midcentral district health board

annUal rePort

2007/08

reading oUr annUal rePort

This annual report presents an account of MidCentral District Health Board’s performance for the year from 1 July 2007 to 30 June 2008.

The annual report is a key report to stakeholders as it sets out what the District Health Board committed to do in the year, and how it delivered on that commitment.

The key components of the report are outlined in the table to the right.

The Board has a vision for its district, and a long term strategy (10 years) as to how this vision will be achieved. This is documented in the District Strategic Plan.

Each year, the Board reviews progress on its vision and long term strategy, and identifies what will be achieved over the next 12 months. This is documented in the District Annual Plan.

A Statement of Intent is also prepared annually and is the formal accountability document between MidCentral DHB and Government. It provides a concise summary of MidCentral’s intentions for the year ahead, and covers both long term and annual planning objectives. It also covers the day-to-day operational performance of the Board.

This document, the Annual Report, tells you how MidCentral DHB performed against the Statement of Intent. It also provides the reader with a detailed account of how the health dollars allocated to this Board were managed.

InTroDuCInG MIDCEnTrAl DIsTrICT HEAlTH BoArDA brief overview of MidCentral’s DHBs role, the district it covers, and resources it manages.

2007/08: THE YEAr In rEvIEwA report from the Chairman and CEo’s report on the year past. Includes a special update on progress against MDHB’s 10 priority areas, staffing matters and the DHBs financial performance.

GovErnAnCE AnD ACCounTABIlITY sTATEMEnTA report on how the Board of MidCentral DHB is structured and operates.

sTATEMEnT of sErvICE PErforMAnCEA report on MidCentral’s performance against the targets set by the Board, and agreed by the Minister of Health.

sTATEMEnT of fIsCAl PErforMAnCEThe annual financial accounts of the organisation. Includes notes and disclosures regarding remuneration, dividend payments, and interests/shares in other organisations.

AuDITor’s rEPorTThe report of the independent auditor regarding the reliability and accuracy of MidCentral DHB’s financial and service statements.

sTATEMEnT of rEsPonsIBIlITYOfficial acknowledgement of responsibility for the accuracy of this report, and commitment to sound operating systems and controls.

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contentsThis year our annual report is provided in two parts due to the volume of financial information.

This report sets out the financial performance.

A companion document provides the commentary on the year and details of what MidCentral DHB does.

Contents ...........................................................................................................3Governing MidCentral District Health Board – setting the Priorities ...............4Meet the Board .................................................................................................6The Management Team ..................................................................................11 statement of service Performance ................................................................12- our Health Priority 1: Cancer.......................................................................14- our Health Priority 2: Cardiovascular ..........................................................15- our Health Priority 3: Child Health ..............................................................16- our Health Priority 4: Diabetes ....................................................................17- our Health Priority 5: older People .............................................................18- our Health Priority 6: Maori Health ..............................................................19- our Health Priority 7: Mental Health ............................................................20- our Health Priority 8: oral Health ................................................................21- our Health Priority 9: respiratory ................................................................22- our Health Priority 10: rural Health ............................................................23- operational Performance ............................................................................24financial statements ......................................................................................25statement of Accounting Policies ..................................................................28notes to Consolidated financial statements .................................................32Auditor’s report .............................................................................................44Cost of service statement .............................................................................45statement of responsibility ...........................................................................45Directory .........................................................................................................47

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4

goVerning midcentral district health board –

setting the Priorities

effective governance of a district

health board requires a committed

board and robust systems and

processes. dhb governance

attracted a lot of public attention

during 2007/08, particularly around

the management of conflicts of

interest. on the following pages,

midcentral dhb’s governance

practices are detailed.

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midcentral dhb’s board members are champions of “quality living – healthy lives”.

during 2007/08 the emphasis has been on healthy eating and healthy action, and so for this annual report they share one of their favourite fruit.

meet the board

dePUtY chair, elected member, commenced 2000 Ann has a clinical background, and continues her interest in otaki community health, after being the founding member and Chair of the otaki Community Health Trust. Ann is involved in local government, being a Councillor/ Deputy Mayor for over 15 years. Ann is a JP and was awarded a MnZM in 2008.Committee Membership:Member of the Community & Public Health, Hospital, and Disability support Advisory Committees, Group Audit and remuneration Committees.

elected member, commenced 2001 Diane’s background is in community and rural advocacy. she has served as a local government Councillor, and a member of the Conservation Board. Diane was instrumental in the establishment of the Eketahuna Health Centre.Committee Membership:Chairman of the Community & Public Health Advisory Committee, and Member of the Disability support Advisory Committee and funding Audit sub-Committee.

DIAnE AnDErson

Ann CHAPMAn

elected member, commenced 2001 lindsay Burnell has a farming operation, and holds various Directorships in the agriculture and power industries. lindsay is involved in local government, being a Councillor for over 30 years.Committee Membership:Chairman of the Disability support Advisory Committee. Member of the Hospital Advisory Committee and Enable nZ Governance Group.

lInDsEY BurnEll

chairman, appointed member, commenced 1992 Ian is a Company Director, and has been involved in health since 1992, including membership of waikato (Chairman) and whanganui DHBs and the Ministerial Health workforce Advisory Committee. Ian presently serves on the health sector’s national Capital Committee, and is a director of crown companies in the science, research and education sectors. Ian was awarded the Massey university Medal in 2004 and a Qso in 2005, and is a fellow of the Institute of Directors and an Associate of the nZ Institute of Management.Committee Membership:Chairman of the remuneration Committee. Member of the Hospital, Community & Public Health, and Disability support Advisory Committees, and Group Audit.

IAn wIlson

elected member, commenced 2007Graeme is a retired doctor, and worked for many years in both the public health system and in private practice in Manawatu and Horowhenua area. for most of this time he was a General surgeon, but latterly was Emergency Department Director for MidCentral Health. Committee Membership:Member of the Community & Public Health Advisory Committee, funding Audit sub-Committee and Group Audit Committees.

GrAEME CAMPBEll

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DEnnIs EMErY

elected member, commenced 2004 Jim is a Chartered Accountant, Business Advisor, and Company Director. Jim is also involved in local government, being a City Councillor since 1998.Committee Membership:Chairman of the Group Audit Committee. Member of the Hospital Advisory Committee, and funding and Hospital Audit sub-Committees.

JIM JEffErIEs

appointed member, commenced 2008stephen has been involved in local health and Maori affairs for over 30 years. He has a management background and has worked in the health, legal, education, and Maori government sectors. He is a member of the Tararua Primary Health organisation.Committee Membership:Chairman of the Hospital Audit sub-Committee. Member of the Hospital Advisory and Group Audit Committees.

sTEPHEn PAEwAI

elected member, commenced 2001Barbara’s background involves consumer and community health advocacy, and dental nursing. she is involved in a number of national health committees, providing a consumer perspective.Committee Membership:Chairman of the Enable nZ Governance Group. Member of the Hospital Advisory Committee, Group Audit and Hospital Audit sub-Committee.

BArBArA roBson

appointed member, commenced 2007 ormond stock has an engineering and business background. He has been involved in health governance since 1998 and is currently a board member of both MidCentral and whanganui District Health Boards. He holds a number of directorships.Committee Membership:Member of the Community & Public Health Advisory and Disability support Advisory Committees, and the Enable new Zealand Governance Group.

orMonD sToCK

appointed member, commenced 2002 of ngati Maniapoto and ngati Kauwhata descent, Dennis works with richmond new Zealand, and holds a directorship with a medical insurance provider. Prior to this he had extensive experience in Iwi health management, the meat industry and Trade union movement. Committee Membership:Chairman of the funding Audit sub-Committee. Member of the Community & Public Health Advisory Committee, and Group Audit.

Note: Danielle Harris, Pat Kelly and Cynric Temple-Camp were members of the Board for the first six month’s of the year.

elected member, commenced 2001 A practising GP, Jack is also the national Co-ordinator of Police forensic Medicine. He is a fellow of the Australian & nZ College of GPs, and holds a Masters in forensic Medicine.Committee Membership:Chairman of the Hospital Advisory Committee. Member of the remuneration Committee and Hospital Audit sub-Committee.

JACK DruMMonD

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midcentral dhb’s goVernance strUctUreThe governance structure is based on the DHB’s three key roles, reflecting the management structure:

• Planning and funding health and disability services for the MDHB district. • Providing health and disability services to its communities. These services

include: medical, surgical, women’s health, child’s health, elderly, disability support, mental health, intellectual disability, public health and related support services.

• Governing the District Health Board.

The management of MidCentral DHB comprises three divisions. Care has been taken to separate the funding and provider functions.

i. the funding Division, which is responsible for the planning and funding of health and disability services for the District.

ii. the Provider Division, has two key units being:

– MidCentral Health, which delivers (hospital based) secondary and lower tertiary level of specialist health and disability services

– Enable new Zealand, a national service provider to the disability sector.

iii. the District Health Board Governance and Corporate Division, which includes the activities of the board, its statutory advisory and audit committees, the overall management functions of the District Health Board and its obligations and responsibilities as a body corporate owned by the Crown.

Matching this, the Board has established seven committees, including audit committees, to oversee these functions.

role of committees

Community & Public Health Advisory Committee:• Advises on the district’s health status• Advises on priorities for the use of health funding.

Disability support Advisory Committee:• Advises on the district’s disability support needs• Advises on priorities for the use of disability support funding.

Hospital Advisory Committee:• Monitors the financial and operational performance of MidCentral Health• Assesses strategic issues regarding the provision of hospital services.

Enable new Zealand Governance Group:• Monitors the financial and operational performance of Enable new Zealand.

Group Audit Committee:• Considers the adequacy of financial statements, accounting policies, and financial controls• Co-ordinates the DHB’s risk profile and associated internal audit plan• Monitors the internal audit function of the corporate/ governance section.

Hospital Audit sub-Committee:• Ensures management reporting and decision-making process within Provider Division are robust• Monitors the delivery of quality health services• Develops a risk profile for this Division• Monitors associated internal audit programme.

funding Audit sub-Committee:• Ensures management reporting and decision-making process within funding Division are sound• Ensures contract payment process are adequate• Ensures funding received from vote Health is appropriately accounted for• Develops a risk profile for this Division• Monitors associated internal audit programme.

remuneration Committee:• Monitors the individual performance of the CEo and associated remuneration.

the role of the boardThe functions carried out directly by the Board include:• approving major strategic and policy documents, including the District

strategic Plan, District Annual Plan, capital expenditure plan and operational budgets.

• considering recommendations on key issues, such as the findings of the health needs analysis and subsequent funding investment plan.

• maintaining and developing an effective working relationship with Manawhenua Haoura, its Iwi partner.

• monitoring the implementation of the District Annual Plan and Budget, and ensuring all measures and initiatives are successfully achieved.

• monitoring the operating performance of all divisions of the DHB.• ensuring the District Health Board acts legally and responsibly on all

matters.• appointing, evaluating and rewarding the performance of the CEO.

Governance

Management

Health and Disability Services ProvisionHealth Planning and Funding

Manawhenua HauoraBoard

Community &Public Health

Advisory Committee

Disability SupportAdvisory

Committee

HospitalAdvisory

Committee

Enable New ZealandGovernance

Group

GroupAudit

Committee

CEO

Funding AuditSub-Committee

Hospital AuditSub-Committee

FundingDivision

CorporateServices

MidCentralHealth

EnableNew Zealand

RemunerationCommittee

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board/committee membershiP and deVeloPmentThere are 11 Board Members, who collectively possess a broad range of skills, knowledge and experience. seven of these members are elected through the triennial local government elections, and four are appointed by the Minister of Health. In making the appointments, the Minister ensures any skills gaps are met, including a minimum of two Maori Board members.

The election term is for three years. The current board took office on 10 December 2007. Transition arrangements are put in place toward the end of each term to ensure a smooth transition from the outgoing to the incoming Board. This ensures continuity of business.

Membership of the Board’s committees is reviewed three-yearly. Board members make up the majority of committee members, and the Board uses its legislative power to appoint additional members to assist with the governance of the provider and funding divisions and disability issues. The three-year appointment term of external committee members has been timed to commence one year after the election of Board members to enable continuity of governance through the DHB election process. The external committee members during 2007/08 were:

Community & Public Health Advisory Committee

linda Graystephen Paewai*Colleen sweeney

Disability support Advisory Committee

sharon DevonshireIrene Gregorynicolas steenhout

Hospital Advisory Committee

Hera EparaimaBuster KellsJane stojanovic

Enable new Zealand Governance Group

Gail Munroraewyn skipper

* appointed as Board Member, April 2008.

goVernance Processes at midcentral dhb• Each Board committee operates within a

formal terms of reference.• A work programme is in place for each

Committee and the Board, and this is closely aligned with the District Annual Plan.

• An annual meeting calendar for the Board and its Committees is established. The Board meets monthly, except January. At least three meetings of the Board are scheduled for outlying areas within the district.

• four open forums are held for public to engage with the Board each year.

• The Board appoints an internal auditor to ensure its systems and processes are robust. The internal auditors report to the Board’s audit committees.

• The Office of the Auditor-General appoints the Board’s external auditor.

• A strong risk management approach to internal audit is taken, led by the Board’s audit committees.

• Meetings of the Board and its Committees are run in accordance with the Board’s standing orders.

• All Board and Committee Members undertake a collective and self evaluation process on a regular basis. The results are used to continually assure and improve governance processes and inform annual training and development programmes.

• new Board and Committee Members receive a comprehensive orientation to the public health sector, and to MidCentral District Health Board.

• Members are aware of the duty to manage existing and potential conflicts of interest. A conflict of interest register is maintained (see table below), and meeting processes support individual members and the Board/Committee to manage all existing or potential conflicts.

third PartY relationshiP

MidCentral distriCt HealtH Board – Board MeMBers

I wilson, Chair Corporate Involvements limited Director/shareholderEstendart limited DirectorInstitute of Environmental and research limited Chairmanlearning Media limited DirectorMassey ventures limited DirectorMidCentral DHB wife is employeeMinistry of Health’s national Capital Committee MemberPolybatics limited DirectorPolybatics Trading limited Directorrural fuel limited DirectorAddz livewire Electrical limited shareholder

A Chapman, otaki women’s Health Group Memberdeputy Chair Gen-I son is employee

Te wananga o raukawa Board MemberKapiti Coast District Council Deputy Mayorotaki Community Health Trust Member, landlord to otaki PHo and MDHB nursesHorowhenua-Kapiti Electra Trust Trustee

l Burnell Electra limited TrusteeManawatu-wanganui regional Council Councillor

J Drummond Bay of Plenty District Health Board’s laboratory services Tender review Committee

GP representative

Practitioner of forensic Medicine PractitionerPolice Medical service national Co-ordinator. nZ Police representative in the

development of a service level agreement regarding sexual health services between several government agencies, including Police, ACC, CYPs and Ministry of Health

D Emery Union Medical Benefits Society - Unimed Board Memberrichmond new Zealand Employee (Kaiwhakarite role)nga Kaitiaki o ngati Kauwhata Inc ChairmanTe roopu Hokowhitu limited Board Member Elect (for ngati Kauwhata-ki-te-Tonga)

table continued over page...

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third PartY relationshiP

D Harris Best Care (whakapai Haurora) Trustee/Chief Executive OfficerManawatu PHo Member/shareholderCompass Health limited funderuCol Council Memberrangitaane o Manawatu Treaty Claims Principal negotiatorTanenuiarangi Manawatu inc roopu including Kia ora fM and te hotu Manawa o rangitaane Marae

Chief Executive Officer

J Jefferies Palmerston north City Council CouncillorAorangi Hospital ltd ChairmanJim Jefferies limited Director/ownerrural fuel limited DirectorCentrePort limited Director

P Kelly Palmerston north City Council Councillor

s Paewai rangitane o Tamaki nui a rua Incorporated society ConsultantTararua Primary Health organisation Deputy ChairpersonCompass Health limited funder

B robson Central region’s Technical Advisory service: regional Development service Initiative

Consumer representative

federation of women’s Health Councils Aotearoa nZ Co-convenorHealth & Disability Commissioner’s Consumer Advisory Group Consumer representativeOffice of the Health & Disability Commissioner short-term contract

o stock Aorangi Hospital ltd Directorwhanganui DHB Directorsteel Pencil ltd shareholder and Directorsteel Pencil Global ltd shareholder and Directorsteel Pencil Philippines ltd Inc shareholder and DirectorPalmerston north Airport ltd Director

C Temple-Camp Medlab Central ltd CEoCentral Technical Advisory service’s Clinical Guidance Committee MemberBroadway radiology CEoMidCentral Health wife is a consultant to MCHnational Coronial Pathology services Advisory Group to Ministry of Justice MemberAotea Pathology limited DirectorT-lab Directorroyal College of Pathologists of Australasia representative for the Central

region’s Clinical service PlanManawatu Chamber of Commerce Member of Health Interests

s Devonshire Home Help Personal Care Professionals ownerryder-Cheshire foundation ChairpersonDPA Palmerston north & Districts ChairpersonrEK Centre Committee Member

H Eparaima Manawhenua Hauora Employee

l Gray naylor lawrence & Gray (trading as Auditlink) Partnernaylor lawrence & Gray Partnernaylor lawrence & Associates ltd PartnerGCf Electrical ltd shareholderJohn n Couchman ltd shareholder

B Kells MidCentral Health Daughter is employeeGlendinning, Chartered Accountants ConsultantABn AMro Craigs limited - sharebrokers Investment AdvisorJolly and Mills limited Directorspeirs securities limited Directorlutheran Homes Trust Board Inc Trustee and secretary/Treasurerluthyeran layman’s league of nZ Inc Director

G Munro Massey university - Ethics Committee MemberCentral region Advocacy service Board MemberMidCentral Health Partner is employee

r skipper Best Care (whakapai Hauora) Employeewhaioro Trust Board Member

n steenhout Axian ltd/Diversityworks

J stojanovic Midwifery Council of new Zealand, Professional Conduct Committee Memberotaki Primary Health organisation Trustee and Deputy ChairHorowhenua Maternity services limited ownerMassey university Employee/lecturerCompass Health limited funderCompass Health strategic Advisory Group MemberCompass Health Disease state Planning Committee Member

C sweeney uCol Employee

ManageMent

M Georgel Central region’s Technical Advisory service limited DirectorAllied laundry services limited DirectorMedical Museum Trust DirectorPharmac observer (on Board)sport Manawatu regional Trust Trustee

goVernance and managementThe Board delegates to the Chief Executive authority to manage the operational performance of MidCentral District Health Board. These delegations are detailed in the DHB’s Delegations Policy which is approved by the Minister of Health.The roles of governance and management are well defined and understood and an excellent working relationship exists between the Board and the executive management team.Details of the CEo and his management team are provided overleaf.

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Pictured are the members of midcentral dhb’s executive management team.

in the spirit of healthy eating and healthy action, they share with us one of their favourite walks.

the management team

general manager, funding divisionresponsibilities: Mike Grant manages the DHB’s funding Division, and is responsible for ensuring the health needs of the district are routinely assessed, and access to health and disability services is in place. He ensures contracts are in place with a wide range of health and disability service providers.

Background: Mike has a long association with health. He joined MidCentral DHB in 2002. Prior to that he was the General Manager of Hospital and Health services in Tairawhiti (Gisborne), and then Taranaki.

MIKE GrAnT

general manager, corporate servicesresponsibilities: Stuart Wilson manages the corporate financial and information systems units, including IT, library services, health statistics, and clinical records. He also leads the DHB’s strategic and annual planning process, and oversees risk management.

Background: stuart has extensive experience in corporate roles within both the private sector and many state owned Enterprises. He joined MidCentral DHB in 2000.

sTuArT wIlson

general manager, midcentral healthresponsibilities: lareen Cooper oversees the provision of hospital and associated services to the district. she is also responsible for a number of regional services, including the regional Cancer Treatment service.

Background: lareen has worked in the nZ public health sector for many years. she joined MidCentral DHB in 2005. Prior to that she was interim CEo of Bay of Plenty DHB, and was General Manager in both Planning and funding and in the provider division of Bay of Plenty.

lArEEn CooPEr

general manager, enable new Zealandresponsibilities: Heather Browning manages Enable new Zealand, the largest disability support service provider in nZ.

Background: Heather has worked within the disability sector in new Zealand and Australia as a manager and consultant. she took up her role at Enable new Zealand in 2001.

HEATHEr BrownInG

MurrAY GEorGElChief Executive Officerresponsibilities: Murray Georgel leads MidCentral DHB Executive Management Team, and is responsible for the overall performance of the DHB. This team meets regularly to monitor DHB performance, and develop strategy.

Background: Murray joined the public health sector in 1994, and led MidCentral through the significant change to becoming a District Health Board in 2001. He has considerable management and leadership experience across a wide range of industries, including primary production, tourism, pharmaceuticals and social services. He became MidCentral DHB’s CEo in 1999.

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12

statement of serVice Performance

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2007/08 target achieVement in sUmmarYwe are well on the way to achieving high cervical and breast screening levels and ready access to cancer treatment.

Long term outcome: An increase in cervical screening and breast screening rates

MEAsurE 1: Proportion of eligible (target) Breast screen Coast to Coast (BsCC) population screened for breast cancer.

2006/07 2007/08 Target

110.4% 95% 100%

The number of women who were screened for breast cancer during 2007/08 was close to target.

MEAsurE 2: Proportion of eligible population screened for cervical cancer (coverage rate: Manawatu-wanganui districts).

2006/07 2007/08** Target

67.3% MidCentral 68.7%wanganui 69.3% 75%

** as at end april 2008

nsu reporting changed during the year. reporting is now by DHB rather than combined districts as in previous years.MidCentral’s result to end April 2008 is a 2.2% point improvement since July 2007. wanganui’s result is a 1.9% point improvement since July 2007.

data source: Breast screen Coast to Coast

data source: national screening Unit

Long term outcome: Increased access to, and effectiveness of, regional cancer treatment services

MEAsurE:Proportion of patients (excluding Category D) waiting less than eight weeks between first specialist assessment and the start of radiation oncology treatment. target: 100%.

CoMMEnT:During 2007/08 83.5% of patients waited less than eight weeks to commence radiation treatment following their assessment – an improvement on the previous years’ result.MidCentral is increasing capacity with the commissioning of a new Linear accelerator and additional staffing. A number of patients received treatment at waikato DHB and Melbourne to help reduce the number of people waiting greater than eight weeks. some people chose not to commence their treatment within the eight week guideline and consequently registered as ‘waiting greater than eight weeks’.

110%

100%

90%

80%

70%

Proportion of Eligible MidCentral DHB PopulationScreened for Breast Cancer

2006/07 2007/08 2007/08 Target

Proportion of Eligible Population Screened for Cervical Cancer

80%

75%

70%

65%

60%2006/07 2007/08** 2007/08** 2007/08

MidCentral Wanganui Target

1target areasIncreased cervical and breast screening rates, and, a maximum wait time of eight weeks for radiation oncology treatment.

cancer our Health Priority 1

WhY these targets are imPortantscreening enables cancer to be detected early. This, combined with timely treatment is important for improving outcomes and providing a better quality of life. waiting times for radiation treatment indicate how well the cancer treatment system is working by measuring one part of the patient’s journey with cancer.

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2007/08 target achieVement in sUmmarYThe risk assessment tool has been provided to general practice, but reporting systems are still being developed.

Long term outcome: An increase in the early recognition of individuals at risk of cardiovascular disease/stroke

MEAsurE:

Percentage of people within each target group in our district who have had their five-year absolute cardiovascular disease CVD risk recorded in the last five years.

Target groups:

Male > 35 years: Maori Pacific Indian subcontinent

Male > 45 years: European other

female > 45 years: Maori Pacific Indian subcontinent

female > 55 years: European other

target for all population groups: 25%.

CoMMEnT:

Data for these indicators is currently not available from Primary Health organisations (PHos). The PHo Performance Monitoring framework and information systems are being implemented to support PHos’ capability to monitor and report these measures.

target areaCardiovascular risk assessments conducted for at risk population groups.

WhY this target is imPortantIf primary health care practitioners can identify people early who are at risk of cardiovascular disease/stroke, they can put a programme in place to monitor the risk factors and focus on prevention and management of the disease process.

cardioVascUlar our Health Priority 22

note: re statement of service Performance – the 2006/07 results reported in the statement of service Performance are based on the information in the 2007 Annual Report, which is more accurate than the Statement of Intent.

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2007/08 target achieVement in sUmmarYwe are on the way to achieving the national target of 95% of two year old children being fully up to date with their immunisation by 2012.

Long term outcome: Improved immunisation cover

MEAsurE 1:Percent of eligible newborns born and enrolled on the national Immunisation register (nIr) in the reporting period.

2006/07 2007/08 Target

Total 95% 92.4% 96%

MEAsurE 2:Percentage of children on the nIr up to date with immunisation on the day they turned a specific age (6, 12, 18, 24 months) during the reporting period.fully immunised for age:

2006/07 2007/08 Target

6 months 59% 57% n/a

12 months 77% 80% n/a

18 months 58% 64% n/a

24 months n/a 73% 82%

noTE: The target of 82% at 24 months is noted in the District Annual Plan.

MEAsurE 3:DTaP (dose 3) at 12 months of age.

2006/07 2007/08 Target

Total 75% 80% 95%

MEAsurE 4:Percentage of children on the nIr up to date with MMr immunisation (dose 1) on the day they turned 18 months during the reporting period.

2006/07 2007/08 Target

Total 65% 68% 88–90%

CoMMEnT:Progress toward the national goal of 95% of two year olds fully immunised has been made, although not to target, achieving 73% over the 12 months to end June 2008.MidCentral DHB is concerned at its current immunisation coverage rates and is working with local PHos to increase coverage rates across the board. MidCentral DHB is increasing the number of full time equivalent staff (fTEs) undertaking immunisation co-ordination services with PHos and MidCentral Health in order to improve immunisation rates. data source: national immunisation register

Percentage of Children on the National Immunisation RegisterUp to Date with Immunisation at Age 6, 12, 18, 24 Months

100%

80%

60%

40%

20%

0%2006/07 2007/08

100%

80%

60%

40%

20%

0%

Percentage of Children on the National ImmunisationRegister Up to Date with MMR Immunisation

2006/07 2007/08 2007/08 Target

2006/07 2007/08 2007/08 Target

Percentage of Eligible Newborns Enrolledon the National Immunisation Register

100%

80%

60%

40%

20%

0%

3 target areasImproved immunisation cover for children.

child health our Health Priority 3

WhY these targets are imPortantImmunisation aims to prevent the spread of vaccine preventable diseases in a community and protect children against a range of serious diseases, such as measles, mumps and rubella.

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child health our Health Priority 3

Long term outcome: To increase case detection and case management rates for diabetes

MEAsurE 1:

Diabetes follow up: Percentage of expected number of people with Type I or II diabetes mellitus on a diabetes register, whose date of their free annual check is during the reporting period.

2005/06 2006/07 2007/08 Target

Total 49% 53.4% 63% 58%

Maori 28% 32.1% 38% 36%

Pacific 40% 51.6% 70% 52%

other 56% 60.0% 70% 64%

CoMMEnT:

There has been a significant improvement in uptake of diabetes annual reviews, resulting in the targets being exceeded in all cases.

MEAsurE 2:

Diabetes management: Percentage of people with Type I or Type II diabetes mellitus on a diabetes register that had an HbA1c level of equal to or less than 8% and the date of their free annual check is during the reporting period.

2005/06 2006/07 2007/08 Target

Total 73% 73.2% 69.8% 75%

Maori 65% 59.6% 52.1% 67%

Pacific 67% 50.8% 54.5% 60%

other 74% 76.0% 73.1% 76%

CoMMEnT:

Although not to target, relatively good rates were achieved in light of a large increase in the number of people reviewed annually.

MEAsurE 3:

Diabetes retinopathy screening: Percentage of people with Type I or II diabetes mellitus on a diabetes register that have had retinal screening or an ophthalmologist examination in the last two years and the date of their free annual check is during the reporting period.

2005/06 2006/07 2007/08 Target

Total 88% 90.3% 86% 90%

Maori 83% 85.7% 83% 86%

Pacific 80% 85.2% 80% 85%

other 89% 91.2% 84% 91%

CoMMEnT:

relatively good rates maintained in light of the large increase in the number of people reviewed. MidCentral has contracted PHos for locally based retinal screening services. The PHo has been working with MidCentral Health on referral and data collection processes to ensure all those screened at various locations throughout the district are captured in the dataset.

data source: PHo Performance Management Programme

Percentage of Registered People with Diabetes who hadtheir Annual Check in the Period (Case Detection)

Total Maori Pacific Other

80%

70%

60%

50%

40%

30%

20%

10%

0%

Population Group

2006/07 2007/08 2007/08 Target

Total Maori Pacific Other

Population Group

80%

70%

60%

50%

40%

30%

20%

10%

0%

Percentage of Registered People with Diabetes who had anHbA1c Level of Equal to or Less than 8% (Case Management)

2006/07 2007/08 2007/08 Target

Total Maori Pacific Other

Population Group

Percentage of Registered People with Diabetes whohave had Retinal Screening in the last Two Years

100%

80%

60%

40%

20%

0%

2006/07 2007/08 2007/08 Target

target areasAn increased number of people with diabetes receiving regular checks and eye screening, and, whose blood glucose level shows their diabetes is being well managed.4diabetes our Health Priority 4

WhY these targets are imPortantDiabetes is a condition that requires constant attention, and if it is well managed people can lead a healthy life. Measuring the number of people who have a annual checks and regular eye screening, and their blood glucose levels gives a good indication of the effectiveness of diabetes management.

2007/08 target achieVement in sUmmarYroutine checks and screening levels are increasing for people with diabetes, and testing blood glucose levels (HbA1c levels) indicates around 70% are being managed well.

17

Long term outcome: Ensuring information sharing and needs assessment and service coordination with other services is improved

MEAsurE:

Proportion of support needs assessments for persons aged 65+ years completed within specified target working days of referral from MidCentral Health providers.

target: 100% completed within three days.

CoMMEnT:

28% of referrals in the 2007/08 financial year were seen within three days. The average wait time between referral date and assessment date is 20 days. MidCentral Health and the needs Assessment service Coordination Agency service provided by supportlinks are currently examining ways to improve this response time, including having a needs Assessment service Coordinator position available within the hospital site.

target areaneeds assessments for elderly people in hospital are conducted within three days.

WhY this target is imPortantTimely assessment (and re-assessment) of older people’s needs ensures they can access community or home-based care and support in a timely manner to maintain as much independence as possible. Measuring the waiting times for these assessments is a good indicator of the system’s responsiveness.

2007/08 target achieVement in sUmmarYThe length of time it takes for older people in hospital to receive a needs assessment needs reducing.

5 older PeoPle our Health Priority 5

18

Long term outcome: Ensuring information sharing and needs assessment and service coordination with other services is improved

MEAsurE:

Proportion of support needs assessments for persons aged 65+ years completed within specified target working days of referral from MidCentral Health providers.

target: 100% completed within three days.

CoMMEnT:

28% of referrals in the 2007/08 financial year were seen within three days. The average wait time between referral date and assessment date is 20 days. MidCentral Health and the needs Assessment service Coordination Agency service provided by supportlinks are currently examining ways to improve this response time, including having a needs Assessment service Coordinator position available within the hospital site.

target areasIncreased spend on Maori health and disability services, and targeted care protocols to improve Maori access to services.

WhY these targets are imPortantThe level of expenditure on Maori health and disability services gives an indication of the availability of services for Maori. Measuring the programmes in place to ensure mainstream services are culturally appropriate, and therefore more likely to be accessed by Maori as required.

2007/08 target achieVement in sUmmarYTargets achieved or exceeded.

Long term outcome: Increase the capacity and capability of the Maori workforce and Iwi/Maori providers

MEAsurE:

Maori health and disability service expenditure increased in line with targets set.

target: $4.31m as per budget.

CoMMEnT:

$4.84m (excluding GsT) was spent on Maori Health and Disability services in the 2007/08 year. This is 12.4% above that targeted.

data source: dHB Funding division

Long term outcome: Improved access to, and effectiveness of, mainstream services for Maori

MEAsurE:Target number of pathways of care focusing on improving access to effective services for Maori have been reviewed and actions taken to address issues identified in the reviews by end of year.

target number: 2.

CoMMEnT 1:Two pathways of care were reviewed in the year that seek to improve access to effective services for Maori. These are summarised below.

a) Cancer: Three new staff positions have been established within the four local Iwi/Maori Providers to provide cancer related services across the cancer control continuum, particularly early detection, rehabilitation and support to improve cancer outcomes for Iwi/Maori within the district. These positions seek to:• Improve access to cancer services by Maori• support Maori community development initiatives for cancer• Improve the level of communication and information about cancer• Improve the delivery of health promotion and education about cancer• support cancer service coordination for the diagnosed patient and whanau.

The DHB envisages these positions contributing to health promotion/education, service coordination (Maori communities, PHo, primary and secondary health care, mainstream cancer organisations and Iwi/Maori health providers) & advocacy on behalf of the diagnosed patient & whanau.

b) older disabled: The appropriateness and effectiveness of services for older disabled Maori have been identified as an area for improvement. Project planning for the pathway ahead, which will include staff training and issues of Maori governance and participation, has commenced.

CoMMEnT 2:Percentage of (access funded) PHo effectively collecting ethnicity data.

target: 75%.

All four PHos (100%) are effectively collecting ethnicity data.

2006/07 2007/08 2007/08 Target

Kaupapa Maori Health and Disability Service Spend

$5,000,000

$4,800,000

$4,600,000

$4,400,000

$4,200,000

$4,000,000

$3,800,000

6 maori health our Health Priority 6

19

Long term outcome: Increased access to mental health services

MEAsurE:

Proportion of projected domiciled population seen on average (annual).

Age 2006/07 2007/08 Target

0-19 yrs Total 1.6% 1.9% 2.0%

Maori 1.4% 1.5% 2.0%

other 1.7% 2.0% 2.0%

20-64 yrs Total 2.5% 2.5% 2.7%

Maori 3.3% 3.3% 2.7%

other 2.3% 2.5% 2.7%

65+ yrs Total 0.3% 0.5% 0.5%

Maori 0.3% 0.4% 0.2%

other 0.3% 0.5% 0.3%

Rates are for 12 months to 31 March 2008.

CoMMEnT:

Target access rates were achieved in the other youth population group and exceeded in the adult Maori population group and all those aged 65+ years.

service improvements initiated to improve the access rates include: the introduction of an early intervention in first episode psychosis team; increased fTE capacity in the rural sector; the development of a Home Based Treatment option service and funding for the introduction of a mental health phone line. data source: Mental Health information national Collection

3.5%

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

Mental Health Access RatesTo

tal

Ma

ori

Oth

er

Tota

l

Ma

ori

Oth

er

Tota

l

Ma

ori

Oth

er

% P

op

ula

tion

0-19 yrs 20-64 yrs 65+ yrs

2006/07 2007/08 2007/08 Target

7mental health our Health Priority 7

target areause of mental health services is in line with projected demand.

WhY this target is imPortantA responsive mental health service ensures people with a serious mental illness are able to access assessment, treatment and support services as required. Measuring the number of people who access services as a proportion of expected demand gives an indication of access levels.

2007/08 target achieVement in sUmmarYThe majority of targets across all age groups were met, and we are well on the way to achieving others.

20

Long term outcome: A reduction in the number of dental caries in our district’s child and youth populations

MEAsurE 1:Percentage of children caries free at the commencement of dental care, in the year to which the reporting relates, examined by the DHB school Dental service (sDs), by ethnic group.

2005 2006 2007 Target

Total 54% 61.7% 51.9% 62%

Maori 38% 44.1% 33.1% 45%

Pacific 40% 43.8% 24.3% 45%

other 61% 69.4% 61.3% 70%

noTE: Data is based on a calendar year.

CoMMEnT:over this last year, the school Dental service has been looking to increase access to the service – particularly targeting non-fluoridated areas where there is also a higher proportion of Maori children and people with lower socio-economic status. Although the total number of children seen was less, it is likely that this targeting has increased the number of children examined who have caries.The small volume of Pacific children gives rise to large variations in rates.

MEAsurE 2:Mean score of Decayed, Missing and filled Teeth of Year 8 (form 2) children at the last dental examination before the child leaves the DHB school Dental service (sDs).

2005 2006 2007 Target

Total 1.6 1.6 1.6 1.6

Maori 2.1 2.3 2.3 2.1

Pacific 3.3 2.0 2.2 2.0

other 1.4 1.4 1.4 1.4

noTE: Data is based on a calendar year.

CoMMEnT:There was a 7.3% increase in the number of Year 8 children seen in 2007 than in 2006. The total number of decayed, missing, or filled teeth increased by 279 (8.2%); however, a mean score of 1.6 for the total population met target. data source: MidCentral Health school dental service

80%

70%

60%

50%

40%

30%

20%

10%

0%

Population Group

Percentage of Children Carries Free at Commencementof Dental Care with the School Dental Service

Total Maori Pacific Other

2006 2007 2007 Target

2.5

2.0

1.5

1.0

0.5

0.0

Population Group

Total Maori Pacific Other

Mean Score of Decayed, Missing andFilled Teeth, Year 8 Children

Me

an

Sc

ore

2006 2007 2007 Target

8 oral health our Health Priority 8

target areasA reduction in the number of children/youths with dental caries.

WhY these targets are imPortantEncouraging children to have good dental hygiene & preventative dental care will promote good oral health for life. Measuring the number of children who are caries-free, & those who have decayed, missing or filled teeth is a good indicator of oral health.

2007/08 target achieVement in sUmmarYwe are on the way to achieving targets.

21

Long term outcome: An increase in access to, and uptake of, effective asthma prevention and self-management strategies

MEAsurE:

The proportion of children and young people in our district who have been discharged from hospital with a diagnosis of asthma.

i. Discharge rate per 1,000 population aged under five years.

2005 2006 2007 Target

Total 6.7 7.7 8.7 5.8–8.1

Maori 9.7 10.1 8.6 7.1–11.2

Pacific -- 14.6 12.2 --

other 5.4 6.0 8.6 4.7–5.5

noTE: Data is based on a calendar year.

ii. Discharge rate per 1,000 population aged 5–14 years.

2005 2006 2007 Target

Total 2.1 1.7 1.9 1.8–2.0

Maori 2.3 2.1 2.0 1.7–2.5

Pacific -- -- -- --

other 2.0 1.3 2.0 1.5–1.7

“--” means that the number of discharges is less than five.

noTE: Data is based on a calendar year.

CoMMEnT:

A reduction in the discharge rates for Maori and Pacific children under five years is noted, however, the increase in the Other population group of children under five years is an area of focus from 2008/09.

MidCentral has a range of initiatives such as community respiratory services underway to address this. Additionally, MidCentral is appointing a community Clinical nurse specialist in child health to aid the assessment and treatment of children seen by General Practice

The discharge rates for children aged 5–14 years are within target. data source: nMds Public Hospital data (MoH)

9resPiratorY our Health Priority 9

target areasreducing the number of children/youths who require admission to hospital for asthma.

WhY these targets are imPortantImproved access to and uptake of, effective asthma self-management strategies reduces the impact of the disease. low hospital discharge rates for asthma indicate how effective self-management strategies are and how well primary and community-based services are responding to the care and treatment of people with asthma, by measuring those for whom a higher level of intervention was required, ie hospital care (measured as hospital discharge).

2007/08 target achieVement in sUmmarYTargets for young people largely achieved, but further improvement required in child rates.

20

15

10

5

0

Target range

2006 2007 2006 2007 2006 2007 2006 2007Total Maori Pacific Other

Asthma – Discharge Rates per 1,000 PopulationAged Under 5 Years

Ra

tes

pe

r 1,0

00

2.5

2.0

1.5

1.0

0.5

0.02006 2007 2006 2007 2006 2007 2006 2007

Total Maori Pacific Other

Asthma – Discharge Rates per 1,000 PopulationAged Under 5–14 Years

Ra

tes

pe

r 1,0

00

Target range

22

Long term outcome: Enhance capability and capacity requirements of the district’s primary sector

MEAsurE:

The ratio of age-standardised rate of GP consultations per high need person to non-high need person.

target: 1.0 : 1.0

CoMMEnT:

result 1.11 : 1.0

rates in excess of one are being recorded by the Horowhenua, Tararua, and Manawatu PHos. The otaki PHo is close to one with a 0.98 result.

Source: PHO Performance Programme Report August 2008.

Long term outcome: Service coverage for MidCentral’s district maintained

MEAsurE:

shared GP roster areas are equal to or better than GP:population ratio of 1:2,000 as at end June 2008.

• Dannevirke • Pahiatua• Foxton • Otaki.

CoMMEnT:

All regions have a GP:Population ratio better than 1:2,000

The GP:population ratio for MidCentral is 1:1,521.

GP ratios per district are:

District Population* GPs ratio

Tararua 17,634 11 1:1,603

Horowhenua 29,865 18 1:1,659

otaki 7,551 4 1:1,888

Manawatu/Palmerston north 103,797 72 1:1,442

MidCentral DHB 159,716 105 1:1,521

* Population: 2006 census usually resident population.

10 rUral health our Health Priority 10

target areasAppropriate GP levels and workloads in rural areas.

WhY these targets are imPortantGeneral practitioners are the health professionals most seen by people, and measuring their client load, and the complexity of that load, indicates how accessible this care is to the rural population.

2007/08 target achieVement in sUmmarYTargets largely achieved.

23

oUtPUt class three (Provider function)

target areas: Achievement of agreed levels of hospital care, customer satisfaction rates, wait times for elective and emergency care, and staff turnover.

WhY these targets are imPortant: Hospital and associated services form an important part of the continuum of health and wellbeing, and it is important that these can be accessed in a timely manner and that acute services are available on demand. This requires a stable workforce.

2007/08 target achieVement in sUmmarY: further improvements in some measures is required.

MeasUre: Health and disability services provided as per the Provider Arm schedule.

targets actualAllied Health services $2.0m $1.75mChild Health services $0.9m $0.9mCommunity services $2.0m $1.6mDental services $3.7m $3.7mDomiciliary services $5.6m $5.6mGP Coordination $0.2m $0.2mEmergency services $5.4m $5.2mMedical services $70.3m $73.5mrural Health services $2.6m $2.4msexual Health services $0.6m $0.58msurgical services $48.0m $49.5mTransport services $0.8m $0.8mwomen’s Health services $9.3m $9.7mMental Health services $21.3m $21.6mDisability services $9.2m $9.3mlocal Projects $17.2m $23.5m

CoMMent: $209.8m was spent against a target of $199.1m. This represents a 5.4% increase on target.

MeasUre: Patients’ overall satisfaction rate. target: > 90%.

Proportion of inpatients and outpatients whose rating of their overall satisfaction with the services delivered is “good - very good”. result 87.4%.CoMMent: rates have been maintained at a satisfactory level in a busy year involving high patient numbers and several interruptions to service provision.

MeasUre: staff Turnover rate ave per month. Target: ≤ 1.3%.

The proportion of MCH staff (excluding temporary, casual staff and Resident Medical Officers) who voluntarily resign, on average, each month. result 0.8%.CoMMent: MCH continues to enjoy a relatively low staff turnover rate and has exceeded target.

MeasUre: reduced proportion of people waiting greater than six months for a first specialist assessment (FSA) for medical and surgical services.

(1) Proportion of people waiting greater than six months for a surgical (including gynaecological) first specialist assessment as at 30 June.

(2) Proportion of people waiting greater than six months for a Medical first specialist assessment as at 30 June.

CoMMent: The service interruptions of industrial activity and the closure of ambulatory care facilities due to flooding impacted on the ability to meet the target.

MeasUre: reduced proportion of people given certainty waiting greater than six months for surgery (post fsA).

Proportion of patients given a commitment to treatment but not treated within six months, as at end June 2008.

CoMMent: Although this Elective services Patient flow Indicator (EsPI 5) achieved the national target of < 5% not treated (and therefore compliant), MidCentral’s more ambitious target of 3% was not achieved. This was largely due to an unexpected demand for acute medical and surgical services, which resulted in reduced available capacity for elective surgery.

MeasUre: Improved triage wait times.

Proportion of people who are Triage Category 1, 2, or 3 who are seen by a doctor or nurse (whichever is first) within the specified times.

Patients seen 2005/06 2006/07 2007/08 Target

Triage 1 Immediately 100% 100% 100% 100%

Triage 2 within 10 mins 83% 82.8% 88.8% 80%

Triage 3 within 30 mins 78% 68.2% 73.6% 75%

CoMMent: Improvements are seen in triage categories 2 and 3.

oUtPUt class tWo (funding and Planning function)

target areas: The level of services purchased, prioritisation processes, service gaps and service quality.

WhY these targets are imPortant: It is important that MDHB’s population has access to a wide range of health and disability services, and that purchasing decisions are prioritised so health funds are used for effectively. It is also important that services provided are to an appropriate standard, and there are no service gaps.

2007/08 target achieVement in sUmmarY: Targets achieved.

MeasUre: Health and Disability services to the value of $384.2m purchased for MDHB’s district.

CoMMent: Health and Disability services were purchased in the following areas:Primary Care services $94.4msecondary Care services $201.0mMental Health services $33.8mDisability support services (for Elderly) $53.2mMaori Health services $1.8mTotal $384.2m

Fully achieved

Partially achieved

not achieved

MeasUre: funding Division’s prioritisation process is maintained and applied in a robust manner.

CoMMent: All funding proposals are considered by the funding Management Board apply a standard prioritisation process as the basis for all funding decisions. The framework includes the following prioritisation criteria:• Alignment with District Health Board • Procurement arrangement • Measurement, Evaluation & reporting • Equity summary• regional filter – impact on the region • financial impact • Evidence to support Proposal.

MeasUre: Service coverage gaps identified during annual planning round are addressed by year end.

CoMMent: All service coverage gaps that were identified during the year were addressed within the planning period.

MeasUre: Proportion of planned routine service provider audits completed by due date. target: 100%.

CoMMent: All planned routine audits were completed by the due date to evaluate and ensure that the contracted organisation has the necessary capability, resources, processes and procedures to provide the service as required by the contract. funding Division Provider Audit Committee ensures there is adequate follow-up of issues raised by Portfolio Managers and any outstanding issues arising from audits.

oUtPUt class one (Governance/Corporate function)

target areas: financial performance and processes, and public and Iwi input to decision-making.

WhY these targets are imPortant: The DHB is the Crown entity responsible for planning and purchasing most health services and some disability services for its district. It is responsible for $475 million of government funds. It is important that its governance processes are robust & ensure public and Iwi input.

2007/08 target achieVement in sUmmarY: All targets, bar one, achieved.

MeasUre: number of Board and statutory Committee meetings held per year to conduct governance function. target: 36.

CoMMent: All board and committee meetings scheduled during the year were held.

Fully achieved

Partially achieved

not achieved

MeasUre: number of public forums held by the Board each year to gain community feedback. target: 4.

CoMMent: Public forums with the board were held in Palmerston north, foxton, Pahiatua, and Kimbolton.

MeasUre: The DHB’s functions are delivered within agreed budget (as detailed in Appendix A).

CoMMent: The DHB completed the year ahead of budget. MeasUre: Memorandum of understanding with Manawhenua Hauora in place and regularly reviewed.

CoMMent: The Mou with Manawhenua Hauora is in place. It is due for review in 2009. Good progress is being made against the Mou and joint work programme.

MeasUre: self review of governance processes undertaken annually and no issues of significance identified

CoMMent: An annual review was undertaken by the board. No issues of significance were identified.

MeasUre: Annual external audit review ratings are satisfactory or above.

CoMMent: The criteria for ratings achieved in the external audit review have changed. of the items that were rated the majority were ‘good’ and one item needed improvement.

2007/08 Target

7.5% 1%

2007/08 Target

6.1% 6%

2007/08 Target

4.6% 3%

24

financial statements

consolidated statement of financial Performancefor the Year Ended 30 June 2008

Budget note group & Parent June-08 June-08 June-07 $000 $000 $000

435,027 revenue 1 442,548 426,037

3,909 other operating Income 2 4,878 4,341

3,872 finance Income 5a 4,696 4,620

442,808 total income 452,122 434,998

141,564 Employee Benefit Costs 4 147,225 148,671

11,295 Depreciation and Amortisation Expense 7, 8 10,875 10,751

15,781 outsourced services 22,949 18,702

37,739 Clinical supplies 37,281 36,299

44,663 Infrastructure and non-Clinical Expenses 44,388 42,971

185,162 Payments to non-Health Board Providers 181,974 167,928

other operating Expenses 3 789 844

3,425 finance Costs 5b 3,660 3,498

7,587 Capital Charge 6 7,070 8,224

447,216 total expenses 456,211 437,888

(4,408) loss for the Period 15 (4,089) (2,890)

consolidated statement of recognised income and exPensesfor the Year Ended 30 June 2008

Budget note group & Parent June-08 June-08 June-07 $000 $000 $000

- net Movement in special funds 15 (79) 289

- net Income recognised Directly in Equity (79) 289

(4,408) loss for the Period 15 (4,089) (2,890)

(4,408) total recognised income and expense for the Period (4,168) (2,601)

25

consolidated statement of financial PositionAs at 30 June 2008

Budget note group & Parent June-08 June-08 June-07 $000 $000 $000

Assets

139,763 Property, Plant and Equipment 7 138,836 141,184

3,991 Intangible Assets 8 3,394 1,848

750 Investments in Associates 10 750 750

1,170 other Investments 11 1,500 1,500

145,674 total non-current assets 144,480 145,282

2,750 Inventories 9 2,853 2,805

Term Investments 12 15,000 -

14,056 Trade and other receivables 13 10,443 8,540

32,419 Cash and Cash Equivalents 14 20,615 37,321

49,225 total current assets 48,911 48,666

194,899 total assets 193,391 193,948

Equity

65,055 Crown Equity 15 63,818 64,451

35,986 other reserves 15 35,941 35,986

(8,155) retained Earnings/(losses) 15 (12,055) (8,011)

1,950 Trust/special funds 15 1,916 1,995

94,836 total equity 89,620 94,421

Liabilities

38,715 Interest-Bearing loans and Borrowings 16 47,700 24,100

1,814 Employee Benefits 17 1,330 1,814

40,529 total non-current liabilities 49,030 25,914

16,000 Interest-Bearing loans and Borrowings 16 7,243 25,011

28,417 Trade and other Payables 18 24,996 31,007

15,117 Employee Benefits 17 22,502 17,595

59,534 total current liabilities 54,741 73,613

100,063 total liabilities 103,771 99,527

194,899 total equity and liabilities 193,391 193,948

These Financial Statements were authorised for issue by the Board on 16 September 2008.

for and on behalf of the board

chairman deputy chair 30 october 2008 30 october 2008

26

consolidated statement of cash floWsfor the year ended 30 June 2008

Budget note group & Parent June-08 June-08 June-07 $000 $000 $000

Cash Flows from Operating Activities 438,910 Cash receipts from Ministry of Health and Patients 445,512 424,460 (283,345) Cash Paid to suppliers (289,411) (261,368) (141,564) Cash Paid to Employees (142,802) (140,856)

14,001 Cash Generated from operations 13,299 22,236 3,898 Interest received 4,696 4,620 (3,425) Interest Paid (3,660) (3,498) - Goods and services Tax received (Paid) (672) (378) (7,587) Capital Charge Paid (10,238) (5,318)

6,887 net cash flows from operating activities 14 3,425 17,662

Cash Flows from Investing Activities (10,863) Acquisition of Property, Plant and Equipment (8,076) (17,591) (2,100) Acquisition of Intangible Assets (2,175) (1,514) - Increase in Investments and restricted and Trust funds Assets (15,003) -

(12,963) net cash flows from investing activities (25,254) (19,105)

Cash Flows from Financing Activities - Distributions to the Crown (633) (544) - Proceeds from Borrowings 5,756 4,094 - repayment of Borrowings - (4)

- net cash flows from financing activities 5,123 3,546

(6,076) net Increase in Cash and Cash Equivalents (16,706) 2,103 38,495 Cash and Cash Equivalents at Beginning of Year 37,321 35,218

32,419 cash and cash equivalents at end of Year 14 20,615 37,321

consolidated statement of contingent liabilitiesAs at 30 June 2008

legal Proceedings 400 -

MidCentral DHB has been notified of one claim but it is not possible to assess the likelihood of the claim succeeding or any possible settlement sum at this time.

consolidated statement of commitmentsAs at 30 June 2008

capital commitments 4,188 6,564

Non-Cancellable Commitments – Provider Commitmentsnot More than one Year 25,953 18,916one to Two Years 11,899 10,073Two to five Years 9,673 11,765over five Years 117 587

47,642 41,341

Non-Cancellable Commitments – Operating Lease Commitmentsnot More than one Year 1,503 1,844one to Two Years 1,190 1,183Two to five Years 1,285 2,134over five Years 481 11

4,459 5,172

total commitments 56,289 53,077

27

rePorting entitYMidCentral District Health Board (MidCentral DHB) is a Crown entity in terms of the Crown Entities Act 2004, is owned by the Crown, and is domiciled in new Zealand. MidCentral DHB was created under the new Zealand Public Health and Disability Act 2000, effective 1 January 2001.The group consists of MidCentral DHB, associated entity Allied laundry services limited (Alsl) (25.0% owned) and an investment in Central region’s Technical Advisory service limited (TAs) (16.7% owned). In addition, the group includes wholly owned subsidiary Enable new Zealand limited, which is non-trading. As of november 2002 all the assets, liabilities and activities of Enable new Zealand ltd were vested in the MidCentral District Health Board. The financial statements and group financial statements of MidCentral DHB have been prepared in accordance with the requirements of new Zealand Public Health and Disability Act 2000, the financial reporting Act 1993, the Public finance Act 1989, and the Crown Entities Act, 2004.MidCentral DHB is a public benefit entity, as defined under NZ IAS1 - Presentation of financial statements.In addition, funds administered on behalf of patients have been reported as a note to the financial statements.MidCentral DHB’s activities involve delivering health and disability services and mental health services in a variety of ways to the community.The financial statements were authorised for issue by the Board on 16 september 2008.

statement of comPliance and basis of PreParationThe consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice in new Zealand (nZ GAAP). They comply with the new Zealand equivalents to International financial reporting standards (nZ Ifrs), and other applicable financial reporting standards as appropriate for Public Benefit Entities.These are MidCentral DHB’s first NZ IFRS financial statements and nZ Ifrs 1, first Time Adoption of new Zealand’s Equivalent to Internal financial reporting, has been applied. An explanation of how the transition to NZ IFRS has affected the reported financial position and financial performance of MidCentral DHB is provided in Note 28.The financial statements are presented in New Zealand Dollars (NZD), rounded to the nearest thousand. The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: land and buildings, and derivative financial instruments (foreign exchange contract).non-current assets held for sale and disposal groups held for sale are stated at the lower of carrying amount and fair value less costs to sell.The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and in preparing an opening nZ Ifrs statement of financial Position at 1 July 2006 for the purposes of the transition to nZ Ifrs.The preparation of financial statements in conformity with NZ Ifrs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of nZ Ifrs that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 26.

basis for consolidationAssoCIATEsAssociates are those entities in which MidCentral DHB has significant influence, but not control, over the financial and operating policies. Alsl is an associate company of MidCentral DHB.The consolidated financial statements include MidCentral DHB’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When MidCentral DHB’s share of losses exceeds its interest in an associate, MidCentral DHB’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that MidCentral DHB has incurred legal or constructive obligations or made payments on behalf of an associate.

TrAnsACTIons ElIMInATED on ConsolIDATIonIntragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of MidCentral DHB’s interest in the entity. unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

forEIGn CurrEnCY TrAnsACTIonsTransactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to nZD at the foreign exchange rate ruling at that date. foreign exchange differences arising on translation are recognised in the statement of financial Performance. non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to nZD at foreign exchange rates ruling at the dates the fair value was determined. The associated foreign exchange gains or losses follow the fair value gains or losses to either the statement of financial Performance or directly to equity.

BuDGET fIGurEsThe budget figures are those approved by the health board in its District Annual Plan and included in the statement of Intent tabled in Parliament. The budget figures have been prepared in accordance with nZ GAAP. They comply with nZ Ifrs and other applicable financial Reporting Standards as appropriate for public benefit entities. Those standards are consistent with the accounting policies adopted by MidCentral DHB for the preparation of these financial statements.

ProPErTY, PlAnT AnD EQuIPMEnTClasses of Property, Plant & EquipmentThe major classes of property, plant and equipment are as follows:• freehold land • freehold buildings• plant, equipment and vehicles • work in progress • fixtures and fittings.

Owned AssetsExcept for land and buildings and the assets vested from the hospital and health service (see below), items of property, plant and equipment are stated at cost, less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of direct overheads.

statement of accoUnting Policies

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land and buildings are revalued to fair value as determined by an independent registered valuer every three years. valuations undertaken in accordance with standards issued by the new Zealand Property Institute are used where available. otherwise, valuations are conducted in accordance with the rating valuation Act 1998, which have been confirmed by an independent valuer. Any increase in value of a class of land and buildings is recognised directly in equity unless it offsets a previous decrease in value recognised in the statement of financial Performance. Any decreases in value relating to a class of land and buildings are debited directly to the revaluation reserve, to the extent that they reverse previous surpluses and are otherwise recognised as an expense in the statement of financial Performance.Additions to property, plant and equipment between valuations are recorded at cost.where material parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate components of property, plant and equipment.rental property is included in property plant and equipment in accordance with nZ Ifrs as the rental property is held for strategic and social purposes rather than for rental income, capital appreciation or both.

Disposal of Property, Plant & Equipmentwhere an item of plant and equipment is disposed of, the gain or loss recognised in the statement of financial Performance is calculated as the difference between the net sales price and the carrying amount of the asset.

Leased Assetsleases where MidCentral DHB assumes substantially all the risks and rewards of ownership are classified as finance leases. The assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses. The capitalised values are amortised over the period in which the DHB expects to receive benefits from their use. operating leases, where the lessor substantially retains the risks and rewards of ownership, are recognised in a systematic manner over the term of the lease. leasehold improvements are capitalised and the cost is amortised over the lease or the estimated useful life of the improvements, whichever is the shorter.

Subsequent Costssubsequent costs are added to the carrying amount of an item of property, plant and equipment when that cost is incurred if it is probable that the service potential or future economic benefits embodied within the new item will flow to MidCentral DHB. All other costs are recognised in the statement of financial Performance as an expense as incurred.

DepreciationDepreciation is charged to the statement of financial Performance using the straight line method. land and work in progress is not depreciated.Depreciation is set at rates that will write off the cost or fair value of the assets, less their estimated residual values, over their useful lives. The estimated useful lives of major classes of assets and resulting rates are as follows:

ClAss of AssET EsTIMATED lIfE

freehold Buildings 1 to 80 years

Plant, Equipment and Motor vehicles 3 to 20 years

fixtures and fittings 3 to 25 years

The residual value of assets are reassessed annually.work in progress is not depreciated. The total cost of a project is transferred to the appropriate class of asset on its completion and then depreciated.Accumulated depreciation at revaluation date will be eliminated against the gross carrying amount so that the carrying amount after revaluation equals the revalued amount.for each property, plant and equipment project, borrowing costs incurred during the period required to complete and prepare the asset for its intended use are expensed.

InTAnGIBlE AssETsIntangible assets that are acquired by MidCentral DHB are stated at cost less accumulated amortisation and impairment losses.

Subsequent Expendituresubsequent expenditure on intangible assets is capitalised only when it increases the service potential or future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

AmortisationAmortisation is charged to the statement of financial Performance on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with

indefinite useful lives are tested for impairment at least annually to determine if there is any indication of impairment. other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

TYPE of AssET EsTIMATED lIfE

software 6 to 10 years

realised gains and losses arising from disposal of intangible assets are recognised in the statement of financial Performance in the period in which the transaction occurs.

fInAnCIAl AssETs AnD lIABIlITIEsFinancial AssetsFinancial assets are classified into the following specified categories. Financial assets “at fair value through profit or loss”, “held to maturity” investments, “available for sale” financial assets, and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. At balance date MidCentral DHB had “held to maturity investments” and “loans and receivables”.

Effective Interest MethodThe effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or where appropriate, a shorter period, to the net carrying amount of the financial asset.

Loans & ReceivablesCash, short term deposits and trade and other receivables with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate method.

Held to Maturity InvestmentsTerm deposits with fixed or determinable payments and maturity dates that the group has the positive intent and ability to hold to maturity are classified as held to maturity investments. Held to maturity investments are initially recorded at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment, with revenue recognised on an effective interest method. Investments are classified as “held to maturity” investments.

Investments in Equity SecuritiesInvestments in associates and subsidiaries are measured at cost.

Impairment of Financial AssetsFinancial assets other than those at fair value through profit or loss are assessed for indicators of impairment at each balance sheet date. financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the asset have been impacted. For financial assets carried at amortised cost, the amount of impairment is the difference between carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate.The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date of impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Other Financial LiabilitiesOther financial liabilities including trade and other payables and interest bearing loans and borrowings are initially measured at fair values, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis.The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate a shorter period, to the net carrying amount of the financial liability.

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Derivative Financial InstrumentsMidCentral DHB uses foreign exchange contracts to hedge its exposure to foreign exchange risks arising from investing activities.Derivatives that do not qualify for hedge accounting are accounted for as trading instruments.Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the statement of financial Performance. The fair value of forward exchange contracts is their quoted market price at the balance date, being the present value of the quoted forward price.

InventoriesInventories are stated at the lower of cost and net realisable value. net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.Cost is based on weighted average cost.

Inventories Held for DistributionInventories held for distribution are stated at the lower of cost and current replacement cost.

Cash & Cash EquivalentsCash and cash equivalents comprises cash balances, call deposits and deposits with a maturity of no more than three months from the date of acquisition. Bank overdrafts that are repayable on demand and form an integral part of MidCentral DHB’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of Cash flows.

Impairment of Other Tangible AssetsThe carrying amounts of MidCentral DHB’s assets other than inventories and inventories held for distribution are reviewed at each balance date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.If the estimated recoverable amount of an asset is less than its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the statement of financial Performance.For intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.An impairment loss on property, plant and equipment revalued on a class of asset basis is recognised directly against any revaluation reserve in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation reserve for the same class of asset.When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the statement of Financial Performance even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the statement of financial Performance is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the Statement of financial Performance.The recoverable amount of MidCentral DHB’s receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (ie the effective interest rate computed at initial recognition of these financial assets). receivables with a short duration are not discounted.Impairment losses on an individual basis are determined by an evaluation of the exposures on an instrument by instrument basis. All individual trade receivables that are considered significant are subject to this approach. For trade receivables which are not significant on an individual basis, collective impairment is assessed on a portfolio basis based on numbers of days overdue, and taking into account the historical loss experience in portfolios with a similar amount of days overdue.

Calculation of Recoverable AmountThe estimated recoverable amount of receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at their original effective interest rate. receivables with a short duration are not discounted.Estimated recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. value in use is calculated differently depending on whether an asset generates cash or not. for an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.for non-cash generating assets that are not part of a cash generating unit value in use is based on depreciated replacement cost (DrC). for cash generating assets value in use is determined by estimating future cash flows from the use and ultimate disposal of the asset and discounting these to their present value using a pre-tax discount rate that reflects current market rates and the risks specific to the asset.

Impairment gains and losses, for items of property, plant and equipment that are revalued on a class of assets basis, are also recognised on a class basis.

Reversals of ImpairmentImpairment losses are reversed when there is a change in the estimates used to determine the recoverable amount.An impairment loss on an equity instrument investment classified as available-for-sale or on items of property, plant and equipment carried at fair value is reversed through the relevant reserve. All other impairment losses are reversed through the statement of financial Performance.An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Borrowing CostsBorrowing costs are recognised in profit or loss in the period in which they are incurred.

EMPloYEE BEnEfITsDefined Contribution PlansObligations for contributions to defined contribution plans are recognised as an expense in the statement of financial Performance as incurred.There are a small number of employees that are part of a state defined benefit superannuation plan. The DHB has no legal or constructive obligation to pay future benefits, the Crown guarantees these benefits and as a result the plans are accounted for as a defined contribution plan.

Long Service Leave, Sabbatical Leave and Retirement GratuitiesMidCentral DHB’s net obligation in respect of long service leave, sabbatical leave and retirement gratuities is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value. The discount rate is the market yield on relevant new Zealand government bonds at the balance sheet date.

Annual Leave, Conference Leave, Sick Leave & Medical Education LeaveAnnual leave, conference leave, sick leave and medical education leave are short-term obligations and are calculated on an actual basis at the amount MidCentral DHB expects to pay. MidCentral DHB accrues the obligation for paid absences when the obligation both relates to employees’ past services and it accumulates.

Termination PaymentsTermination Payments are recognised in the statement of financial Performance only where there is a demonstrable commitment to either terminate employment prior to normal retirement date or to provide such benefits as a result of an offer to encourage voluntary redundancy. Termination benefits settled in 12 months are reported as the amount expected to be paid, otherwise they are reported as the present value of the estimated future cash flows.

ProvIsIonsA provision is recognised when MidCentral DHB has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market rates and, where appropriate, the risks specific to the liability.

RestructuringA provision for restructuring is recognised when MidCentral DHB has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. future operating costs are not provided for.

Revenue Relating to Service ContractsMidCentral DHB is required to expend all monies appropriated within certain contracts during the year in which it is appropriated. should this not be done, the contract may require repayment of the money or MidCentral DHB, with the agreement of the Ministry of Health, may be required to expend it on specific services in subsequent years. The amount unexpended is recognised as a liability where there is sufficient certainty of a specific obligation to repay.

Other Liabilities & Provisionsother liabilities and provisions are recorded at the best estimate of the expenditure required to settle the obligation. liabilities and provisions to be settled beyond 12 months are recorded at their present value.

Insurance ContractsMidCentral DHB belongs to the ACC Partnership Programme whereby it accepts the management and financial responsibility for employee work related illnesses and accidents. under the

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programme MidCentral DHB is liable for all its claims costs for a period of two years up to a specified maximum. At the end of the two year period, MidCentral DHB pays a premium to ACC for the value of residual claims, and from that point the liability for ongoing claims passes to ACC. The liability for the ACC Partnership Programme is measured using actuarial techniques at the present value of expected future payments to be made in respect of the employee injuries and claims up to the reporting date. Consideration is given to anticipated future wage and salary levels and experience of employee claims and injuries. Expected future payments are discounted using market yields on government bonds at balance date with terms to maturity that match, as closely to possible, the estimated future cash outflows.

TAxATIonIncome TaxMidCentral DHB is a crown entity under the new Zealand Public Health and Disability Act 2000 and is exempt from income tax under section CB3 of the Income Tax Act 1994.

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

rEvEnuECrown FundingThe majority of revenue is provided through an appropriation in association with a Crown funding Agreement. revenue is recognised monthly in accordance with the Crown funding Agreement payment schedule, which allocates the appropriation equally throughout the year. revenue from the supply of goods and services is measured at the fair value of consideration received.

Goods Sold & Services Renderedrevenue from goods sold is recognised when MidCentral DHB has transferred to the buyer the significant risks and rewards of ownership of the goods and MidCentral DHB does not retain either continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.revenue from services is recognised, to the proportion that a transaction is complete, when it is probable that the payment associated with the transaction will flow to MidCentral DHB and that payment can be measured or estimated reliably, and to the extent that any obligations and all conditions have been satisfied by MidCentral DHB.

Rental IncomeRental income from strategic assets/assets held for social benefit is recognised in the statement of financial Performance on a straight-line basis over the term of the lease. lease incentives granted are recognised as an integral part of the total rental income over the lease term on a straight line basis.

ExPEnsEsOperating Lease PaymentsPayments made under operating leases are recognised in the statement of financial Performance on a straight-line basis over the term of the lease. lease incentives received are recognised in the statement of financial Performance over the lease term as an integral part of the total lease expense on a straight line basis.

Finance Lease PaymentsMinimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term on an effective interest basis.

Net Financing Costsfinancing costs comprise interest paid and payable on borrowings calculated using the effective interest rate method.The interest expense component of finance lease payments is recognised in the statement of financial Performance using the effective interest rate method.

Non-Current Assets Held For Sale & Discontinued OperationsImmediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable nZ Ifrs. Then, on initial classification as held for sale, a non-current asset and/or a disposal group is recognised at the lower of its carrying amount and its fair value less costs to sell. Impairment losses on initial classification as held for sale are included in the statement of financial Performance, even when the asset was previously revalued. The same applies to gains and losses on subsequent remeasurement.A discontinued operation is a component of MidCentral DHB’s business that represents a separate major line of business or

geographical area of operations or is a subsidiary acquired exclusively with a view to resale.Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier.

Contingent Assets & Contingent LiabilitiesContingent liabilities and contingent assets are recorded in the statement of Contingent liabilities and Contingent Assets at the point at which the contingency is evident. Contingent liabilities are disclosed if the possibility that they will crystallise is not remote. Contingent assets are disclosed if it is probable that the benefits will be realised.

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

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

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

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

Cost Drivers for Allocation of Indirect CostsThe cost of internal services not directly charged to outputs is allocated as overheads using appropriate cost drivers such as actual usage, staff numbers and floor area.

statement of cash floWsStatement of Cash Flows The statement of cash flows is prepared exclusive of GST, which is consistent with the method used in the statement of financial performance.GST inflows and GST outflows in the Cash Flow Statement have been shown net as the Board does not believe that showing gross cash flows provides more useful information given that GST is paid net each month.Definitions of the terms used in the statement of cash flows are:cash includes coins and notes, demand deposits and other highly liquid investments readily convertible into cash and includes all call borrowings such as bank overdrafts used by the organisation.operating activities include all transactions and other events that are not investing or financing activities.investing activities are those activities relating to the acquisition and disposal of current and non current investments and any other non-current assets.financing activities are those activities relating to changes in the equity and debt capital structure of the organisation and those relating to the cost of servicing the organisation’s equity capital.

New Standards & Interpretations Approved But Not Yet AdoptedCertain new standards, amendments and interpretations to existing standards have been published that are not yet effective for the year ended 30 June 2008, and have not been applied in preparing these financial statements. The adoption of the following standards is not expected to have a material impact on MidCentral DHB’s financial statements.• nZ IAs 1, Presentation of financial statements (revised 2007)

– (effective from annual periods beginning on or after 1 January 2009).

• nZ IAs 23, Borrowing Costs (revised) – (effective from annual periods beginning on or after 1 January 2009).

• NZ IAS 27, Consolidated and Separate financial statements (revised 2008) – (effective from annual periods beginning on or after 1 July 2009).

• nZ Ifrs 3, Business Combinations (revised 2008) – (effective from annual periods beginning on or after 1 July 2009).

• Improvements to new Zealand Equivalents to International financial reporting standards 2008 – (effective various).

other standards/interpretations that are not relevant to MidCentral DHB have been reviewed and are not applicable.The effective date and transitional provisions vary by standard. Most of the improvements are effective for annual periods beginning on or after 1 January 2009, with earlier adoption permitted, and they are to be applied retrospectively.

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note group & Parent June-08 June-07 $000 $000

1. rEvEnuEHealth and Disability services – Ministry of Health (MoH) Contracted revenue 388,956 375,577 ACC 17,789 15,949 Inter District Patient Inflows 35,072 33,370 Patient Income 731 1,141

442,548 426,037

2. oTHEr oPErATInG InCoMEDonations and Bequests received 133 173rental Income 1,236 1,119other 3,509 3,049

4,878 4,341

3. oTHEr oPErATInG ExPEnsEs Impairment of Trade receivables (Bad and Doubtful Debts) 13 (139) - loss on Disposal of Property, Plant and Equipment 178 110 Audit fees (for the Audit of the financial statements) 148 118Audit related fees (for Assurance related services) 27 15other 226 (4)Board fees and Expenses 24 320 328Change in fair value of Derivative 29 277

789 844

Audit related fees includes fees incurred in relation to the NZ IFRS financial statement disclosures and a laboratory project audit.

4. EMPloYEE BEnEfIT CosTswages and salaries 148,071 146,385Contributions to Defined Contribution Plans 1,749 1,528(Increase)/Decrease in Employee Benefit Provisions (2,595) 758

147,225 148,671

5a. fInAnCE InCoMEInterest Income 4,696 4,620

5b. fInAnCE CosTsInterest Expense 3,660 3,498

6. CAPITAl CHArGEMidCentral DHB pays a monthly capital charge to the Crown based on the greater of its actual or budgeted closing equity balance for the month. The capital charge rate for the period ended 30 June 2008 was 8% (2007: 8 %).

notes to consolidated financial statementsfor the year ended 30 June 2008

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7. ProPErTY, PlAnT AnD EQuIPMEnT (GrouP AnD PArEnT) Freehold Land Freehold Buildings Plant, Equipment Fixtures Work in Total (at valuation) (at valuation) & Vehicles & Fittings Progress $000 $000 $000 $000 $000 $000

Cost

Balance at 1 July 2006 9,825 99,969 49,845 5,485 3,974 169,098 Additions - 11,314 3,477 359 2,487 17,637Disposals - - (1,454) - - (1,454)Transfers - 3,005 1,164 - (4,169) -

Balance at 30 June 2007 9,825 114,288 53,032 5,844 2,292 185,281

Additions - 1,044 2,427 - 4,647 8,118Disposals - (64) (398) (1,009) - (1,471)Transfers - 1,831 1,208 - (3,039) -

Balance at 30 June 2008 9,825 117,099 56,269 4,835 3,900 191,928

Depreciation and Impairment LossesBalance at 1 July 2006 - - 31,367 3,800 - 35,167Depreciation Charge for the Year - 5,927 4,073 370 - 10,370Disposals - - (1,440) - - (1,440)

Balance at 30 June 2007 - 5,927 34,000 4,170 - 44,097

Depreciation Charge for the Year - 5,700 4,116 473 - 10,289Disposals - (14) (350) (930) - (1,294)

Balance at 30 June 2008 - 11,613 37,766 3,713 - 53,092

Carrying AmountsAt 1 July 2006 9,825 99,969 18,478 1,685 3,974 133,931At 30 June 2007 9,825 108,361 19,032 1,674 2,292 141,184At 30 June 2008 9,825 105,486 18,503 1,112 3,900 138,836

Valuation:land and buildings were last revalued on 30 June 2006. revalued land and buildings are stated at fair value as determined by an independent valuer, Knight frank, Palmerston north, as at 30 June 2006. The methodology used to arrive at fair value has been to value land on a market basis and buildings on an optimised depreciated replacement cost methodology. The total fair value of land and buildings valued by the valuer amounted to $106,403,000 as at 30 June 2006.

restrictions:MidCentral DHB does not have full title to Crown land it occupies but transfer is arranged if and when land is sold. some of MidCentral DHB’s land is subject to waitangi Tribunal claims. The disposal of certain properties may be subject to the provisions of s40 of the Public works Act 1981. Titles to land transferred from the Crown to MidCentral DHB are subject to a memorial in terms of the Treaty of waitangi Act 1975 (as amended by Treaty of waitangi (state Enterprises) Act 1988). The effect on the value of assets resulting from potential claims under the Treaty of waitangi Act 1975 cannot be quantified.

8. InTAnGIBlE AssETs (GrouP AnD PArEnT) software total $000 $000 CostBalance at 1 July 2006 3,977 3,977Additions 1,558 1,558

Balance at 30 June 2007 5,535 5,535

Additions 2,132 2,132Disposals

Balance at 30 June 2008 7,667 7,667

Amortisation and Impairment LossesBalance at 1 July 2006 3,306 3,306Amortisation Charge for the Year 381 381

Balance at 30 June 2007 3,687 3,687

Amortisation Charge for the Year 586 586

Balance at 30 June 2008 4,273 4,273

Carrying AmountsAt 1 July 2006 671 671

At 30 June 2007 1,848 1,848

At 30 June 2008 3,394 3,394

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9. InvEnTorIEs note group & Parent June-08 June-07 $000 $000

surgical and Medical supplies 2,645 2,545Pharmaceuticals 208 260

2,853 2,805 write-down of inventories amounted to $50,000 for 2008 (2007: $49,000). The amount of inventories recognised as an expense during the year ended 30 June 2008 was $19,963,000 (2007: $18,151,000). no inventories are pledged as security for liabilities.

10. InvEsTMEnTs In AssoCIATEsMidCentral DHB has the following investments in associates:

A) GENERAL INFORMATION

name of entity Principal activities interest Held at 30 June 2008/2007 Balance date

Allied laundry services limited Provision of laundry services 25% 30 June

B) SuMMARY OF FINANCIAL INFORMATION ON ASSOCIATE ENTITIES (100 PER CENT)

assets $000 liabilities $000 equity $000 revenues $000 Profit/(Loss) $0002008 actual – Allied laundry services limited 4,065 1,036 3,029 6,097 -2007 actual – Allied laundry services limited 4,032 1,003 3,029 6,180 -

C) SHARE OF PROFIT OF ASSOCIATE ENTITIES

2008 actual $000 2007 actual $000Share of Profit/(Loss) Before Tax - -less: Tax Expense - -Share of Profit/(Loss) After Tax - -

D) INvESTMENT IN ASSOCIATE ENTITIESCarrying Amount at Beginning of Year 750 750share of Total recognised revenue and Expenses - -

Carrying Amount at End of Year 750 750

MidCentral DHB has a 25% (2007: 25%) shareholding in Allied laundry service limited (Allied laundry) and participates in its commercial and financial policy decisions. Allied Laundry has a total share capital of $3,000,000 of which MidCentral DHB’s share is $750,000. Consideration was made for the shares through the sale of property and plant at market value. Allied laundry commenced operations on 2 December 2002, has a balance date of 30 June and operates a laundering service. Allied laundry service limited achieved breakeven at 30 June 2008 (2007: breakeven). The organisation’s aggregate share of associates’ contingent liabilities is nil (2007: nil).

11. non CurrEnT InvEsTMEnTsspecial funds at westpac Trust limited 1,500 1,500

The weighted average interest rate at 30 June 2008 was 8.44% (2007: 7.8%).

12. CurrEnT InvEsTMEnTsDeposits Held with Banks 15,000 -

The weighted average interest rate at 30 June 2008 was 8.81% (2007: nil).

13. TrADE AnD oTHEr rECEIvABlEsTrade receivables Due from Associates 23 33 170Trade receivables from non-related Parties 2,328 3,230Ministry of Health receivables 6,246 3,843Accrued Income 1,147 869Prepayments 689 567Provision for Doubtful Debts - (139)

10,443 8,540

The average credit period on the provision of services is 7.10 days (2007: 6.10 days). no interest is charged on the trade receivables. receivables (other than that due from the Crown) that are outstanding for more than 60 days from the date of the invoice are handed over to a debt collection agency for collection. Included in the Group’s trade receivable balance are debtors that are past due beyond 90 days with a carrying amount of $616,000 (2007: $273,000). Management have assessed the collectibility of all accrued income. no issues were noted from the review.

Movement in the Allowance for Doubtful DebtsBalance at the Beginning of the Period 139 139Increase/(Decrease) in Allowance Recognised in Profit or Loss (139) -

Balance at End of the Year - 139

In determining the recoverability of a trade receivable, MidCentral DHB considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly the Board believes that no allowance for doubtful debts will be required commencing year 2008. The allowance for doubtful debts considered as specific and non-recoverable was $139,000 in 2007.

34

14. CAsH AnD CAsH EQuIvAlEnTs note group & Parent June-08 June-07 $000 $000

Bank Balances 1,244 2,530Call Deposits 19,371 34,791

Cash and Cash Equivalents 20,615 37,321

Cash and Cash Equivalents in the statement of Cash flows 20,615 37,321

MidCentral DHB does not administer funds on behalf of patients.The weighted average interest rate on call deposits at 30 June 2008 was 7.37% (2007: 8.1%).Included within bank balances is $416,000 (2007: $495,000) of special funds with westpac Trust.

Reconciliation of Profit for the Period with Net Cash Flows from Operating Activities:loss for the Period 15 (4,089) (2,890)

Add Back Non-Cash Items:Depreciation 10,289 10,370Amortisation 586 381other non-Cash Items 110 (463)net loss/(Gain) on Disposal of Property, Plant and Equipment 178 110Impairment of Trade receivables (139) -Change in fair value of Derivative 29 277

Movements in Working Capital:(Increase)/Decrease in Trade and other receivables (1,903) 14,503 (Increase)/Decrease in Inventories (48) (237)Increase/(Decrease) in Trade and other Payables (6,011) 1,883Increase/(Decrease) in Employee Benefits 4,423 (6,272)

net Movement in working Capital (3,539) 9,877

Net Cash Inflow/(Outflow) from Operating Activities 3,425 17,662

15. CAPITAl AnD rEsErvEs (GrouP AnD PArEnT) note Crown Property trust/ retained total equity revaluation special earnings equity reserve FundsReconciliation of Movement in Capital and Reserves

Balance at 1 July 2006 28 62,165 35,986 1,706 (2,291) 97,566net Movements in special funds - - 289 - 289loss for the Period - - - (2,890) (2,890)Distributions to the Crown (544) - - - (544)Transfer from retained Earnings 2,830 - - (2,830) -

balance at 30 June 2007 28 64,451 35,986 1,995 (8,011) 94,421

net Movement in special funds - - (79) - (79)loss for the Period - - - (4,089) (4,089)Distributions to the Crown (633) - - - (633)Transfer from Property revaluation reserve - (45) - 45 -

balance at 30 June 2008 63,818 35,941 1,916 (12,055) 89,620

Revaluation Reserve

The revaluation reserve relates to land and buildings.

Trust/Special Funds

Special funds are funds donated or bequeathed for a specific purpose. The use of these assets must comply with the specific terms of the sources from which the funds were derived. All trust funds are held in bank accounts that are separate from MidCentral DHB’s normal banking facilities.

Balance at Beginning of Year 1,995 1,706Transfer from retained Earnings in respect of: Interest received 377 642 Donations and funds received 133 98Transfer to retained Earnings in respect of: funds spent (589) (451)

balance at end of Year 1,916 1,995

35

16. InTErEsT-BEArInG loAns AnD BorrowInGs group & Parent note June-08 June-07 $000 $000Non-Current secured loans 47,700 24,100

47,700 24,100Currentsecured loans 7,243 25,011

54,943 49,111

Analysis of Secured LoansEECA loan 243 11Crown Health financing Agency 54,700 49,100

Repayable as Follows:within one Year 7,243 25,011one to Two Years 4,100 7,000Two to Three Years - 17,100Three to four Years 13,000 -four to five Years 8,000 -later than five Years 22,600 49,111

Term loan Facility LimitsCrown Health financing Agency 56,700 56,700

MidCentral DHB has term loan facilities with the Crown Health financing Agency (CHfA) for $56.7m ($54.7m drawn down). The term loan is secured by a negative pledge.

without CHfA’s prior written consent, MidCentral DHB cannot perform the following actions:– Create any security over its assets except in certain circumstances– lend money to another person or entity (except in the ordinary course of business and then only on commercial terms)

or give a guarantee– Make a substantial change in the nature or scope of its business as presently conducted or undertake any business or

activity unrelated to health; and– Dispose of any of its assets except disposals at full value in the ordinary course of business.

During the year there have not been any defaults or breaches of principal, interest or redemption terms of the loan.

17. EMPloYEE BEnEfITsNon-Current Liabilitiesliability for long-service leave 484 659liability for retirement Gratuities 846 1,155

1,330 1,814

Current Liabilitiesliability for long-service leave 1,190 353liability for retirement Gratuities 401 249liability for Annual leave 12,200 10,459liability for sick leave 436 87other liabilities – redundancies and Backpay 3,356 2,760salary and wages Accrual 4,919 3,687

22,502 17,595

Defined Contribution Plan:MidCentral DHB has a number of employees that are part of a defined contribution scheme. The total expenses recognised in the income statement of $1,565,000 (2007: $1,307,000) represents contributions paid or payable to the plans for the year. MidCentral DHB has no other liability in respect of these schemes.

Defined Benefit Plan:MidCentral DHB has a small number of employees that are part of a multi-employer scheme. under the plan the employees are entitled to retirement benefits. No other post-retirement benefits are provided. The total expenses recognised in the income statement of $184,000 (2007: $221,000) represents contributions paid or payable to the plan for the year. MidCentral DHB has no other liability in respect of the above scheme. Should there be a deficit in the fund, all the benefit payments are guaranteed by the Crown as a result the scheme is accounted for as a defined contribution scheme by MidCentral DHB.

36

18. TrADE AnD oTHEr PAYABlEs note group & Parent June-08 June-07 $000 $000

Trade Payables to non-related Parties 21,800 23,961ACC levy Payable 930 885GsT and PAYE Payable 1,062 1,734Income in Advance Relating to Contracts with Specific Performance Obligations 312 63ACC Partnership Programme liability 249 305Capital Charge Due to the Crown 614 3,782Derivative financial Instrument 29 277

24,996 31,007

19. oPErATInG lEAsEsLeases as Lessee

non-Cancellable operating lease Commitments are as follows:

less than one Year 1,503 1,844Between one and five Years 2,475 3,317More than five Years 481 11

4,459 5,172

non-Cancellable Contracts are as follows:

less than one Year 25,953 18,916Between one and five Years 21,572 21,838More than five Years 117 587

47,642 41,341

The operating commitments disclosed for the other non-cancellable contracts include committed obligations for health purchasing expenditure with various external parties. MidCentral DHB is also obligated to fund significant streams of “demand driven” health purchasing expenditure. Commitments of this nature are in place for the purchase of pharmacy, laboratory and GP services. Because this expenditure is “demand driven”, it is not possible to quantify the obligation in this note.During the year ended 30 June 2008, $2,885,000 was recognised as an expense in the statement of financial performance in respect of operating leases (2007: $2,327,000).

20. fInAnCIAl InsTruMEnTsa) MARkET RISk: Exposure to credit, interest rate and currency risks arise in the normal course of MidCentral DHB’s operations. Derivative financial instruments are used to manage exposure to fluctuations in foreign currency. Foreign currency forward exchange contracts are used to manage foreign currency exposure. There has been no change to the MidCentral DHB’s exposure to market risks or the manner in which it manages and measures the risks.

b) FOREIGN CuRRENCY RISk: MidCentral DHB is exposed to foreign currency risk on purchases that are denominated in a currency other than nZD. The currencies giving rise to this risk are primarily us Dollars (usD).MidCentral DHB hedges all trade receivables and trade payables denominated in a foreign currency over nZD 50,000. MidCentral DHB uses forward exchange contracts to hedge its foreign currency risk. where necessary, the forward exchange contracts are rolled over at maturity.

RECOGNISED ASSETS AND LIABILITIES: Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied are recognised in the statement of financial performance. Both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating to the monetary items are recognised as part of other operating expenses. The fair value of forward exchange contracts used as economic hedges of monetary assets and liabilities in foreign currencies at 30 June 2008 was $29,000 (2007: $277,000).

SENSITIvITY ANALYSIS: In managing currency risks, MidCentral DHB aims to reduce the impact of short-term fluctuations on MidCentral DHB’s earnings. over the longer-term, however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.MidCentral DHB is mainly exposed to us Dollars (usD). The following table details the Group’s sensitivity to a 10% increase and decrease in the new Zealand Dollar against the usD. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign currency rates. The sensitivity analysis includes only outstanding usD denominated monetary items and adjusts their translation at the period end for a 10% change in USD rates. A positive number indicates an increase in profit or loss and other equity.

Usd impact group & Parent June-08 June-07 $000 $000

Profit or Loss +10% (365) (655) -10% 342 367

37

FORWARD FOREIGN ExCHANGE CONTRACTS: It is the policy of MidCentral DHB to enter into forward foreign exchange contracts to cover specific foreign exchange payments. MidCentral DHB also enters into forward foreign exchange contracts to manage the risk associated with anticipated purchase transactions out to six months of the exposure generated. Basis adjustments are made to the carrying amounts of non-financial hedged items when the anticipated purchase transaction takes place.

Average Exchange Rate Foreign Currency Contract Value Fair Value

outstanding Contracts Consolidated

2008 2007 2008 Us $000

2007 Us $000

2008 nZ $000

2007 nZ $000

2008 $000

2007 $000

Buy us Dollars 0.7412 0.6828 2,342 2,500 3,160 3,661 29 277

MidCentral DHB has entered into a contract to purchase a linear Accelerator for its regional Cancer Treatment service (rCTs). MidCentral DHB has entered into a forward exchange contract (for terms not exceeding 18 months) to mitigate the exchange rate risk arising from this transaction. As at reporting date the amount of realised loss under the forward exchange contract is $29,000 (2007: $277,000).

c) INTEREST RATE RISk: MidCentral DHB adopts a policy of ensuring that it continuously reviews its exposure to changes in interest rates on borrowings. These borrowings are currently on a fixed rate basis at year end and is denominated in NZD.Deposits with banks are also on a fixed rate basis at year end.

INTEREST RATE SENSITIvITY: A sensitivity analysis to determine the exposure to interest rates at the reporting date has not been carried out as all the borrowings and deposits at year end are on fixed terms.

INTEREST RATE SWAP CONTRACTS: There were no interest rate swaps at the end of the financial period.

d) CREDIT RISk: financial instruments, which potentially subject MidCentral DHB to concentrations of risk, consist principally of cash, short-term deposits and trade receivables.MidCentral DHB places its cash and short-term deposits with high-quality financial institutions and MidCentral DHB has a policy that limits the amount of credit exposure to any one financial institution. Credit exposure and credit limits are continuously monitored, reviewed and approved by the Board.Concentrations of credit risk from trade receivables are limited due to the large number and variety of customers. The Ministry of Health is the largest single debtor (approximately 73 per cent). It is assessed to be a low risk and high-quality entity due to its nature as the government funded purchaser of health and disability support services.At the balance sheet date there were no other significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position.

The status of trade receivables at the reporting date is as follows:

gross receivable 2008 impairment 2008 gross receivable 2007 impairment 2007 $000 $000 $000 $000trade receivablesnot Past Due 6,055 - 6,585 -Past Due 0–30 Days 1,305 - 261 -Past Due 31–120 Days 1,229 - 124 -Past Due 121–360 Days 18 - 273 (139)

total 8,607 - 7,243 (139)

In summary, trade receivables are determined to be impaired as follows: actual 2008 actual 2007 $000 $000trade receivablesGross Trade receivables 8,607 7,243Individual Impairment - (139)Collective Impairment - -

net total trade receivables 8,607 7,104

e) LIquIDITY RISk MANAGEMENT:

ultimate responsibility for liquidity risk management rests with MidCentral DHB, which has built an appropriate liquidity risk management framework for the management of short, medium and long-term funding and liquidity management requirements. MidCentral DHB manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecasts and actual cashflows and matching the maturity profiles of financial assets and liabilities. Included in note 16 is a listing of additional undrawn facilities that MidCentral DHB has at its disposal to further reduce liquidity risk.

The following table sets out the contractual cashflows for all financial liabilities and derivatives that are settled on a gross basis.

2008 group & Parent

groUP effective interest rate %

total $000

6 Months or less $000

6-12 Months $000

1-2 Years $000

2-5 Years $000

More than 5 Years $000

Trade and other Payables 0 24,996 24,996 - - - -

nZD fixed rate loan 5.92-7.28 73,124 8,858 1,623 7,218 28,369 27,056

EECA loan 0 243 - - - 243 -

Total Contractual Cash flows 98,363 33,854 1,623 7,218 28,612 27,056

2007 group & Parent

Trade and other Payables 0 31,007 31,007 - - - -

nZD fixed rate loan 5.86–7.28 55,371 16,571 10,915 8,422 19,463 -

EECA loan 0 11 - 11 - - -

Total Contractual Cash flows 86,389 47,578 10,926 8,422 19,463 -

38

f) FAIR vALuES: The fair values together with the carrying amounts shown in the statement of financial position are as follows:

group & Parent

note Carrying amount actual June-08 $000

Fair Value actual June-08 $000

Carrying amount actual June-07 $000

Fair Value actual June-07 $000

financial assetsTrade and other receivables 13 10,443 10,443 8,540 8,540Cash and Cash Equivalents 14 20,615 20,615 37,321 37,321Investments (Current) 12 15,000 15,000 - -Investments (non-current) 11 1,500 1,500 1,500 1,500financial liabilitiesInterest Bearing loans and Borrowings 16 54,943 55,789 49,111 49,111Trade and other Payables 18 24,996 24,996 31,007 31,007

estiMation oF Fair ValUes analYsis – The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table.

INTEREST-BEARINg LOANS AND BORROWINgS – Fair value is calculated based on discounted expected future principal and interest cash flows.

trade and otHer reCeiVaBles/PaYaBles/CasH and CasH eqUiValents and inVestMents – for receivables/payables/cash and cash equivalents and investments with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All other receivables/payables/investments are discounted to determine the fair value.

inVestMents (non CUrrent) – Non current investments notional amount is deemed to reflect fair value because although they are non current they can be drawn on at any time with no significant change in carrying value. Non current investments relate to funds for special purposes which are unlikely to be utilised within the next 12 months, hence the classification as non current.

g) CAPITAL MANAGEMENT: MidCentral DHB’s capital is its equity, which comprises Crown equity, reserves, special funds and retained earnings. Equity is represented by net assets. MidCentral DHB manages its revenues, expenses, assets, liabilities and general financial dealings prudently in compliance with the budgetary processes.MidCentral DHB’s policy and objectives of managing the equity is to ensure that MidCentral DHB effectively achieves its goals and objectives, whilst maintaining a strong capital base. MidCentral DHB policies in respect of capital management are reviewed regularly by the Board.There have been no material changes in MidCentral DHB’s management of capital during the period.

21. rEMunErATIon of EMPloYEEsThe number of employees (not including Board Members) who received, during the twelve months, remuneration and benefits at a rate of $100,000 or more per annum was as shown in the table to the right.

of the total of 173 staff paid more than $100,000, 138 are professional medical staff.

The Chief Executive Officer is the highest remunerated employee of the organisation and is in the $430,000 to $439,999 band.

22. sEvErAnCE PAYMEnTsDuring the twelve months ended 30 June 2008,15 employees received a payment totalling $185,122 in respect of the termination of their employment with the District Health Board (2007 $7,010,578).

nUmber of emPloYees amoUnt ($)1 177

1 338

1 1,087

1 4,409

1 8,707

1 9,180

1 9,504

1 11,178

1 11,509

1 14,029

1 14,078

1 14,247

1 15,921

1 22,213

1 48,545

15 185,122

rangegroUP & Parent

JUne-08 JUne-07100,000 - 109,999 18 26

110,000 - 119,999 23 21

120,000 - 129,999 11 21

130,000 - 139,999 18 9

140,000 - 149,999 6 9

150,000 - 159,999 8 10

160,000 - 169,999 7 14

170,000 - 179,999 12 11

180,000 - 189,999 12 5

190,000 - 199,999 10 8

200,000 - 209,999 4 8

210,000 - 219,999 8 4

220,000 - 229,999 10 12

230,000 - 239,999 5 3

240,000 - 249,999 6 3

250,000 - 259,999 5 3

260,000 - 269,999 5 1

270,000 - 279,999 1 1

280,000 - 289,999 1 0

290,000 - 299,999 2 0

410,000 - 419,999 0 1

430,000 - 439,999 1 0

39

23. rElATED PArTIEsIdentity of Related Parties:

MidCentral DHB is a crown entity in terms of the Crown Entities Act 2004, and is owned by the Crown.

Transactions with other entities controlled by the Crown:There have been transactions with other entities controlled by the Crown that have not been separately disclosed because the transactions have been carried out on the same terms as if the transactions had been carried out at arms length.

Related Party Transactions and Balances:

ENABLE NEW ZEALAND LIMITED No transactions occurred between MidCentral DHB and wholly owned subsidiary Enable New Zealand Limited during the financial year (2007: nil). There was no amount outstanding from Enable new Zealand at year end.

allied laUndrY serViCes liMitedMidCentral DHB were charged $2.2m by associate company Allied Laundry for the supply of laundry services during the financial year (2007: $2.4m). The amount owing to Allied laundry at year end was $317,724 (2007: $368,052). MidCentral DHB leases a building and charges electricity costs to Allied laundry. MidCentral DHB charges Allied laundry $860,000 for the lease and electricity charges (2007: $734,000). The amount receivable from Allied laundry at year end was $32,930 (2007: $170,062).

CENTRAL REgION’S TECHNICAL ADvISORy SERvICES LIMITEDMidCentral DHB’s transactions with related company Central region’s Technical Advisory services limited were for the supply of audit and consultancy services to the Board. There was no amount outstanding at year end (2007: $nil).

otHer related PartiesThe following organisations have been regarded as related parties as a result of a Board member at MidCentral DHB holding a senior position (Chief Executive Officer or equivalent) with the organisation: Medlab Central, Broadway Radiology, Best Care (Whakapai Haurora).

Compensations:The key management personnel compensations are as follows: group & Parent June-08 June-07 $000 $000

short Term 1,500 1,454Post Employment 2 -Other Long Term Benefits 4 4Termination Benefits - -

1,506 1,458

remunerationBoard Members 320 328Executive Team 1,186 1,130

1,506 1,458

sales to related PartiesAllied laundry services ltd 860 734Central region Technical Advisory service 125 -Best Care (whakapai Haurora) 2 2Broadway radiology - -Medlab Central ltd 155 188

1,142 924

Purchases from related PartiesAllied laundry services ltd 2,227 2,379Central region Technical Advisory service 496 461Best Care (whakapai Haurora) 947 820Broadway radiology 1,511 1,403Medlab Central ltd 13,615 13,830

18,796 18,893

outstanding balances to related PartiesAllied laundry services ltd 318 368Central region Technical Advisory service 125 -Best Care (whakapai Haurora) 84 76Broadway radiology 136 100Medlab Central ltd 3 144

666 688

outstanding balances from related PartiesAllied laundry services ltd 33 170Central region Technical Advisory service - -Best Care (whakapai Haurora) - -Broadway radiology - -Medlab Central ltd 16 71

49 241

key Management and Board Members:No significant transactions were enacted between the Group and Key Management and Board members during the year.

40

24. BoArD MEMBErs’ fEEsnon-executive board members received no remuneration or provision of benefits except for standard fees and additional fees for extra duties of a special nature, as approved by the Minister of Health.

25. suBsEQuEnT EvEnTThere are no significant events after balance date (2007: none).

26. ACCounTInG EsTIMATEs AnD JuDGEMEnTs key Sources of Estimated uncertainty:Key assumptions concerning the future and other key sources of estimation uncertainty at 30 June 2008 which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below:Estimation of Employee Entitlements Accruals:The liability relating to back pay and long term employee benefits (long service leave, gratuities and sabbatical leave) is based on a number of assumptions in relation to the estimated length of service, the timing of release of the obligation, the rate at which the obligation will be paid and the discount factor to be applied in determining the present value. If any of these factors changed significantly the actual outcome could be materially different to the estimate provided in the financial statements. The carrying value of the accruals has been disclosed in Note 17.Optimisation and useful Lives of Property, Plant and Equipment:The value of property, plant and equipment is based on the estimated optimisation and useful lives of the assets. The optimisation and useful lives were determined by an independent valuer as at 30 June 2006. The group reviews the optimisation and estimated useful lives of property, plant and equipment at the end of each annual reporting period. Based on this review it was determined that no change was required to the assets. The carrying value of property, plant and equipment is disclosed in note 7.Critical Accounting Judgements in Applying the DHB’s Accounting Policies:Certain critical accounting judgments in applying MidCental DHB’s accounting policies are described below.Revenue Recognition and Income in Advance:In determining whether or not revenue has been earned a degree of judgement is required based on information included within the funding agreements. where the funding agent has the right to demand repayment, income in advance is recognised for the unearned portion of the funding received. The carrying value of income in advance has been disclosed in note 18.

27. ExPlAnATIon of fInAnCIAl vArIAnCEs froM BuDGETCrown revenue exceeded budget by $7,521,000, with the most significant increase being due to personal health revenue.Employee costs exceeded budget by $5,661,000 due to pay settlements and additional Ifrs adjustments.outsourced services exceeded budget by $7,168,000 due to increased expenditure on locum medical staff.Payments to non-health board providers are under budget by $3,977,000, due to timing differences in implementing primary health initiatives.Interest bearing loans and borrowings (non-current liabilities) exceeded budget by $8,985,000. This is offset by the current portion of interest bearing loans and borrowings being under budget by $8,757,000.Cash and cash equivalents are under budget by $11,804,000, but this is more than offset by the increase in investments of $15,000,000. The net increase of $3,196,000 is largely due to acquisitions of property, plant and equipment being less than budget.The non current portion of employee entitlements exceeded budget by $7,385,000. This is due to the reclassification of accrued backpay from trade and other payables, an increase in the annual leave provision and nZ Ifrs adjustments for long service leave and sick leave.Trade and other payables are lower than budget by $3,421,000. This is primarily due to the reclassification of accrued backpay to employee entitlements.

board member 2008 $000 2007 $000MidCentral District Health Board I wilson, Chair 50 49

A Chapman, deputy Chair 34 33

D Anderson 26 25

l Burnell 26 25

G Campbell 14 -

J Drummond 25 24

D Emery 25 26

D Harris 11 24

J Jefferies 25 25

P Kelly 12 25

s Paewai 4 -

B robson 25 25

o stock 14 -

C Temple-Camp 11 25

Committee Members s Devonshire 1 -

H Eparaima 2 3

l Gray 2 3

I Gregory 1 1

A J Kells 3 3

I Miritana - 2

G Munro 1 1

s Paewai 2 1

r skipper 1 1

n steenhout 1 1

J stojanovic 2 3

C sweeney 2 3

total 320 328

41

28. ExPlAnATIon of TrAnsITIon To nZ Ifrs These are MidCentral’s DHB’s first consolidated financial statements prepared in accordance with NZ IFRS. The accounting policies set out in the notes to the financial statements have been applied in preparing financial statements for the year ended 30 June 2008, the comparative information presented for the year ended 30 June 2007 and in the preparation of an opening nZ Ifrs Balance sheet at 1 July 2006 (MidCentral’s DHB’s date of transition). In preparing its opening NZ IFRS Balance Sheet and restating the 2007 financial statements, MidCentral DHB has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (previous GAAP). An explanation of how the transition from previous GAAP to NZ IFRS has affected MidCentral DHB’s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

Reconciliation of the Equity transition Balance sheet Comparative Balance sheet 1-Jul-06 30-Jun-07 effect of effect of note Previous transition nZ iFrs Previous transition nZ iFrs gaaP to nZ iFrs $000 gaaP to nZ iFrs $000 $000 $000 $000 $000

Property, Plant and Equipment c 131,211 2,720 133,931 139,641 1,543 141,184Intangible Assets a - 671 671 - 1,848 1,848Investments in Associates 750 - 750 750 - 750other Investments 1,170 - 1,170 1,500 - 1,500Properties Intended for sale b 3,391 (3,391) - 3,391 (3,391) -

total non-current assets 136,522 - 136,522 145,282 - 145,282

Inventories 2,568 - 2,568 2,805 - 2,805other Investments f 536 - 536 495 (495) -Trade and other receivables 23,043 - 23,043 8,540 - 8,540Cash and Cash Equivalents f 34,723 - 34,723 36,826 495 37,321

total current assets 60,870 - 60,870 48,666 - 48,666

total assets 197,392 - 197,392 193,948 - 193,948

EquityCrown Equity g 62,165 - 62,165 61,621 2,830 64,451other reserves 35,986 - 35,986 35,986 - 35,986retained Earning/(losses) g (5,121) 2,830 (2,291) (6,427) (1,584) (8,011) Trust/special funds 1,706 - 1,706 1,995 - 1,995

total equity 94,736 2,830 97,566 93,175 1,246 94,421

LiabilitiesInterest-Bearing loans and Borrowings 29,021 - 29,021 24,100 - 24,100Employee Benefits 1,814 - 1,814 1,814 - 1,814

total non-current liabilities 30,835 - 30,835 25,914 - 25,914

Interest-Bearing loans and Borrowings 16,000 - 16,000 25,011 - 25,011Trade and other Payables d 29,124 - 29,124 30,702 305 31,007Employee Benefits e 26,697 (2,830) 23,867 19,146 (1,551) 17,595

total current liabilities 71,821 (2,830) 68,991 74,859 (1,246) 73,613

total liabilities 102,656 (2,830) 99,826 100,773 (1,246) 99,527

total equity and liabilities 197,392 - 197,392 193,948 - 193,948

RECONCILIATION OF THE SuRPLuS FOR THE YEAR ENDED 30 JuNE 2007

note Previous effect of transition nZ iFrs gaaP to nZ iFrs $000 $000 $000

total income 434,998 - 434,998

Employee Benefit Costs h 147,087 1,584 148,671Depreciation and Amortisation Expense 10,751 - 10,751outsourced services 18,702 - 18,702Clinical supplies 36,299 - 36,299Infrastructure and non-Clinical Expenses 42,971 - 42,971Payments to non-Health Board Providers 167,928 - 167,928other operating Expenses 844 - 844finance Costs 3,498 - 3,498Capital Charge 8,224 - 8,224

total expenses 436,304 1,584 437,888

Share of Profit of Associates - - -

surplus before and after tax (1,306) (1,584) (2,890)

The only change to the 2007 cash flow statement related to the reclassification of $495,000 from investments to cash and cash equivalents. The effect was to increase the closing cash and cash equivalents by $495,000.

42

a) RECLASSIFICATION OF INTANGIBLES:

under previous GAAP, software was included in property, plant and equipment. In accordance with nZ IAs38 - Intangibles, these assets have been separately disclosed.The effect of the reclassification was an increase in intangibles of $1,848,000 as at 30 June 2007 and $671,000 as at 1 July 2006, with a corresponding decrease to property, plant and equipment.

b) RECLASSIFICATION OF PROPERTIES INTENDED FOR SALE:

under previous GAAP, properties intended for sale were recorded separately.These properties do not meet the definition of properties held for sale under NZ IFRS 5 - Non Current Assets Held for Sale and Discontinued Operations, and as a result they have been reclassified to property, plant and equipment on transition to NZ IFRS. The effect of the reclassification is to decrease properties intended for sale by $3,391,000 as at 30 June 2007 and 1 July 2006, with a corresponding increase recognised in property, plant and equipment.

c) EFFECT OF RECLASSIFICATIONS ON PROPERTY, PLANT AND EquIPMENT: 1/7/2006 30/6/2007 $000 $000

Reclassification of Software (refer Note a above) (671) (1,848)Reclassification of Properties Intended for Sale (refer Note b above) 3,391 3,391

2,720 1,543

d) ACC LIABILITY:

ACC Partnership Program (APP) offers MidCentral DHB the option to accept injury management and financial responsibility for employees who suffer work-related illness or injury for a specified period. In return, the accredited employer’s ACC premiums are reduced. Participation in the APP is an insurance contract between the employer and the employee, as the employer (insurer) accepts significant insurance risk from the employee (policyholder) by agreeing to compensate the employee if a work-related injury (the insured event) adversely affects the employee.under previous GAAP, no liability resulting from insurance risk was recognised by MidCentral DHB. In accordance with nZ Ifrs 4, Insurance Contracts, MidCentral DHB accounted for its participation in the APP as an insurance contract and recognised the resulting insurance liability.The effect of recognising the insurance provision was an increase in current provisions by $305,000 and a decrease in retained earnings by $305,000 at 30 June 2007.

e) SABBATICAL, CONTINuING MEDICAL EDuCATION (CME) AND SICk LEAvE:

under previous GAAP, sabbatical and CME leave was recognised when the employee was entitled to the leave.under previous GAAP, sick leave was not provided for. since sick leave, sabbatical leave and CME leave granted by MidCentral DHB to its employees is an accumulating compensating absence, MidCentral DHB has the obligation to provide for accumulated sick leave, sabbatical leave and CME leave expected to be taken in future periods (over and above the entitlement to be earned by employees in those future periods). Under NZ IAS 19, Employee Benefits, MidCentral DHB now recognises the expected cost of accumulated compensated absences which MidCentral DHB expects to be used in the future years. This provision was based on its historical payroll information.

The effect of recognising the above employee entitlements resulted in the following adjustments: 1/7/2006 30/6/2007 $000 $000

sabbatical (1,500) -CME (1,418) (1,639)sick leave 88 88

(2,830) (1,551)

f) TERM DEPOSITS

under previous GAAP, term deposits were included in investments. under nZ Ifrs accounting policies all deposits with a maturity of no more than three months from the date of acquisition are classified as cash and cash equivalents. The effect of this change in accounting policy was an increase in cash and cash equivalents of $495,000 and a decrease in other investments of the same amount.

g) RETAINED EARNINGS AND CROWN EquITYThe effect of the above adjustments on retained earnings is as follows: retained earnings Crown equity note $000 $000

Employee Entitlements e 2,830 -

Total Adjustments to Equity at 1 July 2006 2,830 -

Employee Entitlements e 1,551 -ACC liability d (305) -Transfer Between reserves (2,830) 2,830

Total Adjustments to Equity at 30 June 2007 (1,584) 2,830

h) RECONCILIATION OF NET PROFIT/(LOSS):

Movement in Employee Entitlements 1,279Movement in ACC Provision 305

Total Adjustments to the Net Profit for the Year ended 30 June 2007 1,584

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aUditor’s rePort

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cost of serVice statement

The Board and management of MidCentral District Health Board accept responsibility for the preparation of the annual financial statements and the judgements used in them.

The Board and management of MidCentral District Health Board accept responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting.

In the opinion of the Board and management of MidCentral District Health Board, the financial statements for the year ended 30 June 2008 fairly reflect the financial position and operations of MidCentral District Health Board.

ian a Wilson ann chapman chairman dePUtY chair

murray georgel stuart Wilson chief execUtiVe officer general manager, corPorate serVices

30 october 2008

funding for District Health Boards is aligned to three output classes:

– funding– Governance and funding Administration– DHB Hospital Provider.

DHBs are required to show their financial performance against these output classes.

($000) fUndinggoVernance

& fUnding administration

dhb hosPital ProVider eliminations total dhb

Gross revenue- Crown 396,186 2,385 253,859 (210,613) 441,817- other - 4,491 5,814 - 10,305

Total revenue 396,186 6,876 259,673 (210,613) 452,122

Expenses- Personnel - (8,047) (139,178) - (147,225)- Depreciation - (1,171) (9,704) - (10,875)- Capital Charge - (1,831) (5,239) - (7,070)- other (392,587) 4,150 (113,217) 210,613 (291,041)

Total Expenditure (392,587) (6,899) (267,338) 210,613 (456,211)

Net Surplus/(Deficit) 3,599 (23) (7,665) - (4,089)

statement of resPonsibilitY

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directorYBoArD MEMBErs

Ian wilson, ChairmanAnn Chapman, deputy Chairman

Diane Andersonlindsay Burnell

Graeme CampbellJack Drummond

Dennis EmeryJim Jefferies

stephen PaewaiBarbara robson

ormond stock

ExECuTIvE offICErsMurray Georgel, Chief Executive Officer

Heather Browning, general Manager, enable new Zealandlareen Cooper, general Manager, MidCentral Health

Mike Grant, general Manager, Funding divisionstuart wilson, general Manager, Corporate services

Jill Matthews, Principal Administration Officer

rEGIsTErED offICEHeretaunga street, Palmerston north

PosTAl ADDrEssPo Box 2056, Palmerston north 4440

TElEPHonE(06) 350 8061, Board Office

fAx(06) 355 0616, Board Office

wEBsITEwww.midcentraldhb.govt.nz

AuDITorDeloitte on behalf of the Office of the Controller & Auditor General

BAnKErsCrown financing Agency, wellington

Bank of new Zealand limited, wellingtonAsB Bank limited, Auckland

westpac Trust limited, Palmerston north

solICITorsBuddle findlay, wellington

fitzherbert rowe, Palmerston north

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