1 JULY 2025 – 30 JUNE 2026
1.0 INTRODUCTION
1.1 Purpose of this Statement of Performance Expectations
1.2 Who we are
1.3 Te Tiriti o Waitangi
1.4 Statement of responsibility 2.0 OUR STRATEGIC DIRECTION
2.1 Building foundations for growth
2.2 Delivering operational effectiveness
2.3 Providing exceptional service 3.0 OUR
This Statement of Performance Expectations (SPE) sets out New Zealand Blood Service’s1 financial and non-financial performance expectations and a set of performance measures, with baseline figures and targets, for the 2025/26 financial year. The SPE is a statutory requirement that provides a basis for assessing outputs, thereby ensuring we remain accountable to New Zealanders. The actual results of service performance (against what is forecast in the SPE) will be published in the organisation’s 2025/26 annual report.
This SPE has been prepared with regard to the Minister of Health’s April 11, 2024, letter of expectation and November 14, 2024, supplementary letter. The financials have been prepared in line with the 2025/26 Budget approved by the New Zealand Blood Service (NZBS) Board on 27 February 2025.
The Minister’s April 16, 2025, letter of expectation is referenced within this SPE, but financials have not been adjusted as the cost consideration workstreams requested are underway and will not conclude and take effect until after the start of the 2025/26 financial year.
This document reflects New Zealand Blood Service’s continuing focus on delivering its strategic objectives in an efficient and fiscally responsible manner, and its support of the Minister of Health’s five priority areas – timeliness, access, quality, workforce, and infrastructure.
New Zealand Blood Service (NZBS) was established in 1998 under the New Zealand Public Health and Disability Act 20002 and is an appointed entity pursuant to section 63 of the Human Tissue Act 2008.
The organisation is required under the Crown Entities Act 2004 to give effect to Government policy as directed by the responsible Minister, the Minister of Health. The NZBS Board is appointed by and responsible to the Minister of Health and performs strategic and governance functions for the organisation in accordance with this Act.
The core purpose of the New Zealand health system is to protect, promote, and improve New Zealanders’ health and wellbeing. The long-term vision for health and wellbeing is to achieve longer life expectancy and improved quality of life for all New Zealanders.
New Zealand Blood Service plays a crucial role in ensuring the delivery of Health New Zealand's New Zealand Health Plan. NZBS is New Zealand’s sole provider of blood, blood products, and associated services, and co-ordinates deceased organ donation, tissue donation (eye tissue, heart valves, and skin), and hip bone donation. It also operates the National Heart Valve Bank and the New Zealand Bone Marrow Donor Registry.
New Zealand Blood Service has responsibilities and accountabilities to Māori through Te Tiriti o Waitangi, the founding document of Aotearoa New Zealand, expressed through the Pae Ora (Healthy Futures) Act 2022 (‘Pae Ora Act’). We give effect to Te Tiriti principles, as articulated by the courts and the Waitangi Tribunal.
NZBS acknowledges its role as part of the wider health sector to help:
• Protect, promote, and improve the health of all New Zealanders
• Achieve equity (fairness for all) in health outcomes among New Zealand population groups, and
• Build towards pae ora (healthy futures) for all New Zealanders.
This Statement of Performance Expectations meets the requirements of the Crown Entities Act 2004 and reflects NZBS’s proposed performance targets and prospective financial information for the period 1 July 2025 to 30 June 2026. It should be read in conjunction with the Statement of Intent 2023–27.
The purpose of the prospective financial statements is to facilitate Parliament’s consideration of New Zealand Blood Service’s planned performance.
Using this information for other purposes may not be appropriate. There is no intention to update the prospective financial statements after their presentation.
The NZBS Board is responsible for, and has deemed appropriate for issue, the prospective financial statements presented, including the appropriateness of the assumptions underlying them and all other required disclosures.
On behalf of the New Zealand Blood Service Board:
Fiona Pimm Chair
30 June 2025
Sam Cliffe Chief Executive Officer
30 June 2025
Our strategic direction is articulated in the Statement of Intent 202 3 – 27 and sets out NZBS's broad objectives and strategic priorities of:
• Building foundations for growth
• Delivering operational effectiveness
• Providing exceptional service
Demand for plasma-derived products in New Zealand continues to increase. The primary immunoglobulin fractionated product shows average annual growth of 11 percent over the last 15 years. This growth trend is forecast to continue, while trends in the use of fresh products are generally showing modest growth. NZBS is committed to engaging collaboratively with Health New Zealand to efficiently meet the clinical demand for immunoglobulin fractionated products at best cost.
New Zealand Blood Service holds the mandated responsibility for surety of supply. Key to this, is a commitment to selfreliance for fractionated products (where self-reliance is defined as meeting 85-90 percent of domestic demand with locally sourced, New Zealand plasma) (NZBS needs to be fully self-sufficient for all other blood products). Self-reliance mitigates New Zealand’s level of exposure to international supply chain realities in a product category where global demand looks set to outstrip supply into the foreseeable future.
Reflecting this, NZBS’s work to develop organisational capacity and capability continues; we are three years into a fiveyear investment programme, with a focus on modernising and expanding collection and manufacturing infrastructure capabilities to meet current and growing demand and self-reliance targets.
Capital expenditure planned over the five years to 30 June 2029 totals $86.5 million.
A period of elevated or strategic pricing to Health New Zealand is required to support the capital expenditure programme.
It is forecast that approximately 104,000 New Zealanders will make a blood or plasma donation during 2025/26, which is just over four percent of the eligible population. This rate compares favourably with countries like Australia and the USA, where donor rates historically range between three and four percent. During 2025/26, NZBS will continue efforts to recruit and retain donors, with a specific focus on growing Māori, Youth (18-25), and Pacific peoples’ panels, and increasing the frequency of donations across donor groups.
In terms of workforce and capability, NZBS will continue to manage its staffing levels in fiscally responsible ways, balancing its resources and skill mix to meet future business needs. We will progress the six key actions detailed in our gender and ethnicity pay equity action plan and continue our efforts to position NZBS as an employer of choice with its safe, healthy, work environment and commitment to empowering people to be the best they can be.
We will continue building on Organ Donation New Zealand's (ODNZ) strong foundations and growth, working within current funding to implement the National Strategy for Increasing Deceased Organ Donation and Transplantation. A focus for this year is to develop a five-year strategy for ODNZ towards 2030.
National Clinical Oversight Programme
New Zealand Blood Service will continue delivering the National Clinical Oversight Programme for blood banks in partnership with International Accreditation New Zealand (IANZ). As part of this programme, Clinical, Quality and Technical specialists visit Health New Zealand hospital blood banks not directly managed by NZBS. We provide guidance and clinical oversight, ensuring nationally consistent quality systems and processes are used in the provision of blood components and blood products to patients.
Therapeutic apheresis
NZBS supports hospitals by carrying out therapeutic apheresis procedures that improve health by removing unwanted cells or abnormal proteins from a patient’s blood. NZBS also provides therapeutic venesection for patients with iron overload. These procedures are carried out either by NZBS staff in New Zealand’s larger hospitals or at our dedicated collection sites. NZBS is currently developing a new clinical leadership structure to improve support for patients and enhance clinical governance for our therapeutic services across the country. NZBS is currently also responding to Health New Zealand requests to deliver therapeutic apheresis and venesection at additional sites.
Adjusting to meet demand
Increasing demand for plasma coupled with an expanding portfolio of products and services, including cellular therapies and tissue services, requires robust operational management and planning, including:
• extended donor collection hours
• preparing for more donor centres at convenient locations
• greater use of mobile facilities, and
• adequate safe, quality, cleanroom and laboratory infrastructure
This will enhance our ability to fulfil our surety of supply duties as New Zealand’s sole supplier of blood, blood products, organs and tissues, to the country’s health system.
Ensuring product and service quality and safety is a fundamental principle that blood services worldwide strive to uphold.
NZBS’s commitment to this principle will continue to be of utmost importance in 2025/26.
NZBS remains dedicated to ensuring the integrity of our regulated activities. Our Quality and Regulatory Affairs team collaborates with operational areas of the organisation to deliver safe and compliant practices. Compliance with legislation and standards is monitored through a comprehensive programme of internal and external audits, and incident and change management, all supported by a robust Quality Management System.
New Zealand is fortunate to be primarily self-sufficient for its blood and blood products. This requires NZBS to maintain an active donor population and collect enough blood and plasma to supply and manufacture the range of blood and blood products needed to meet hospital demand.
From donation to transfusion and transplantation, we are committed to providing the highest quality products and services—including cellular therapies and tissues—to our donors, recipients, patients, healthcare partners, and the wider healthcare community.
Recognising that donor experience is a key indicator of whether donors a) return and b) advocate for NZBS and donation generally, NZBS introduced a new Customer Service Standard in March 2025. This was informed by a series of staff and donor workshops. As part of this work, a training package will be developed and deployed in the second half of 2025 (calendar year), equipping staff to consistently deliver to the Standard when engaging with NZBS consumers. This initiative is part of a wider workstream designed to deliver to the Code of expectations for health entities’ engagement with consumers and whānau.
Delivering safe, effective, and compassionate care is also one of the six priority areas detailed in NZBS’s Nursing and Donor Technician Strategy (2024-2029). Our nurses and donor technicians will continue to use data that reflects the donor, patient, and whānau experience to guide their work in achieving this priority, and to position our consumers at the centre of their work as true partners in care delivery.
NZBS publishes an annual Clinical Hemovigilance Report and shares this data and information with the HQSC and all Health New Zealand hospitals via their Hospital Transfusion Committees. This provides shared learning opportunities to help reduce the incidence of transfusion-related adverse events.
As an enduring responsibility, we will continue our work to increase awareness, improve the donor experience, increase donor numbers, and work closely with our healthcare partners to achieve better outcomes for patients, their families and whānau.
As the National Agency for Organ Donation and Transplantation, we acknowledge our responsibility to ensure we maintain the highest standards of care and ongoing support for organ donors and their families. We are equally as committed to supporting the work of the New Zealand Bone Marrow Donor Registry (NZBMDR), which is responsible for a registry of around 13,500 potential donors and is part of a worldwide network of registries that provide the capability to secure matched bone marrow donations.
We will continue to provide New Zealanders with safe, appropriate, and timely access to blood and blood products, cellular therapies, and tissue products—and their related services—to meet their health needs.
This SPE reflects the performance expectations for the third year of a five-year programme of capital investment that will support NZBS’s commitment to self-reliance for plasma and plasma-derived products.
Stage one of our facility at Highbrook is now in use by our Auckland logistics and plasma processing teams. Stage two is on hold due to financial constraints, and no further significant work was undertaken during FY25. The development’s second stage will provide a new cellular therapy and tissue banking facility to replace aging facilities at our Epsom site, and to meet the increasing demand we are facing today and into the future. Funding for this next stage is not provided for in the above capital expenditure plan forecast and, due to its material cost (forecast to be between $50-$60m as a preliminary assessment), will need to be financed outside of the current pricing mechanism available to NZBS.
Demand for plasma-derived products continues to increase. NZBS is committed to surety of supply and consequently must hold an appropriate inventory of these products. The inventory of plasma-derived products has grown over recent years and is expected to increase further in line with growing demand. Although NZBS works to agreed minimum stock targets to improve cashflow and costs, overall inventory volumes and costs continue to increase in line with growth in demand and rising costs for these highly complex manufactured items.
A period of elevated or strategic pricing to NZBS’s primary customer and funder, Health New Zealand (10.5% in FY24 and 16.9% in FY25), has been required to support the capital investment programme, larger working capital requirements of inventory, and higher costs arising from recent pay parity and Holidays Act remediation payments, and collective agreement settlements. Prices for the 2025/26 year are increasing by a more modest 5.8 percent and are expected to remain at these levels for the next couple of years in line with NZBS’s strategic objectives, before returning to CPI levels from 2028/29 onwards.
NZBS acknowledges and recognises the constrained economic climate we are working in and will continue to deliver the most fiscally prudent but appropriate cost structures to ensure the correct level and quality of services are consistently delivered. We will also continue to improve our processes and systems, looking to remove inefficiencies and waste where we can.
• Delivering the planned infrastructure investment, on time and within budget.
• Working collaboratively with Health New Zealand to establish a Service Level Agreement clarifying clinical, financial, and operational arrangements and service levels between the two organisations. The overall aim will be to maximise return on cost/ investment, improve service delivery, and achieve better results for all New Zealanders.
• Maintaining and enhancing the work of Organ Donation New Zealand and the New Zealand Bone Marrow Donor Registry within the health sector.
• Increasing the donor panels and donation frequencies of Māori and Pacific peoples.
• Supporting a Ministry-led review of plasma selfreliance (where this means meeting 85-90 percent of domestic demand for fractionated products from New Zealand-sourced plasma), including
consideration of increased international sourcing. Depending on the review’s outcome, a revision to NZBS financial forecasts may be required.
• Reviewing options to limit cost uplifts, re-evaluating the capital programme of work, and greater use of debt financing to meet capital expenditure requirements.
• Improving financial capabilities through investment in people, improved processes, and new technologies.
• Developing a five-year strategy for ODNZ towards 2030.
• Working with the Ministry of Health to develop efficiency indicators to supplement current performance information.
• Ensuring the collection network capacity remains aligned to the health sector’s product and service needs.
The health needs of people in New Zealand are supported by the availability of safe and appropriate blood, blood products, tissue products, and related services. NZBS has a single output class with performance measures and targets detailed on the following pages.
1.0 Measures related to key products and services which contribute to achieving NZBS's Enduring Outcome
1.1 Key products and services are always available. Measure is instances when this is not achieved, and which have a negative consequence for a patient.
2.0 Measures related to Strategic Priority 1: Building foundations for growth
2.1 Annual employee turnover
2.2 Cultural Competency Programme
The organisation and its employees display good levels of cultural awareness in all things NZBS does (subject to budget allocation)
2.3 Health and safety in the workplace
The NZBS Health and Safety (H&S) programme is an important part of the day-to-day processes and culture of safety across the organisation.
2.4 Capital expenditure
Capital programmes are focused on facilities construction and refurbishment, procurement, upgrade and implementation of information solutions, and equipment procurement and upgrade. Delivery of projects should meet planned targets to the standards agreed.
3.0 Measures related to Strategic Priority 2: Delivering operational effectiveness
3.1 Raw material (collections) inputs
Total whole blood donations
Total plateletpheresis donations
Total plasmapheresis donations
Maintain cultural competency and development across all staff
National and regional H&S committees all meet at least once per quarter.
The number of trained H&S representatives meets the minimum one representative to 19 employees, in accordance with Section 6 of the Health and Safety at Work Regulations 2016
Project milestones achieved in line with project work programmes and business cases
3.2 Clinical Oversight Programme
All blood banks located in main hospitals (other than the six hospitals where NZBS is responsible for blood bank provision) receive NZBS Clinical Oversight visits and audit reports to enable them to meet ISO15189 requirements for IANZ Accreditation.
3.3 Donation testing
Donations are tested in accordance with NZBS Manufacturing Standards (as approved by Medsafe).
No product is released for issue to a patient until it completes mandatory testing or is released under the Exceptional Release protocol.
3.4 Regulatory compliance - Medsafe
NZBS will maintain Medsafe licenses for each of its manufacturing, testing and collection sites, to provide an assurance of Good Manufacturing Practices (GMP) compliance.
NZBS is required to maintain a license to manufacture medicines.
3.5 Regulatory compliance – IANZ (International Accreditation New Zealand)
NZBS will maintain IANZ accreditation at all NZBS diagnostic laboratories and the six blood banks we operate.
IANZ is the national authority for the accreditation of testing and calibration laboratories, inspection bodies, and radiology services.
3.6 Regulatory Compliance – ASHI
(American Society of Histocompatibility and Immunogenetics)
NZBS will maintain ASHI accreditation at the NZ Transplantation and Immunogenetics Laboratory (NZTIL).
ASHI accreditation is a programme to evaluate laboratory personnel, procedures, and facilities to ensure compliance with published ASHI standards. Maintaining ASHI accreditation is a mandatory NZBS requirement.
3.7 Financial management
Assure cost efficiency and value for money by maintaining financial sustainability in a demand driven environment.
3.8 NZBS reports for Health New Zealand
Demand reports outlining purchase volumes by key product line are provided to Health New Zealand hospitals to help them manage local usage and costs.
3.9 Organ Donation New Zealand – Performance monitoring
Performance monitoring reports are provided to the Ministry of Health.
All blood banks receive at least one NZBS Clinical Oversight visit and audit report
100% of donations are tested
All manufacturing, testing, and collection sites maintain Medsafe licensing 100% of the time throughout the period
All diagnostic laboratories and the six blood banks we operate maintain IANZ accreditation 100% of the time throughout the period
The New Zealand Transplantation and Immunogenetics Laboratory maintains ASHI accreditation 100% of the time throughout the period
Achievement of budget or better
Monthly demand reports are provided by the tenth working day of each month
Performance monitoring reports are provided quarterly
3.10 Regulatory Compliance - New Zealand Bone Marrow Donor Registry
NZBS will maintain World Marrow Donor Association (WMDA) certification. Compliance promotes global collaboration and best practices for the benefit of blood stem cell donors and transplant patients.
4.0 Measures related to Strategic Priority 3: Providing exceptional service
4.1 Blood donation donor population
NZBS maintains a donor population capable of meeting the ongoing demand for blood and blood products.
Active 12 whole blood, plateletpheresis and plasmapheresis donor panels.
4.2 Blood donation - donor satisfaction
Donors have a high level of satisfaction with the service they experience with NZBS.
Maintain WMDA certification 100% of the time throughout the period
More than 90% of donors are satisfied with their experience
4.3 Grow the total number of Active 12 3 Māori donors 8,595
4.4 Grow the total number of Active 12 Youth donors (aged 16 – 25) 12,054
4.5 Planning and communication with Health New Zealand hospitals
NZBS will demonstrate a productive and supportive strategic relationship with Health New Zealand at all levels - whether hospital, region, or national office, including proactively engaging with them to ensure they are fully informed on all relevant matters.
4.6 Haemovigilance reporting - patient safety
To promote risk awareness and best practice in transfusion, NZBS will publish a Haemovigilance Report. The report will be distributed to Health New Zealand hospitals to support a reduction in transfusion-related adverse events.
4.7 Haemovigilance reporting – patient safety
Number of transfusion-related errors made by NZBS that result in an adverse reaction in the recipient with a severity score greater than 1 and an imputability score classified as Likely/Probable or Certain.
4.8 Sustainability – carbon reduction Initiative
NZBS is committed to reducing its greenhouse gas (GHG) emissions and has set a target of reducing its carbon footprint intensity by 15 percent within five years of the baseline measurement being established, in accordance with rule 59b of the Government’s reduction programme.
4.8.1 Replace existing petrol/diesel fleet vehicles with electric / hybrid vehicles where a conversion option exists.
Measured at CEO-to-CEO level
Publish and distribute for the 2024 calendar year
Continue progression to a target of 21% reduction in GHG emissions from baseline by the 2025/26 financial year
100% replaced
The purpose of these prospective financial statements is to provide a base against which our financial performance can be assessed to inform our public accountability. These statements are prepared for this purpose, and the information may not be appropriate for any other purpose. They have been prepared in accordance with New Zealand generally accepted accounting practice (New Zealand GAAP) for public benefit entities. Their purpose is to assure Parliament of the planned performance of NZBS. Actual financial results achieved for the period covered may vary from the information presented, and the variations may be material. The information in the forecast financial statements is unaudited. There is no intention to update the prospective financial statements after presentation.
The prospective financial statements have been prepared in accordance with the requirements of the New Zealand Public Health and Disability Act (2000) and the Crown Entities Act (2004), which include the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP).
The following assumptions have been used in preparing these prospective financial statements:
• NZBS pricing to Health New Zealand for 2025/26 will be agreed with an overall weighted minimum price increase of 5.8 percent. Projected pricing in subsequent years indicates the moderation of price increases after a period of elevated strategic pricing.
• Demand from Health New Zealand | Te Whatu Ora for NZBS products and services continues to grow at the rates and volumes in the tables below.
Demand from Health New Zealand
Fresh blood product issues
Key fractionated blood product issues
Other key product issues
Other service test volumes
• The operating costs have been prepared based on known and planned expenditure to deliver the current level of service and achieve the strategic priorities outlined in the organisation’s Statement of Intent.
• Capital expenditure in 2025/26 will total $29.04 million, of which $13.85 million forms part of a five-year capital infrastructure investment programme.
• The current Westpac New Zealand Limited credit facility (total of $25.0 million) ends 31 December 2025. An extension has been requested through to 31 December 2028.
• Forecast 2025 consists of seven months of actual performance and five months of planned performance.
THE FOLLOWING TABLES PROVIDE INFORMATION ON THE FUTURE FINANCIAL PERFORMANCE, POSITION AND CASH FLOWS OF NEW ZEALAND BLOOD SERVICE.
Prospective statement of comprehensive income for the period 1 July 2025 to 30 June 2027
Prospective statement of changes in equity for the period 1 July 2025 to 30 June 2027
Prospective statement of financial position as at 30 June
Prospective statement of cashflows for the period 1 July 2025 to 30 June 2027
New Zealand Blood Service is a Crown entity as defined by the Crown Entities Act 2004 and is domiciled and operates in New Zealand. The relevant legislation governing New Zealand Blood Service’s operations includes the Crown Entities Act 2004, the Pae Ora Healthy Futures Act 2022, and the Human Tissue Act 2008. New Zealand Blood Service’s ultimate parent is the New Zealand Crown and its primary objective is to provide services to the New Zealand public. NZBS is the country’s sole provider of blood, blood products, and associated services, and co-ordinates deceased organ donation, tissue donation (eye tissue, heart valves and skin), and hip bone donation. It also operates the National Heart Valve Bank and the New Zealand Bone Marrow Donor Registry. New Zealand Blood Service does not operate to make a financial return and is a self-designated public benefit entity (PBE) for financial reporting purposes.
Statement of compliance
New Zealand Blood Service’s financial statements have been prepared in accordance with Crown Entities Act 2004 requirements, including complying with generally accepted accounting practice in New Zealand (NZ GAAP). New Zealand Blood Service is a Tier 1 entity, and the financial statements have been prepared in accordance, and comply, with PBE standards.
Presentation currency and rounding
The financial statements are presented in New Zealand dollars, and all values are rounded to the nearest thousand dollars ($000).
New or amended standards adopted
2022 Omnibus Amendments to PBE Standards, issued June 2022
The 2022 Omnibus Amendments issued by the External Reporting Board include several general updates and amendments to several Tier 1 PBE accounting standards, effective for reporting periods starting 1 January 2023. New Zealand Blood Service has adopted the revised PBE standards, and the adoption did not result in any significant impact on New Zealand Blood Service’s financial statements.
Foreign currency transactions (including those that forward foreign exchange contracts are held for) are translated into NZ dollars (the functional currency) using the spot exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the surplus or deficit.
Items in the financial statements are presented exclusive of GST, except for receivables and payables, which are presented on a GST-inclusive basis. Where GST is not recoverable as input tax, it is recognised as part of the related asset or expense. The net amount of GST recoverable from, or payable to, the IRD is included as part of receivables or payables in the statement of financial position. The net GST paid to, or received from, the IRD, including the GST relating to investing and financing activities, is classified as a net operating cash flow in the statement of cash flows. Commitments and contingencies are disclosed exclusive of GST.
New Zealand Blood Service is a public authority and consequently is exempt from paying income tax. Accordingly, no provision has been made for income tax.
The specific accounting policies are explained below:
Sale of products
Revenue from the sale of goods is recognised when the goods are sold to the customer.
Provision of services
Services provided to third parties on commercial terms are recognised as revenue once the services have been fully provided.
Funding from the Crown
Crown funding is restricted in its use for the purpose of New Zealand Blood Service meeting the objectives specified in Output agreements with the Crown. Where conditions are attached to funding from the Crown, any annual surpluses arising from the efficient delivery of services may be retained by New Zealand Blood Service for use in subsequent years. Funding from the Crown is recognised as revenue only to the extent that economic benefits of the funding have been consumed. The fair value of revenue from the Crown has been determined to be equivalent to the amounts due in the funding arrangements.
Interest income
Interest revenue is recognised by accruing, on a time proportion basis, the interest due on the investment.
Salaries and wages
Salaries and wages are recognised as an expense as employees provide services.
Superannuation schemes
Defined contribution schemes
Employer contributions to KiwiSaver, the Medical Assurance Society Retirement Savings Plan, the Mercer Individual Retirement Plan, the Lump Sum National Scheme, and the AMP NZ Retirement Trust are accounted for as defined contribution superannuation schemes and are expensed in the surplus or deficit as incurred.
Expired and written down product
New Zealand Blood Service is the sole supplier of blood, blood products, organs, and tissues needed within New Zealand’s heath system and must maintain sufficient inventory of products to ensure their 24/7 availability. New Zealand Blood Service continually monitors inventory to minimise the number of products held to expiry.
Changes in inventory represent an aggregated reporting amount, which includes cost of goods sold, production recoveries, consumables, and inventory valuation adjustments. This is consistent with the application of manufacturing standard costing methodologies and generally accepted inventory valuation principles.
The capital charge is expensed in the financial year that the charge relates to.
Borrowing costs are expensed in the financial year that they are incurred in.
Operating leases
An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset to the lessee. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term. Lease incentives received are recognised in the surplus or deficit as a reduction of rental expense over the lease term.
Cash and cash equivalents include cash on hand, deposits held on call with banks, and other short-term, highly liquid investments with original maturities of three months or less.
Short-term receivables are recorded at the amount due, less an allowance for expected credit losses (ECL). New Zealand Blood Service applies the simplified ECL model of recognising lifetime ECLs for short-term receivables.
In measuring ECLs, short-term receivables have been assessed on a collective basis because they possess shared credit risk characteristics. They have been grouped based on the days past due. A provision matrix is then established based on historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
Short-term receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include the debtor being in liquidation or the receivable being more than one year overdue.
Bank term deposits
Bank term deposits are initially measured at the amount invested. A loss allowance for expected credit losses is recognised if the estimated loss allowance is not trivial.
Term deposits
New Zealand Blood Service considers that there has not been a significant increase in credit risk for investments in term deposits because the issuer of the investment continues to have low credit risk at balance date. Term deposits are held with banks that have a long-term AA- investment grade credit rating, which indicates that the bank has a very strong capacity to meet its financial commitments. No loss allowance for expected credit losses has been recognised because the estimated 12-month expected loss allowance for credit losses is trivial. The carrying amounts of term deposits with maturities of 12 months or less approximate their fair value.
Derivative financial instruments are used to manage exposure to foreign exchange risk arising from New Zealand Blood Service’s operational activities. New Zealand Blood Service does not hold or issue derivative financial instruments for trading purposes. New Zealand Blood Service has not adopted hedge accounting.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance date, with the resulting gain or loss recognised in the surplus or deficit.
A forward foreign exchange derivative is classified as current if the contract is due for settlement within 12 months of balance date. Otherwise, the full fair value of a forward foreign exchange derivative is classified as non-current.
To the extent that inventory was received through non-exchange transactions (i.e. donated goods) for no cost or for a nominal cost, the cost of the inventory is its fair value at the date of acquisition.
However, as NZBS is not legally permitted to purchase blood from the public, the fair value for accounting purposes of blood from donors is considered to be nil. Therefore, the cost of inventories comprises all costs of collection and conversion, plus any other costs incurred in bringing the inventories to their present location and condition. After initial recognition, inventory is measured at the lower of cost and net realisable value. The cost of inventory is determined using the FIFO or weighted average methods. The valuation includes allowance for slow moving items. Obsolete inventories are written off.
Inventories are recognised as an expense when deployed for utilisation or consumption in the ordinary course of NZBS’s operation. Any write-down from cost to net realisable value is recognised in surplus or deficit in the year of the write-down.
Property, plant, and equipment consists of four asset classes, which are measured as follows:
• leasehold improvements, at cost less accumulated depreciation and impairment losses;
• plant and equipment, at cost less accumulated depreciation and impairment losses;
• furniture and office equipment, at cost less accumulated depreciation and impairment losses; and
• motor vehicles, at cost less accumulated depreciation and impairment losses.
The cost of an item of property, plant, and equipment is recognised as an asset only when it is probable that future economic benefits or service potential associated with the item will flow to New Zealand Blood Service and the cost of the item can be measured reliably.
Work in progress is recognised at cost less impairment and is not depreciated.
In most instances, an item of property, plant, and equipment is initially recognised at its cost. Where an asset is acquired through a non-exchange transaction, it is recognised at its fair value as at the date of acquisition.
Costs incurred after initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to New Zealand Blood Service and the cost of the item can be measured reliably.
The costs of day-to-day servicing of property, plant, and equipment are expensed in the surplus or deficit as they are incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are reported net in the surplus or deficit.
Depreciation is provided on a straight-line basis on all property, plant, and equipment at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of property, plant, and equipment have been estimated as follows:
Leasehold improvements
Plant and equipment
Furniture and office equipment
2 - 30 years: 3% - 50%
2 - 20 years: 5% - 50%
3 - 15 years: 6% - 33%
8 - 12 years: 8% - 13%
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter.
Impairment of property, plant, and equipment
New Zealand Blood Service does not hold any cash-generating assets. Assets are considered cash-generating where their primary objective is to generate a commercial return.
Property, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. An impairment loss is recognised for the amount that the asset’s carrying amount exceeds its recoverable service amount. The recoverable service amount is the higher of an asset’s fair value, less costs to sell, and value in use.
Value in use is the present value of an asset’s remaining service potential. It is determined using an approach based on a depreciated replacement cost approach, a restoration cost approach, or a service units approach. The most appropriate approach for measuring value in use depends on the nature of the impairment and availability of information.
If an asset’s carrying amount exceeds its recoverable service amount, the asset is regarded as impaired and the carrying amount is written down to the recoverable service amount.
The total impairment loss is recognised in the surplus or deficit.
Software acquisition and development
Computer software licenses are capitalised on the basis of the costs incurred to acquire the specific software and bring it to use.
Costs that are directly associated with developing software for internal use are recognised as an intangible asset where this results in an asset controlled by New Zealand Blood Service. Direct costs include software development, employee costs and an appropriate portion of relevant overheads.
Where software is provided under a Software-as-a-service (SaaS) arrangement, costs of configuration and customisation are recognised as an intangible asset only if the activities create an intangible asset that New Zealand Blood Service controls and asset recognition criteria are met. Costs, including ongoing fees for use of software that do not result in an intangible asset or a software finance lease, are expensed as a service contract as incurred. However, where fees represent payment for future services to be received, New Zealand Blood Service recognises these as a pre-payment and expenses these as subsequent services are received.
Staff training costs are recognised as an expense when incurred.
Costs associated with maintaining computer software are expensed when incurred.
Costs associated with developing and maintaining New Zealand Blood Service’s website are expensed when incurred.
Amortisation
The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date when the asset is derecognised. The amortisation charge for each financial year is expensed in the surplus or deficit.
The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows:
Acquired computer software . 3 - 6 years: 16% - 33% Developed
software 3 - 6 years: 16% - 33%
Impairment of intangible assets
Refer to the policy for impairment of property, plant, and equipment. The same approach applies to the impairment of intangible assets.
Short-term payables are recorded at the amount payable.
Borrowings on normal commercial terms are initially recognised at the amount borrowed plus transaction costs. Borrowings are carried at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless New Zealand Blood Service has an unconditional right to defer settlement of the liability for at least 12 months after balance date.
Finance leases
A finance lease transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee, whether or not title is eventually transferred. At the start of the lease term, finance leases are recognised as assets and liabilities in the statement of financial position at the lower of the fair value of the leased asset or the present value of the minimum lease payments.
The finance charge is charged to the surplus or deficit over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability.
The amount recognised as an asset is depreciated over its useful life. If there is no reasonable certainty of New Zealand Blood Service obtaining ownership at the end of the lease term, the asset is fully depreciated over the shorter of the lease term or its useful life.
Short-term employee entitlements
Employee benefits expected to be wholly settled earlier than 12 months after the end of the reporting period in which the employee provided the related service, are measured based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date, and sick leave.
Long-term employee entitlements
Employee benefits, such as long service leave and retirement gratuities, not expected to be settled earlier than 12 months after the end of the reporting period during which the employee provided the related service, have been calculated on an actuarial basis. The calculations are based on:
• likely future entitlements accruing to employees, based on years of service, years to entitlement, the likelihood that employees will reach the point of entitlement, and contractual entitlement information; and
• the present value of the estimated future cash flows.
Presentation of employee entitlements
Sick leave, annual leave, and vested long service leave are classified as a current liability. Non-vested retirement and long service leave expected to be settled within 12 months of balance date are classified as a current liability. All other employee entitlements are classified as a non-current liability.
General
A provision is recognised for future expenditure of uncertain amount or timing when:
• There is a present obligation (either legal or constructive) resulting from a past event.
• It is probable that an outflow of future economic benefits or service potential will be required to settle the obligation; and
• A reliable estimate of the amount of the obligation can be made.
Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. An increase in the provision because of the passage of time is recognised as a finance cost.
Equity is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified into the following components:
• contributed capital;
• accumulated surplus/(deficit); and
• adverse event reserves
Capital management
New Zealand Blood Service’s capital is its equity, which comprises accumulated funds and adverse event reserves.
Equity is represented by net assets. New Zealand Blood Service is subject to the financial management and accountability provisions of the Crown Entities Act 2004, which impose restrictions on borrowings, acquisition of securities, issuing of guarantees and indemnities, and the use of derivatives. New Zealand Blood Service manages its equity as a byproduct of prudently managing revenues, expenses, assets, liabilities, investments, and general financial dealings to ensure that New Zealand Blood Service effectively achieves its objectives and purpose while remaining a going concern.
In preparing these financial statements, New Zealand Blood Service has made estimates and assumptions about the future. These estimates and assumptions might differ from the subsequent actual results. New Zealand Blood Service continually evaluates its estimates and assumptions, which are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:
• assessing the useful lives and residual values of property, plant, and equipment;
• assessing the useful lives of software assets;
• estimating the current costs, inflation rates, discount rates, and other assumptions used in measuring the provision for lease make-good provisions;
• Year-end valuation of inventory and the provision raised for obsolete inventory items.
• estimating the rates of future salary increases, discount rates, and other assumptions used in measuring retirement and long service leave.
Estimating useful lives and residual values of property, plant, and equipment
At each balance date, the useful lives and residual values of property, plant, and equipment are reviewed. Assessing the appropriateness of useful life and residual value estimates of property, plant, and equipment requires several factors to be considered, such as the asset’s physical condition, how long New Zealand Blood Service expects to use it, and expected disposal proceeds from the future sale of the asset.
An incorrect estimate of the useful life or residual value will affect the depreciation expense recognised in the surplus or deficit and carrying amount of the asset in the statement of financial position. New Zealand Blood Service minimises the risk of this estimation uncertainty by:
• physical inspection of assets; and
• asset replacement programmes.
There have been no material changes to useful lives, depreciation methods, or residual values.
Determining lease classification
Determining whether a lease is a finance lease or an operating lease requires judgement as to whether the lease transfers substantially all the risks and rewards of ownership to New Zealand Blood Service.
Judgement is required on various aspects that include, but are not limited to, the fair value of the leased asset, the economic life of the leased asset, whether or not to include renewal options in the lease term, and determining an appropriate discount rate to calculate the present value of the minimum lease payments. Classification as a finance lease means that the asset is recognised in the statement of financial position as property, plant, and equipment, but no such asset is recognised for an operating lease.
Measuring retirement and long service leave obligations
Measuring the long service leave and retirement gratuities obligations depends on several factors that are
determined on an actuarial basis using several assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will affect the carrying amount of the liability. Expected future payments are discounted using discount rates derived from the yield curve of New Zealand Government bonds. The discount rates used have maturities that match, as closely as possible, the estimated future cash outflows. The salary inflation factor has been determined after considering historical salary inflation patterns and obtaining advice from an independent actuary.
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