings Limited Holding company New Zealand 100 100 - -
Orion Health Corporate Trustee Limited Holding company New Zealand 100 100 100 100
Orion Health Hosting Limited Dormant New Zealand 100 100 100 100
Orion Health Services Limited Dormant New Zealand 100 100 - -
Orion Health Limited Sales and support New Zealand 100 100 - -
Orion Health Properties Limited Property owner New Zealand 100 100 100 100
Orion Health Pty. Limited Software development, sales and support Australia 100 100 - -
Orion Health Limited Sales and support Canada 100 100 - -
Orion Health SAS Sales and support France 100 100 - -
Orion Health K.K. Sales and support Japan 100 100 - -
Orion Health Pte. Limited Sales and support Singapore 100 100 - -
Orion Health S.L.U. Sales and support Spain 100 100 - -
Orion Health Limited Software development, sales and support Thailand 100 100 - -
Orion Sağlık ve Bilgi Sistemleri Limited ğirketi Sales and support Turkey 100 - - -
Orion Health Systems FZ-LLC Sales and support United Arab Emirates 100 100 - -
Orion Health Limited Sales and support United Kingdom 100 100 - -
Orion Health Inc. Software development, sales and support USA 100 100 - -
Orion Health China Limited Sales and support New Zealand 100 100 - -
Orion Health Software Technology Consulting (Shenzhen) Co., Limited
Sales and support China 100 - - -
Name of entity Nature of business Country of incorporation
Interest held by Parent (%)
Interest held by Group (%)
The financial year end of all subsidiaries is 31 March. During the period new subsidiaries were established and incorporated by a subsidiary of the Parent Company. None of them
were acquired in relation to business combination transactions.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 71
13 INVESTMENT IN ASSOCIATE
Orion Corporation Limited had a 52.4% shareholding in HealthLink International Limited (2013: 52.4%). Orion Corporation Limited did not have the power to appoint any further
directors as 75% shareholder approval would have been required under article 15.2 of the HealthLink Constitution. Orion Corporation Limited held one of two current Director
positions and therefore “control” did not exist.
The Parent’s carrying amount on this investment in associate was less than $1,000.
HealthLink International Limited declared a dividend on 2 October 2013 and Orion Corporation Limited’s share was $262,000. This is recognised in Other Income in the
Statements of Comprehensive Income.
The Group sold its share in HealthLink International Limited on 29 November 2013 for $8,008,000 and recorded a gain on sale of $6,369,000 (Parent: $8,008,000) as a result
of this transaction.
The share of profit of investments accounted for using the equity method in the period to 29 November 2013 amounted to $145,000 and is included within the Statements of
Comprehensive Income.
MOVEMENTS IN THE CARRYING VALUE OF EQUITY ACCOUNTED INVESTEE
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Carrying value as at 1 April 1,494 1,130 - -
Share of current year profit 145 364 - -
Dividends received (262) - - -
Disposals (1,377) - - -
CARRYING VALUE AS AT 31 MARCH - 1,494 - -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS72
14 PROPERTY, PLANT AND EQUIPMENT
GROUP Land & Buildings NZ$’000
Leaehold improvementsNZ$’000
Furniture & fittingsNZ$’000
Office & Cafe equipment NZ$’000
Computer equipment NZ$’000
Assets under construction NZ$’000
Total NZ$’000
Cost - 1,366 2,049 686 4,707 9,442 18,250
Accumulated depreciation - (901) (973) (414) (2,844) - (5,132)
NET BOOK AMOUNT - 465 1,076 272 1,863 9,442 13,118
YEAR ENDED 31 MARCH 2013
Opening net book amount - 465 1,076 272 1,863 9,442 13,118
Additions/transfers 13,490 805 857 230 1,676 (9,442) 7,616
Disposals (21,037) - (289) (35) (3) - (21,364)
Gain/(loss) on sale 9,059 - (91) (8) - - 8,960
Depreciation charge - (353) (281) (136) (1,223) - (1,993)
Depreciation on disposals - - 198 28 2 - 228
FX movement - 10 110 20 45 - 185
CLOSING NET BOOK AMOUNT 1,512 927 1,580 371 2,360 - 6,750
AS AT 31 MARCH 2013
Cost 1,512 2,171 2,617 885 6,382 - 13,567
Accumulated depreciation - (1,244) (1,037) (514) (4,022) - (6,817)
NET BOOK AMOUNT 1,512 927 1,580 371 2,360 - 6,750
YEAR ENDED 31 MARCH 2014
Opening net book amount 1,512 927 1,580 371 2,360 - 6,750
Additions - 2,364 1,364 246 4,276 - 8,250
Disposals - (105) (382) (36) (85) - (608)
Depreciation charge - (497) (372) (149) (2,055) - (3,073)
Depreciation on disposals - 41 356 17 49 - 463
FX movement - (32) (20) (3) (27) - (82)
CLOSING NET BOOK AMOUNT 1,512 2,698 2,526 446 4,518 - 11,700
AS AT 31 MARCH 2014
Cost 1,512 4,361 3,532 1,071 10,411 - 20,887
Accumulated depreciation - (1,663) (1,006) (625) (5,893) - (9,187)
NET BOOK AMOUNT 1,512 2,698 2,526 446 4,518 - 11,700
No property, plant or equipment was held by the Parent (2013: nil).
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 73
15 INTANGIBLE ASSETS
GROUP Computer Software NZ$’000 Total NZ$’000
Cost 1,554 1,554
Accumulated amortisation (816) (816)
NET BOOK AMOUNT 738 738
YEAR ENDED 31 MARCH 2013
Opening net book amount 738 738
Additions 625 625
Amortisation charge (450) (450)
FX movement 9 9
CLOSING NET BOOK AMOUNT 922 922
YEAR ENDED 31 MARCH 2014
Opening net book amount 922 922
Additions 840 840
Disposals (4) (4)
Amortisation charge (637) (637)
FX movement (21) (21)
CLOSING NET BOOK AMOUNT 1,100 1,100
AT 31 MARCH 2014
Cost 2,947 2,947
Accumulated amortisation (1,847) (1,847)
NET BOOK AMOUNT 1,100 1,100
All intangibles assets are acquired and have finite lives. No intangible assets were held by the Parent (2013: nil).
AT 31 MARCH 2013
Cost 2,179 2,179
Accumulated amortisation (1,257) (1,257)
NET BOOK AMOUNT 922 922
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS74
16 TRADE AND OTHER PAYABLES
Trade payable balances are unsecured and attract no interest. Balances are usually paid within 45 days of recognition, are of short term nature and are not discounted.
The carrying amount of trade and other payables approximates their fair value due to their short term nature.
The Group’s and Company’s exposures to currency and liquidity risk related to non-monetary assets, including trade and other payables, is disclosed in note 28.
TRADE AND OTHER PAYABLES Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Trade payables 4,161 4,449 - -
Accrued expenses 2,791 3,142 - -
Deferred lease incentive 1,244 - - -
Other payables 3,706 2,439 - 30
Intra-group payables - - 400 341
11,902 10,030 400 371
17 EMPLOYEE BENEFITS
EMPLOYEE BENEFITS Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Wages and salaries 499 - - -
Annual leave 5,214 3,616 - -
Commissions payable 2,067 1,174 - -
Bonuses 2,636 26 - -
Long service leave 576 477 - -
10,992 5,293 - -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 75
18 PROVISIONS FOR OTHER LIABILITIES
GROUP Lease make-good (NZ$’000) Loss-making contracts (NZ$’000) Total (NZ$’000)
At 1 April 2012 - - -
Amount provided - - -
Amount utilised - - -
At 31 March 2013 - - -
At 1 April 2013 - - -
Amount provided 579 1,241 1,820
Amount utilised - - -
At 31 March 2014 579 1,241 1,820
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Current 1,241 - - -
Non-current 579 - - -
TOTAL PROVISIONS 1,820 - - -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS76
19 REVENUE IN ADVANCE
REVENUE IN ADVANCE Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Licenses 5,225 2,932 - -
Professional implementation services 12,411 7,953 - -
Client support services 16,486 16,318 - -
Global managed services 6,432 2,680 - -
40,554 29,883 - -
20 SHARE CAPITAL
SHARE CAPITAL Group 2014 (No. shares) Group 2013 (No. shares)
Balance at 1 April 134,450,360 13,181,408
Issue of ordinary shares - 263,628
Shares cancelled (2,073,583) -
Share split - 121,005,324
Ordinary Shares on issue at 31 March 132,376,777 134,450,360
Treasury shares (1,034,637) (2,636,280)
NET ORDINARY SHARES ON ISSUE AT 31 MARCH 131,342,140 131,814,080
At 31 March 2014 the total authorised number of ordinary shares, including treasury shares is 132,376,777 shares (2013: 134,450,360):
- 131,217,140 are fully paid shares (2013:131,117,140)
- 125,000 partly paid ($0.09) restricted ordinary shares (2013: 696,940)
- 1,034,637 fully paid restricted ordinary shares held by Orion Health Corporate Trustee Limited (2013: 2,636,280)
On 31 March 2013 each of the Fully Paid Shares, Partly Paid Shares and Incentive Shares were subdivided into 10 ordinary shares (the “share split”).
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Some of the restricted ordinary shares do not carry voting rights. All shares rank equally
with regard to the Parent company’s residual assets.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 77
21 SHARE-BASED PAYMENTS
Orion Health Senior Executive Partly Paid
Share Scheme
The Orion Health Senior Executive Partly Paid Share
Scheme (“Partly Paid Scheme”) was introduced for
selected Senior Executives of the Group. Under the
Partly Paid Scheme, ordinary shares in the Company
were issued to participants at $1.80 per share
(adjusted to reflect a 10:1 share split during FY13).
The initial payment towards the issue price and three
subsequent annual payments of 2.5% of the issue
price are then required and a final 90% balance four
years after date of issue. The issue price represents
the fair value of the shares at grant date.
Until the shares are fully paid they are not able to
be sold, charged or transferred. If a participant
ceases employment prior to the shares being
fully paid that participant can make full payment
of the remaining balance of the issue price or the
Company may sell the shares. This scheme is no
longer used by the Company; however, two current
employees remain on the scheme with unvested
shares as at 31 March 2014.
Parent 2014 (No. shares) Parent 2013 (No. shares)
Unvested shares at 1 April – allocated to employees 225,000 22,500
Awarded pursuant to Orion Health Senior Executive Partly Paid Share Scheme
- -
Share split - 202,500
Vested and exercised (100,000) -
UNVESTED SHARES AT 31 MARCH – ALLOCATED TO EMPLOYEES 125,000 225,000
Shares not yet allocated at 1 April – held by Trustee 471,940 471,940
Shares cancelled (471,940) -
SHARES NOT YET ALLOCATED AT 31 MARCH – HELD BY TRUSTEE - 471,940
During the year the Company received $180,000 in respect of the partly paid shares.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS78
original invitation price to repay the loan on unvested
shares. Alternatively, the Board of Directors may at
its discretion determine a new performance test
during a newly specified period. The shares would
then vest upon achieving the subsequent financial
performance test and completing the subsequent
retention period. Participants are entitled to
dividends on unvested shares although they are not
entitled to the voting rights. Upon transfer of legal
title to the participant the shares will have the same
rights as and will rank equally with all other shares
on issue.
(b) Restricted Stock Award Agreement (RSAA)
The participant is allocated fully paid restricted
shares that vest in equal tranches over three annual
vesting periods if an Operating Revenue condition is
achieved relating to the financial year in which the
award is made. If the participant leaves the Company,
the Company can call any unvested shares.
The participant is entitled to dividends and voting
rights on any unvested shares. Upon transfer of legal
title to the participant the shares will have the same
rights as and will rank equally with all other shares
on issue.
Orion Health Long Term Share Incentive Scheme
The Orion Health Long Term Share Incentive
Scheme (“LTI Scheme”) was introduced for selected
executives and employees of the Group. Under the
LTI Scheme, ordinary shares in Orion Corporation
Limited are issued to a trustee, Orion Health Corporate
Trustee Limited, a wholly-owned subsidiary, and
allocated to participants, on grant date. Under the
LTI Scheme, the shares are beneficially owned by the
participants, subject to vesting conditions based on
Operating Revenue targets and retention periods.
The number of shares awarded is determined by
the Board of Directors taking into account the
recommendations of the Remuneration Committee
of the Board.
The Group has no legal or constructive obligation
to repurchase the shares or settle the LTI Scheme
for cash.
There are three variants of this scheme driven by the
requirements of local law in different countries:
(a) Share Awards Scheme (SAS)
The participant is advanced an interest-free loan
by the Company to purchase the restricted shares
that vest in equal tranches over three annual
vesting periods if an Operating Revenue condition
is achieved relating to the financial year in which the
award is made. To the extent the shares vest, the
participant can elect to repay the loan at which time
the Company will pay the participant a cash bonus
covering that portion of the loan and the shares
will be transferred to the participant. If the shares
do not vest the Company can call the shares (or the
participant can put the shares to the Company) at the
(c) Restricted Stock Purchase Agreement (RSPA)
The participant is advanced an interest bearing,
limited recourse loan by the Company to purchase
restricted shares that vest in six tranches subject
to Operating Revenue conditions. Each tranche
vests in full at the time the hurdle is assessed by the
Board of the Company as having been achieved. To
the extent that the Operating Revenue conditions
are not achieved by 31 March 2022 the associated
tranches will never vest. The loan principal and
accrued interest is fully repayable by the participant
on or before 31 March 2022. The participant may put
unvested shares back to the Company at the lesser of
(i) the issue price plus accrued interest on the loan;
and (ii) market value of the shares as determined by
the Board of Directors. If the participant leaves the
Company, the Company has the option to call any
unvested shares at the lesser of (i) fair market value of
the shares on the date of repurchase, as determined
by the Board of Directors; and (ii) the issue price
without any accrued interest attached on the loan. The
participant is entitled to dividends and voting rights on
any unvested shares. Upon transfer of legal title to the
participant the shares will have the same rights as, and
will rank equally, with all other shares on issue.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 79
SAS (No. shares) RSAA (No. shares) RSPA (No. shares) Total (No. shares)
Unvested shares at 31 March 13 – allocated to employees - - -
Awarded pursuant to the LTI Scheme 272,500 12,137 750,000 1,034,637
Forfeited - - - -
Vested - - - -
Cancelled - - - -
Unvested shares at 31 March 14 – allocated to employees 272,500 12,137 750,000 1,034,637
The shares awarded during the year under the LTI Scheme were issued by the Parent to the Trustee at $2.00 per share, a total of $2,069,000 (2013: nil).
Movements in the number of share awards outstanding are as follows:
The unvested RSPA share awards at 31 March 2014
have an exercise price of $2.10 and a weighted average
remaining contractual life of 8 years. The expected
life of the RSPA share awards may differ to the
contractual end of the award life because of the timing
of achievement of Operating Revenue targets.
Fair value of awards granted
The weighted average fair value of the share awards
granted during the year under the SAS and RSAA,
were $2.14 and $2.20, respectively.
The fair values of shares granted were determined
using a combination of the preceding six month
VWAP (variable weighted average price) historical
trading data of the Parent’s shares, trading
multiples of comparable listed companies and
equity issuance multiples.
The weighted average fair value of the share awards
granted during the year under the RSPA, determined
using the Binomial Option Pricing model, was $0.97.
The significant inputs into the model under the RSPA
variant were the fair value of the share price at grant
date of $2.25, the exercise price of $2.10, the expected
annualized volatility of between 40% and 43%, a
dividend yield of 0%, an expected life of the share
awards of between 2.0 and 8.0 years and an annualized
risk free interest rate of between 3.5% and 4.6%.
The volatility measure is the standard deviation of
continuously compounded returns of comparable
listed companies. Expected volatility is based on
the implied volatilities on statistical analysis on daily
share prices over the last four years using comparable
traded companies.
No share awards were exercised during the year (2013:
nil). No shares vested during the year (2013: nil).
Refer to note 6 for the expense recognised in the
Statements of Comprehensive Income for share
awards granted.
Movements in the total number of shares held by the Trustee in relation to the LTI Scheme are as follows:
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS80
Parent 2014 (No. shares) Parent 2013 (No. shares)
Unvested shares at 1 April – allocated to employees - -
Awarded pursuant to the LTI Scheme 1,034,637 -
UNVESTED SHARES AT 31 MARCH – ALLOCATED TO EMPLOYEES 1,034,637 -
Shares not yet allocated at 1 April – held by Trustee 2,636,280 2,636,280
Shares issued but not yet allocated - -
Shares cancelled (1,601,643) -
Awarded pursuant to the LTI scheme (1,034,637) -
SHARES NOT YET ALLOCATED AT 31 MARCH – HELD BY TRUSTEE - 2,636,280
22 EARNINGS PER SHAREGroup 2014 (No. shares) Group 2013 (No. shares)
(Loss)/Profit for the year attributable to equity holders of parent (NZ$’000) (1,137) 7,750
Number of issued ordinary shares (refer note 20) 131,342,140 131,814,080
Weighted average number of issued ordinary shares 131,786,927 131,814,080
Basic and diluted (loss)/earnings per share (cents) (0.9) 5.9
Dividends received 5 3,500 -
Administration recoveries - 310
Share-based payments 6 309 -
Shares issued 21 2,069 -
Transactions between the Parent and subsidiaries during the year are as follows:
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Short-term employee benefits 1,894 2,300 - -
Share-based payments 230 - -
Directors’ fees 270 196 270 196
2,394 2,496 270 196
(b) Key management compensation
Key management includes Directors (executive and non-executive) and members of the Executive Leadership Team. The compensation paid or payable to key management
personnel for employee services is as follows:
23 RELATED PARTIES
INTRA-GROUP RECEIVABLES/(PAYABLES) Note Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Orchestral Developments Limited (335) (335)
Orion Systems International Limited 23,263 11,602
Orion Health Corporate Trustee Limited 2,071 -
Orion Health Limited (NZ) 1,327 1,332
Other Group entities – receivables 53 50
Other Group entities – payables (65) (6)
26,314 12,643
(a) Subsidiaries
All related party transactions were completed at arm’s length on normal trade terms. Balances are on demand and attract no interest. There have been no impairments or
write-offs of related party balances during the year (2013: nil). Balances outstanding as at reporting date are shown below:
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 81
(c) Transactions with related parties
McCrae Limited
The Group is controlled by McCrae Limited, which owned 62% of the shares in the Parent as at 31 March 2014 (2013: 61%). The remaining shares are widely held. McCrae Limited is
the Group’s ultimate parent. The Group’s ultimate controlling party is Mr Ian Richard McCrae. There have been no transactions with this company during the year (2013: nil).
Healthlink International Limited
Healthlink Limited (a subsidiary of Healthlink International Limited, an equity accounted associate, refer also to note 13) provides e-referral services to Group entities as well as purchasing
licenses from Group entities. These transactions were at arm’s length on normal trade terms as part of a wider transaction involving the sale of Orion Health’s shares in Healthlink
International Limited.
Revera Limited
Andrew Clements, Chairman, was previously a Director of Revera Limited (ceased 7 May 2013) which provided hosting services to the Group. These transactions were at arm’s length
on normal trade terms.
Pioneer Capital Partners
Neil Cullimore, Director, is an Operating Partner at Pioneer Capital which provided professional services to the Group. These transactions were at arm’s length on normal trade terms.
New Zealand Trade and Enterprise
Andrew Ferrier, Director, is Chairman of New Zealand Trade and Enterprise. During the prior year, the Group won the Supreme Award at the 2012 NZTE NZ International Business
Awards. The prize entitled the Group to claim $100,000 in cost reimbursement from NZTE. In addition to this, the Group has been receiving cost reimbursements from NZTE for
cost incurred in expanding into Japan and China.
(d) Trading transactions
During the period, Group entities entered into the following transactions with related parties:
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Healthlink Limited 126 863 2 59
Revera Limited - - 11 61
New Zealand Trade and Enterprise (4) 573 1 -
Pioneer Capital Partners - - 2 93
A provision of $45,000 (2013: $788,000) was recognised in the year and deducted from related revenue in respect of provision made against amounts owed from Healthlink
Limited. The balances were cleared at the date of disposal.
Sale of software, services and Government grants Purchase of goods or services
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS82
24 CONTINGENT LIABILITIES
The Group had outstanding letters of credit of $577,470
(2013: $2,120,000).
The Group has a standby letter of credit in place with
ASB Bank Limited for GBP 150,000 effective 28 July
2009. This was put in place to cover the issue of Visa
corporate credit cards by HSBC Bank Plc. to Orion
Health employees based in the United Kingdom used
for purposes of normal business and travel expenses.
The Group has lease bonds in favour of:
• Kintella Pty Ltd for AUD 18,775 (NZD 20,028)
• Perpetual Trustee Company Ltd for AUD 58,400 (NZD 62,297)
• Concessionaire des Immeubles for EUR 32,550 (NZD 51,591)
• Bumrungrad Hospital Public Company Limited for THB 1,737,780 (NZD 61,504)
• HSBC Institutional Trust for SGD 38,428 (NZD 35,166)
• Maria Enterprises Pty Ltd, Gaddka Pty Ltd and JPK Pty Ltd for AUD 55,550 (NZD 59,257)
• Broadway 10-Ten PO Fee LLC for USD 200,336 (NZD 230,903)
25 EVENTS AFTER REPORTING DATE
On 9 May 2014, the Combined Trade Facility that the
Group holds with ASB Bank (refer note 28(v)) was
extended from $15,000,000 to $25,000,000.
The Board of the Company resolved to issue, subject
to shareholders’ approval by ordinary resolution,
5,000,000 ordinary shares in the Company at
NZ$4.00 per share, for total consideration of
NZ$20,000,000. The shareholders, at a special
meeting dated 6 May 2014, voted in favour of an
ordinary resolution to authorise the Board of the
Company to issue such shares. The shares were issued
on or about 6 June 2014.
In addition to the above, the Board of the Company
resolved to take oversubscriptions to the share
issue. Subject to shareholders’ approval by ordinary
resolution, 1,375,880 ordinary shares in the Company
were issued at NZ$4.00 per share, for total
consideration of NZ$5,503,520. The shareholders, at
a special meeting dated 6 June 2014, voted in favour
of an ordinary resolution to authorise the Board of the
Company to issue such shares. The shares were issued
on or about 10 June 2014.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 83
(i) Leasing commitments
Operating lease commitments – Group as lessee
The Group has entered into commercial leases on certain premises and office equipment. The original lease terms are between 1 and 15 years. There are no restrictions of entry
placed upon the lessee.
Future minimum rentals payable under non-cancellable operating leases as at 31 March are as follows:
26 COMMITMENTS
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
No later than 1 year 6,046 4,466 - -
Later than 1 year and no later than 5 years 20,127 12,201 - -
Later than 5 years 18,532 19,238 - -
44,705 35,905 - -
(ii) Capital commitments - The Group has no capital commitments as at 31 March 2014 (2013: nil).
27 RECONCILIATION OF NET (LOSS)/PROFIT FOR THE YEAR WITH NET CASH FLOWS FROM OPERATING ACTIVITIES
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
NET (LOSS)/PROFIT AFTER INCOME TAX (1,137) 7,750 11,456 3
Adjusted for:
Non-cash items
Depreciation and amortisation 3,710 2,443 - -
Loss/(profit) on disposal of property, plant and equipment 99 (8,960) - -
Impairment allowance – trade receivables 218 230 - -
Deferred tax (6,297) 32 (11) -
Net loss on foreign exchange 1,518 66 (1) (1)
Share of profit of equity accounted investment (145) (364) - -
Share based payments 309 - - -
Gain on sale of investments accounted for using the equity method (6,369) - (8,008) -
Dividend income (262) - (3,762) -
Impact of changes in working capital items
Increase/(decrease) in trade and other payables 2,645 2,808 - -
Increase/(decrease) in employee entitlements payable 4,727 (313) - -
Increase/(decrease) in revenue in advance 14,567 (2,271) - -
Increase/(decrease) in provisions for other liabilities 1,244 - - -
(Increase)/decrease in trade and other receivables (11,283) 610 - -
(Increase)/decrease in accrued revenue (13,507) - - -
(Increase)/decrease in taxation payable 1,189 (2,304) - (294)
(Increase)/decrease in intercompany payable - - 326 292
NET CASH FLOW FROM OPERATING ACTIVITIES (8,774) (273) - -
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS84
28 FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risks from its
use of financial instruments:
- Credit risk
- Liquidity risk
- Market risk
This note presents information about the Group’s
exposure to each of the above risks, the Group’s
objectives, policies and processes for measuring
and managing risks, and the Group’s management
of capital.
Financial risk management objectives and policies
The principal financial instruments of the Group and
Parent comprise receivables, payables, overdrafts
and cash.
The Group and Parent manages their exposure to
key financial risks, including interest rate, currency
risk, and credit risk in accordance with the Group’s
financial risk management policies. The objective of
these policies is to support the delivery of the Group
and Parent’s financial targets whilst protecting future
financial security.
If deemed necessary by management the Group
and Parent may enter into derivative transactions,
principally interest rate swaps and forward currency
contracts, although no such transactions were entered
into in the current year or prior year. The purpose is
to manage the interest rate, currency, and credit risks
arising from the Group and Parent’s operations and
its sources of finance. The main risks arising from the
Group and Parents’ financial instruments are interest
rate risk, foreign currency risk, credit risk and liquidity
risk. The Group and Parent use different methods to
measure and manage different types of risks to which
they are exposed. These include monitoring levels of
exposure to interest rate and foreign exchange risk
and assessments of market forecasts for interest rate
and foreign exchange.
Ageing analysis and monitoring of specific credit
allowances are undertaken to manage credit risk.
Liquidity risk is monitored through the development
of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing
each of these risks as summarised on the next page.
Primary responsibility for identification and control of
financial risks rests with senior management under the
authority of the Board. The Board reviews and agrees
policies for managing each of the risks identified
below, including the setting of limits for trading in
derivatives, hedging cover of foreign currency and
interest rate risk, credit allowances, and future cash
flow forecast projections.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 85
(i) Financial instruments by category
FINANCIAL ASSETS – LOANS AND RECEIVABLES Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash and cash equivalents 12,655 9,278 - -
Trade receivables 49,982 41,698 - -
Related party receivables - - 26,714 12,984
Accrued revenue 20,947 8,788 - -
83,584 59,764 26,714 12,984
FINANCIAL LIABILITIES – MEASURED AT AMORTISED COST
Bank overdraft (13,583) (2) - -
Trade payables and accruals (6,952) (7,591) - (30)
Related party payables - - (400) (341)
(20,535) (7,593) (400) (371)
FINANCIAL ASSETS Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
Cash and cash equivalents 12,655 9,278 - -
12,655 9,278 - -
Financial Liabilities
Bank overdrafts (13,583) (2) - -
(13,583) (2) - -
NET EXPOSURE (928) 9,276 - -
GROUP 2014 (NZ$’000) 2013 (NZ$’000) 2014 (NZ$’000) 2013 (NZ$’000)
+1% (100 basis points) (68) (67) (68) (67)
-0.5% (50 basis points) 47 33 47 33
Post tax profit higher/(lower) Equity
(ii) Market risk
Interest rate risk
The exposure to market interest rates relates primarily to the Group debt obligations. The level of debt is disclosed in note 9.
At reporting date, the Group had the following mix of financial assets and liabilities exposed to New Zealand variable interest rate risk that are not designated in cash flow hedges:
At 31 March 2014, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows;
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS86
Foreign currency risk
Orion Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies arising from normal trading activities. The foreign
currencies in which the Orion Group primarily transacts are Arab Emirate Dirhams, Australian Dollars, Canadian Dollars, Euros, Great British Pounds, Japanese Yen,
Singapore Dollars, Thai Baht and United States Dollars. Where exposures are certain, it is the Orion Group’s policy to evaluate the risk and hedge these risks if necessary
as they arise.
NZD 2014 2013 2014 2013
AED 3.01423 2.9944 3.1876 3.0788
AUD 0.8866 0.7897 0.9374 0.8040
CAD 0.8691 0.8182 0.9599 0.8531
EUR 0.6099 0.6334 0.6309 0.6539
GBP 0.5142 0.5165 0.5215 0.5517
JPY 82.3899 67.9072 89.2096 78.9831
SGD 1.0344 1.0119 1.0928 1.0396
THB 25.9266 25.1574 28.2549 24.7330
USD 0.8204 0.8151 0.8676 0.8380
Average Rate Reporting date mid-spot rate
The table below summarises the material foreign exchange exposure on the net monetary assets of each Group entity against its respective functional currency,
expressed in NZD:
The following significant exchange rates applied during the year:
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 87
Group 2014 (NZ$’000) Group 2013 (NZ$’000) Parent 2014 (NZ$’000) Parent 2013 (NZ$’000)
AUD (951) - - -
CAD 1,694 - - -
EUR 1,278 533 - -
GBP 2,251 731 - -
USD 6,115 1,341 - -
Sensitivity analysis
Based on the net exposure on the previous page, the table below outlines the sensitivity of profit and equity to movements of that currency to the NZD.
GROUP 2014 (NZ$’000) 2013 (NZ$’000) 2014 (NZ$’000) 2013 (NZ$’000)
10% weakening in NZD
AUD (76) - (76) -
CAD 136 - 136 -
EUR 102 43 102 43
GBP 180 58 180 58
USD 489 107 489 107
5% strengthening in NZD
AUD 33 - 33 -
CAD (58) - (58) -
EUR (44) (18) (44) (18)
GBP (77) (25) (77) (25)
USD (210) (46) (210) (46)
Post tax profit higher/(lower) Other comprehensive income higher/(lower)
(iii) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade receivables, accrued revenue and related party receivables. The Group’s
exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at reporting date
is addressed in each applicable note.
The credit risk on cash and cash equivalents is limited because counterparties are banks with high credit ratings assigned by international credit-rating agencies.
The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties, and as such collateral is not
requested nor is it the Group’s policy to securitise its trade and other receivables. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. The demographics of the Group’s customer base, including the default risk of the industry and country, in which customers operate, has less influence on credit risk.
Receivable balances are monitored on an on-going basis with the result that the Group’s experience of bad debts has not been significant.
CREDIT QUALITY OF FINANCIAL ASSETS S&P rating BB+ and above NZ$’000 Total (NZ$’000)
At 31 March 2014
Cash and cash equivalents 12,655 12,655
12,655 12,655
At 31 March 2013
Cash and cash equivalents 9,278 9,278
9,278 9,278
The S&P rating represents the rating of the counterparty with whom the financial asset is held rather than the rating of the financial asset itself.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS88
(iv) Fair value
The methods for estimating fair value of the applicable financial instruments of the Group and Parent, being
accrued revenue subject to extended payment terms, are outlined in note 11 to the financial statements.
(v) Liquidity risk
Liquidity risk arises from the financial liabilities of the
Group and the Group’s subsequent ability to meet
their obligations to repay their financial liabilities as
and when they fall due.
The Group’s objective is to maintain a balance
between continuity of funding and flexibility through
the use of available credit lines.
The Group manages its liquidity risk by monitoring
the total cash inflows and outflows expected on a
monthly basis.
The Group maintains the following lines of credit:
Current and prior year
- NZD15.0 million interchangeable facilities
overdraft and/or combined trade facility.
Overdraft interest is payable at the ASB
Corporate Indicator Rate plus applicable
margin. Foreign currency overdraft interest
in payable at the ASB Bank’s offer rate for
the relevant currency plus applicable margin.
This facility is secured by a general security
deed over all the present and future assets
and undertakings of the Group.
The facility is sufficiently flexible that amounts can
be drawn down and repaid within overall limits
without need for prior approval from the bank.
The facility is subject to a number of external bank
covenants. These covenants are calculated and
reported either quarterly or annually. As part of
the amendment to the facility, including the facility
limit, in April 2014 it was agreed not to test the
interest cover ratio as at 31 March 2014. The Group
has complied with all tested covenants during the
current and prior years. Refer to note 25 for detail
regarding the extension to the facility subsequent to
year end.
Cash balances of $12,655,000 (2013: $9,278,000)
and bank overdrafts of $13,583,000 (2013: $2,000)
held with ASB are subject to a netting arrangement.
This allows for settlement on a net basis in the event
of default.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS 89
The following are the contractual undiscounted cash flow maturities of net monetary assets, including interest payments and excluding the impact of netting agreements:
GROUPCarrying amount
NZ$’000Total cashflow
NZ$’0006 months or less
NZ$’0006-12 months
NZ$’0001-2 years NZ$’000
2-5 years NZ$’000
Cash and cash equivalents 12,655 12,655 12,655 - - -
Trade receivables 49,982 49,982 49,982 - - -
Accrued revenue 20,947 21,333 15,675 1,399 2,705 1,554
Bank overdraft (13,583) (13,583) (13,583) - - -
Trade and other payables (6,952) (6,952) (6,952) - - -
TOTAL AS AT 31 MARCH 2014 63,049 63,435 57,777 1,399 2,705 1,554
At 31 March 2013
Cash and cash equivalents 9,278 9,278 9,278 - - -
Trade receivables 41,698 41,698 41,698 - - -
Accrued revenue 8,788 8,788 7,679 1,109 - -
Bank overdraft (2) (2) (2) - - -
Trade and other payables (7,591) (7,591) (7,591) - - -
TOTAL AS AT 31 MARCH 2013 52,171 52,171 51,062 1,109 - -
(vi) Capital risk management
The main objective of capital risk management is to ensure the Group operates as a going concern, meets debts as they fall due, maintains the best possible capital structure
and reduces the cost of capital. Group capital consists of share capital, other reserves and retained earnings. To maintain or alter the capital structure, the Group has the
ability to review if dividends are paid to shareholders, return capital or issue new shares, reduce or increase debt or sell assets. There has been no change in Group policies or
objectives in relation to capital risk management since the prior year.
ORION HEALTH ANNUAL REPORT | NOTES TO THE FINANCIAL STATEMENTS90
The Board has ultimate responsibility for the
strategic direction of Orion Corporation Limited and
oversight of the management of Orion Corporation
Limited for the benefit of Shareholders. Specifically,
the responsibilities of the Board include:
- working with management to establish
the strategic direction of the Orion
Health Group;
- monitoring management and
financial performance;
- monitoring compliance and risk management;
- establishing and monitoring the health and
safety policies of the Orion Health Group;
- establishing and ensuring implementation
of succession plans for senior
management; and
- ensuring effective disclosure policies
and procedures.
In discharging their duties, Directors have direct
access to and may rely upon Orion Health’s senior
management and external advisers. Directors have
the right, with the approval of the Chairman or by
resolution of the Board, to seek independent legal
or financial advice at the expense of Orion for the
proper performance of their duties.
The Board currently comprises six Directors: a non-
executive Chairman, one executive Director and four
non-executive Directors.
Board members have an appropriate range of
proficiencies, experience and skills to ensure that
all governance responsibilities are fulfilled and to
achieve the best possible management of resources.
Directors’ meetings
The Board formally schedule to meet at least four
times during any financial year including sessions to
consider the strategic direction of Orion Health and
Orion Health’s forward-looking business plans. Video
and/or phone conferences are also used as required.
For the year ended 31 March 2014 five Board Meetings
were held.
Board committees
Committees have been established by the Board to
review and analyse policies and strategies, usually
developed by management, which are within their
terms of reference. They examine proposals and,
where appropriate, make recommendations to the
full Board. Committees do not take action or make
decisions on behalf of the Board unless specifically
mandated by prior Board authority to do so. The
Committees are as follows:
• Audit and Risk Management Committee
The Audit and Risk Management Committee is
responsible for overseeing the risk, insurance,
accounting and audit activities of Orion
Health, and reviewing the adequacy and
effectiveness of internal controls, meeting with
and reviewing the performance of external
auditors, reviewing the consolidated financial
statements, and making recommendations on
financial and accounting policies.
• Remuneration Committee
The Remuneration Committee is responsible
for overseeing management succession
planning, establishing employee incentive
schemes, reviewing and approving the
compensation arrangements for the
executive Directors and senior management,
and recommending to the full Board the
compensation of Directors.
CORPORATE GOVERNANCE the role of the board
ORION HEALTH ANNUAL REPORT | CORPORATE GOVERNANCE 91
Name Category Remuneration 2014 Remuneration 2013
Andrew Clements (via Zeus Management Limited) Independent Chairman $90,000 $90,000
Neil Cullimore (via The Culloden Trading Trust) Non-executive director $45,000 $45,000
Andrew Ferrier (via FCS Limited) Non-executive director (appointed 9 December 2011) $45,000 $45,000
Roger France Non-executive director (appointed 15 February 2013) $45,000 $7,250
Paul Shearer Non-executive director (appointed 15 February 2013) $45,000 $7,250
Ian McCrae Executive director – CEO $417,409 $407,424
Directors
Non-executive Directors receive fees determined by the Board on the recommendation of the Remuneration Committee plus reasonable travelling, accommodation and
other expenses incurred in the course of performing duties or exercising powers as Directors.
Ian McCrae is employed as CEO and receives salary and other remuneration and benefits in respect of his employment.
The following people held office as a Director during the year and received the following remuneration including benefits during the year. The Executive Director’s
remuneration includes incentive payments pertaining to the 2013 financial year.
Directors’ interests
As permitted by the Companies Act 1993, the Company has granted certain indemnities to the Directors and specified employees of the Company or any related company
in respect of liability and legal costs incurred by those Directors and specified employees in their capacity as Directors and/or employees of the Company or any related
company. As permitted by the Companies Act 1993, the Company has arranged a policy of Directors’ and Officers’ Liability Insurance which insures those persons
indemnified for certain liabilities and costs.
SHAREHOLDER INFORMATION
ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION92
Andrew Clements:Antipodes Wing Limited Director
Genesis Energy Limited Director
RDGP Limited Director
Ryman Healthcare Limited Director
Jacon Investments Limited Principal (Director and Shareholder)
Zeus Management Limited Principal (Director and Shareholder)
New Zealand Football Foundation Chairman
The Mt Wellington Stadium Charitable Trust Trustee
Optima Corporation Limited Shareholder
Andrew Ferrier:Bunge Ltd (New York) Director
Lufa Farms Limited (Montreal) Director
CANZ Capital Director & Owner
Ferrier Consulting Services Limited Director & Owner
New Zealand Trade and Enterprise Chairman
Play It Strange Foundation Trustee
University of Auckland Council Member
Ian McCrae:McCrae Limited Director
Neil Cullimore:Culloden Investments Limited Director and Shareholder
HealthNet Investments Pty Limited Director and Shareholder
Heartland Investments Limited and subsidiaries Director and/or Shareholder
Pioneer Capital II Operating Partner
The North and South Trust Limited Shareholder
Paul Shearer:Fisher & Paykel Healthcare Limited (NZ) Director and Senior Vice President - Sales & Marketing
Fisher & Paykel Healthcare Corporation Limited Director of various subsidiary companies
Roger France:Air New Zealand Limited Director
Dilworth Trust Board Trustee
Fisher & Paykel Healthcare Corporation Limited Director
Tappenden Holdings Limited Director
Tappenden Management Limited Director
The University of Auckland Foundation Trustee
Treasury Commercial Operations Advisory Board Member
In accordance with Section 140(2) of the Companies Act
1993, the Directors named below have made a general
disclosure of interest during the period 1 April 2013 to 31
March 2014 by a general notice disclosed to the Board
and entered in the Company’s interests register:
ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION 93
Directors’ shareholdings
Directors’ shareholdings are shown as at balance date.
31 March 2014
Andrew Clements - Shares held with beneficial interest
Ian McCrae - Shares held with beneficial interest
Neil Cullimore - Shares held with beneficial interest
Andrew Ferrier - Shares held with beneficial interest
Paul Shearer - Shares held with beneficial interest
Roger France - Shares held with beneficial interest
2,550,000
81,953,250
100,000
1,350,000
1,000,000
-
Employees’ remuneration
During the year the number of employees or former employees not being Directors of Orion Corporation Limited received remuneration including the value of other
benefits in excess of $100,000 in the following bands:
Remuneration (NZD) Number of employees Remuneration (NZD) Number of employees
$100,000 - $110,000 54 $270,001 - $280,000 2
$110,001 - $120,000 39 $280,001 - $290,000 3
$120,001 - $130,000 50 $290,001 - $300,000 3
$130,001 - $140,000 46 $310,001 - $320,000 1
$140,001 - $150,000 32 $320,001 - $330,000 1
$150,001 - $160,000 23 $340,001 - $350,000 1
$160,001 - $170,000 14 $350,001 - $360,000 1
$170,001 - $180,000 10 $360,001 - $370,000 2
$180,001 - $190,000 9 $370,001 - $380,000 1
$190,001 - $200,000 7 $380,001 - $390,000 1
$200,001 - $210,000 4 $390,001 - $400,000 1
$210,001 - $220,000 6 $410,001 - $420,000 1
$220,001 - $230,000 3 $530,001 - $540,000 1
$230,001 - $240,000 2 $640,001 - $650,000 1
$240,001 - $250,000 4 $730,001 - $740,000 1
$260,001 - $270,000 2
The numbers above include 91 New Zealand based current and former employees and 235 overseas-based current and former employees.
ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION94
Top Twenty Shareholders at 11 June 2014
Name Number of shares % of Ordinary Shares
MCCRAE LIMITED 81,862,250 59.0%
PIONEER CAPITAL I NOMINEES LIMITED 13,370,900 9.6%
GEOFFREY A CUMMING 13,100,000 9.4%
TEA CUSTODIANS LIMITED 3,331,250 2.4%
JACON INVESTMENTS LIMITED 2,550,000 1.8%
MARK JAMES THOMSON & DEBORAH MARY THOMSON & STUART ALEXANDER MCRAE PERRY 1,765,000 1.3%
CANZ CAPITAL LIMITED 1,537,500 1.1%
DAVID JOHN CLARKE & BELINDA MARIA CLARKE & KEVIN JAFFE 1,514,640 1.1%
EDWIN WENG KIT NG 1,297,000 0.9%
JOHN HAROLD DUNN 1,292,520 0.9%
MICHAEL BRIAN CLEGG & KYLIE ANNE CLEGG 1,175,000 0.8%
NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED 1,125,000 0.8%
ORION HEALTH CORPORATE TRUSTEE LIMITED 1,034,637 0.7%
K ONE W ONE (NO 2) LIMITED 1,000,000 0.7%
PAUL NIGEL SHEARER & SONYA MAREE SHEARER & MARK EDGAR WILSON 1,000,000 0.7%
PAUL AUGUSTIN VISKOVICH & PATRICK JAMES KENNELLY 968,670 0.7%
MARK STEWART CAPILL 950,000 0.7%
HIRVI LIMITED 850,000 0.6%
GORDON STANLEY MCCRAE 741,500 0.5%
GORDON STANLEY MCCRAE & MALCOLM STUART BOYD 481,530 0.3%
ORION HEALTH ANNUAL REPORT | SHAREHOLDER INFORMATION 95
Registered Office
Orion House
181 Grafton Road
Grafton
Auckland
New Zealand
Incorporated in New Zealand.
Bankers
ASB Bank Limited
HSBC Bank
Auditors
PricewaterhouseCoopers
Share registrar
Computershare Investor Services Limited
DIRECTORY
ORION HEALTH ANNUAL REPORT | DIRECTORY96
