CONFIDENTIAL TO BOARD MEMBERS ONLY
NEW ZEALAND BLOOD SERVICE
Minutes – NZBS Board Meeting
Minutes of the NZBS Board
Meeting held at:
by video conference and at
71 Great South Road
Epsom
Auckland
In at endance:
Mr David Chamberlain (Chair)
Dr Jackie Blue (Deputy Chair)
Dr Bart Baker
Dr Paula Martin
Ms Fiona Pimm
Mr Ray Lind
Ms Edie Moke
Apologies:
None
Management:
Ms Sam Cliffe (Chief Executive)
Mr John Harrison (Finance Director)
Board Secretariat:
Vanessa Siddins (Board Secretary)
Date:
29 October 2020
The Board meeting commenced at 9.30am.
ITEM 1.0 APOLOGIES
There were no apologies for this meeting.
ITEM 2.0 INTERESTS REGISTER
2.1
Updates to the Interest Register
E Moke advised that she is no longer a Trustee of Nga Taonga Sound and Vision.
2.2
Declarations of Conflicts of Interest for this Agenda
There were no updates to the interest register.
ITEM 3.0 MINUTES OF PREVIOUS MEETING/ACTIONS REPORT
3.1
Confirmation of Minutes – 26 August 2020 Board meeting
Motion:
The presented minutes of the 28 May NZBS Board meeting were accepted as a true and correct record
of that meeting.
Motion by:
F Pimm
Seconded by: E Moke
Carried:
Al present in favour
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S Clif e advised that a ful business case is being developed and she believes it wil be compel ing. There was discussion
around the freeing up of space at 71GSR for services such as the expansion of ODNZ and other new services. This would
also make the staging of Stage 3 works easier and there would be some of set of costs. We need to make it clear the
changes and expansion of services weren’t predictable and we can of er more than ever before.
S Cliffe noted that we did know the building had its limitations and we had looked at greenfield sites, however it was going
to cost at least double. This building wil have good future proof space here but it can’t do everything. CSL are now talking
about container shipping for plasma and we are already using Hel mann’s for finished product storage however we don’t
particularly want external parties looking after our plasma. Our preference would be to have the satel ite site closer to
Epsom than the airport as it’s more important to rent a more suitable space for our purposes. A draft business case will
come to the 3 December Board meeting
Motion:
The Board received and noted the CEO report including a discussion on the redevelopment appendix
paper.
Motion by:
J Blue
Seconded by: R Lind
Carried:
Al present in favour
ITEM 6.0 DECISION PAPERS
6.1
Delegated Authorities Policy
S Clif e took the paper as read and advised that it had been reviewed by the Executive which will hopefully make things
simpler for staff.
E Moke noted that on page 58 of 235 we need to change to Exec delegation up to 50k and make CEO from 50k-150k.
D Chamberlain asked how will this work with ODNZ noting that they would have reasonable expenditure, hiring planes
etc. S Cliffe will make a note to work that in as an addition and added that NZBS are working through a service level
agreement with Auckland DHB, ie coordinating chartering of planes.
D Chamberlain noted that it would be useful to get rid of the inconsistent acronyms, eg HRA, HR advisor HR and check
for instances of the National Medical Director when it should be CMO. He also noted that it’s not necessary to be so
specific on car rentals eg 1.8L or 2L.
Motion:
The NZBS Board formal y reviewed the draft Policy on Delegated Authorities and fol owing discussion
approved the updated Delegated Authorities policy incorporating the additional changes arising from the
Board review and discussion.
Motion by:
B Baker
Seconded by: E Moke
Carried:
Al present in favour
6.2
Adverse Financial Events Policy
J Harrison noted this paper is a complete reset so did not mark the document up, he has treated it as a brand new
document driven by the Covid -19 pandemic perspective. This organisation is a national provider and are natural y
weighted to be conservative. The speed in which we dipped into the reserves during the Covid lockdown has shown us
that the reality is our business model is not equipped for such events and we need to accept that if anything north of $5m
insurance cover is needed then we talk to our shareholder as we did with Covid recovery monies. The main change is we
now cap self-reliance at $5m, noting it currently sits at $4m as the first line of defence before turning to our shareholder. If
we are clear about the fact that we are capped then we are clear when we talk to them.
B Baker commented that the current reserve of $5m covers the loss of a pool, however when we go to the new process
with much bigger pools, this won’t cover the loss of a 24 tonne pool? J Harrison responded that the CSL new pooling wil
have potential y significant implications for the business going forward. D Chamberlain added that this is a yearly review
therefore could be increased if needed. The issue is what is a reasonable level of self-reliance? J Harrison sees it as a
buf er and a recognition that we can only do so much under self-reliance and that our shareholder is our first port of cal
over our own capacity.
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DHBs had also used EY for this Holidays Act work. The second point to note is this adjustment has tripped the interest
cover banking covenant to a negative interest cover. The Bank accepts that there had been a breach and they have
signal ed they acknowledged the breach and wil waive any and al rights for this specific instance. The third point will be
updating the financial projections contained in the 2021/22 SPE as this adjustment is material to the base year in the
financial forecasts within the SPE document.
Motion:
The Board noted the late material change to the 30 June 2020 financial statements with such change
meaning:
1.
Additional audit work is now required by Audit NZ meaning the audit is now planned to be
completed by mid-November 2020,
2.
The increase in reported deficit has triggered a possible banking breach with Westpac bank
formal y notified of the potential breach. NZBS is awaiting a formal response from Westpac as to
whether, in their view a breach has occurred.
3.
The requirement to also update the 2020/21 SPE financial projections with the updated 2020/21
SPE document to be resubmit ed to the Ministry for tabling no later than 30 November 2020,
4.
The expectation the 30 June 2020 formal sign-of and issuance of Audit opinion wil now take
place at the 3 December 2020 Board meeting.
Motion by:
F Pimm
Seconded by: E Moke
Carried:
Al present in favour
6.5
Holiday Act Remediation – Approval of next Steps in Rectification and Remediation process
J Harrison explained that the interpretation of the Holidays Act is complex and there is no payrol system that is perfect,
therefore there is always going to be a need for an intermediate manual interface for holiday payment calculations.
Apologies to the Board as the rectification work was far more complex than original y envisaged. J Harrison noted that he
had just today submit ed the finalised CFIS return as the Ministry had asked us to be specific on our Holidays Act
remediation provisioning.
D Chamberlain noted that when the SPE is updated he would like to see the Westpac letter.
Discussion followed on the cost of EY engagement and whether we could have done that work ourselves. The cost for
engaging EY in this complex undertaking of system rectification and employee remediation was estimated at $500k. J
Harrison noted that as part of the MOU there needed to be robust independent rectification of the payrol system and then
remediation of al af ected employees, present and past with MBIE and Union representatives also engaged as part of this
process. We need to get our current payroll system as compliant as possible and wil need EY to assist us in working with
Datacom to do that.
Motion:
NZBS having completed the designated Stage 1 works of the Holidays Act 2003 remediation process was
now ready to commence Stage 2 which requires the engagement of expert payrol professionals to provide
advice and service support to the Stage 2 execution as required under the sector MOU. Having established
a working relationship with EY for Stage 1, NZBS is planning to engage EY as its Stage 2 service provider
and has tabled the EY proposal with the Board for its information. Accordingly, the Board;
1. noted the planned commencement of Stage 2 of the Holidays Act remediation process and approve
the engagement of EY to provide support and specialist services to NZBS for all required Stage 2
activities.
2. approved the unbudgeted cost for the EY engagement quoted as between $460,000 and $540,000.
3. delegated to the CEO the execution of the EY contract for their Stage 2 Holidays Act service provision
in accordance with the service proposal tabled at the October Board meeting.
Motion by:
B Baker
Seconded by: R Lind
Carried:
Al present in favour
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Lunch break 12.40-1.15pm
ITEM 7.0 DISCUSSION PAPERS
7.1
Behaviour Deferral Discussion paper
D Chamberlain noted that this is a discussion paper rather than a decision paper as it’s a clinical decision not a governance
one. S Cliffe advised that the recommendation at the 28 May Board meeting was for the submission to go to Medsafe.
S Morley advised the application to Medsafe was accepted on 9 September and that part of that application was our action
plan. This is the third time we have implemented a change in our deferral period on this scale and have mapped this to
the previous instances. The action and communications plans were included in the papers to help the Board understand
how the changes would be implemented.
The team are aiming for 14 December as the go live date with a lot of the action planning being completed and the
outstanding work predominantly around staff and computer changes. We also need to inform CSL of the change to our
standards and they need to implement and include this in their Plasma Master File for al the product they created from
NZBS plasma. We are expecting confirmation of this from CSL by 13 November and if their response is delayed we will
push the go live date out to next February 2021. The preference is for the December date as we are slow moving on this
international y and fairly well aligned with Australian col eagues.
In terms of communications to internal and external stakeholders, Atlantis Health who run our cal centre and our PR
agency, wil begin early communications as we anticipate interest from news agencies. We will start firming up bot om
drawer statements in next few weeks as we know the kinds of questions we wil get. S Morley felt it was a timely change
and was happy we are in a safe place to go ahead as long as we have the confirmation from CSL. S Clif e added that this
wil form part of BIM and there wil be a specific briefing for the Minister before media and special interests’ groups. S Cliffe
will draft a let er for D Chamberlain’s review to the new Minister and Ministry
ACTION 5.2
There was a discussion about being clear around decision rights as it was not clear when this last came to the Board who
was making the decision and this needs to be clear in future particularly for new Board members. Should it be S Cliffe and
S Morley writing to the Minister instead of the Board Chair given this is seen as a clinical decision based on international
best practice. S Cliffe to check who sent it last time.
The Chair thanked everyone involved for all the effort that had gone into this. It was noted that Peter Flanagan will deal
with most of media or Sarah Morley.
Motion: The Board received and noted the report implementation and communication plans for the Medsafe approved
change in Behavioural Donor Criteria. The Board would like it recorded that they thanked everyone who was involved.
Motion by:
F Pimm
Seconded by: B Baker
Carried:
Al present in favour
7.2
Equity Request Proposal – Draft for discussion
S Cliffe noted there should be nothing the Board had not seen before in this proposal apart from the satellite site as
mentioned earlier. We don’t yet know what the budget bid template looks like or timing for it. We had advised the previous
Minister that we would be seeking $15m however now we are seeking $19m equity injection over several financial years.
This situation is due to NZBS not owning infrastructure and this is the first time we have asked for this, noting we have had
our hand forced by DHB landlord actions.
We are wel down the path with the Waikato facility, however we lost the property that the Board agreed we could enter
into discussions on. NZBS has subsequently found another suitable site. S Clif e is keeping the Ministry informed and
taking advice from Peter Jane on what they would want to see.
J Harrison noted that the main change from the earlier version of the document is that the blood bank fit outs have moved
into our own capital planning framework. We have tried to reflect what the Ministry is looking for, ie quantum of col ections,
payback calculation, additional plasma we’d be col ecting and the value of what that represents to us. We need to put in
an explicit statement that if we don’t get this equity request, it wil be to the detriment of our self-reliance intent.
E Moke queried if we could be more overt to the Ministry with our own $20m contribution to the Auckland hub, this would
be an indication to the Ministry we have already commit ed $20m ourselves. F Pimm added that it is good to put positive
strengths in repeatedly.
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P Martin asked if we had suf iciently made the point that we are expanding service offerings? S Clif e agreed that the point
about expanding service of ering is a good one, we need to think about the narrative, not just the financials.
S Clif e concluded that the next steps are to refine the paper and send it to Peter Jane at the Ministry to seek feedback.
We can let them know the paper is on its way tomorrow at the Ministry meeting. S Cliffe will make sure the views of this
Board are clearly replicated and will certainly raise that it wil be part of the BIM.
The Board received and noted the Equity Request Proposal further noting there would be some revisions, then it would
go back to the Ministry for feedback before recirculating to the Board.
7.3
Insurance Programme for 2021 Calendar Year – Policy Setting Review and Renewal Terms
J Harrison advised the renewal programme had largely been concluded noting we have now come out of a three year
price freeze for the liability policies. Consequently there wil be an increase in premiums this year. We are seeing increases
occurring around 8.2%, partly an element of volume but mostly price. Currently NZBS has a $10.m D&O policy split $8m
to liability and $2m to defence. Marsh suggested a $7m liability and $3m defence split for 2021. We are also looking at
extending cyber social engineering (social media platforms) insurance from $100k to $250k as cyberat acks have become
more aggressive. This was Marsh’s recommendation and we haven’t seen a cost indication as yet., However it might make
sense to lift the current cover. The ful renewal report is in the Diligent resource centre.
Recommendation to the Board is to go to $7m liability and $3m for the defence cost split in the D&O cover with current
thinking to also lift cyber social engineering cover to $250k.
The Board;
1. Advised the above changes to the current insurance portfolio cover set ings to apply from 1 January 2021.
2. Noted that fol owing the Board review the agreed cover set ings for al policies wil be confirmed for placing no
later than mid-December for insurance cover commencing 1 January 2021.
3. Noted the finalised 2021 insurance portfolio wil be updated to the Insurance folder of the Diligent’s resource
library for ease of Board member future reference.
4. Board Members wil be provided with the updated 2021 policies of the Directors & Of icers Liability policy together
with the Defence Costs policy for their own records.
Motion by:
B Baker
Seconded by: J Blue
Carried:
Al present in favour
ITEM 8
MONTHLY/REGULAR REPORTS
8.1
Director Finance Report – Financial Performance – 3 months to 30 September 2020 with 2021/22 Budget
Assumptions Update
J Harrison advised that he was pleased with the performance in the first quarter of the year noting the first half of the year
often delivers stronger results. The main item to highlight was that the Finance team had undertaken the first full year
forecast and that showed a positive forward outlook. Revenue looked strong for the month of October the indicated revenue
wel above budget for the October month. There is a decision to be made shortly as to whether a seventh budgeted pool
can be dropped from the current financial year leaving six pools in the forecast.
The pausing of stage 3 of the redevelopment and possible design refresh wil require an impairment charge assessment
to be made of Stage 3 capitalised costs. The forecast included an impairment of $0.5m based on changes discussed.
The 2021/22 budget round has now commenced and we are looking at a first cut with 8% per annum Ig increase. There
is modest growth in fresh product mainly red cel and cryoprecipitate The first cut of the budget will be completed prior to
Christmas to ensure it is ready for the end of January board meeting, noting the intervening Xmas and New Year holiday
break.
Discussion fol owed around the capital charge potential y reducing with J Harrison noting he is in discussions with Peter
Jane at the Ministry as DHBs have a specific al ocation which is of set but we don’t have the same model which makes
any potential claw back of saving from NZBS dif icult with NZBS unwil ingly to hand back any savings.
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standards over time with a solid plan that is acceptable to Medsafe. We have embarked on a review of our clean room
qualifications and operating practices to improve compliance. Palmerston North clean room is an issue, but our newer
sites won’t be too dif icult and we wil create compliant rooms in Auckland. The question was raised if Medsafe does a cost
benefit analysis to justify the upgraded standards? S Cliffe noted that we work in partnership with Medsafe, but made a
note as it’s a good point.
S Clif e noted that item 8 on ODNZ wil need to be updated in light of the additional information since the register was last
updated
D Chamberlain thanked S Clif e for the work on the risk register.
There was discussion on plasma and how management see demand increasing? S Clif e noted that even if demand
increases by 5% it’s still an increase and that our CMO is convinced this is an anomaly and it will increase further. B Baker
added that at some point the DHBs wil have to do something about control ing usage and an 8% increase seems
reasonable since growth seems likely to continue in the foreseeable future.
Motion:
The Board received and noted the Organisational Risk Register
Motion by:
E Moke
Seconded by: P Martin
Carried:
Al present in favour
ITEM 9
INFORMATION PAPERS
9.1
Refreshed Deed of Indemnity – Signing & Issuance to Board Members
J Harrison advised that this is the finalised refreshed Deed of Indemnity with one change from the earlier approved version
with new clause 2.2. Two copies wil be sent out to Board members to be signed, scanned, then sent back. It was agreed
to add D Chamberlain and J Blue’s signatures to the document electronically.
The Board noted the refreshed Deed of Indemnity.
ITEM 10 Correspondence
10.1
Letter from Minister Henare Draft SPE & SOI for tabling - 2 September
The let er received from the Minister Henare dated 2 September was noted by the Board. S Cliffe added that this hasn’t
been completed as there isn’t financial audit clearance.
10.2
Letter from Te Kawa Mataaho – Standards for providing information to political parties – 15 September
The letter from Te Kawa Mataaho dated 15 September was noted by the Board.
10.3
Letter to Director General of Health re national agency roles and functions paper – 9 October
The let er to the Director General of Health dated 15 September was noted by the Board.
ITEM 11 General Business
No items raised.
ITEM 12 Board Matters
12.1
Board Work Programme and Calendar
The NZBS Board Work Programme was noted by the Board.
12.2
Board Member Tenure Timetable
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The Board Member Tenure Timetable was noted by the Board.
12.3
Proposed Board meeting dates for 2021
D Chamberlain asked the Board to let V Siddins know if the dates work for them in the next few days.
ITEM 13 Next Meeting
13.1
The next Board meeting is a scheduled for Thursday, 3 December 2020. The Board agreed to make this a
zoom meeting and for the accounts to be pre-signed or digital y signed once signed of by NZ Audit.
Close of meeting: The meeting closed at 2.30pm.
Certified as a true and correct record:
________________________________
David Chamberlain – Board Chair
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