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Delivering ValueAnnual Report 2013–2014

Canadian Blood Services1800 Alta Vista Drive, Ottawa, Ontario k1g 4j5Tel: 613-739-23001 888 2 DOnATe (1-888-236-6283)blood.ca

Can

adian

Blood

Services An

nu

al Rep

ort 2013–2014

About Canadian Blood Services

Canadian Blood Services manages the national supply of blood, blood products and stem cells, and related services for all the provinces and territories (excluding Quebec). We also lead an integrated, interprovincial system for organ donation and transplantation for all of Canada.

We are dedicated to improving patient outcomes through the manufacturing and delivery of safe, relevant, quality products and services to Canadians. generous donors, volunteers, corporate partners and employees make this possible. We are grateful for their ongoing commitment to helping save or improve the lives of many Canadians.

Canadian Blood Services operates an integrated, pan-Canadian service delivery model. Our national scope, infrastructure and governance make us unique in the Canadian health-care landscape.

Canadian Blood Services was founded in 1998, based on recommendations from the krever Report on the tainted blood scandal. We are regulated as a biologics manufacturer by Health Canada and primarily funded by the provincial and territorial ministries of health. Canadian Blood Services is a not-for-profit charitable organization.

On the cover

Deborah Hunte is a blood recipient and volunteer for Canadian Blood Services. She has sickle cell disease, a genetic blood disorder requiring medical treatments as well as blood transfusions to control the pain. Unfortunately, Deborah lost her sister, Sandra, and brother, geoffrey, to the same disease.

As a member of Canadian Blood Services’ volunteer speakers bureau, she shares her story with different organizations, hoping to inspire others to become involved. It’s her way of showing gratitude to blood donors, not just for prolonging her life but the lives of her sister and brother.

Table of Contents

24 A message from our chair

and our chief executive officer

28 Management discussion and analysis

46 Management’s report to members

47 Independent auditors’ report

48 Financial statements and notes

This broad understanding of our role in delivering value frames the following annual report, which covers the fiscal year

from April 1, 2013, through March 31, 2014. Canadian Blood Services acknowledges the funding of provincial and territorial

governments in the delivery of its programs. The views expressed in this document are those of Canadian Blood Services

and do not necessarily reflect those of the provincial and territorial governments. Cre

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Canadian Blood Services Annual Report 2013–2014 1

The idea of value in health care goes far beyond dollars and cents.At Canadian Blood Services, we share the fundamental goals championed by our partners in health-care systems across the country: to ensure the best possible delivery of care and constantly improve patient outcomes while optimizing cost-efficiency.

Delivering value

Better care Better outcomes Optimal costs

By embracing the same priorities as our partners, we ensure

that the diverse initiatives we pursue are all directed at one

ultimate goal: delivering value to Canadians.

As prudent stewards of financial assets, we must

carefully manage every dollar in our budget. But this is only

one facet of our broader commitment to product safety and

effectiveness, reliability of supply and the sharing of best

practices, innovative research and proven models of service

delivery. Together, these diverse elements constitute

Canadian Blood Services’ primary values of delivering

quality care, enabling better patient outcomes and

judiciously managing costs.

2 Canadian Blood Services Annual Report 2013–2014

Manufacturing biological products

Including red blood cells, platelets, plasma and stem cells (from bone marrow, blood and cord blood)

RecRuitMent

Identifying and attracting potential donors for all products, from blood to stem cells, as the first step in the supply chain

Supply chain ManageMent

Planning, collection, manufacturing, testing and distribution of biologics products – to the right place at the right time

Everything we deliver as both a biologics manufacturer and a clinical services provider is focused on two key objectives:

improving patient outcomes through the manufacturing and delivery of safe, relevant, quality products and services to canadians.1

2 continually earning the right to serve through our commitment to safety, performance improvement, and responsible and accountable financial management.

In a climate of fiscal restraint, our strategy is clearer than ever.There are two equally important dimensions to what we deliver as a pan-Canadian organization. We manufacture safe, effective biological products designed to meet patients’ needs in the right place at the right time. Equally important, we provide clinical services in areas such as organ donation, stem cell matching and laboratory diagnostics that help advance patient care beyond the traditional realm of blood and related products.

the heart of our strategy

providing clinical services Including registries, medical services, knowledge, tools and expertise

clinical and Medical SeRviceS

From registry management to diagnostic services to guidance on product utilization

innovation

Research; knowledge creation, application and exchange; education; and new product development

“ The public must have access to information about the policy, management and operations of the blood supply system and be represented in decision-making.”

—Justice Horace Krever

At Canadian Blood Services, every strategic decision is aimed at

advancing the health and well-being of the people we’re empowered

to serve. Our organization was created following four years of

intensive public consultation by a federal commission of inquiry –

headed by Justice Horace Krever – that heard nearly 500 submissions

and reviewed more than a million pages of evidence. The Krever

Commission’s final report, tabled in November 1997, established

the mandate for a pan-Canadian system under a single operator,

with sufficient funding, clear accountability and a commitment to

making public safety paramount in every operational, technical and

clinical area. We remain focused on those founding principles as an

organization created by and for Canadians.

CreaTed by and for CanadIans

“ I tell people who have never donated that the time is now to help because you never know when it could be you needing blood.”

Brent CairnsDonor, peer recruiter


We’ve reorganized how we work to better implement our strategy.Integrated supply chain management now shapes every area of our operations as a biologics manufacturer. At the same time, we’ve brought our clinical services more closely together, guided by a common strategic direction.

The primary reason for the organizational redesign implemented

over the past year was to ensure that Canadian Blood Services

is ideally positioned to execute our long-term strategy. However,

because our redefined strategic priorities are focused on helping

us deliver our products, services and programs more effectively,

their implementation has also enabled us to do so with less

administrative support. By simplifying organizational layers and

finding ways to work more productively, we will reduce our total

number of full-time-equivalent (FTE) positions in administrative

functions by more than 10 per cent.

Two years ago we undertook a systematic review of our priorities as an

organization, which ultimately yielded a refreshed corporate strategy. This, in

turn, led us to rethink how we could best put our updated strategy into action

and support day-to-day operations. As a key initial step, we introduced a new

organizational structure at the end of last year. Implementing that structure

has been a challenging and sometimes disruptive process, but with each

incremental change we’ve stayed focused on one goal: the execution of our

long-term strategy.

To better meet our stakeholders’ needs as a manufacturer of biological

products, we’ve adopted a more integrated operating model. Lines of business

that for historical reasons were separately managed have been brought

together, ensuring our efforts are better coordinated from initial donation

through to the delivery of products on the front lines of health care. Similarly,

in our role as a clinical services provider, we’ve found better ways of organizing

ourselves to take advantage of our collective expertise in everything from the

management of transplant registries to the sharing of knowledge through

professional education.

10% reduction in administrative fTes

Riley Knowles, volunteer


from the donor clinic to the patient’s bedside, every step counts.We’re constantly re-examining each critical step in the supply chain to improve quality control, eliminate redundancy and waste, and automate processes for greater precision – all while making the system safer and more effective and efficient than ever.

Over the past year we moved to a more integrated model of

supply chain management, changing how we’re organized

to facilitate the flow of products and information. As a

result, we’re able to more effectively plan and manage all

of our activities as a biologics manufacturer, from donor

clinic operations and the sourcing of medical supplies,

through production and testing, to the timely delivery of

safe, high-quality products to patients in need. At each key

step in the process, meaningful real-time data and metrics

will now be visible to everyone on the team, helping us

make better-informed decisions.

Previously, Canadian Blood Services was organized

into lines of business that delivered specific products

and services. While this structure helped us focus

on developing unique systems and processes in each

business line, it was difficult to identify potential areas of

collaboration and take advantage of common skillsets. For

example, the two groups testing stem cells and fresh blood

components used comparable equipment and expertise

but operated independently of one another.

In our redesigned organization, all products are aligned

in a single supply chain. There are differences in systems

but also common standards for operating them. Similarly,

the specifics of accreditation may vary for employees, but

there are many opportunities for productive collaboration.

From a management perspective, there are similar practices

in everything from quality assurance to maintenance that

make it simpler – and more efficient – to oversee all

operations from one vantage point.

Nancy MacNeil, employee


Supply chain integration has not only erased the

boundaries between products but also streamlined

sequential process steps. For example, logistics is no longer

a support service managed at the corporate level; it is now

embedded in our supply chain processes, making it far

easier to plan ahead, manage day-to-day operations and

maximize resources as efficiently as possible.

Integration also opens up new opportunities for

productive innovation. For example, in taking a more

holistic approach to the first step in our supply chain,

donor recruitment, we envision building a dialogue

with donors through which we can better align their

generosity with current patient needs. By communicating

transparently about the demand for certain blood types,

optimal donation times and other factors, we can maintain

an ideal balance between building positive relationships

with donors and ensuring we derive the greatest possible

value from their vital contributions. The change in

approach has also encouraged us to be more innovative

and targeted in our talent recruitment.

Most importantly, we’ve made huge strides in our ability

to plan for the future. With a comprehensive vision of our

entire supply chain, we can review detailed performance

analytics and will now be able to produce more accurate

forecasts to better manage capacity, workflow and the

allocation of resources. If any factors affecting supply and

demand change, we can model potential scenarios and

find the best solution to keep our operations running safely

and smoothly.

Logical integration

Each unit of blood collected at a donor clinic is entered into

an information system that tracks its progress through testing,

manufacturing, distribution and final delivery to a hospital. This

process ensures it will be fully traceable at each safety and quality

control step along the way. In 2013, we introduced eProgesa, our

updated blood management information system. Working closely

with the developer, we added more robust tracking and reporting

capabilities, as well as a more user-friendly interface, to bring

even greater transparency and precision to how we manage

blood products.

Rather than roll out the upgrade in phases, we knew it would

be less disruptive to switch over to the new system in a single

transition. To prepare for the change, nearly 3,500 employees were

trained on the new system and more than 125 standing operating

procedures were updated. When the formal cutover came in

February 2014, it was the culmination of a multi-year planning

process; as a result, there were no significant issues during the

36-hour implementation, and all measures taken to maintain a

safe, secure blood supply were performed smoothly.

The upgraded information system has brought a new level

of sophistication to our management of blood collection and

distribution. With instant access to tracking data and the ability

to add medical information and adjust inventory in real time, we

gain valuable additional tools in our ongoing efforts to optimize

the supply chain. Moreover, the system’s web-based technology

will make it easier to integrate future enhancements, both to

our operating processes and to the experience of donors and

hospital partners.

ImprovIng our bLood InformaTIon sysTem


In March 2013, we moved our Halifax production and distribution functions to a new facility in Dartmouth, Nova Scotia (photo), and

shifted collection and logistics for southwestern Ontario to a new location in London. With the addition of a donor testing lab at the

Canadian Blood Services site in Brampton, Ontario – for which we received approval in the spring of 2014 – we will complete Phase I of our

multi-year National Facilities Redevelopment Program. Phase II is focused on Alberta and Saskatchewan; a business case approved by our

board of directors has been submitted to governments, who are consulting with us on funding and financing options.

auTomaTIng proCesses

The next step in the evolution of our supply

chain management will be to introduce

more automation to further enhance safety

and productivity. Our current paper-based

system is complex and susceptible to

errors. Over the past year we’ve built the

business case for automating our collection

processes so that data can be captured

when it is received by the clinic or at each

subsequent process step. This automation

strategy includes a self-administered

electronic questionnaire that donors

can complete at the clinic or – for added

convenience – fill out online prior to their

arrival. Through all stages of the donation

process, clinic staff will be able to enter

information directly into the system.

monITorIng hospITaL usage

This year we significantly enhanced

the system that enables us to monitor

and evaluate hospitals’ use of Canadian

Blood Services products. Implemented

in May 2014, the new solution allows

administrators to report on the disposition

of fresh blood components and plasma

products using a web-based application.

Data is compiled monthly to generate

detailed reports, providing a clearer picture

of how products are used and supporting

more accurate comparisons among peer

hospitals. The system also generates daily

inventory reports.

98% satisfactionThis year our performance in delivering

blood products yielded a 98% satisfaction

rating from large hospitals across Canada

that use 3,000 or more units of red blood

cells annually. This was a significant

increase from our score of 88% in the

previous year, when temporary service

challenges arose as we shifted production

and distribution functions from several

Ontario locations to our new facility

in Brampton.

addIng neW produCTIon and dIsTrIbuTIon faCILITIes


“ Being on the National Liaison Committee really opened my eyes to how critical the blood supply is to so many user groups.”

Dennis KoebelBlood donor, volunteer


There has been a slight yet steady decline in Canadian

demand for blood products as health-care systems

adopt more efficient approaches to utilization, and blood

conservation and surgical techniques. In this context, it

is vital that we continue to reduce the average number

of labour hours required per unit, even as we lower

collection targets, while always maintaining our rigorous

quality controls. At the same time, we must keep pace

with emerging expectations about how blood products

are selected and deployed – for example, the increased

demand from hospitals for platelets that have undergone

HLA (human leukocyte antigen) typing. There are also

potential donor health concerns, such as a decrease in

iron levels that may require lengthening the time between

donations for young female donors, among others.

The diminishing need for many fresh blood components

is in contrast to the growing demand for specialized

plasma products. We have seen an average annual increase

of 6.5 per cent in use of the latter over the past several

years, despite new utilization measures introduced by

some provincial health ministries. Of particular concern

is the growing off-label use of these expensive products,

sometimes in the absence of compelling medical evidence

that they support effective treatment. The resulting

pressure on our traditional sources of supply has obliged

us to begin evaluating alternatives.

We treat every product as if lives depend on it – because they do.Canadians trust us not only to collect and distribute blood and stem cells but also to get the right products to the right patients at the right time at the right cost – while upholding the highest standards of safety.

Jeanette Posey, volunteer


$65m savingIn recent years, Canadian Blood

Services has negotiated new contracts

with suppliers of immunoglobulins,

recombinant factor VIII (a blood-

clotting protein used to treat

hemophilia) and other plasma

products to secure the best possible

pricing and terms. Compared to the

previous year, these agreements

helped save $65 million this year in

plasma product costs – a testament

to the value of our buying power on

behalf of the provinces and territories.

$12.5mCanadian Blood Services has

committed to raising $12.5 million in

support of Canada’s national public

cord blood bank. The bank will be a

vital resource for all Canadians in need

of stem cell transplants, especially

for Aboriginal Canadians and people

of mixed ethnicity, who face more

difficulty in finding donor matches.

879,940 whole blood unitsThis year we collected 879,940 units

of whole blood from a national pool

of just over 412,000 active donors —

who average slightly more than two

donations annually

naTIonaL pubLIC Cord bLood bank

Over the past year Canadian Blood Services continued to spearhead the development of

Canada’s national public cord blood bank. The first collection site for umbilical cords – a

rich source of stem cells for the 70 per cent of transplant patients who must find matches

outside their families – was launched at The Ottawa Hospital in September 2013, at the

same time as the bank’s first manufacturing and storage facility began operating in the city.

A second production and storage facility is scheduled to open in Edmonton in the fall

of 2014, and additional collection sites in Brampton, Edmonton and Vancouver will begin

operations over the coming year. Meanwhile, we continue to focus on our capital campaign

for the cord blood bank. We have undertaken to raise $12.5 million as part of the total

combined commitment of $48 million from the provincial and territorial ministries of

health (except Quebec). The Campaign For All Canadians, the first fundraising effort ever

undertaken by Canadian Blood Services, has raised $8.4 million in cash and signed pledges

as this report goes to press. With the campaign now in its public phase, we expect to meet

the balance of our commitment by the end of December 2014.

The peak of CommITmenT

In August 2013, a team led by Canadian Blood Services CEO Dr. Graham Sher climbed

Africa’s Mount Kilimanjaro to support the Campaign For All Canadians, which was

launched to fund a national public cord blood bank. All 25 climbers reached the summit

(photo), generating wide interest via social media and raising more than $350,000 plus an

additional $115,000 in sponsorships.

projeCT reCovery

In a world first, the Canadian Hemophilia Society has enlisted the support of Canadian

Blood Services and two other manufacturers to turn unused blood products into

hemophilia medicine for developing countries. Officially launched in September 2013,

Project Recovery will take previously discarded cryoprecipitate from Canadian blood

donations and use it to produce factor VIII, a protein necessary for blood coagulation.

Distributed through a humanitarian aid program overseen by the World Federation

of Hemophilia, the product will go to patients who receive little or no medical treatment

and would otherwise be at risk of death or severe disability. The project is expected to

yield enough units of factor VIII each year to treat approximately 5,000 joint hemorrhages,

the most common symptom of hemophilia, in both children and adults, sparing them

excruciating pain and crippling long-term damage.


for us, quality is more than protection; it’s about adding value.Our quality journey remains focused on maintaining the highest standards of product safety and effectiveness, and reliability of supply. At the same time, we offer expert guidance to help our partners achieve better patient outcomes.

Our perspective on quality is outward-looking. Internally,

all of our processes are focused on consistently delivering

safe, tested and effective products and services. The true

value of those efforts, however, can only be measured by

their success in meeting the needs of patients. The quality

of a donated blood unit, or the efficacy of a match in one

of our transplant registries, is ultimately determined by

whether it has the intended effect on the person who

needs it most.

At the same time, our quality journey is framed by

another key insight: We’re in business to provide not

only the products and services we develop but also our

expertise on how they can achieve the most positive

impact. Our medical specialists provide guidance to

clinicians on what fresh blood component is best for

treating a specific condition or how our organ registry

data can help to shape a transplant strategy. On a broader

level, we regularly share research with health-care

administrators on new products in development and the

improvements we’ve made to our own processes.

We’re constantly enhancing and augmenting the tools

we provide to hospital blood banks to encourage more

effective product utilization. For example, we’ve improved

our web-based disposition reporting system for all fresh

blood components and plasma products. And we’ve

introduced an inventory management reporting system

that will facilitate the development of an accessible and

automatically updated national inventory. We’re also

working with governments and other stakeholders to

improve the tracking of factor concentrates issued for

home-care use, with the goal of better understanding and

improving utilization of these products as well.

Our overall goal is to seek more areas where our

knowledge and experience can add value. It’s one more

dimension of our role as a proactive partner in health

care, working alongside other leaders toward common

quality goals.

Ellen Flores-Abad, employee


In August 2013 Canadian Blood Services issued a recall notice to hospitals regarding

1,500 units of blood for which one of our standard tests – for Cytomegalovirus (CMV) –

was not performed according to specifications for a period of three days.

CMV is a common community-acquired infection that lies dormant in white blood

cells and is harmless for most people. CMV-negative blood is required only by a

few patients with special needs, such as low-birth-weight infants and people with

compromised immune systems. Therefore this was a recall addressing a remote risk.

That said, any recall is clearly unwelcome for an organization committed to ensuring

the safety and reliability of Canada’s blood supply. To minimize the likelihood of any non-

conformance with established standards, we must ensure that the rigorous policies and

procedures we’ve put in place are always followed. And in the rare event that a process is not

properly executed, it’s essential that we have systems for rapidly detecting the lapse, along

with appropriate steps for recalling, if necessary, any potentially compromised products.

Importantly, in this case the fact that a shortcoming in CMV testing was discovered

in a routine audit confirms that our exacting safety standards are indeed being applied.

And our management of the response and subsequent recall demonstrates our adherence

to sound quality principles – though of course we’d prefer that this event had never

occurred in the first place.

payIng for pLasma

The debate over paid plasma donations

continued to generate public discussion

over the past year, notably when the

Ontario provincial government introduced

legislation that would effectively prohibit

organizations from paying all blood donors,

including plasma donors. Our position

on this issue remains clear: The question

of whether to allow payments to plasma

donors is a moral and ethical decision

for policy-makers to arrive at through

consultation and debate with Canadians.

It is not about safety. Decades of evidence

have proven that pharmaceutical products

made from the plasma of paid donors are

just as safe as those made from the plasma

of volunteer donors. Although Canadian

Blood Services is exempt from the above

prohibition, we remain committed to

voluntary donation and have no intention

of paying donors.

82%

Trust ratingIn our annual survey of Canadians’

trust in the blood system we scored

two points higher than our 80%

target for 2012–2013.

anaTomy of a reCaLL


“ Having had several family members receive blood, myself included, the best part of my job is inspiring others to donate and save someone else’s life.”

Melissa Smith-McGuireBlood recipient, employee


We’re building deeper, long-term relationships with donors.To strengthen the vital human element in our supply chain, we’re encouraging dialogue with donors in various ways, guiding them toward other donation options and keeping them engaged through the unfolding stages of their lives.

We’ve made donor relations a distinct area of focus in

our redesigned organization. In taking a fresh look at our

interactions with donors, we’re shifting our focus from how

we can fulfill our own operational needs to how donors

view us, as well as the role they can play in improving

other people’s health and the overall quality of care. This

is an important step for Canadian Blood Services as we

recognize the growing demands being placed on donors in

all areas of their lives. We must evolve our donor relations

to remain relevant to Canadians and remind them that

blood donation is a rewarding way they can contribute to

their communities.

To get to know our donors better, we’re adopting a

“life-cycle management” approach. By focusing on the

progressive stages of donors’ relationships with us –

awareness of need, first donation, repeat donations and,

ultimately, advocacy to family and friends – we can

find more opportunities to build dialogue and reinforce

their support. At the same time, we can broaden their

understanding of other areas where they might consider

contributing. For example, someone who regularly gives

blood may be interested in also registering as a potential

stem cell or organ donor; a female donor who becomes

pregnant may be willing to donate her umbilical cord to

the national cord blood bank; and so on.

Our new donor relations focus has three key

components: audience, communications and technology.

For our core audience of potential donors, Canadian Blood

Services draws from a robust and loyal base. Historically,

however, our knowledge of donors has largely been limited

to the specific interactions they’ve had with us. The

result has been a fragmented view of our most committed

audience as we’ve connected with them at blood clinics

and via the stem cell registries – up to a dozen interactions

in all. Now we’re seeking donors’ help in gaining a more

complete picture of who they are. This includes not only

demographic information but also the nuances of their

diversity, as well as the attitudes behind their support for

Canadian Blood Services and comparable organizations

with social purpose.

Tyler Dorey, employee. Dave Thomson, volunteer


Getting to know our donors better is a two-way street

that requires a coordinated approach to communications.

We plan to deliver more timely updates on all aspects

of what we do, from transplantation registries to

epidemiological studies to the national public cord blood

bank. We also need to provide clear, accessible answers

to donors’ questions about everything from priority

blood types and hospitals’ changing needs to eligibility

criteria and what to expect at a clinic. In the age of

digital communications, people want immediate access

to information so they can make better decisions. And

by sharing the reasons behind our decision-making – for

instance, why a surplus of AB-positive blood might lead

us to suggest that such donors consider plasma donations

instead – we can build the kind of open and collaborative

relationships that retain donors.

As donors embrace new technologies, they expect to

interact with us via multiple channels. Last year we had

7.5 million telephone conversations with existing and

potential donors; we opened a second National Contact

Centre in Saint John, New Brunswick, to provide additional

support in handling the high volume of inbound and

outbound calls. At the same time, donors booked nearly

100,000 clinic visits through our online appointment

system. Going forward, we’ll be putting even more

emphasis on digital communications – beginning with our

new mobile app (see sidebar) – as we offer donors the fast,

convenient connectivity they’ve come to expect in all areas

of their lives. By engaging with them via Facebook, Twitter

and other social media, as well as the interactive areas

of our enhanced website, we’ll gain insights into how we

can better respond to their interests and build a dynamic

community, particularly among the Millennials who

represent our future donor base.

1. awareness of need

2. First blood donation

3. Regular blood donor

4. advocacy to others

5. Support in other areas (registries, cord blood, fundraising, research)

gIvIng on The move

To ensure donors can connect with us in

all the ways they prefer to communicate,

this year we invested in the development

of our first mobile app, GiveBlood, which

was officially launched in the spring of

2014. Donors can use it to search for

nearby clinics, book appointments, review

eligibility criteria, set reminders and chat

with the donor support team anywhere

they travel with their smartphones.

Available in English and French for both

Apple iOS and Android devices, GiveBlood

has been embraced by donors; as this

report goes to press, it is the top-ranked

health-related app in Canada. The next

release will include more social media

features. At the same time, work on the

redesigned Canadian Blood Services

website, which began in this reporting year

with a launch date targeted for later in

2014, has taken into account the needs

of mobile users.

The donor LIfe CyCLe

1

25

34


“ I feel very blessed to have had the opportunity to save someone’s life. If it happened again, I’d be the happiest person.”

Kabir ChughtaiBlood and stem cell donor


Counting on donors

150,000Approximate number of donors who were

deferred last year because they did not meet the

eligibility criteria for donation. We appreciate

their desire to give and are working to suggest

other ways they can stay involved.

4.6 millionEstimated potential Canadian donor pool, based on

eligibility criteria for our products and services, as well

as a predisposition to be engaged in the community.

450,000Short-term target for growing the pool of

active donors. This goal takes into account

several factors, including an overall decline

in demand for blood products against the

rising use of specialized plasma products,

the emergence of new pathogens around

the globe and the impact of lower iron levels

(and therefore reduced donation frequency)

among some donors.

412,000Current pool of active Canadian Blood

Services donors and registrants – our

primary focus for deepening engagement

and suggesting new ways they can

contribute.

jim

Sticky Note

Doug had suggested that this be moved closer to the dotted orange line and the numbers colour coded to match the correct area on the illustration.


Canada has a lower organ donation rate (relative to

population) than other developed countries, and demand

continues to exceed supply. While there has been some

improvement since 2008, when the mandate of Canadian

Blood Services was extended to include organ and tissue

donation and transplantation (OTDT), the pace of progress

has been modest. As we noted in responding to the 2013

annual report of the Canadian Organ Replacement Register

(CORR), that pace could be accelerated if provincial

governments adopt a cost-shared, nationally coordinated

approach to tackling the challenge. Canadian Blood

Services is well positioned to facilitate the process, but

for the system to improve there must also be continued

investment in both front-line provincial services and

interprovincial collaboration.

One important sign of progress has been an expansion

of deceased donations, as programs have been able to

acquire more organs after cardiac death. Working in this

area with the critical care community and provincial organ

donation organizations, Canadian Blood Services has

supported knowledge translation by arranging for national

and international experts to participate in programs aimed

at enhancing performance at the front lines of patient

care. We’ve also developed leading practices with some

of the world’s most respected practitioners – and in the

process have advanced our own expertise – as we create

workshops in which teams from successful programs

engage with and provide mentoring to their counterparts

in the interprovincial programs. Our evidence-based

recommendations have triggered changes in program

delivery that lead to higher donation rates – and more

transplants.

We have also consulted extensively on the proposed

design of a national donation and transplantation system,

as detailed in our 2011 Call to Action report. Since the

report was tabled with governments, its recommendations

on organ donation and transplantation have been

implemented to varying degrees across the country. Our

We create vital connections that improve health and save lives. From our management of the Canadian Transplant Registry and its related interprovincial programs – the Kidney Paired Donation program, the National Organ Waitlist and the Highly Sensitized Patient program – to the best practices we’ve developed in delivering services across the country, we draw upon a wealth of experience as we collaborate with Canada’s health leaders to help patients get the care they urgently need.

Heather MacDonald, employee and blood donor, and

daughter Alexis MacDonald, blood recipient


collective efforts are now focused on creating the report’s

recommended “clinical” governance structure among the

provinces, including guidelines on how provincial systems

that collaborate on programs will be accountable to one

another. This work is critical to ensuring the next level

of success.

In the area of tissue donation and transplantation, a

unified pan-Canadian strategy remains elusive. Demand

for many types of specialized tissue continues to be met

largely by products imported from the U.S. Across Canada,

eye and tissue programs still operate essentially with a

provincial focus; tissue production and distribution among

the provinces have yet to be integrated. In the meantime,

in the absence of a unified strategy, Canadian Blood

Services plays a key role by advancing the development of

leading practices in tissue banking, professional education

to encourage tissue donation, public awareness initiatives

and the collection of national data.

Demand for stem cell transplants continued to grow last

year, albeit at a slightly slower rate, as research continues

to reveal promising new treatment uses. The OneMatch

Stem Cell and Marrow Network, the national registry

developed and managed by Canadian Blood Services, had

nearly 340,000 adult donors at the end of March 2014,

an increase of 9.8 per cent over the previous year. This

strong growth reflects the success of our recruiting efforts

to improve the demographic composition of the registry.

The increase also mirrors the expansion of potential uses

for stem cells to include treatment of Type 1 diabetes,

rheumatoid arthritis, congenital heart disease and cerebral

palsy – adding to a list of more than 50 other diseases and

disorders, from leukemia to aplastic anemia. Meanwhile,

cord blood banks worldwide are challenged by inventories

of lower-quality umbilical cords with minimal donor

diversity – a cautionary trend as we work to establish

Canada’s national public cord blood bank.

339,558Total number of searchable

stem cell registrants at the end

of March 2014 – an increase

of 9.8% over the previous

fiscal year.

333Stem cell transplants from

unrelated donors performed

in Canada (excluding Quebec)

during the last fiscal year.

39%Proportion of male registrants,

of whom 16% are under age

36. The latter group represents

optimal donors, as stem cell

transplants from young men

result in fewer complications

and better patient outcomes.

40%Total male and female

registrants under age 36 –

up four percentage points,

reflecting our targeted

recruitment of younger donors.

7% Segment of ethnic males

under age 36 – a gain of one

percentage point, but evidence

that there is still work to be

done in aligning the registry

with the 30% of Canada’s

population who are aboriginal,

from ethnically diverse

backgrounds or of mixed

ethnicity.

21%Increase in Canadian donations

for international patients

over the past year, reflecting

our close cooperation with

the operators of more than

70 other stem cell registries

globally.

1,000Approximate number of

Canadians currently on waiting

lists for suitable unrelated

donors. The total number of

patients seeking life-saving

stem cell matches has tripled

over the last five years, making

the national public cord blood

bank more needed than ever.

stem cell stats


The kidney paired donation (kpd) program extends the

transplant possibilities for prospective kidney recipients who have

willing but incompatible donors. Since 2010, all provinces, including

Quebec, have participated in the KPD (formerly the Living Donor

Paired Exchange). The program enables matches among multiple

donor–recipient pairs, as well as anonymous non-paired donors,

making possible “domino” chains of kidney exchanges. By the

end of March 2014, the KPD had facilitated more than 250 kidney

transplants across the country. Making it possible to perform over

65 transplants annually requires extensive matching, modelling

and management of pairs – work that is coordinated by Canadian

Blood Services and executed in partnership with the program team

The national organ Waitlist (noW) program is a real-time

online waiting list for patients in need of heart, lung, liver, pancreas

or bowel transplants. Leaving behind an antiquated paper-based

system, transplant programs and organ procurement agencies

can now search a web-based registry of nearly 1,000 potential

recipients. The comprehensive listing of all transplant candidates

makes it possible to obtain a true national picture of current wait

times and access to organs for transplantation.

The national highly sensitized patient (hsp) program,

launched in 2013, tracks and facilitates matches for transplant

candidates who are at high risk of rejecting kidneys because of

increased antibodies from past exposures to foreign tissue, typically

through pregnancy, transplants or blood transfusions. The larger

the pool of participants, the greater the likelihood that a successful

match will be found. As of June 2014, program members across the

country are able to work together more effectively to find these

challenging matches.

The Canadian Transplant registry provides all three

interprovincial programs with real-time access to information,

including significant transactional and point-of-service data to

support listing, allocation and reporting – which, in turn, can

inform far more robust national reporting on donation and

transplantation. Data and analytic services will continue to

evolve in the coming year.

In 2008, Canada’s federal, provincial and territorial

governments (except Quebec) recognized the need for

improvements to the country’s organ and tissue donation

and transplantation (OTDT) system. Together, they gave

Canadian Blood Services a mandate to conduct activities

related to:

• Developing a strategic plan, including mandate, roles and

responsibilities in a nationally coordinated system.

• Leading practices; professional education and knowledge

translation; and public education.

• System performance improvement, including system-

wide reporting.

• Three interprovincial patient registries for organ

transplantation: the Living Donor Paired Exchange

(LDPE), the National Organ Waitlist (NOW) and the Highly

Sensitized Patient (HSP) program.

The three registries are now more accurately described as

a single Canadian Transplant Registry that serves three

interprovincial programs for organ listing and sharing: the

LDPE – now renamed the Kidney Paired Donation program

– the NOW and the HSP program.

These programs and the Canadian Transplant Registry

are guided by interprovincial policy and informed by

evidence-based leading practices developed collaboratively.

Point-of-service data from program activity is exchanged

with the web-based Canadian Transplant Registry, which

will ensure that system reporting is more timely and

readily available going forward. The Quebec government

also participates through a separate agreement with

Canadian Blood Services, making this a truly pan-Canadian

endeavour.

Today more than 100 leading transplant practitioners

across Canada – with support from our experts, as well

as from organ procurement organizations and health

ministries – work together to bring greater transparency

and traceability to the interprovincial processes for

managing waitlists and sharing organs.

Interprovincial programs and the Canadian Transplant registry


We work every day to extend the impact of what we

do far beyond our organizational footprint. As we’ve

mapped out our strategy for delivering value, the final

critical component is a renewed focus on groundbreaking

investigation and the sharing of leading practices with our

partners in health care. Over the past year we restructured

our centre for innovation to better leverage our strengths

in three key areas: research, product and process

development, and knowledge mobilization.

We’ve proposed a comprehensive program focused

on utilization management. Working closely with major

hospitals across the country, we can help to develop

guidelines for using blood products more efficiently and

effectively. We are now working with governments to plan

collaborative efforts in this area so that together we can

promote leading practices that balance productivity gains

with the highest standards of care.

All of our research and education initiatives are aimed

at achieving the best possible patient outcomes. In helping

innovators make their work more widely accessible, in

developing new products and services and in responding

to emerging needs within our own organization, our

fundamental objective is the same: to get appropriate

products or services quickly to the patients who need them

– and only if they need them. Even when we collaborate

on frameworks for the entire blood system, whether

focused on blood safety, risk-based decision-making or the

economics of service delivery, the final touchstone of value

is always the quality of individual patient care.

building future value starts with nurturing today’s best ideas.System sustainability is not just a matter of securing the supply chain and fine-tuning our services. We’re dedicated to encouraging innovation and sharing new approaches, both within our organization and throughout the global health-care community.

Mark Berrigan, employee


researCh

focus: targeted research to improve the

safety and quality of blood products.

goal: promote innovation that addresses

the most important clinical, product quality

and patient care needs in transfusion and

transplantation medicine.

deveLopmenT

focus: applied process and product

development driven by research findings

and the needs of the blood system.

goal: translate research into new

development through innovative problem-

solving and process improvements;

facilitate design, validation and

implementation; support quality-focused

operations through the evaluation of

product specifications and manufacturing

processes; monitor trends, risks and

opportunities.

knoWLedge mobILIzaTIon

focus: acquiring, evolving and translating

knowledge to advance patient care and

help shape policy and clinical practice.

goal: share knowledge nationally

and globally to promote excellence in

transfusion and transplantation medicine

and in the commercialization of processes

and products.

Centre for innovationThrough our centre for innovation, Canadian Blood Services plays a leadership role in all aspects of research – discovery,

development and clinical – across the spectrum of blood transfusion medicine. Highlights of the past year include:

• Further knowledge development about emerging technologies in areas such as red blood cell immunocamouflage

and intravenous immunoglobulins (IVIG) replacement.

• Evidence-based data gathered for the Canadian Standards Association to inform changes in red blood cell storage

and cryosupernatant plasma regulation.

• Contributions to several key clinical trials, as well as the publication of systematic reviews and guidelines on

clinical practice.

The centre allocates information, expertise and funding across three interrelated areas:

In March 2014 the topic of organ donation and death received

national media coverage, sparking widespread public discussion.

Canadian Blood Services joined the conversation, pointing out

that Canada is recognized as a global leader in establishing ethical

and medical practices for determining when an organ donor can

be declared dead. Indeed, two years earlier, in collaboration with

the World Health Organization, we had hosted a highly influential

conference on the development of international guidelines for the

determination of death. The subsequent conference report, with

contributions from renowned experts in critical care, neurology,

neurosurgery, emergency medicine and other areas, was released

in March 2014. As we emphasized to Canadians, current practices

in our country are consistent with these guidelines.

The centre for innovation regularly develops ResearchUnits – plain-language summaries of recent research – and posts

them on our website at transfusionmedicine.ca/research-summaries.

Also available on the site is an annual progress report reviewing the centre’s wide-ranging research, development and

knowledge-sharing initiatives.

deTermInaTIon of deaTh


aWards and reCognITIon 2013–2014

• Dr. Debra Lane, the Canadian Blood Services medical director for

Manitoba, received the Ortho Award for excellence in transfusion

medicine from the Canadian Society for Transfusion Medicine.

• A research team led by Dr. Sandra Ramirez was honoured by the

International Society for Blood Transfusion for contributing the

best paper of the year to the journal Vox Sanguinis. The study of

how long red blood cells can be exposed outside a controlled

environment could change standards and benefit blood operators

worldwide.

• The Canadian Blood Services direct-response TV “Rally” campaign

earned a Silver at the annual Canadian Marketing Association

awards in the Customer Management: Not-for-Profit/Fundraising/

Public Service category.

• Canadian Blood Services was also recognized with a Bronze for

eRecruitment in the same category of the Canadian Marketing

Association awards.

• Our online advertising campaign was showcased as a Facebook

for Business success story, earning “Distinction” from the social

network.

• Our online booking solution won a third-place award ($25,000) in

the “Drive to the Next Million” ImagineNation Challenge sponsored

by Canada Health Infoway.

• OneHero.ca, a donor recruiting microsite created by Canadian

Blood Services for the OneMatch Stem Cell and Marrow Network,

was named Site of the Day by the Favourite Website Awards (FWA).

• The GiveBlood mobile application, consistently ranked as Canada’s

#1 health-related app by the App Store, was recognized with an

award for innovative development from the Association of Donor

Recruitment Professionals (ADRP).

• Canadian Blood Services was honoured with an Outstanding

Achievement Award from Scotiabank, along with a Customer

of the Year Award from software developer Readsoft, for driving

efficiency and automation through our new travel and expense

card program and for implementing best practices in digital

invoice processing.

• Dr. Graham Sher, CEO of Canadian Blood Services, was named

president of the American Association of Blood Banks (AABB); he is

the first non-American to hold this position.

• Leah Hollins, chair of the board of directors of Canadian Blood

Services, was recognized with an honorary doctorate by the

University of Manitoba.

• Rabbi Dr. Reuven P. Bulka, a member of the board of directors of

Canadian Blood Services, was named to the Order of Canada.

• Kimberly Young, director, donation and transplantation,

at Canadian Blood Services, was named president of the

International Society for Organ Donation; she is the first non-

physician and the first woman to assume this leadership role.


During the past year, Canadian Blood Services continued to

build on the solid record of performance we’ve maintained

since our founding in 1998. Collaborating closely with

our stakeholders, we met and surpassed our targets in

key areas such as operational efficiency and hospital

satisfaction levels – while working as always to ensure the

safety and effectiveness of the products and services we

provide to health-care systems across Canada.

This sustained momentum, however, must be seen in

the context of our times. The provincial and territorial

governments that fund Canadian Blood Services, still

challenged by the severe fiscal restraint of recent years,

have no choice but to intensely scrutinize every tax dollar

invested in health care – and this pressure shows no sign

of abating. At the same time, we work with our funding

partners in a political climate that demands the highest

standards of transparency and accountability from any

organization supported by public money. Canadians

rightly expect us to be exemplars of sound governance and

responsible management while providing a solid return on

their investment.

how do we define value?Delivering value has been central to our purpose from

the day we assumed responsibility for operating Canada’s

blood system. In highlighting this aspect of our mandate,

we must begin by defining what value means in health

care. Value cannot be appraised simply by looking at a

balance sheet. Optimal cost-efficiency is just one facet of

a three-sided model that gives equal importance to the

effective delivery of care and the improvement of patient

outcomes.

The opening sections of this annual report explore

all three dimensions of the value we deliver – not as an

abstract ideal, but through the concrete steps by which we

put our strategy into action, along with the tangible results

that our collective efforts produce. As both a manufacturer

of biological products and a provider of clinical services,

we gauge our progress by how effectively we help deliver

quality care and contribute to better outcomes while

optimizing the impact of every dollar spent.

delivering valueA message from our chair and our chief executive officer


measuring our performanceOur activities over the past year yielded many objective

measures of success. In the area of service delivery, for

example, we achieved a 98 per cent satisfaction rating

among major Canadian hospitals. And as an illustration

of our progress in the realm of patient care, we increased

the number of registered stem cell donors by nearly 10

per cent, boosting the treatment prospects for potential

recipients across the country. That outlook will further

improve as we continue to build Canada’s national public

cord blood bank, which opened its first collection and

processing facilities in Ottawa in the fall of 2013.

As for the fiscal dimension of value, we will reduce our

administrative staff costs through the elimination of some

100 full-time-equivalent positions. This year, we reduced

and avoided costs associated with new contracts for plasma

products. We expect to save or avoid an average of about

$120 million in costs compared to what we would have paid

annually, assuming foreign exchange at parity. Over five

years, the total savings will amount to approximately

$600 million from this year through to 2018.

Inviting an outside reviewTo validate our internal performance measures with a

third-party assessment, in 2011 the board of directors

voluntarily proposed a collaborative independent review

of our operations. This comprehensive assessment was

conducted by Ernst & Young from October 2012 through

March 2013, and the results were summarized in a report

tabled the following May.

The report concluded that the majority of Canadians

continue to trust in the safety of the blood system and

believe that Canadian Blood Services, as the steward of

that system, acts in their best interests. The external

consultants’ analysis found that we excel in several key

areas: the safety and reliable supply of products, hospital

satisfaction, stakeholder engagement and transparency,

and the achievement of cost-efficiencies. The report

also set out 79 recommendations identifying areas of

potential improvement in our organization, as well as in

the provincial and territorial health ministries. Most have

already been implemented, and work on the remainder is

well underway.

The performance review focused in particular on the

relationship between Canadian Blood Services and our

funding partners, underlining that we must continue

to collaborate on improving system performance while

remaining “independent parties, operating at arm’s

length, in a mutually respectful fashion.” We are now in

discussions with our funders on how to better delineate

our complementary roles. From our perspective as an

independent provider, we are responsible for managing our

operations with full transparency and accountability under

a clearly defined governance model. Our funders, for their

part, see the benefits of safeguarding our independence

while defining the parameters of our mandate, along with

all aspects of health policy and the expenditure of public

funds in their jurisdictions. As a result of our ongoing

dialogue, we hope to see a collaborative pan-Canadian

accountability agreement in place by the spring of 2015.

a strategy for changeA big part of delivering value is looking for opportunities

to add value wherever we can. In our focus on quality,

for example, we not only provide safe, effective products

and services but also offer expert guidance on how to

maximize their impact, whether we’re advising front-line

physicians on the use of specific fresh blood components

or sharing insights with health-care leaders on improving

utilization.

Equally crucial, as we extend our positive contribution

across the spectrum of Canadian health care, are the

great strides we’ve made this year in restructuring our

organization. As a biologics manufacturer, we’ve applied

the principles of integrated supply chain management to

every area of operations, from the lifetime relationships we

build with donors to the fine-tuning of countless process

steps that help ensure we always get the right product

to the right place at the right time. And as a provider

of clinical services, from organ donation registries to

innovative research and education programs, we evaluate

success in terms of our ultimate impact on the lives of

patients in need.

What frames all of our efforts is a well-defined strategy

– grounded in experience, adaptable to changing needs and

aimed at achieving what has always been our overarching

goal: delivering value to Canadian health care and to all

Canadians.

Dr. Graham Sher Leah Hollins

Chief Executive Officer Chair, Board of Directors


Board of directors

Leah Hollins

Chair (Victoria, British Columbia)

R. Wayne Gladstone

(Port Perry, Ontario)

Elaine Sibson

(Halifax, Nova Scotia)

The Honourable Denis Losier

(Cap Pelé, New Brunswick)

Henry J. Pankratz

(Cobourg, Ontario)

Suromitra Sanatani

(Victoria, British Columbia)

Dunbar Russel

(Toronto, Ontario)

Rabbi Dr. Reuven P. Bulka

(Ottawa, Ontario)

Robert H. Teskey

(Edmonton, Alberta)

Dr. Christopher Carruthers

(Ottawa, Ontario)

Dr. Gary Glavin

(Headingley, Manitoba)

Craig Knight

(Victoria, British Columbia)

Mike Shaw

(Regina, Saskatchewan)


Dr. Graham D. Sher

Chief Executive Officer

Dr. Dana Devine

Chief Medical and Scientific Officer

Ian Mumford

Chief Supply Chain Officer

Pauline Port

Chief Financial Officer and Vice-President, Corporate Services

Mark Donnison

Vice-President, Donor Relations

Ralph Michaelis

Chief Information Officer

Andrew Pateman

Vice-President, Talent Management and Corporate Strategy

Jean-Paul Bédard

Vice-President, Public Affairs

Dr. Christian Choquet

Vice-President, Quality and Regulatory Affairs

Watson Gale

Vice-President, General Counsel and Corporate Secretary

executive management team


Management discussion and analysis

This financial report includes forward-looking statements. By their nature, forward-looking statements require the organization to make assumptions and are subject to important known and unknown risks and uncertainties that may cause the organization’s actual results to differ from those disclosed. While the organization considers its assumptions to be reasonable and appropriate based on current information, actual results may vary from the results predicted in the forward-looking statements.

oveRview

Fulfilling our mandate as both a biologics manufacturer and a clinical services provider involves a broad range of activities, including:

• Managing the blood supply.• Purchasing manufactured plasma protein products from commercial plasma sources, manufacturing selected

products from plasma collected in Canada, and arranging for the purchase of recovered plasma in the United States.

• Providing international leadership in overseeing scientific investigations and supporting innovation, and sponsoring and training researchers to contribute to transfusion medicine research.

• Educating health professionals to ensure our fresh blood components are used wisely.• Operating the Canadian Organ Donation and Transplantation Network (including three interprovincial registries

for organ transplantation), and facilitating the development and implementation of leading practices and professional education for OTDT, public education and awareness, and research and innovation.

• Overseeing Canada’s OneMatch Stem Cell and Marrow Network in all provinces and territories outside Quebec, as well as developing and managing a national public cord blood bank.

• Providing diagnostic services in some provinces.

goveRnance

Canadian Blood Services is unique in Canada’s health-care system. We supply blood products and services across all provincial and territorial jurisdictions excluding Quebec, with the exception of the organ registries in which Quebec does participate. We were created in 1998 and operate under a memorandum of understanding between the federal, provincial and territorial ministers of health. We are mandated to function as an independent, not-for-profit organization that operates at arm’s length from government.

Governance at Canadian Blood Services is guided by the principles of accountability, safety, engagement and transparency.

Members

The provincial and territorial ministers of health provide the majority of the funding for Canadian Blood Services and are the organization’s corporate members. The ministers have the authority to appoint the organization’s board of directors and approve Canadian Blood Services’ three-year corporate plan subject to annual budget approval.

The Provincial/Territorial Blood Liaison Committee provides support and advice to the ministers and deputy ministers of health on issues affecting the blood system. It comprises a representative from each funding province and territory, with a lead province, which is currently New Brunswick.


Board of directors and committees

Appointed by the provincial and territorial ministers of health, the board of directors comprises 13 members, including a chair of the board; four regional representatives; six medical, scientific, technical, business and public health representatives; and two consumer interest representatives. The board meets at least six times per year; two of those meetings are open to the public.

Record of attendance by directors

Board and committee meetings held this year:

Number of meetings held

Board 8

Finance and Audit Committee 5

Governance Committee 4

Pension Committee 3

Talent Management Committee 4

Safety, Science and Ethics Committee 4

Safety, Science and Ethics Committee

Talent Management Committee

Pension Committee

Board of Directors

Governance Committee

Finance and Audit Committee

MaNagEMENt aNalysis


The following chart summarizes board members’ attendance at board and committee meetings and the honorariums paid this year:

number of board number of committee director (1) chair meetings attended meetings attended honorariums paid

Leah Hollins Board 7/8 13/14 $41,375

Robert H. Teskey 8/8 10/10 $19,125

Rabbi Dr. Reuven P. Bulka 8/8 10/10 $21,750

Dr. Christopher Carruthers Talent Management 7/8 10/12 $23,750 Committee

R. Wayne Gladstone Finance and Audit 8/8 12/12 $30,000 Committee and Pension Committee

Dr. Gary Glavin Safety, Science 8/8 8/8 $23,625 and Ethics Committee

Henry J. Pankratz Governance Committee 7/8 9/9 $32,875

Elaine Sibson 3/4 5/5 $10,875

Suromitra Sanatani 8/8 9/9 $21,000

Dunbar Russel 4/4 4/4 $10,875

Denis Losier 7/8 8/9 $20,250

Craig Knight 4/4 4/4 $10,875

Mike Shaw 6/8 7/9 $17,250

(1) Excludes directors who retired from the board in 2013–2014.

directors’ compensation: Canadian Blood Services’ bylaws provide that directors be remunerated for attendance and participation at meetings of the board of directors and committees as set by the members. The chair receives an annual retainer, other directors receive meeting honorariums and all directors are reimbursed for their travel expenses. Directors are also entitled to per diems when they are required to conduct business on behalf of the board. The table below shows the honorariums paid to the directors of the board.

Board of directors’ retainer and honorariums

Annual retainer for the chair $15,000 per annum

Meeting honorarium $750 per diem

Meeting preparation honorarium Two days for chair @ $750 per day

1.5 days for committee chairs @ $750 per day

One day for directors @ $750 per day

Travel to meetings Up to two days (depending on origin and destination) per meeting @ $500 per day

Days on business honorarium $750 per diem (for events such as meetings on behalf of Canadian Blood Services)

Travel Travel costs according to Canadian Blood Services’ expense policy

MaNagEMENt aNalysis


MaNagEMENt aNalysis

Executive management team compensation

Canadian Blood Services is an organization founded on the principles of safety, openness and transparency – traits deeply rooted in our culture. The manner in which we compensate executives reflects these principles. As such, Canadian Blood Services has a comprehensive and rigorous executive performance management and compensation program, following best-practice principles in corporate governance.

Each year, the performance of members of the executive management team, including the CEO, is measured through the use of executive scorecards. These scorecards contain objectives linked directly to the corporate balanced scorecard, which defines the measurable goals of the organization. Performance against these objectives drives compensation decisions at Canadian Blood Services.

The CEO’s performance is both overseen by the Talent Management Committee of the board and validated by the full board of directors. Each year, the Talent Management Committee commissions an independent study to gather comparative compensation data for the CEO and conducts a detailed review of the CEO’s performance against objectives. Every second year, the committee independently commissions outside expertise to lead a 360° performance review of the CEO. The committee’s review is validated by the full board, which ultimately decides whether to make any compensation adjustments.

Members of the executive management team are reviewed through a similar process. The CEO meets with all of the executive management team members, who report directly to him, and reviews their performance based on the corporate performance indicators contained in their respective executive scorecards. The CEO’s recommendations for compensation adjustments are presented to the Talent Management Committee of the board for approval and subsequent validation by the full board.

Components of the compensation program

The compensation program for executives comprises several elements, referred to as “total compensation.” Total compensation includes: • base salary• annual pay at risk • pension plan• benefits and perquisites


Canadian Blood Services aims to align its total compensation for executives with the market median for comparator groups.

MaNagEMENt aNalysis

(1) Temporary responsibility pay of 12 per cent included from January to October 2013.

(2) Temporary responsibility pay of 12 per cent included.

(3) Temporary responsibility pay of 15 per cent included from January to October 2013.

(4) Temporary responsibility pay of 15 per cent included.

Vacation entitlement: Year 1 – four weeks; Year 2 – five weeks; Year 3 – six weeks

Severance terms: First year – 12 months; >1 year – 18 months

Standard benefits package: Executive benefit package covering health, dental, life insurance,

long-term disability, defined-benefit pension and health-care spending account.

compensation at risk as a percentage Base salary of base salary annual allowance

Dr. Graham D. Sher 2013 – $560,000 25% $18,000 Chief Executive Officer 2012 – $560,000 2011 – $560,000 2010 – $560,000

Ian Mumford 2013 – $335,304 22.5% $10,000 Chief Supply Chain Officer 2012 – $335,304 2011 – $335,304 2010 – $335,304

Watson Gale 2013 – $286,649 20% $10,000 Vice-President, General Counsel 2012 – $286,649 and Corporate Secretary 2011 – $286,649 2010 – $286,649

Pauline Port 2013 – $342,238 22.5% $10,000 Chief Financial Officer 2012 – $342,238 20% and Vice-President, Corporate Services 2011 – $342,238 2010 – $342,238

Dr. Dana Devine 2013 – $326,890 20% $10,000 Chief Medical and Scientific Officer 2012 – $326,890 2011 – $326,890 2010 – $326,890

Dr. Christian Choquet 2013 – $277,812(1) 20% $10,000 Vice-President, Quality 2012 – $283,060(2) and Regulatory Affairs 2011 – $283,060(2) 2010 – $252,733

Andrew Pateman 2013 – $292,000 20% $10,000 Vice-President, Talent Management 2012 – $292,000 and Corporate Strategy 2011 – $292,000

Jean-Paul Bédard 2013 – $295,757(3) 20% $10,000 Vice-President, Public Affairs 2012 – $302,588(4) 2011 – $302,588(4) 2010 – $263,120

Ralph Michaelis 2013 – $216,000 20% $10,000 Chief Information Officer

Mark Donnison 2013 – $225,000 20% $10,000 Vice-President, Donor Relations


MaNagEMENt aNalysis

ouR BuSineSS

Organizational redesign

The new structure will result in a reduction of 111 full-time equivalent (FTE) positions. This reduction in administrative and management functions resulted in one-time restructuring costs of $12 million but will save approximately $6 million annually in salaries with a project payback of two years.

Operational resources

As a pan-Canadian biologics manufacturer and clinical services provider, we bring many operational resources to bear to deliver our products and services effectively and efficiently.

At a glance:

Permanent collection sites 41

Bloodmobiles 3

OneMatch field sites 8

Annual donor clinics > 21,000

Blood testing facilities 2

Manufacturing facilities 10

National Facilities Redevelopment Program

The National Facilities Redevelopment Program (NFRP) is a comprehensive, 10-year strategic initiative to upgrade our current facility infrastructure and operational resources to better meet current and future business, customer and patient needs.

NFRP Phase I

The first phase of our redevelopment program is a $128 million investment in our production and distribution facilities in our South-Central Ontario and Atlantic regions. This phase is nearing completion.

The single remaining project from Phase I was to complete a new donor testing laboratory in Toronto. As one-half of a two-site donor testing model, the new testing facility is vital to the overall safety and security of the national blood supply. Canadian Blood Services had originally planned to renovate the existing donor testing laboratory located at 67 College Street, Toronto. However, we now have member-approved funding to build an addition to the existing Brampton production and distribution facility to house the testing laboratory rather than renovate the 67 College site. The addition to the Brampton facility is expected to be completed in the summer of 2015 and will then be validated and commissioned. The move date is targeted for the spring of 2016.

NFRP Phase IIa

Phase IIa of the plan includes building a new facility in Calgary to house a testing laboratory; consolidating blood production and distribution from Edmonton, Calgary and Regina; leasing new spaces in Calgary, Edmonton, Regina and Saskatoon; and selling existing buildings. The limitations of the current facility in Calgary expose us to significant risk in dealing with new and emerging threats. The Calgary facility has insufficient and inappropriate space for existing and new production and testing requirements. The Calgary facility is also located in a flood plain, and operations were disrupted in the flooding in June 2013. In 2011, Canadian Blood Services transitioned from an inefficient three-site donor testing model to a consolidated two-site model (Toronto and Calgary). The new Calgary facility is needed to provide long-term sustainability for redundant testing services between Calgary and Toronto.The business case for Phase IIa is before the provinces and territories for funding approval.


Our carbon footprint

This year we began tracking and reporting on Canadian Blood Services’ corporate carbon footprint, evaluating our impact on the environment by measuring the greenhouse gas emissions associated with our operations. We calculated our nationwide footprint for the year to be 29,875 tonnes of carbon dioxide equivalent (tCO2e), with emissions broken down as follows:

69% emissions from buildings: fuel, energy and steam consumption and refrigerant emissions

21% transportation: fleet fuel use, product shipments and business travel

9% waste management: biomedical and general waste

1% administrative paper use

We aim to reduce our carbon footprint by one per cent in the upcoming fiscal year. Building on our current best practices, we will work to meet that target through a wide range of sustainability initiatives.

Working capital

Canadian Blood Services’ liquidity is largely influenced by the timing of funds received from the provinces and territories, the volume of inventory held, the amount of deferred contributions and the number of large capital- intensive projects, such as facilities redevelopment.

Our consolidated cash and cash equivalents balances declined by $10.3 million to $180.4 million as of March 31, 2014. A large proportion of these funds is deferred for a specific use or activity or represents funding received in advance from members. Excluding these restrictions, Canadian Blood Services had approximately $50 million in unreserved operating cash, or approximately 18 days of cash on hand, at March 31, 2014.

MaNagEMENt aNalysis

Unreserved operating cash Post-retirement and post-employment Total deferred contributions Days of cash on hand

250

200

150

100

50

0

35

30

25

20

15

10

5

0

$ M

illio

ns

Day

s of

cas

h on

han

d

$103.3

$103.7

$90.3 $91.4 $90.1 $98.5$105.2

$184.2

$161.7 $167.5

$188.6

$199.5

$190.7$180.4

$15.7

$17.3

$18.3

$19.220.7

$22.3

$24.4

$65.2

Actual Actual Actual Actual Actual Actual Actual 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 2013–2014

$40.7 $58.9 $78.0 $88.7 $69.9 $50.8


MaNagEMENt aNalysis

With the higher cost of plasma protein products and our planned drawdown on unreserved operating cash, pressures on working capital are more likely to increase. Running a national system, we are also exposed to varying payment terms and balances owed to and owed by Canadian Blood Services in each jurisdiction. These varying terms and balances put pressure on our working capital and could require us to access our line of credit.

One of the larger cash draws is related to the funding of plasma protein products, which represent almost 80 per cent of our inventory. Canadian Blood Services is proactively managing the weeks of inventory on hand to lower the cost of inventory held and reduce pressure on our working capital. However, as utilization and foreign exchange rates increase, so does the inventory value, which offsets some of the reductions.

Inventory – Plasma Protein Products

This year, Canadian Blood Services received approval to defer $3.7 million in members’ contributions. This amount results from efficiencies delivered in advance and was essentially returned to the provinces and territories in the form of a deferral to help offset costs associated with plasma protein products next year. Canadian Blood Services also received approval to defer $25 million in unrestricted operating cash for use in future years. These funds will be applied predominantly to the automated supply chain, one of our productivity initiatives underway, and the testing component of NFRP Phase I, a key safety initiative. With this proposal, Canadian Blood Services implemented two key initiatives without incremental funding from members. Canadian Blood Services is mindful of the fiscal environment and is keenly aware of its financial stewardship role in the greater health-care sector. Given this context, we acknowledge it will become more challenging to fund future infrastructure projects and productivity initiatives, and innovative funding proposals will be required.

130

120

110

100

90

80

70

60

$ M

illio

ns

$82.9

Actual Actual Actual Actual Actual Actual Actual 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 2013–2014

$118.8 $96.4 $86.1 $86.6 $103.0 $91.2


Costs

The costs to run our business are highlighted below. Plasma protein products represent our largest cost, at 45 per cent of total costs. This cost is driven by product utilization by members, the price of the products and foreign exchange. Our second largest cost is the labour required to deliver our products and services, at 33 per cent of total costs. The remaining expenses we incur to run our business are for medical supplies, which include supplies such as blood bags used in the collection of fresh blood components, general and administrative costs, and depreciation and amortization.

Productivity and efficiency journey

This year we continued our productivity and efficiency journey as we focused on providing lean, efficient processes that provide high value to our customers and members. Over the past several years, Canadian Blood Services has committed to finding significant operational efficiencies. In this year’s budget, we established a target of efficiencies, cost reductions and cost avoidance measures totalling $95 million.

The productivity and efficiency objectives we have set were to be met through a variety of initiatives, including favourable medical supplies pricing, the implementation of apheresis platelet collection devices and Docon shakers (blood mixing scales), improvements in production processes and various activities in strategic sourcing, as well as changes to marketing and donor recruitment. These objectives were met and helped to offset inflationary pressures and system investments and to lower costs.

Financial peRFoRMance oF ouR pRoductS and SeRviceS

Fresh blood components and support services

Canadian Blood Services manufactures and delivers fresh blood components derived from whole blood and apheresis collections. The activities required to supply these products include recruitment of donors, collection, processing, testing, shipping to our hospital customers, and support activities.

Funding

The total members’ contributions this year were $465.8 million (excluding NFRP), or 0.2 per cent less than last year. Cost reduction initiatives and decreased demand have contributed to this decrease. Funding in 2014–2015 is budgeted to decrease by 2.9 per cent and will be lower than 2009–2010 funding.

MaNagEMENt aNalysis

Cost of plasma protein products $459,120 45%

Staff costs $332,302 33%

General and administrative expenses $117,367 12%

Medical supplies $84,873 8%

Depreciation and amortization $21,826 2%


The demand for red blood cells, platelets and plasma and the associated number of whole blood collections have the greatest influence on activities associated with fresh blood components. The main factors affecting costs are labour and materials needed to collect and produce each unit of product. Additional expenses, such as fuel, utilities, information technology, facility costs and support functions, also influence these costs.

Whole blood collections and red blood cell shipments and discard rate

Demand for red blood cells in Canada declined by 1.9 per cent, consistent with the declining demand experienced by our international counterparts. This decline in demand has made forecasting more challenging as we try to accurately project collection and shipment needs for future years. The implications of not predicting demand more precisely are problematic in terms of our ability to meet financial and efficiency targets, such as cost per unit (CPU) and labour hours per unit (LHU); we often need to book clinics and associated staff six months in advance, and it is challenging to change our clinic plan once the demand targets are established and collection plans are made.

Declining demand would normally increase inventory. However, the combination of declining collections and declining demand for red blood cells has offset the impact on inventory.

Discard rates continue to cause concerns; the level of discards is too high. Although discards will never be zero – there are components that should rightly be discarded during the supply chain process due to a variety of factors – lowering our discard rate is a priority. We will focus on low-weight and underweight collections, as well as component expiry.

MaNagEMENt aNalysis

Whole blood collections (actual) Red blood cell shipments (actual)

Whole blood collections (anticipated) Red blood cell shipments (anticipated) Discard rate

Member funding (actual) Member funding (anticipated) Per cent change

1,100,000

1,000,000

900,000

800,000

700,000

600,000

500,000

10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0%

Uni

ts

Dis

card

rat

e

910,

218

901,

639

879,

940

870,

400

838,

047

828,

664

824,

520

833,

318

817,

397

801,

595

803,

381

777,

707

771,

486

767,

628

8.4%

9.3% 9.2%

7.7%7.2%

6.7% 6.7%

Actual Actual Actual Budget Plan Plan Plan 2011–2012 2012–2013 2013–2014 2014–2015 2015–2016 2016–2017 2017–2018

$470

$465

$460

$455

$450

$445

$440

$ M

illio

ns

Year

-ove

r-ye

ar p

er c

ent

chan

ge

Actual Actual Actual Actual Actual Budget 2009–2010 2010–2011 2011–2012 2012–2013 2013–2014 2014–2015

+10%

+8%

+6%

+4%

+2%

0%

–2%

–4%

–6%

–8%

–10%

Fresh blood components and support services – Total funding allocation

$454.6

+2.2% +2.6%

+0.1% +0.0% –0.2%

–2.9%

$466.5 $466.7 $466.9

$452.3

$465.8


Platelet demand and collections through apheresis

Total platelet shipments include platelets collected through apheresis and those derived from whole blood collections using the pooled production method. Demand for platelets remained flat compared to last year.

Platelet shipments by source

Since they are sourced from a single donor, platelets derived from apheresis are often preferred to treat sensitized patients because this process enables more precise matching and avoids multiple donor exposures. Although sometimes preferred for this or other medical reasons, platelets derived from apheresis are much more expensive to collect than a platelet dose manufactured through pooled production. The continued expansion of cardiac and oncology services suggests ongoing demand for platelets in the coming years. However, this must be balanced against new medical innovations and therapies and more patient blood management programs, which may reduce the overall need for blood products. For example, new chemotherapy agents are less toxic on patients’ bone marrow, thereby reducing the need for platelet transfusion support in cancer care.

Platelet apheresis procedures – Single and large-volume

MaNagEMENt aNalysis

Pooled platelets (actual) Apheresis platelets (actual) Pooled platelets (anticipated) Apheresis platelets (anticipated) Per cent change

Single Large-volume Large-volume platelet per cent

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

+16%

+11%

+6%

+1%

–4%

–9%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Uni

tsN

umbe

r of

pro

cedu

res

Year

-ove

r-ye

ar p

er c

ent

chan

geLa

rge-

volu

me

plat

elet

per

cen

t sp

lit

119,528

20,370

11,338 12,136

16,495 16,745 16,745 16,745 16,745

17,765 10,635 7,160 7,160 7,160 7,160

114,977 114,206 115,001 155,001 155,001 155,001

+4.7%

36%



–3.8%

41%

–0.7%

61%

+0.7%

70% 70% 70% 70%

0% 0% 0%


Num

ber

of li

tres

MaNagEMENt aNalysis

Through platelet apheresis technology, we can collect a single dose or, if the donor qualifies, a large-volume platelet (LVP) dose. An LVP dose is twice the volume of a single collection, which means that increasing the proportion of LVP collections reduces the required number of donations.

The LVP split rate for this year of 61 per cent exceeded the annual planned LVP split rate of 51 per cent. Approximately $0.5 million in medical supplies and $0.4 million in staff costs were avoided this year due to the increase in the LVP split rate. From the inception of the LVP collections technology in 2008–2009 to this year, we saved and avoided $22 million in costs.

Plasma

Plasma can be manufactured from whole blood or apheresis collections. It can then be either transfused, used to make platelets derived from pooled production or diverted to our commercial fractionators for further manufacturing.

Plasma for transfusion demand

New licensed protein product substitutes, such as prothrombin complex concentrates (PCCs) and solvent detergent plasma, as well as more conservative transfusion practices, have contributed to the decline in demand for transfusion plasma in Canada, although at a slower rate than in prior years. Canada is completely self-sufficient in transfusion plasma, meaning patient demand is completely met within the country. This year, total litres shipped for transfusion fell 4.3 per cent while demand continued to weaken.

Plasma for fractionation demand

Plasma shipments for fractionation

The drugs manufactured from fractionated plasma are generically referred to as plasma protein products. There are many different types of plasma protein products, and the major categories include albumin, which is used to treat fluid loss in burn and trauma patients; immunoglobulins, which are used to treat infections and immune disorders; and products that are used to enhance clotting in patients with hemophilia and other bleeding disorders.

Like many other countries, Canada has never been self-sufficient in the collection of plasma for fractionation into plasma protein products. Over time and in consultation with our stakeholders, Canadian Blood Services developed a strategy to mitigate the associated risks.

Recovered plasma Source plasma Cryosupernatant plasma for fractionation U.S. recovered plasma Per cent change

270,000

250,000

230,000

210,000

190,000

170,000

150,000

130,000

+20%

0%

–20%

–40%

–60%

–80%

–100%

Year

-ove

r-ye

ar p

er c

ent

chan

ge

5,4929,530

6,6554,311

6,277 4,320 4,320 4,320

4,659 5,30111,017 12,306 13,162 14,045

+21.8%

–4.2%+0.1% –1.1%

+3.5%–0.3% +0.1%

187,520

26,904

176,945

31,476

175,896

34,529

168,402

32,000

166,651

42,000

165,011

42,000

164,249

42,000



MaNagEMENt aNalysis

Given that self-sufficiency is not operationally or economically feasible in a volunteer, unpaid model, Canadian Blood Services strives to maintain a sufficiency of 30 per cent for immunoglobulin (Ig). The demand for Ig continues to rise in Canada and internationally, and, to meet our needs, Canadian Blood Services purchases surplus recovered plasma (from voluntary donations) from the United States for fractionation.

Costs

Expenses associated with fresh blood components and support services increased by $14 million compared to last year. This increase is mainly due to higher staff costs as a result of organizational redesign, offset by reduced medical supplies due to lower collections this year.

Key performance indicators

labour hours per unit – Core operations for fresh blood components

The LHU is the ratio of total labour hours to collections of all fresh blood components. This ratio is an integrated measure of our performance for the supply chain and support services. The supply chain comprises our costs incurred in recruitment, collection, production, testing, distribution and transportation. The collections include the collections of all equivalent units and are categorized into three broad groups: whole blood collections, platelet collections and plasma collections. The following graph summarizes our LHU since 2011–2012.

Staff costs $301,398 60%

General and administrative expenses $98,506 20%

Medical supplies $77,318 15%

Depreciation and amortization $21,826 4%

Labour hours per unit (actual) Labour hours per unit (anticipated) Year-over-year per cent change

6.90

6.80

6.70

6.60

6.50

6.40

6.30

6.20

6.10

6.00

+10%

+8%

+6%

+4%

+2%

0%

–2%

–4%

–6%

Labo

ur h

ours

per

uni

t co

llect

ed

Year

-ove

r-ye

ar p

er c

ent

chan

ge6.71

6.61

6.71

6.63

6.77

6.55 6.56

–3.9%


–1.5%

+1.4%

–1.1%

+2.0%

–3.2%

+0.1%


MaNagEMENt aNalysis

Weaker collections contributed to the increase in LHU compared to last year. As collection volumes go down, labour hours (those directly associated with collections), which are only partially variable, need to drop at a similar rate or LHU will increase. Fixed costs also contribute to this increase. In addition to lower collections, other factors that contributed to the increase include higher than budgeted labour hours worked at our National Contact Centre. These hours resulted from higher hemoglobin deferrals and higher than planned clinic hours worked, training and backfill hours. Hemoglobin contains iron and is the pigment that makes our blood red and is essential to transport oxygen to the cells in our body. Donors’ hemoglobin levels are measured as a precautionary measure because hemoglobin levels temporarily drop after donation. Donors who do not meet the minimum hemoglobin criteria are deferred.

Cost per unit

CPU is the ratio of total expenses to shipments of all fresh blood components. This ratio is a gross productivity indicator. Though the CPU is not a direct product cost, it is used to gauge our productivity. The CPU links the inputs and outputs of the fresh blood components activities. The inputs are staff costs, medical supplies, general and administrative costs and the amortization of capital assets. The outputs are the shipments of fresh blood products.

The CPU for this year was $351 compared to the budget of $338, within the predefined range of $331–351. The unfavourable CPU is due to weakening demand and compares unfavourably with the CPU last year, which stood at $343.

Plasma protein products

Our formulary of plasma protein products includes plasma-derived, recombinant and therapeutic products such as Ig, albumin and various clotting factors (e.g., recombinant factor IX (rFIX), recombinant factor VIII (rFVIII) or recombinant factor VIIa (rFVIIa)). Plasma protein products represent just under half of our total funding.

Variance analysis

2013–2014 2012–2013 Volume Price Total Actual Actual over (under) over (under) over (under)

Albumin 17,805 16,424 1,769 (388) 1,381 Starches – 135 (135) – (135) Ig 201,361 199,982 13,533 (12,154) 1,379 Recombinant factor VIII 102,702 134,006 8,538 (39,842) (31,304) Recombinant factor VIII/VWF 20,808 15,806 4,298 704 5,002 Recombinant factor IX 30,659 27,506 2,513 640 3,153 Recombinant factor XIII 2,076 508 1,152 416 1,568 Inhibitors 43,312 38,562 2,665 2,085 4,750 C1 esterase 17,030 10,735 6,931 (636) 6,295 Prothrombin complex 7,175 8,681 802 (2,308) (1,506) Immunoglobulin 11,475 10,099 1,025 351 1,376 Solvent detergent plasma 1,654 1,303 326 25 351 Other plasma protein products 4,351 3,489 723 139 862 plasma protein products 460,408 467,236 44,140 (50,968) (6,828)

program administration (1,144) 2,026 – (3,170) (3,170)external customers 96 251 (155) – (155)

total program 459,360 469,513 43,985 (54,138) (10,153)

Note: Certain products in the above table have been reclassified from prior years.


MaNagEMENt aNalysis

Cost variables

A number of variables influence the costs of plasma protein products, including:• Product utilization – How much of the products are being used or the demand for the various products.• The price of products and annual contractual increases in the consumer price index (CPI).• Foreign exchange – Approximately 85 per cent of all products are purchased in U.S. dollars, which exposes

us to fluctuations in the foreign exchange markets.

This year’s total costs compared to last year’s total costs reflect the effects of these variables. Through the successful tendering activities completed in 2011–2012 and 2012–2013, we saved $54.1 million in the price of plasma protein products. When foreign exchange and CPI are removed, product price savings were approximately $65 million. We are proud of this accomplishment, which will result in cost savings and avoidance to the health-care system and Canadians more than $600 million over five years.

Patterns in product demand vary substantially. This variability adds significant pressure to funding these products; savings obtained through favourable prices are eroded by increases in utilization. This year’s price savings of $65 million were offset by increases in product demand of $44 million, mainly through growth in the following products.

Growth in demand from 2011–2012 to 2013–2014

+70%

+60%

+50%

+40%

+30%

+20%

+10%

0%

–10%

–20%

Gro

wth

2011–2012 2012–2013 2013–2014

Immunoglobulin

Recombinant factor VIII

Recombinant factor IX

Recombinant factor VIIa

C1 esterase


+70%

+60%

+50%

+40%

+30%

+20%

+10%

0%

–10%

–20%

–30%

MaNagEMENt aNalysis

Growth in demand for the largest-volume products, immunoglobulin and recombinant factor VIII, by province and territory was as follows.

Growth in demand by province and territory for 2013–2014 versus 2012–2013

Foreign exchange risk

Actual Actual Budget Budget

2013–2014 2012–2013 2013–2014 2014–2015

U.S. dollar/Canadian dollar 1.04 1.00 1.01 1.05

The program is exposed to foreign exchange risk through contracts for products in U.S. dollars. We manage this risk through a combination of hedges and spot purchases. This year the rate was $1.04 on our U.S. dollar purchases, $0.03 more than the budgeted rate. After periods of favourable exchange rates, the current environment is a perfect storm of higher foreign exchange rates and product utilization, which will mask the benefits of price savings and create funding pressures on members.

Foreign exchange continues to be a significant funding risk in 2014–2015. Markets have traded above the budgeted rate of $1.05 in the first quarter, and current forecasts indicate the budgeted rate of $1.05 will not be achievable.

Stem cells

Through the OneMatch Stem Cell and Marrow Network, Canadian Blood Services coordinates the search for stem cells on behalf of all Canadian unrelated stem cell patients, manages all logistics related to collection and ensures transport of stem cell products to transplant centres or international registries. Stem cells may be sourced from bone marrow, from peripheral blood of healthy adults or from umbilical cord blood. All three products are used in Canadian patient transplants.

As with fresh blood components, demand for stem cell products is volatile and uncertain. But in the case of stem cells, the uncertainty is more focused on rate of growth and the source of products, be it from cord blood or peripheral blood. We work closely with transplant centres and physicians to better understand trends and changes in practice and to ensure we are recruiting the right donors to optimize the likelihood of finding matches for patients.

The program is funded by the provinces and territories, as well as revenue generated from services, including search activations, and products provided to international registries.

Total expenses decreased $2.7 million compared to last year. This decrease is mainly due to the timing of project expenses and a lower cost of searches because fewer searches were performed.

Prince British New Edward Nova Newfoundland Yukon Northwest Nunavut Columbia Alberta Saskatchewan Manitoba Ontario Brunswick Island Scotia and Labrador Territory Territories Territory TotalIg 8.1% 2.3% 8.0% 3.2% 8.4% 2.1% (20.8%) 12.3% 19.0% (9.1%) 0.1% – 6.8%rFVIII 15.2% 21.5% 7.0% (6.0%) 4.8% 2.3% 12.8% (14.5%) (22.3%) 66.5% (8.4%) – 6.4%

Gro

wth


MaNagEMENt aNalysis

Diagnostic services

We provide diagnostic services in the western provinces and in Ontario, including the testing of samples referred from hospitals and clinics.

Member funding matches the cost of diagnostic services received. This year revenue and costs for diagnostic services were consistent with last year. Expenses include staff, general and administrative charges and medical supplies required to complete patient laboratory and patient therapeutic services.

Procedure volumes

British Columbia Alberta Saskatchewan Manitoba Ontario

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

Red cell serology 58,204 60,460 85,009 89,482 20,863 20,486 113,898 157,924 – –

Platelet immunology – – – – – – 1,923 2,089 – –

Immunohematology – – – – – – – – 1,404 1,344

Stem cell – – 194 209 – – – – 213 236

Autologous 2 – 12 16 26 47 10 23 387 541

58,206 60,460 85,215 89,707 20,889 20,533 115,831 160,036 2,004 2,121

This year, Canadian Blood Services continued to work on the pilot phase of the Trace Line laboratory information system (LIS) rollout to the hospital sites in Manitoba, completing the rollout to three hospitals. We intend to expand Trace Line to 15 hospital sites in Manitoba by December 2014. The implementation of the new LIS provides a common and consistent platform for managing patient test records across the diagnostic services laboratories. The electronic interfacing of the automated testing equipment with the new LIS will reduce the number of errors due to the elimination of manual entry of test results and the automatic faxing of prenatal reports to the requesting physician. This automation will increase productivity.

Fundraising

Canadian Blood Services raises funds to support building a better blood system in Canada. Financial contributions enable us to invest in new technologies, enhance programs to recruit and retain blood and stem cell donors, and support research and development programs in transfusion medicine. These contributions have a direct impact on the future growth of the blood system and its capacity to save more lives.

Canadian Blood Services launched a $12.5 million fundraising Campaign For All Canadians to help build a national public cord blood bank. Since the inception of the campaign, we have raised $8.4 million in cash and signed pledges toward this goal as this report goes to press. This year we received the largest single contribution to Canadian Blood Services to date at the “Founder” level of $1.5 million from Marshall Eliuk. Additional leadership gifts include two “Miracle-Maker”-level gifts (more than $1 million) by Roche Diagnostics Canada and Bayer Inc. and two “Champion”-level gifts (more than $250,000) from CIBC and Abbott Diagnostics. The creation of Canada’s first national public cord blood bank will provide new mothers with an opportunity to donate their child’s umbilical cord blood for the benefit of patients in need of a stem cell transplant.

Part of ensuring the growth of the blood system means encouraging the participation of future blood donors; today’s children are tomorrow’s blood and stem cell donors. This year, funds were used to advance key projects, including Young Blood for Life, a national high school program funded by FedEx, and the development of Learning to Save Lives, a middle and elementary school program to educate young people about the blood donation process and blood usage funded by Bayer Inc.

Cash donations received this year totalled $3.5 million (including the Campaign For All Canadians), compared to $1.4 million last year. Gift-in-kind donations totalled $0.1 million, consistent with last year.

This year, Canadian Blood Services was honoured to work with the following major financial donors and participate in activities to raise funds and awareness of the blood system and the OneMatch Stem Cell and Marrow Network.


MaNagEMENt aNalysis

partner donation

FedEx Sponsored the Young Blood for Life national high school

program for $60,000 over three years

Standard Life $97,000 gift-in-kind donation of rental space for

the permanent Standard Life Blood Clinic in Vancouver

Manulife Financial – long-standing partner with more $35,000 for rental space for the permanent blood donor

than 60 years saving lives clinic held in the Manulife Centre in Toronto

Canada Wide Media Ltd. $35,000 gift-in-kind donation of advertising

Canadian Blood Services $78,000 raised in support of the Campaign

Charity Golf Classic For All Canadians

Canadian Blood Services Mount Kilimanjaro $356,000 in donations and $115,000 in sponsorship

#Climb4Cord was a fundraising event held in support of the Campaign For All Canadians

in August 2013 in support of the Campaign

For All Canadians

Canadian Blood Services Night with the

Ottawa Senators Hockey Club

Top Sponsors:

Bayer Inc. $20,000

CSL Behring Canada Inc. $20,000

Honouring Our Lifeblood Event 2013

Top Sponsors:

Bayer Inc. $30,000

CSL Behring Canada Inc. $30,000

All fundraising amounts are rounded to the nearest thousand for reporting purposes.

Captive Insurance Program

The Canadian Blood Services’ Captive Insurance Program comprises two wholly owned insurance corporations: Canadian Blood Services Insurance Company Limited (CBSI) and the Canadian Blood Services Captive Insurance Company Limited (CBSE). The policies of insurance issued to Canadian Blood Services consist of comprehensive blood risks liability in the amount of $1 billion; a stock throughput in the aggregate amount of $10 million, renewable on a one-time basis; and a contingent risk indemnification policy in the amount of $20 million.

Recently, CBSI has begun to see premium net assets (net assets after policy, regulatory and market volatility reserves). At March 31, 2014, premium net assets amounted to $39.5 million. Additionally, we have engaged an independent investment adviser who will work with the Investment Committee and the board of CBSI to optimize the management of the investment portfolio within appropriate levels of risk.

Enterprise Risk Management Program

Canadian Blood Services continues to mature and refine our Enterprise Risk Management Program to reflect our continuous focus on the understanding and management of enterprise risk. We have made significant advancements in integrating the program with our internal strategy management and execution processes. We are actively advancing our risk management reporting to provide the board and executive management team members with clear, concise and actionable information on key risks. The board is also working toward integrating enterprise risk management into all of its oversight activities. The new components, along with our existing processes, should allow us to proactively manage risk to improve performance and achieve corporate objectives.


Management’s report to members

The consolidated financial statements contained in this report have been prepared by Canadian Blood Services’ management team in accordance with accounting standards for not-for-profit organizations. Management is responsible for the integrity and reliability of the data in these statements and for ensuring that all other information in this report is consistent, where appropriate, with the financial statements.

Management maintains a system of internal control to provide reasonable assurance as to the reliability of the financial information and safeguarding of assets. The board of directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control. The board exercises this responsibility through the Finance and Audit Committee of the board, which is composed of directors who are not employees of the Corporation. The Finance and Audit Committee meets periodically during the year with management and the external auditors.

The external auditors, KPMG LLP, conduct an independent audit in accordance with Canadian generally accepted auditing standards and express an opinion on the financial statements. The external auditors, whose report follows, have full and free access to the Finance and Audit Committee of the board and meet with the committee regularly.

Dr. Graham Sher Pauline PortChief Executive Officer Chief Financial Officer and Vice-President, Corporate Services

June 20, 2014


independent auditors’ Report

To the Members of Canadian Blood Services

Report on the Financial StatementsWe have audited the accompanying consolidated financial statements of Canadian Blood Services, which comprise the consolidated statement of financial position as at March 31, 2014, the consolidated statements of operations, changes in net assets and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Canadian Blood Services as at March 31, 2014 and its consolidated results of operations, changes in net assets and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

Report on other legal RequirementsAs required by the Canada Corporations Act, we report that, in our opinion, these principles have been applied on a basis consistent with that of the preceding year.

Chartered Professional Accountants, Licensed Public AccountantsJune 20, 2014Ottawa, Canada

FiNaNCial REPORt


consolidated statement of financial position

as of March 31, 2014, with comparative information for 2013

(In thousands of dollars)

2014 2013

assets:Current assets: Cash and cash equivalents (note 3) $180,376 $190,676 Members’ contributions receivable 18,515 3,364 Other amounts receivable 11,133 20,343 Inventory (note 4) 115,060 131,133 Prepaid expenses 8,149 7,793 333,233 353,309Investments, captive insurance operations (note 5) 384,282 354,174

Capital assets and intangible assets (note 6):

Land, buildings, software and equipment 205,129 211,760 Right to the blood supply system 21,562 22,442 226,691 234,202

$944,206 $941,685

liabilities, deferred contributions and net assets: Current liabilities: Accounts payable and accrued liabilities (note 7) $86,806 $88,091 Current portion of obligations under capital leases 300 316 87,106 88,407

Provision for future claims (note 15) 249,886 249,886Employee future benefit liabilities (note 8) 32,981 28,109Obligations under capital leases 349 680Deferred contributions (note 10): Expenses of future periods 179,894 202,285 Capital assets 210,546 217,699 390,440 419,984Net assets: Invested in capital assets 15,579 15,579 Restricted for captive insurance purposes (note 11) 131,654 102,829 Unrestricted net assets 36,211 36,211 183,444 154,619

Guarantees and contingencies (note 16)

Commitments (note 17)

$944,206 $941,685

See accompanying notes to the consolidated financial statements.

On behalf of the board

Leah Hollins, Director and Chair R. Wayne Gladstone, Director


consolidated statement of operations

year ended March 31, 2014, with comparative information for 2013


Canadian Blood Captive insurance Services (note 13) (note 15) Consolidated 2014 2013 2014 2013 2014 2013

Revenue: Members’ contributions $973,269 $980,278 $– $– $973,269 $980,278 Federal contributions 8,432 8,580 – – 8,432 8,580 Less amounts deferred (29,412) (42,776) – – (29,412) (42,776) 952,289 946,082 – – 952,289 946,082 Amortization of previously deferred contributions: Relating to capital assets 22,067 21,510 – – 22,067 21,510 Relating to operations 24,288 26,486 – – 24,288 26,486 Total contributions recognized as revenue 998,644 994,078 – – 998,644 994,078

Stem cells revenue 12,536 15,462 – – 12,536 15,462 Net investment income (note 12) 1,917 2,089 15,854 16,977 17,771 19,066 Other income 2,147 5,264 – – 2,147 5,264 total revenue 1,015,244 1,016,893 15,854 16,977 1,031,098 1,033,870

expenses: Cost of plasma protein products 459,120 464,274 – – 459,120 464,274 Staff costs 332,302 316,141 – – 332,302 316,141 General and administrative (note 14) 117,123 126,034 244 487 117,367 126,521 Medical supplies 84,873 86,963 – – 84,873 86,963 Depreciation and amortization 21,826 21,116 – – 21,826 21,116 total expenses 1,015,244 1,014,528 244 487 1,015,488 1,015,015

excess of revenue over expenses before the undernoted – 2,365 15,610 16,490 15,610 18,855

Change in fair value of investments measured at fair value – – 13,215 1,411 13,215 1,411excess of revenue over expenses $– $2,365 $28,825 $17,901 $28,825 $20,266



consolidated statement of changes in net assets



Restricted Invested in for captive capital assets insurance Unrestricted 2014 2013Balance, beginning of year $15,579 $102,829 $36,211 $154,619 $134,353Excess of revenue over expenses – 28,825 – 28,825 20,266Balance, end of year (note 11) $15,579 $131,654 $36,211 $183,444 $154,619



consolidated statement of cash flows



2014 2013

Cash and cash equivalents provided by (used for):

Operating activities: Excess of revenue over expenses $28,825 $20,266 Items not involving cash and cash equivalents: Depreciation and amortization of capital assets and intangible assets 21,826 21,116 Amortization of deferred contributions (46,355) (47,996) Loss on sale of capital assets 74 94 Net realized gains on sales of investments, captive insurance operations (4,017) (5,186) Change in fair value of equity investments, captive insurance operations (13,215) (1,411) Amortization of bonds, captive insurance operations 266 299 Employee future benefit expenses in excess of cash payments 4,872 2,563 (7,724) (10,255)

Change in non-cash operating working capital: Decrease (increase) in members’ contributions receivable (15,151) 20 Decrease (increase) in other amounts receivable 9,210 (3,735) Decrease (increase) in inventory 16,073 (16,252) Increase in prepaid expenses (356) (903) Increase (decrease) in accounts payable and accrued liabilities (1,918) 128 Increase in deferred contributions of future periods 1,897 34,467 Total operating activities 2,031 3,470

Investing activities: Proceeds on sales of investments, captive insurance operations 154,014 161,584 Purchases of investments, captive insurance operations (167,156) (174,784) Increase in deferred contributions related to capital assets 14,914 20,297 Proceeds on sale of capital assets 167 300 Purchases of capital assets (13,923) (19,105) Total investing activities (11,984) (11,708)

Financing activities: Repayment of obligations under capital leases (347) (626) Total financing activities (347) (626)

Decrease in cash and cash equivalents (10,300) (8,864)Cash and cash equivalents, beginning of year 190,676 199,540Cash and cash equivalents, end of year $180,376 $190,676

Cash and cash equivalents comprise: Cash on deposit $180,068 $190,181 Butterfield Asset Management Money Market Fund 52 239 HSBC Money Market Pooled Fund 256 256 $180,376 $190,676



notes to the consolidated financial statements

year ended March 31, 2014(In thousands of dollars)

1. nature of the organization and operations:

Canadian Blood Services/Société canadienne du sang (Canadian Blood Services) owns and operates the national blood supply system for Canada, except Quebec, and is responsible for the collection, testing, processing and distribution of blood and blood products, as well as the recruitment and management of blood donors. Canadian Blood Services also recruits volunteer donors for both Canadian and international patients requiring stem cell transplants and delivers an array of diagnostic services throughout Canada. Since 2008, Canadian Blood Services assumed a new mandate for organ and tissue donation and transplantation in Canada. This mandate includes the development of a set of recommendations for an integrated national donation and transplantation system, national registries to facilitate organ transplantation and leading practice and system performance initiatives. In addition, recognizing the importance of cord blood stem cell transplantation as a treatment for Canadian patients, Canadian Blood Services has been given the mandate to establish Canada’s (excluding Quebec) national public cord bank.

Canadian Blood Services was incorporated on February 16, 1998, under Part II of the Canada Corporations Act. Effective May 7, 2014, Canadian Blood Services continued its incorporation to the Canada Not-for-Profit Corporations Act. It is a corporation without share capital and qualifies for tax-exempt status as a registered charity under the Income Tax Act (Canada). The members of the Corporation are the ministers of health of the provinces and territories of Canada, except Quebec. The members, as well as the federal government, provide contributions to fund the operations of Canadian Blood Services. Canadian Blood Services operates in a regulated environment, pursuant to the requirements of Health Canada.

Canadian Blood Services has established two wholly owned captive insurance corporations: CBS Insurance Company Limited (CBSI) and Canadian Blood Services Captive Insurance Company Limited/Compagnie d’assurance captive de la société canadienne du sang limitée (CBSE). CBSI was incorporated under the laws of Bermuda on September 15, 1998, and is licensed as a Class 3 reinsurer under the Insurance Act, 1978 of Bermuda and related regulations. CBSE was incorporated under the laws of British Columbia on May 4, 2006, and is registered under the Insurance (Captive Company) Act of British Columbia.

2. Basis of presentation and significant accounting policies:

Significant accounting policies:

The financial statements have been prepared by management in accordance with Canadian Accounting Standards for Not-For-Profit Organizations in Part III of the CPA Handbook.

A summary of the significant accounting policies used in these consolidated financial statements is set out below. The accounting policies have been applied consistently to all periods presented.

(a) Consolidation:The financial statements include the results of the operations of Canadian Blood Services and the accounts of its wholly owned captive insurance subsidiaries (“the Corporation”). Significant inter-company transactions have been eliminated.

(b) Use of estimates:The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses in the financial statement. Estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statement. Actual results could differ from these estimates. Significant estimates include assumptions used in measuring pension and other post-employment benefits and the provision for future insurance claims, which are described in more detail in notes 8 and 15, respectively.


2. Basis of presentation and significant accounting policies (continued):

Significant accounting policies (continued):

(c) Revenue recognition:The Corporation follows the deferral method of accounting for contributions.

Members’ and federal contributions are recorded as revenue in the period to which they relate. Amounts approved but not received at the end of an accounting period are accrued. Where a portion of a contribution relates to a future period, it is deferred and recognized in the subsequent period.

Externally restricted contributions are recognized as revenue in the year in which the related expenses are recognized. Contributions restricted for the purchase of capital assets other than land are initially deferred and then amortized to revenue on a straight-line basis, at a rate corresponding with the depreciation rate for the related capital asset. Contributions restricted for the purchase of land are recognized as direct increases in net assets invested in capital assets.

Unrestricted funding is recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured.

Restricted investment income is recognized as revenue in the year in which the related expenses are recognized. Unrestricted investment income is recognized as revenue when earned.

Revenue from fees and contracts is recognized when the services are provided or the goods are distributed.Restricted donations are recognized as revenue in the year in which the related expenses are recognized. Unrestricted donations are recognized as revenue in the year received.

(d) Donated goods and services:The Corporation does not pay donors for blood donations. Additionally, a substantial number of volunteers contribute a significant amount of time each year in support of the activities of the Corporation. The value of such contributed goods and services is not quantified in the financial statement.

(e) inventory:Inventory of the Corporation consists of plasma protein products, fresh blood components and supplies related to the collection, production and testing of fresh blood components. Plasma protein products and collection supplies inventories are recorded at average cost and are charged to the statement of operations upon distribution to hospitals and usage. Fresh blood components inventory includes an appropriate portion of direct costs and overhead incurred in the collection, production and testing processes. Fresh blood components inventory is charged to the statement of operations upon distribution to hospitals.

(f ) Capital assets and intangible assets:Purchased capital assets are recorded at cost. Contributed capital assets are recorded at fair value at the date of contribution. Assets acquired under capital leases are amortized over the estimated life of the assets or over the lease term, as appropriate. Repairs and maintenance costs are expensed. Betterments, which extend the estimated life of an asset, are capitalized. When capital assets and intangible assets no longer contribute to the Corporation’s ability to provide services, their carrying amount is written down to their residual value.

Capital assets and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the asset no longer has any long-term service potential to the Corporation. In this event, recover-ability of assets held and used is measured by reviewing the estimated residual value of the asset. If the carrying amount of an asset exceeds its estimated residual value, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the residual value of the asset. When a capital asset is written down, the corresponding amount of any unamortized deferred contributions related to the capital asset would be recognized as revenue, provided that all restrictions have been complied with.

Notes to the consolidated financial statementsyear ended March 31, 2014(In thousands of dollars)





(f ) Capital assets and intangible assets (continued):Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets at the rates indicated below:

Asset Useful life

Buildings 40 to 65 yearsMachinery and equipment 8 to 25 yearsFurniture and office equipment 5 to 10 yearsMotor vehicles 8 yearsComputer equipment 3 yearsComputer software 2 to 5 years

Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term or their estimated useful lives. Assets under construction are not depreciated until they are available for use by the Corporation.

The right to the blood supply system represents the excess of the purchase price of the system over the fair value of the tangible net assets acquired in 1998 and is being amortized on a straight-line basis over 40 years.

(g) asset retirement obligations:The Corporation recognizes the fair value of a future asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Corporation concurrently recognizes a corresponding increase in the carrying amount of the related long-lived asset that is amortized over the life of the asset. The fair value of the asset retirement obligation is estimated using the expected cash flow approach that reflects a range of possible outcomes discounted at a credit-adjusted risk-free interest rate. Subsequent to the initial measurement, the asset retirement obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation.

Changes in the obligation due to the passage of time are recognized in the statement of operations as an expense using the interest method. Changes in the obligation due to changes in the estimated cash flows are recognized as an adjustment of the carrying amount of the related long-lived asset that is amortized over the remaining life of the asset.

(h) Foreign currency transactions:Foreign currency transactions of the Corporation are translated using the temporal method. Under this method, transactions are initially recorded at the rate of exchange prevailing at the date of the transaction. Thereafter, monetary assets and liabilities are adjusted to reflect the exchange rates in effect at the statement of financial position date. Gains and losses resulting from the adjustment are included in the statement of operations.

(i) Employee future benefits:The Corporation sponsors two defined benefit plans, one for employees and the other for executives. In addition, the Corporation sponsors a defined contribution pension plan and provides other retirement and post-employment benefits to eligible employees. Benefits provided under the defined benefit pension plans are based on a member’s term of service and average earnings over a member’s five highest consecutive annualized earnings.

The Corporation uses the deferral and amortization approach to account for its defined benefit plans. The Corporation accrues its obligations under employee benefit plans as the employees render the services necessary to earn pension and other retirement and post-employment benefits. The Corporation has adopted the following policies:





(i) Employee future benefits (continued):• The cost of the accrued benefit obligations for pensions and other retirement and post-employment benefits

earned by employees is actuarially determined using the projected benefit method pro-rated on service and management’s best estimate of expected plan investment performance, salary escalation, retirement ages and expected health-care costs. The measurement date of the plan assets and accrued benefit obligation coincides with the Corporation’s fiscal year. The most recent actuarial valuations for the two benefit pension plans for funding purposes were as of December 31, 2013, and January 1, 2014. The next required valuations will be as of December 31, 2016, and January 1, 2017, respectively. The most recent actuarial valuation of the other retirement and post-employment benefits was as of April 1, 2012, and the next valuation will be as of April 1, 2015.

• For the purpose of calculating expected return on plan assets, investments are valued at fair value.

• Actuarial gains (losses) on plan assets arise from the difference between the actual return on plan assets for a period and the expected return on plan assets for that period. Actuarial gains (losses) on the accrued benefit obligation arise from differences between actual and expected experience and from changes in the actuarial assumptions used to determine the accrued benefit obligation. The excess of the net accumulated actuarial gains (losses) over 10% of the greater of the accrued benefit obligation or the fair value of plan assets is amor-tized over the average remaining service period of active employees. The average remaining service period of active employees is nine years (2013 – nine years) and seven years (2013 – seven years) for the two defined bene-fit plans and 10 to 11 years (2013 – 10 to 11 years) for the other retirement and post-employment benefits.

• Past service costs from plan amendments are deferred and amortized on a straight-line basis over the average remaining service period of employees active at the date of the amendment.

• When a restructuring of a benefit plan gives rise to both a curtailment and a settlement of obligations, the curtailment is accounted for prior to the settlement.

• The defined benefit pension plan for employees is jointly sponsored by the employer and participating unions. To reflect the risk-sharing nature of this plan, the Corporation recognizes the 50% of the accrued benefit liability or asset that accrues to the employer.

The Corporation also has a defined contribution plan providing pension benefits. The cost of the defined contribution plan is recognized based on the contributions required to be made during each period.

( j) Financial instruments:Upon initial recognition, financial instruments are measured at their fair value. Financial assets and financial liabilities are recognized initially on the trade date, which is the date that the Corporation becomes a party to the contractual provisions of the instrument.

Fixed-income securities and short-term notes are measured on the statement of financial position at amortized cost. Interest income is recognized on the accrual basis and includes the amortization of premiums or discounts on fixed-interest securities purchased at amounts different from their par value.

Equity securities and mutual funds are measured at fair value with changes in fair value recorded directly in the statement of operations. Dividends are recorded as income when declared.

Foreign exchange contracts not in a qualifying hedging relationship are measured at fair value with changes in fair value recorded directly in the statement of operations.

All other financial instruments are measured at cost or amortized cost. Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are

expensed as incurred. All other financial instruments are adjusted by transaction costs incurred on acquisition and financing costs, which are amortized using the effective interest rate method. Transaction costs comprise primarily legal, accounting, underwriters’ fees and other costs directly attributable to the acquisition, issuance or disposal of a financial asset or financial liability.




( j) Financial instruments (continued):Financial assets measured at cost or amortized cost are assessed for indicators of impairment on an annual basis at the end of the fiscal year. If there is an indicator of impairment, the Corporation determines whether there is a significant adverse change in the expected amount or timing of future cash flows from the financial asset. If there is a significant adverse change in the expected cash flows, the carrying value of the financial asset is reduced to the highest of the present value of the expected cash flows, the amount that could be realized from selling the financial asset or the amount the Corporation expects to realize by exercising its right to any collateral. If events and circumstances reverse in a future period, an impairment loss will be reversed to the extent of the improve-ment, not exceeding the initial carrying value.

(k) Future accounting changes:The Accounting Standards Board has issued new accounting standards for employee future benefits, which are effective for years beginning on or after January 1, 2014. The new standards eliminate the deferral and amortiza-tion method of accounting for employee future benefits, which provided the ability to smooth the recognition of actuarial gains and losses through income. The new standards require that the full amount of the defined benefit liability, net of related assets, be recorded on the statement of financial position and introduce changes to the amounts recognized in the statement of operations or the statement of changes in net assets. The standards allow for the use of either an actuarial valuation for accounting purposes or an actuarial valuation for funding purposes. The Corporation is assessing the impact of the new accounting standards but expects the impact of conversion to be material. Upon adoption in 2015, comparative data will be required to be restated.

3. cash and cash equivalents:

Cash and cash equivalents include deposits with financial institutions that can be withdrawn without prior notice or penalty and units held in money market funds.

Cash and cash equivalents include $308 (2013 – $495) that is restricted for captive insurance operations. Cash and cash equivalents also include members’ contributions received in advance for expenses of future periods (note 10(a)).

4. inventory:

Inventory consists of raw materials, work in process and finished goods. Raw materials include medical supplies available for use in the collection, manufacturing and testing of fresh blood components. Work in process consists of plasma for fractionation. Finished goods include plasma protein products, red blood cells, platelets and plasma for transfusion that are available for distribution to hospitals. Work in process and finished goods inventories include direct costs and overhead incurred in the collection, manufacturing, testing and distribution process.

Inventory comprises:

2014 2013

Raw materials $8,378 $8,831Work in process 4,502 4,863Finished goods 102,180 117,439 $115,060 $131,133




5. investments, captive insurance operations:

All investments are restricted for captive insurance operations. The amortized cost and fair market value of investments are as follows:

2014 2013

Measured at amortized cost:Short-term notes $10,155 $6,929Fixed-income securities 245,722 223,861

Measured at fair value:Mutual funds 40,367 44,588Equity securities 88,038 78,796 $384,282 $354,174

6. capital assets and intangible assets:

2014 2013 Accumulated net book Net book Cost depreciation value value

Buildings $163,971 $39,378 $124,593 $126,698Machinery and equipment 83,496 58,643 24,853 26,871Land 15,579 – 15,579 15,579Furniture and office equipment 28,655 17,038 11,617 12,244Leasehold improvements 21,802 13,909 7,893 6,291Computer equipment 43,383 38,094 5,289 6,093Motor vehicles 17,812 7,370 10,442 10,592Computer software 32,676 28,723 3,953 3,160Equipment under capital leases 3,259 2,884 375 996Assets under construction 535 – 535 3,236 411,168 206,039 205,129 211,760Right to the blood supply system 35,203 13,641 21,562 22,442 $446,371 $219,680 $226,691 $234,202

During the current year, capital assets were acquired at an aggregate cost of $14,556 (2013 – $20,239) of which $nil (2013 – $523) was acquired by means of capital lease. Cash payments of $13,923 (2013 – $19,105) were made to acquire capital assets.

7. accounts payable and accrued liabilities:

Included in accounts payable and accrued liabilities are government remittances payable of $472 (2013 – $3,670), which include amounts payable for sales and payroll taxes.



8. employee future benefits:

The Corporation sponsors two defined benefit pension plans, one for employees and the other for executives. The Corporation also sponsors a defined contribution pension plan and provides other retirement and post- employment benefits to eligible employees.

(a) Defined benefit pension plans:Details about the Corporation’s defined benefit plans are combined and summarized as follows:

2014 2013

Accrued benefit obligation $340,777 $311,885Fair value of plan assets 288,663 242,679Funded status – deficit (52,114) (69,206)Balance of unamortized amounts 35,513 57,929Adjustment for risk-sharing provisions 7,978 5,424Accrued benefit liability $8,623 $5,853

The accrued pension benefit liability is included in the employee future benefit liability in the Corporation’s statement of financial position. The defined benefit plan for regular employees is jointly sponsored by the Corporation, as employer, and the participating unions. To reflect the risk-sharing nature of the plan, the Corporation recognizes the 50% of the accrued benefit liability or asset that accrues to the employer.

The percentages of the fair value of the assets of the defined benefit plan for employees and the plan for executives by major asset class are as follows: equity 60% and 58%, respectively (2013 – 56% and 57%); debt 39% and 14%, respectively (2013 – 43% and 12%); and other 1% and 28%, respectively (2013 – 1% and 31%).

The difference between the accrued benefit liability recognized on the Corporation’s statement of financial position and the actuarially determined funded deficit comprises experience losses and the risk-sharing adjustment for the defined benefit plan for employees. Experience losses represent differences between actual asset and accrued benefit values and expected values determined based on the actuarial assumptions used for accounting purposes.

Experience gains and losses are amortized to pension expense over the average expected remaining service lives of employees when the aggregate gain or loss exceeds 10% of the greater of the accrued benefit obligation or fair value of assets at the beginning of the year. Accordingly, $3,011 of amortization was recorded in 2014 (2013 – $1,192).

The significant actuarial assumptions adopted in measuring the Corporation’s defined benefit plans accrued benefit obligation and benefit cost are summarized as follows:

2014 2013

Accrued benefit obligation: Discount rate 4.60% 4.40% Inflation rate 2.25% 2.50% Rate of compensation increases 3.25–3.75% 3.75–4.00% Mortality table cpM 2014-B UP94G

Benefit cost: Discount rate 4.40% 5.00% Expected long-term rate of return on plan assets 4.50–6.00% 4.50–6.00% Rate of compensation increases 3.75–4.00% 3.75–4.00%



8. employee future benefits (continued):

(a) Defined benefit plans (continued):Other details about the Corporation’s defined benefit pension plans are combined and summarized as follows:

2014 2013

Employer contributions $12,778 $11,678Employee contributions 8,530 7,897Benefits paid 8,000 9,222

(b) Pension plan expense: The net expenses for the Corporation’s pension plans are combined and summarized as follows:

2014 2013

Defined benefit plans $15,548 $12,734Defined contribution plan 4,692 4,825 $20,240 $17,559

(c) Other retirement and post-employment benefits:Information about the Corporation’s other retirement and post-employment benefits is as follows:

2014 2013

Accrued benefit obligation $26,930 $26,429Balance of unamortized amounts 2,572 4,173Accrued benefit liability $24,358 $22,256

2014 2013

Benefits paid $929 $886Net expense 3,031 2,393

The accrued benefit liability is included in the employee future benefits liability in the Corporation’s statement of financial position.

The difference between the accrued benefit liability recognized on the Corporation’s statement of financial position and the accrued benefit obligation comprises experience losses. Experience losses represent differences between actual accrued benefit values and expected values determined based on the actuarial assumptions used for accounting purposes.

Experience gains and losses are amortized to pension expense over the average expected remaining service lives of employees when the aggregate gain or loss exceeds 10% of the accrued benefit obligation at the beginning of the year. Accordingly, $232 of experience losses were amortized into the benefit expense (2013 – experience gains of $18).



8. employee future benefits (continued):

(c) Other retirement and post-employment benefits (continued):The significant actuarial assumptions adopted in measuring the Corporation’s other retirement and post-employment accrued benefit obligation and benefit cost are as follows:

2014 2013

Accrued benefit obligation: Discount rate 4.30–4.70% 3.80–4.40% Rate of compensation increases 3.75% 4.00% Mortality table cpM 2014-B UP94G

Benefit cost: Discount rate 3.80–4.40% 4.70–5.10% Rate of compensation increases 4.00% 4.50%

Hospital costs – 4.50% per annum

Drug costs – 8.05% per annum, with an ultimate rate of 4.50% reached in 2029, starting in 2014

Other health costs – 4.50% per annum

Termination benefits have been recognized in accounts payable and accrued liabilities on the statement of financial position and in staff costs in the statement of operations. At March 31, 2014, $8,538 is accrued on the statement of financial position (2013 – $5,431).

9. credit facilities:

(a) Demand instalment loan:A demand instalment loan in the amount of $25,000 (2013 – $25,000) was arranged to cover contingencies or events not anticipated in the annual budget. At March 31, 2014, no amounts had been borrowed under this facility.

(b) Demand operating credit:A line of credit in the amount of $50,000 (2013 – $50,000) was arranged to provide working capital for inventory. At March 31, 2014, no amounts had been borrowed under this facility.

(c) Demand bridge facility (facilities redevelopment project):A demand revolving bridge facility of $15,000 (2013 – $15,000) was arranged to finance a portion of the redevelop-ment of the Corporation’s facilities. At March 31, 2014, no amounts had been borrowed under this facility.

(d) Demand instalment loan (facilities redevelopment project):A demand instalment loan for the redevelopment of the Corporation’s facilities has been arranged. The credit limit established under this loan is the lesser of $15,000 (2013 – $15,000), the outstanding balance on the demand bridge facility or an amount confirmed by the borrower. The facility was arranged to refinance the demand bridge facility. At March 31, 2014, no amounts had been borrowed under the demand instalment loan. Any amounts bor-rowed under the facility will be repayable on demand.



9. credit facilities (continued):

(e) standby letter of credit:Standby letters of credit in the amount of $2,000 (2013 – $2,000) were arranged to cover municipal requirements with regard to the redevelopment of the Corporation’s facilities. At March 31, 2014, no amounts had been issued under the facility.

Pursuant to the arrangements above, the Corporation has provided a general security agreement in favour of the bank over receivables, inventory, equipment and machinery, a floating charge debenture over all present and future assets and property, and a fixed charge over the Brampton and Dartmouth properties. Amounts deferred for contingency purposes are excluded from the general security agreement. With respect to the demand bridge facility, the standby letter of credit facility and demand instalment loan, the Corporation has provided a first-priority security interest over funds received for the redevelopment of the Corporation’s facilities.

10. deferred contributions:

(a) Expenses of future periods:Deferred contributions represent externally restricted contributions to fund expenses of future periods.

2014 2013

Balance, beginning of year $202,285 $194,304Increase in amounts received related to future periods 4,569 39,902Less amounts recognized as revenue in the year (24,288) (26,486)Less capital assets purchased from deferred contributions (2,996) (5,718)Add income earned on resources restricted for transition 7 58Add income earned on resources restricted for contingency 317 225 $179,894 $202,285


10. deferred contributions (continued):

(a) Expenses of future periods (continued):The capital assets purchased represent purchases from contributions that were deferred at March 31, 2013, as well as contributions received and deferred in the year ending March 31, 2014.

At March 31, deferred contributions comprise:

2014 2013

Members’ funding received in advance $20,491 $34,299

Deferred contributions restricted for specific projects or programs: Fundraising: Campaign For All Canadians 3,262 828 Donations – other 972 882 Programs – Members’ funding: National Facilities Redevelopment 7,900 6,774 Organs and tissues 2,566 2,704 Cord blood funding 2,170 936 Diagnostic services – Manitoba 603 752 Inventory: Plasma protein products inventory working capital 47,653 72,653 Medical supplies 8,603 9,056 Anti-viral vaccinations – 1,303 Fresh blood components inventory 15,511 17,956 Projects: Automated supply chain and donor testing 25,000 – Automated supply chain 1,601 – Productivity and efficiency program – 8,774 eProgesa 500 1,000 Laboratory information system – Manitoba 1,948 1,536 Other: Prepaid rent 3,225 3,275 Winnipeg Building Transfusion Service Centre – 908 Gain on disposal of leased assets – 21 Transition – 1,150

Research and development 18,209 18,115

Contingency 19,680 19,363 $179,894 $202,285




10. deferred contributions (continued):

(b) Capital assets:Funds received to acquire capital assets are recorded as deferred contributions – capital assets on the statement of financial position. They are amortized to revenue in the statement of operations at the same rate as capital assets are depreciated to expenses.

2014 2013

Balance, beginning of year $217,699 $218,912Capital assets purchased 14,556 19,716Capital funding received for leased assets 358 581Less capital assets sold (241) (394)Less amounts amortized to revenue (21,826) (21,116) $210,546 $217,699

11. net assets:

Restricted for captive insurance purposes: All net assets restricted for captive insurance purposes are subject to externally imposed restrictions stipulating that they be used to provide insurance coverage with respect to risks associated with the operations of the Corporation.

12. net investment income:

2014 2013

Interest income on unrestricted funds $1,917 $2,089Net investment income earned on investments restricted for captive insurance 15,854 16,977Interest income on resources restricted for transition 7 58Interest income on resources restricted for contingency 317 225 18,095 19,349Less amounts deferred (324) (283) $17,771 $19,066

Included in net investment income earned on investments restricted for captive insurance are $2,020 (2013 – $2,251) of dividend income, $10,600 (2013 – $10,343) of interest income, $4,017 (2013 – $5,186) of realized gains on sales of investments and $266 amortization of bonds related to captive insurance operations (2013 – $299) net of $517 (2013 – $504) of investment management fees.



13. canadian Blood Services revenue and expenditures detail:

Fresh blood components and Plasma protein Diagnostic Organs and support services products services Stem cells tissues Total

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

Revenue: Members’ contributions $468,788 $470,376 $459,264 $469,262 $17,498 $17,022 $24,139 $20,038 $3,580 $3,580 $973,269 $980,278 Federal contributions 5,000 5,000 – – – – – – 3,432 3,580 8,432 8,580 Less amounts deferred (14,271) (30,587) – – (1,276) (1,273) (10,285) (7,336) (3,580) (3,580) (29,412) (42,776) 459,517 444,789 459,264 469,262 16,222 15,749 13,854 12,702 3,432 3,580 952,289 946,082 Amortization of previously deferred contributions: Relating to capital assets 22,067 21,510 – – – – – – – – 22,067 21,510 Relating to operations 14,986 17,573 – – 535 893 5,634 6,248 3,133 1,772 24,288 26,486 Total contributions recognized as revenue 496,570 483,872 459,264 469,262 16,757 16,642 19,488 18,950 6,565 5,352 998,644 994,078

Stem cells revenue – – – – – – 12,536 15,462 – – 12,536 15,462 Investment income 1,917 2,089 – – – – – – – – 1,917 2,089 Other income 561 1,455 96 251 325 305 – 316 1,165 2,937 2,147 5,264 total revenue 499,048 487,416 459,360 469,513 17,082 16,947 32,024 34,728 7,730 8,289 1,015,244 1,016,893

expenses: Cost of plasma protein products – – 459,120 464,274 – – – – – – 459,120 464,274 Staff costs 301,398 286,228 2,231 2,158 12,974 12,553 10,356 9,688 5,343 5,514 332,302 316,141 General and administrative 98,506 98,482 (2,896) 2,107 1,399 1,834 17,731 20,836 2,383 2,775 117,123 126,034 Medical supplies 77,318 79,225 905 974 2,709 2,560 3,937 4,204 4 – 84,873 86,963 Depreciation and amortization 21,826 21,116 – – – – – – – – 21,826 21,116 total expenses 499,048 485,051 459,360 469,513 17,082 16,947 32,024 34,728 7,730 8,289 1,015,244 1,014,528excess of revenue over expenses $– $2,365 $– $– $– $– $– $– $– $– $– $2,365



14. Financial instruments:

Risk management: The board of directors is responsible for the review and oversight of the Corporation’s risk management frame-work and general corporate risk profile. Through its committees, the board oversees analysis of various risks facing the organization that evolve in response to economic conditions and industry circumstances.

The Corporation is exposed to risks as a result of holding financial instruments. The Corporation does not enter into transactions involving financial instruments, including derivative financial instruments, for speculative purposes. The following is a description of those risks and how they are managed.

(i) Market risk:Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign exchange risk and other price risk. These risks are discussed below:

Interest rate risk:Interest rate risk pertains to the effect of changes in market interest rates on the future cash flows related to the Corporation’s existing financial assets and liabilities.

The Corporation is exposed to interest rate risk on its cash and cash equivalents. At March 31, 2014, this exposure was minimal due to low prevailing rates of return.

Foreign exchange risk:Foreign exchange risk is the risk that the value or future cash flows of financial instruments will fluctuate as a result of changes in foreign exchange rates. The Corporation is exposed to foreign exchange risk on purchases that are denominated in currencies other than the functional currency of the Corporation. To mitigate this risk, the Corporation has a formal foreign currency policy in place. The objective of this policy is to monitor the marketplace and, when considered appropriate, take advantage of opportunities to fix exchange rates using forward contracts to reduce the risk exposures related to purchases made in foreign currencies. Generally, forward contracts are for periods not in excess of 12 months.

At March 31 the Corporation had the following instruments denominated in $US dollars:

2014 (c$) 2013 (C$)

Accounts receivable 57 58Accounts payable and accrued liabilities 18,881 17,432

During 2014, the Corporation entered into foreign exchange contracts to hedge its foreign currency exposure on a substantial portion of its foreign purchases of plasma protein products. The contracts are intended to match the timing of the anticipated future purchases of foreign currencies. The Corporation did not designate the foreign exchange contracts as hedges of firm commitments or anticipated transactions in accordance with CPA Handbook Section 3856 – Financial Instruments and, accordingly, did not use hedge accounting. As a result of this, the foreign exchange contracts are recorded in the statement of financial position at fair value, and changes in fair value of these contracts are recognized as gains or losses in the statement of operations.

Included in general and administrative expenses in the statement of operations for the year ended March 31, 2014, were foreign exchange gains of $4,141 (2013 – $1,034). At March 31, 2014, the Corporation had no foreign exchange contracts outstanding.

Other price risk:Other price risk is the exposure to changes in the value of mutual funds and equity securities in its investment portfolio as a result of market conditions. Other price risk comprises general price risk, which refers to fluctuations in value of the mutual funds and equity securities due to changes in general economic or stock market conditions, and specific price risk, which refers to equity price volatility that is determined by



14. Financial instruments (continued):

Risk management (continued):(i) Market risk (continued):Other price risk (continued):entity-specific characteristics. These risks affect the carrying value of these securities and the level and timing of recognition of gains and losses on securities held, causing changes in realized and unrealized gains and losses. The Corporation mitigates price risk by holding a diversified portfolio. The portfolio is managed through the use of third-party investment managers, and their performance is monitored by management and the board of directors of the captive insurance operations.

(ii) Credit risk:The Corporation is exposed to the risk of financial loss resulting from the potential inability of a counterparty to a financial instrument to meet its contractual obligations. The carrying amount of cash and cash equiva-lents, members’ contributions receivable, other amounts receivable, and investments, captive insurance opera-tions, represents the maximum exposure of the Corporation to credit risk.

Cash and cash equivalents are held with a Canadian financial institution rated by Standard & Poor’s credit rating as A+ credit watch stable. All foreign exchange contracts must be transacted with Schedule I or Schedule II financial institutions as per the Corporation’s foreign currency policy.

The Corporation is also exposed to credit risk on fixed-income securities investments. The investment policy requires an average credit rating of A on the credit quality of its fixed-income portfolio, related to captive insurance operations.

Members’ contributions receivable are current in nature, and management considers there to be minimal exposure to credit risk from members due to funding agreements in place and third-party member credit ratings. Standard & Poor’s available credit ratings for members range from A credit watch stable to AAA credit watch stable.

Credit risk associated with other amounts receivable is considered to be minimal based on past experience with bad debts as these accounts represent a small portion of the total amounts receivable by the Corporation. The carrying amount of amounts receivable for these parties represents the Corporation’s maximum exposure.

(iii) Liquidity risk:Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation’s approach to managing liquidity is to evaluate current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash and cash equivalents. In addition, the Corporation also has credit facilities described in note 9 that it can draw on as required.

At March 31, 2014, the Corporation’s capital lease obligations and accounts payable and accrued liabilities are all due within one year.

The provision for future claims has no contractual maturity, and the timing of settlement will depend on actual claims experience in the future.

The liabilities for employee future benefits are generally long-term in nature and fall due as eligible employ-ees in the Corporation’s defined benefit pension plans retire or terminate employment with the Corporation.

15. captive insurance operations:

The Corporation has established two wholly owned captive insurance subsidiaries, CBS Insurance Company Limited (CBSI) and Canadian Blood Services Captive Insurance Company Limited/Compagnie d’assurance captive de la société canadienne du sang limitée (CBSE). CBSI provides insurance coverage up to $250,000 with respect to risks associated with the operation of the blood system. CBSE has entered into an arrangement whereby the members have agreed to indemnify CBSE for all amounts payable by CBSE under the terms of the excess policy up to $750,000, which is in excess of the $250,000 provided by CBSI. No payment shall be made under CBSE until the



15. captive insurance operations (continued):

limit of the liability under the primary policy in CBSI, in the amount of $250,000, has been exhausted. As a result, Canadian Blood Services has $1,000,000 total in coverage.

The results of operations of the two subsidiaries are as follows:

CBSI CBSE Total 2014 2013 2014 2013 2014 2013

Gross premiums written and earned $551 $685 $60 $60 $611 $745Net premiums earned 551 685 60 60 611 745Net investment income 15,845 16,966 9 11 15,854 16,977 16,396 17,651 69 71 16,465 17,722

Expenses: General and administrative 800 803 55 64 855 867 Net insurance income before undernoted 15,596 16,848 14 7 15,610 16,855Change in fair value of investments measured at fair value 13,216 1,411 (1) – 13,215 1,411Net insurance income $28,812 $18,259 $13 $7 $28,825 $18,266

The provision for future claims is an actuarially based estimate of the cost to the Corporation of settling claims relating to insured events (both reported and unreported) that have occurred to March 31, 2014.

A significant proportion of both the future claims expense for the period and the related cumulative estimated liability of the Corporation for these future claims at March 31, 2014, of $249,886 (2013 – $249,886) covers the manifestation of blood diseases, which is inherently difficult to assess and quantify. There is a variance between these recorded amounts and other reasonably possible estimates.

16. guarantees and contingencies:

(a) guarantees: In the normal course of business, the Corporation enters into lease agreements for facilities and assets acquired under capital leases. In the Corporation’s standard commercial lease for facilities the Corporation, as the lessee, agrees to indemnify the lessor and other related third parties for liabilities that may arise from the use of the leased premises where the event triggering liability results from a breach of a covenant, any wrongful act, neglect or default on the part of the tenant or related third parties. However, this clause may be altered through negoti-ation. In the Corporation’s assets acquired under capital leases both the lessee and the lessor agree to indemnify each other for death or injury to the employees or agents of either party, where the event triggering liability results from negligent acts, omissions or willful misconduct.

The maximum amount potentially payable under any such indemnities cannot be reasonably estimated. The Corporation has liability insurance that relates to the indemnifications described above. Historically, the Corpora-tion has not made significant payments related to the above-noted indemnities and, accordingly, no liabilities have been accrued in the financial statements.

(b) Contingencies:The Corporation is party to legal proceedings in the ordinary course of its operations. In the opinion of manage-ment, the outcome of such proceedings will not have a material adverse effect on the Corporation’s financial statements or its activities. Claims and obligations related to the operation of the blood supply system prior to September 28, 1998, and the Canadian Council for Donation and Transplantation prior to April 1, 2008, are not the responsibility of the Corporation.



17. commitments:

At March 31, 2014, the Corporation had the following contractual commitments:(a) Future minimum payments under operating leases of approximately $18,922 with payments in each of the

next five years of 2015 – $6,214, 2016 – $4,561, 2017 – $2,805, 2018 – $1,891, 2019 – $933 and thereafter $2,518.(b) Research and development project grants of approximately $5,997 (2013 – $3,990) to be funded from the

contributions deferred for future expenses.(c) Construction commitments of approximately $nil (2013 – $231) funded by members’ contributions.(d) Vendor commitments of approximately $186,000 (2013 – $172,000) funded by members’ contributions.

18. Research and development:

For the year ended March 31, 2014, the Corporation incurred $11,635 of expenses related to research and development (2013 – $11,764). These costs are included within fresh blood components and support services.

19. Related-party transactions:

The members provide funding for the operating budgets of the Corporation. The Corporation enters into other transactions with these related parties in the normal course of business.

20. capital disclosures:

The Corporation is a non-share capital corporation and plans its operations to essentially result in an annual financial break-even position. The Corporation considers its capital to be the sum of its net assets. This definition is used by management and may not be comparable to measures presented by other entities. The Corporation manages capital through a formal and approved budgetary process where funds are allocated following the underlying objectives below:(a) to provide a safe, secure, cost-effective and accessible supply of blood and blood products to all Canadians(b) to support the Corporation’s ability to continue as a going concern(c) to meet regulatory and statutory capital requirements related to captive insurance operations(d) to ensure the funding of working capital requirements

The Corporation evaluates its accomplishment against its objectives annually. The Corporation has complied with all externally imposed capital requirements, and there were no changes in the approach to capital manage-ment during the period.

The Corporation’s captive insurance operations are required to maintain statutory capital and surplus greater than a minimum amount determined as the greater of a percentage of outstanding losses or a given fraction of net written premiums. At March 31, 2014, the Corporation’s captive insurance operations were required to main-tain a minimum statutory capital and surplus of $37,483 (2013 – $37,483). The actual statutory capital and surplus were $143,448 (2013 – $120,248), and the minimum margin of solvency was therefore met. The Corporation’s captive insurance operations were also required to maintain a minimum liquidity ratio whereby the value of its relevant assets is not less than 75% of the amount of its relevant liabilities. At March 31, 2014, the Corporation’s captive insurance operations were required to maintain regulatory assets of at least $189,978 (2013 – $189,154). At that date, regulatory assets were $396,753 (2013 – $372,453), and the minimum liquidity ratio was therefore met. The value of regulatory assets differs from that reported on the statement of financial position as it is determined under a different accounting framework, International Financial Reporting Standards.


BRITISH COLUMBIA

KelownaPrince GeorgeSurreyVancouver (2)Victoria

ALBERTA

CalgaryEdmontonLethbridgeRed Deer

SASKATCHEWAN

Regina (2)Saskatoon

MANITOBA

BrandonWinnipeg

ONTARIO

AncasterBarrieBurlingtonGuelphKingstonLondonMississaugaOshawaOttawaPeterboroughRichmond HillSarniaSt. CatharinesSudburyToronto (3) WaterlooWindsor

NEW BRUNSWICK

Moncton Saint John

NOVA SCOTIA

HalifaxSydney

PRINCE EDWARD ISLAND

Charlottetown

NEWFOUNDLAND AND LABRADOR

Corner BrookSt. John’s

permanent whole blood and apheresis collection sites

This annual report covers the period between April 1, 2013, and March 31, 2014. It is published in accordance with the provisions of the Canadian Blood Services Bylaw No. 10, Section 50, Reports.

ISSN: 1488-6367

Charitable number: 87015 7641 rr0001

Polling data provided by Ipsos.

English and French versions of this annual report are posted on our website at www.blood.ca.

Printed in Canada on FSC-certified, 100% post-consumer waste recycled paper.

Aussi publié en français.

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