Data entered below will be used throughout the workbook:

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1 Data entered below will be used throughout the workbook: Trust name: Mid Staffordshire NHS Foundation Trust This year 2008/09 Last year 2007/08 This year ended 31 March 2009 Last year ended 31st March 2008 This year beginning 1 April 2008 Intro

2 FOREWORD TO THE ACCOUNTS MID STAFFORDSHIRE NHS FOUNDATION TRUST These accounts for the period ended 31 March 2009 have been prepared by the Mid Staffordshire NHS Foundation Trust in accordance with paragraph 24 and 25 of Schedule 7 to the National Health Service Act 2006 (the 2006 Act) in the form which Monitor has, with the approval of the Treasury, directed. These are the first accounts prepared as Mid Staffordshire NHS Foundation Trust to cover a 12 month period. As a consequence, comparative data for the previous 2 months in 2007/2008 has been included. Signed. Eric Morton Interim Chief Executive Date. A - Foreword

3 INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 March Months 2 months 31st March March 2008 NOTE Income from activities 3 131,186 22,599 Other operating income 4 13,228 1,952 Operating expenses 5 (138,987) (23,378) OPERATING SURPLUS 5,427 1,173 Profit/(loss) on disposal of fixed assets SURPLUS BEFORE INTEREST 5,427 1,173 Finance income Other finance costs - unwinding of discount 0 (4) SURPLUS BEFORE TAXATION 5,942 1,273 Taxation 0 0 SURPLUS AFTER TAXATION 5,942 1,273 Public Dividend Capital dividends payable (4,264) (640) RETAINED SURPLUS FOR THE YEAR 1, The notes on pages A-5 to A-31 form part of these accounts. All income and expenditure is derived from continuing operations. The retained surplus for the year includes a net surplus of 918k for changes in accounting policy relating to (a) IAS 18 Revenue Recognition for incomplete spells; and (b) Expenditure on Employee Benefits to include the cost of Annual Leave entitlement not taken by employees within the period. These changes were implemented to comply with the NHS Foundation Trust Financial Reporting Manual. Page A-1 I & E

4 FIXED ASSETS BALANCE SHEET AS AT 31 March st March st March 2008 NOTE Intangible assets Tangible assets , , , ,172 CURRENT ASSETS Stocks and work in progress 12 2,725 2,540 Debtors 13 5,921 6,086 Investments ,500 Cash at bank and in hand ,575 3,725 16,221 15,851 CREDITORS: Amounts falling due within one year 15 (13,473) (14,172) NET CURRENT ASSETS/(LIABILITIES) 2,748 1,679 TOTAL ASSETS LESS CURRENT LIABILITIES 125, ,851 CREDITORS: Amounts falling due after more than one year PROVISIONS FOR LIABILITIES AND CHARGES 16 (2,842) (3,353) TOTAL ASSETS EMPLOYED 123, ,498 FINANCED BY: TAXPAYERS' EQUITY Public dividend capital ,275 68,275 Revaluation reserve 18 49,224 49,224 Donated asset reserve 18 1,382 1,407 Income and expenditure reserve 18 4,270 2,592 TOTAL TAXPAYERS' EQUITY 123, ,498 The financial statements on pages A-1 to A-4 were approved by the Board on 4th June, 2009 and signed on its behalf by: Signed: Date:.. Eric Morton (Interim Chief Executive) Page A-2 Bal Sht

5 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE PERIOD ENDED 31 March months 2 months Surplus for the financial year before dividend payments 5,942 1,273 Unrealised surplus on fixed assets and current asset investments revaluations 0 1,981 Reductions in the donated asset reserve due to depreciation, impairment, and/or disposal of donated assets (25) (23) Total gains and losses recognised in the financial year 5,917 3,231 Page A-3 STRGL

6 CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 March months 2 months NOTE OPERATING ACTIVITIES Net cash inflow from operating activities ,091 3,610 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE: Interest received NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Taxation Paid / Received 0 0 CAPITAL EXPENDITURE (Payments) to acquire tangible fixed assets (6,992) (685) Receipts from sale of tangible fixed assets 184 NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (6,992) (501) DIVIDENDS PAID* (4,264) (1,918) NET CASH INFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING 350 1,294 MANAGEMENT OF LIQUID RESOURCES: (Purchase/Sale) of current asset investments 3,500 (3,500) NET CASH OUTFLOW FROM MANAGEMENT OF LIQUID RESOURCES 3,500 (3,500) NET CASH OUTFLOW BEFORE FINANCING 3,850 (2,206) FINANCING Public dividend capital repaid 0 (963) NET CASH OUTFLOW FROM FINANCING 0 (963) INCREASE IN CASH 3,850 (3,169) Page A-4 Cashflow

7 1 Accounting policies and other information NOTES TO THE ACCOUNTS Monitor has directed that the financial statements of NHS foundation trusts shall meet the accounting requirements of the NHS Foundation Trust Financial Reporting Manual which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the 2008/09 NHS Foundation Trust Financial Reporting Manual issued by Monitor. The accounting policies contained in the manual follow UK generally accepted accounting practice for companies (UK GAAP) and HM Treasury's Financial Reporting Manual to the extent that they are meaningful and appropriate to NHS foundation trusts. The accounting policies have been applied consistently in dealing with items considered material in relation to the accounts. 1.1 Accounting convention These accounts have been prepared under the historical cost convention modified to account for the revaluation of tangible fixed assets at their value to the business by reference to their current costs. NHS foundation trusts, in compliance with HM Treasury's Financial Reporting Manual, are not required to comply with FRS 3 requirements to report "earnings per share" or historical profits and losses. 1.2 Income Recognition Income is accounted for by applying the accruals convention. The main source of income for the Trust is under contracts from commissioners in respect of healthcare services. Income is recognised in the period in which services are provided. Where income is received for a specific activity which is to be delivered in the following financial year, that income is deferred in accordance with (a) IAS 18. Revenue Recognition for incomplete spells is recognised. 1.3 Expenditure Expenditure is accounted for applying the accruals convention. Page A-5

8 1.4 Tangible fixed assets Capitalisation Tangible assets are capitalised if they are capable of being used for a period which exceeds one year and they: - individually have a cost of at least 5,000; or - form a group of assets which individually have a cost of more than 250, collectively have a cost of at least 5,000, where the assets are functionally interdependent, they had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control; or - form part of the initial setting-up cost of a new building or refurbishment of a ward or unit, irrespective of their individual or collective cost. Valuation Tangible fixed assets are stated at the lower of replacement cost and recoverable amount. On initial recognition they are measured at cost (for leased assets, fair value) including any costs, such as installation, directly attributable to bringing them into working condition. The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. The costs arising from financing the construction of the fixed asset are not capitalised but are charged to the income and expenditure account in the year to which they relate. All land and buildings are revalued using professional valuations in accordance with FRS15 every five years. A three yearly interim valuation is also carried out. Valuations are carried out by professionally qualified valuers in accordance with the Royal Institute of Chartered Surveyors (RICS) Appraisal and Valuation Manual. The last asset valuations were undertaken in 2004 as at the prospective valuation date of 1st April The revaluation undertaken at that date was accounted for on 31st March The valuations are carried out primarily on the basis of depreciated replacement cost for specialised operational property and existing use value for non-specialised operational property. The value of land for existing purposes is assessed at existing use value. For non-operational properties including surplus land, the valuations are carried out at open market value. Indexation has not been applied in the current year to either Long or Short Term Assets. Additional alternative open market value figures have only been supplied for operational assets scheduled for imminent closure and subsequent disposal. Assets in the course of construction are valued at cost and are valued by professional valuers as part of the five or three-yearly valuation or when brought into use. Operational equipment is valued at net current replacement cost. Equipment surplus to requirements is valued at net recoverable amount. Page A-6

9 Depreciation, amortisation and impairments Tangible fixed assets are depreciated at rates calculated to write them down to estimated residual value on a straight-line basis over their estimated useful lives. No depreciation is provided on freehold land and assets surplus to requirements. Assets in the course of construction and residual interests in off-balance sheet PFI contract assets are not depreciated until the asset is brought into use or reverts to the trust, respectively. Buildings, installations and fittings are depreciated on their current value over the estimated remaining life of the asset as assessed by the NHS foundation trust's professional valuers. Leaseholds are depreciated over the primary lease term. Equipment is depreciated on current cost evenly over the estimated life of the asset. Fixed asset impairments resulting from the losses of economic benefits are charged to the income and expenditure account. All other impairments are taken to the revaluation reserve and reported in the statement of total recognised gains and losses to the extent that there is a balance on the revaluation reserve in respect of the particular asset. Depreciation rates calculated to write off the cost or valuation of each asset evenly over its expected useful life as follows: Freehold Buildings years Plant and other equipment 5-15 years Computer equipment 5-15 years Fixtures and Fittings years 1.5 Donated fixed assets Donated fixed assets are capitalised at their current value on receipt and this value is credited to the donated asset reserve. Donated fixed assets are valued and depreciated as described above for purchased assets. Gains and losses on revaluations are also taken to the Donated Asset Reserve and, each year, an amount equal to the depreciation charge on the asset is released from the donated asset reserve to the income and expenditure account. Similarly, any impairment on donated assets charged to the income and expenditure account is matched by a transfer from the donated asset reserve. On sale of donated assets, the net book value of the donated asset is transferred from the donated asset reserve to the income and expenditure reserve. 1.6 Liquid Resources Deposits and other investments that are readily convertible into known amounts of cash at or close to their carrying amounts are treated as liquid resources in the cashflow statement. 1.7 Private Finance Initiative (PFI) transactions The NHS follows HM Treasury's Technical Note 1 (Revised) "How to Account for PFI transactions" which provides definitive guidance for the application of application Note F to FRS 5. Where the balance of the risks and rewards of ownership of the PFI property are borne by the PFI operator, the PFI obligations are recorded as an operating expense. Where the trust has contributed land and buildings, a prepayment for their fair value is recognised and amortised over the life of the PFI contract by charge to the Income and Expenditure Account. Where, at the end of the PFI contract, a property reverts to the Trust, the difference between the expected fair value of the residual on reversion and any agreed payment on reversion is built up over the life of the contract by capitalising part of the unitary charge each year, as a tangible fixed asset. Where the balance of risks and rewards of ownership of the PFI property are borne by the Trust, it is recognised as a fixed asset along with the liability to pay for it which is accounted for as a finance lease. Contract payments are apportioned between an imputed finance lease charge and a service charge. Page A-7

10 1.8 Stocks and work-in-progress Stock is valued using the most appropriate methodology dependent upon the nature of the item held. In some cases stock is valued at the latest purchase price rather than the lower of cost or net realisable value. However, given that the majority of items are purchased against long-term fixed price contracts, specific valuation differences are unlikely to be material. Stock includes wheelchairs charged to expenditure over a period of four years. Work-in-progress comprises goods in intermediate stages of production. Partially completed contracts for patient services are accounted for as work-in-progress. The value of Ward and Departmental stock has also been reassessed and included as stock at the year end. 1.9 Cash, bank and overdrafts Cash, bank and overdraft balances are recorded at the current values of these balances in the NHS foundation trust's cash book. These balances exclude monies held in the NHS foundation trust's bank account belonging to patients (see "third party assets below"). Account balances are only set off where a formal agreement has been made with the bank to do so. In all other cases overdrafts are disclosed within creditors. Interest earned on bank accounts and interest charged on overdrafts is recorded as, respectively, "interest receivable" and "interest payable" in the periods to which they relate. Bank charges are recorded as operating expenditure in the periods to which they relate Research and development Expenditure on research is not capitalised. Expenditure on development is capitalised if it meets the following criteria: there is a clearly defined project; the related expenditure is separately identifiable; the outcome of the project has been assessed with reasonable certainty as to: - its technical feasibility; - its resulting in a product or service which will eventually be brought into use; adequate resources exist, or are reasonably expected to be available, to enable the project to be completed and to provide any consequential increases in working capital. Expenditure so deferred is limited to the value of future benefits expected and is amortised through the income and expenditure account on a systematic basis over the period expected to benefit from the project. It is revalued on the basis of current cost. The amortisation charge is calculated on the same basis as used for depreciation i.e. on a quarterly basis. Expenditure which does not meet the criteria for capitalisation is treated as an operating cost in the year in which it is incurred. NHS Trusts are unable to disclose the total amount of research and development expenditure charged in the income and expenditure account because some research and development activity cannot be separated from patient care activity. Fixed assets acquired for use in research and development are amortised over the life of the associated project Provisions The NHS foundation trust provides for legal or constructive obligations that are of uncertain timing or amount at the balance sheet date on the basis of the best estimate of the expenditure required to settle the obligation. Where the effect of the time value of money is significant, the estimated risk-adjusted cash flows are discounted using the HM Treasury's discount rate of 2.2% in real terms. Page A-8

11 1.12 Contingencies Contingent assets (that is, assets arising from past events whose existence will only be confirmed by one or more future events not wholly within the entity's control) are not recognised as assets, but are disclosed in note 19 where an inflow of economic benefits is probable. Contingent liabilities are provided for where a transfer of economic benefits is probable. Otherwise, they are not recognised, but are disclosed in note 22 unless the probability of a transfer of economic benefits is remote. Contingent liabilities are defined as: Possible obligations arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control; or Present obligations arising from past events but for which it is not probable that a transfer of economic benefits will arise or for which the amount of the obligation cannot be measured with sufficient reliability Clinical negligence costs The NHS Litigation Authority (NHSLA) operates a risk pooling scheme under which the NHS foundation trust pays an annual contribution to the NHSLA, which, in return, settles all clinical negligence claims. Although the NHSLA is administratively responsible for all clinical negligence cases, the legal liability remains with the NHS foundation trust. The total value of clinical negligence provisions carried by the NHSLA on behalf of the Trust is disclosed at note 16. Since financial responsibility for clinical negligence cases transferred to the NHSLA at 1 April 2002, the only charge to operating expenditure in relation to clinical negligence in 2007/08 relates to the NHS foundation trust's contribution to the Clinical Negligence Scheme for NHS foundation trusts. Non-clinical risk pooling The Trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are risk pooling schemes under which the Trust pays an annual contribution to the NHS Litigation Authority and, in return, receives assistance with the costs of claims arising. The annual membership contributions, and any 'excesses' payable in respect of particular claims are charged to operating expenses when the liability arises Pension costs Past and present employees are covered by the provisions of the NHS Pensions Scheme. The Scheme is an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. As a consequence it is not possible for the NHS Trust to identify its share of the underlying scheme assets and liabilities. Therefore the scheme is accounted for as a defined contribution scheme under FRS 17. Employers pension cost contributions are charged to operating expenses as and when they become due. Additional pension liabilities arising from early retirements are not funded by the scheme except where the retirement is due to ill-health. The full amount of the liability for the additional costs is charged to the income and expenditure account at the time the trust commits itself to the retirement, regardless of the method of payment. Page A-9

12 1.15 Value added tax Most of the activities of the NHS foundation trust are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchased cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT Foreign Exchange Transactions that are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the dates of the transactions. Resulting exchange gains and losses are taken to the Income and Expenditure Account Corporation tax The NHS foundation trust has determined that it has no corporation tax liability due to no commercial type activities Third Party Assets Assets belonging to third parties (such as money held on behalf of patients) are not recognised in the accounts since the Trust has no beneficial interest in them. However, they are disclosed in a separate note to the accounts in accordance with the requirements of the HM Treasury Financial Reporting Manual Leases Where substantially all risks and rewards of ownership of a leased asset are borne by the NHS foundation trust, the asset is recorded as a tangible fixed asset and a debt is recorded to the lessor of the minimum lease payments discounted by the interest rate implicit in the lease. The assets and liability are recognised at the inception of the lease, and are de-recognised when the liability is discharged, cancelled or expires. The interest element of the finance lease payment is charged to the income and expenditure account over the period of the lease at a constant rate in relation to the balance outstanding. Other leases are regarded as operating leases and the rentals are charged to the income and expenditure account on a straight-line basis over the term of the lease Public dividend capital Public dividend capital (PDC) is a type of public sector equity finance based on the excess of assets over liabilities at the time of establishment of the original NHS trust. A charge, reflecting the forecast cost of capital utilised by the NHS foundation trust, is paid over as public dividend capital dividend. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the average relevant net assets of the NHS foundation trust. Relevant net assets are calculated as the value of all assets less the value of all liabilities, except for donated assets and cash held with the Office of the Paymaster General. Average relevant net assets are calculated as a simple mean of opening and closing relevant net assets. Page A-10

13 1.21 Financial instruments and financial liabilities Recognition Financial assets and financial liabilities which arise from contracts for the purchase or sale of non-financial items (such as goods or services), which are entered into in accordance with the Trust's normal purchase, sale or usage requirements, are recognised when, and to the extent which, performance occurs i.e. when receipt or delivery of the goods or services is made. De-recognition All financial assets are de-recognised when the rights to receive cashflows from the assets have expired or the Trust has transferred substantially all of the risks and rewards or ownership. Financial liabilities are de-recognised when the obligation is discharged, cancelled or expires. Classification and Measurement Financial assets are categorised as loans and receivables. Financial liabilities are classified as other financial liabilities. Loans and receivables Loans and receivables are non-derivative assets with fixed or determinable payments with are not quoted in an active market. They are included in current assets. The Trust's loans and receivables comprise: current investments, cash at bank and in hand, NHS debtors, accrued income and other debtors. Loans and receivables are recognised initially at fair value, net of transactions costs, and are measured subsequently at amortised cost, using the effective interest method. The effective interest rate is the rate that discounts exactly estimated future. Interest on loans and receivables is calculated using the effective interest method and credited to the income and expenditure account. Other financial liabilities All financial liabilities are recognised initially at fair value, net of transaction costs incurred, and measured subsequently at amortised cost using the effective interest method. The effective interest rate is the rate that discounts exactly estimated. They are included in current liabilities except for amounts payable more than 12 months after the balance sheet date, which are classified as long-term liabilities. Interest on financial liabilities carried at amortised cost is calculated using the effective interest method and credited to the income and expenditure account. Page A-11

14 2. Segmental Reporting 12 months 2 months Income from activities 131,186 22,599 Other operating income 13,228 1, Income from Activities 144,414 24, months 2 months NHS Foundation Trusts 0 0 NHS Trusts 0 0 Strategic Health Authorities 0 0 Primary Care Trusts 125,167 21,770 Local Authorities 0 0 Department of Health 5, NHS Other 0 0 Non NHS: Private Patients 0 0 NHS Injury Scheme Non NHS: - Other ,186 22, Other Operating Income 12 months 2 months Research and development Education and training 4, Charitable and other contributions to expenditure 0 24 Transfers from donated asset reserve in respect of depreciation, impairment and disposal of donated assets Non-patient care services to other bodies 5, Other income 3, ,228 1, Other income 12 months 2 months Car parking Estates recharges Staff recharges IT recharges Pharmacy sales 64 8 Staff accomodation rentals Clinical tests Catering Other , Income from Activities 12 months 2 months Elective income 30,982 5,865 Non elective income 38,406 6,644 Outpatient income 21,230 2,981 A&E income 4, Other NHS clinical income 35,124 6,088 Other non-protected clinical income ,186 22, Private patient income 12 months 2 months Base Year 000 Private patient income Total patient related income ,051 Proportion (as percentage) 0.00 % 0.00 % 1.20% The Trust has no private patient income. Page A-12

15 5. Operating Expenses 5.1 Operating expenses comprise: 12 months 2 months Services from NHS Foundation Trusts Services from NHS Trusts 2, Services from other NHS Bodies Purchase of healthcare from non NHS bodies 1, Executive directors costs Non-executive directors costs Staff costs 86,118 14,293 Drug costs 11,298 1,698 Supplies and services - clinical (excluding drug costs) 12,012 2,429 Supplies and services - general 2, Establishment 2, Transport Premises 8,921 1,701 Decrease in bad debt provision 0 (3) Depreciation and amortisation 6, Audit services- Other Audit services- statutory audit 76 0 Clinical negligence 2, Other ,987 23,378 Included in "other" is 781k for consultants costs. Page A-13

16 5.2 Operating leases 5.2/1 Operating expenses include: 12 months 2 months Hire of plant and machinery Other operating lease rentals 1, , /2 Annual commitments under non - cancellable operating leases are: Land & Buildings Other Annual commitments on leases expiring: - within one year between one and five years after five years /3 Limitation on auditor's liability There is no specified limitation on auditor's liability. Page A-14

17 6. Staff costs and numbers 6.1 Staff costs 12 months 2 months 31 March March 2008 Total Permanently Other Total Permanently Other Employed Employed Salaries and wages 70,871 70, ,993 11,993 0 Social security costs 5,617 5, Employers contributions to NHSPA 8,582 8, ,333 1,333 0 Bank and agency staff 1, , ,962 85,070 1,892 14,404 14, Average number of persons employed 12 months 2 months Total Permanently Other Total Permanently Other Employed Employed Number Number Number Number Number Number Medical and dental Administration and estates Healthcare assistants and other support Nursing, midwifery and health visiting sta Scientific, therapeutic and technical staff Bank and agency staff Other Total 2,260 2, ,169 2, Employee benefits No benefits were granted in the period. 6.4 Early retirements due to ill-health During 2008/09 there were 6 (2007/08,6) early retirements from the NHS foundation trust on the grounds of ill-health. The estimated additional pension liabilities of these ill-health retirements will be 280,000 ( 146,000). The cost of these ill-health retirements will be borne by the NHS Business Services Authority - Pensions Division. Page A-15

18 7. Profit/(Loss) on Disposal of Fixed Assets Profit/(loss) on the disposal of fixed assets is made up as follows: 12 months 2 months Profit/(Loss) on disposal of plant and equipment Finance Income Interest on Loans and Receivables Interest on available for sale financial assets 0 0 Interest on held-to-maturity financial assets 0 0 Other Page A-16

19 9. Intangible Fixed Assets The Trust held no intangible fixed assets at the balance sheet date. 10. Tangible Fixed Assets 10.1 Tangible fixed assets at the balance sheet date comprise the following elements: Land Buildings excluding dwellings Dwellings Assets under construction and payments on account* Plant and machinery Transport equipment Information technology Furniture & fittings 000 Cost or valuation at 1 April ,550 87, ,388 21, , ,143 Additions purchased 0 1, , ,327 Reclassifications Other revaluations Disposals (43) (43) Cost or Valuation at 31 March ,550 88, ,409 22, , ,427 Depreciation at 1 April , , , ,971 Provided during the year 0 3, , ,254 Disposals (43) (43) Depreciation at 31 March , , , ,182 Net book value - Purchased at 1 April ,550 82, ,388 11, , ,765 - Donated at 1 April ,407 - Total at 1 April ,550 83, ,388 12, , ,172 - Purchased at 31 March ,550 80, ,409 10, , ,863 - Donated at 31 March ,382 - Total at 31 March ,550 80, ,409 11, , ,245 Total Page A-17

20 10.2 Analysis of tangible fixed assets Land Buildings excluding dwellings Dwellings Total Net book value - Protected assets at 31 March ,550 80, ,158 - Unprotected assets at 31 March Total at 31 March ,550 80, ,343 - Total at 31 March ,550 83, , The net book value of land, buildings and dwellings at 31 March 2009 comprises: 31 March March March 2009 Protected Unprotected Total 000 Freehold 102, ,158 Short leasehold Total at 31 March , ,343 - Total at 31 March , , Fixed asset investments There were no fixed asset investments during the period. Page A-18

21 12. Stocks and Work in Progress Raw materials and consumables 2,725 2,540 TOTAL 2,725 2, Debtors Amounts falling due within one year: NHS debtors 3,646 3,044 Provision for irrecoverable debts (234) (204) Prepayments and accrued income Other debtors 1,457 1,830 Sub Total 5,721 5,568 Amounts falling due after more than one year: Provision for irrecoverable debts (63) (141) Other debtors Sub Total TOTAL 5,921 6, Provision for impairment of debtors At 1 April At start of period for new FT's Increase in provision Amounts utilised (124) (169) Unused amounts reversed 0 0 At 31 March Analysis of impaired debtors Ageing of impaired debtors Up to three months 0 0 In three to six months Over six months Total * Ageing of non-impaired debtors past their due date Up to three months 1,886 2,884 In three to six months Over six months Total 2,239 3,156 Other debtors due after one year comprises 263,000 gross from the NHS Injury Scheme for third party compensation claims for accidents. The provision for irrecoverable debts relates to the NHS Injury Scheme debtor which is derived from the claims notified compared to the actual amounts received to date, this stands at 76%. The NHS Injury Scheme debtor includes 642,000 gross for compensation claims for accidents that are less than one year old. Page A-19

22 14. Current Asset Investments 31 March Cost or valuation at 31 March ,500 Additions 158,700 Disposals (162,200) Revaluations 0 TOTAL Creditors 15.1 Creditors at the balance sheet date are made up of: Amounts falling due within one year: Payments received on account 0 0 NHS creditors 1,169 2,972 Other tax and social security costs 2,937 1,743 Capital Creditors 685 1,482 Other creditors 6,954 4,763 Accruals and deferred income 0 3,212 Sub Total 11,745 14,172 Amounts falling due after more than one year: Long - term loans 0 0 Obligations under finance leases and hire purchase contracts 0 0 NHS creditors 0 0 Other 0 0 Sub Total 0 0 TOTAL 11,745 14,172 Page A-20

23 15.2 Loans and other long-term financial liabilities The Trust entered into no loan agreements during the period Prudential Borrowing Limit The Trust has a Prudential Borrowing Limit in 2008/2009 of 34.9m, made up of 1) A maximum cumulative long term borrowing limit of 23.9m and 2) An approved working capital facility of 11m. The Trust has not used this facility for the financial year. Financial Ratio Approved PBL Actual ratios ratios 2008/ /09 Maximum Debt/ Capital Ratio 0% <15% Minimum Dividend Cover 2.5x >1.0x Minimum Interest Cover 0 >3.0x Minimum Debt Service Cover 0 >2.0x Minimum Debt Service to Revenue 0% <3% The Trust has 11m of approved working capital facility. The Trust has not drawn down any of its working capital facility at 31st March The NHS foundation trust is required to comply and remain within a prudential borrowing limit. This is made up of two elements: - the maximum cumulative amount of long-term borrowing. This is set by reference to the five ratio tests set out in Monitor's Prudential Borrowing Code. The financial risk rating set under Monitor's Compliance Framework determines one of the ratios and therefore can impact on the long term borrowing limit. - the amount of any working capital facility approved by Monitor. Further information on the NHS foundation trust Prudential Borrowing Code and Compliance Framework can be found on the website of Monitor, the Independent Regulator of Foundation Trusts Finance lease obligations The Trust entered into no lease obligations during the period Finance Lease Commitments Mid Staffordshire NHS Foundation Trust has not entered into any finance leases. Page A-21

24 16. Provisions for liabilities and charges Pensions relating to other staff Legal claims Equal Pay Other Total 000 At 1 April ,134 2,119 3,353 Arising during the year Utilised during the year (66) (15) (902) (983) Reversed unused (8) (119) (127) Unwinding of discount 0 At 31 March ,000 1,751 2,842 Included in other are provisions for early retirement/injury benefits of 1,047k, Healthcare Commission investigation of 240k, outstanding claims relating to Agenda for Change of 170k and provision for unclaimed holiday pay 294k. Expected timing of cashflows: Within one year Between one and five years 1, ,368 After five years Total ,000 1,751 2,842 7,685K is included in the provisions of the NHS Litigation Authority at 31 March 2009 in respect of clinical negligence liabilities of the NHS Trust (31st March K). Page A-22

25 17. Movement in taxpayers' equity 31 March Taxpayers' equity at 1 April ,498 surplus/(deficit) for the financial year 5,942 Public dividend capital dividends (4,264) Surplus/(deficit) from revaluations of fixed assets and current asset investments Additions/(reductions) in donated asset reserve (25) Taxpayers' equity at 31 March 123, Movements in public dividend capital Public dividend capital 1 April ,275 68,275 Public dividend capital at 31 March 68,275 68,275 Page A-23

26 18. Movements on Reserves Movements on reserves in the period comprised the following: Revaluation Reserve Donated Asset Reserve Income and Expenditure Reserve Total At 1 April ,224 1,407 2,592 53,223 Transfer from the income and expenditure account 1,678 1,678 Surplus/(deficit) on revaluations of fixed assets and current asset investments 0 Transfers to the income and expenditure account for depreciation, impairment and disposal of donated assets (25) (25) At 31 March ,224 1,382 4,270 54,876 Page A-24

27 19. Notes to the cash flow Statement 19.1 Reconciliation of operating surplus to net cash inflow from operating activities: 12 months 2 months Total operating surplus 5,427 1,173 Depreciation and amortisation 6, Transfer from donated asset reserve (157) (23) (Increase)/decrease in stocks (185) (49) (Increase)/decrease in debtors 165 (606) Increase/(decrease) in creditors 98 1,424 Increase/(decrease) in provisions (511) 695 Net cash inflow from operating activities 11,091 3, Reconciliation of net cash flow to movement in net funds/(debt) 12 months 2 months Increase/(decrease) in cash in the period 3,850 (3,168) Cash (inflow)/outflow from (decrease)/increase in liquid resources (3,500) 3,500 Change in net funds/(debt) resulting from cash flows Net funds / (debt) at 1 April ,225 6,893 Net funds / (debt) at 31 March ,575 7, Analysis of changes in net funds/(debt) At 1 April 2008 Other cash changes in the period At 31 March Cash at commercial banks and in hand 99 (50) 49 Cash at OPG (Office of Paymaster General) 3,626 3,900 7,526 Current asset investments 3,500 (3,500) 0 7, ,575 Page A-25

28 20. Capital Commitments Commitments under capital expenditure contracts at 31 March 2009 were 336,384 (2008 1,356,465) 21. Post Balance Sheet Events There were no Post Balance Sheet Events. 22. Contingencies 31 March Gross Value (184) Amounts recoverable 92 Net value of contingent liabilities (92) Contingent liabilities and amounts recoverable against contingent liabilities relates to public and employer liabilities that are managed by t Litigation Authority. 23. Related Party Transactions Mid Staffordshire NHS Foundation Trust is a body corporate established by order of the Secretary of State for Health. During the year none of the Board Members or members of the key management staff or parties related to them has undertaken any mate transactions with Mid Staffordshire NHS Foundation Trust. The Department of Health is regarded as a related party. During the year Mid Staffordshire NHS Foundation Trust has had a significant n material transactions with the Department, and with other entities for which the Department is regarded as the parent Department. These are listed below: West Midlands Strategic Health Authority (inc. 4,034k) Birmingham East and North Primary Care Trust (inc. 3,563k) Shropshire County Primary Care Trust (inc. 123k) South Staffordshire Primary Care Trust (inc. 118,352k, exp. 82k) Stoke on Trent Primary Care Trust (inc. 812k) Walsall Primary Care Trust (inc. 1,142k, exp. 28k) Wolverhampton City Primary Care Trust (inc. 398k) South Staffordshire and Shropshire Healthcare NHS Foundation Trust (inc. 1,725k, exp. 817k) The Royal Wolverhampton Hospitals NHS Trust (inc. 1,175k, exp. 899) NHS Purchasing and Supply Agency (exp. 2,911k) The Trust has also received revenue and capital payments from a number of charitable funds, certain of the Trustees for which are also m the NHS Trust Board. These transactions will be disclosed in the Trustees report and accounts for the Charitable Funds Held on Trust wh published during the current financial year. Page A-26

29 the NHS erial number of e entities members of hich will be Page A-26

30 24. Private Finance Transactions 24.1 PFI schemes deemed to be off-balance sheet 31 March Gross charge to operating expenses in respect of off balance sheet PFI transactions 1,036 Amortisation of PFI deferred asset Net charge to operating expenses in respect of offbalance sheet PFI transactions 1,036 The trust is committed to make the following payments for off-balance sheet PFIs during the next year in which the commitment expires: 2nd to 5th years (inclusive) Estimated capital value of the PFI project 2,156 Contract Start date: October 2002 Contract End date: October 2012 The Trust has the development of an Electronic Patient Record (EPR) project deemed to be off-balance sheet during the period. Page A-27

31 25. Financial Instruments Derivatives and Other Financial Instruments, require disclosure of the role that financial instruments have had during the period in creating or changing the risks an entity faces in undertaking its activities. Because of the continuing service provider relationship that the NHS Foundation Trust has with local Primary Care Trusts and the way those Primary Care Trusts are financed, the NHS Foundation Trust is not exposed to the degree of financial risk faced by business entities. Also financial instruments play a much more limited role in creating or changing risk than would be typical of the listed companies to which the standards mainly apply. The NHS Foundation Trust financial assets and liabilities are generated by day-to-day operational activities rather than being held to change the risks facing the NHS Foundation Trust in undertaking its activities. Debtors and creditors that are due to mature or become payable within 12 months from the balance sheet date have been omitted from all disclosures other than the currency profile. Provisions are shown gross. Amounts expected in reimbursement against a provision (and included in debtors) are separately disclosed. Liquidity risk The NHS Foundation Trust's net operating costs are incurred under annual service agreements with local Primary Care Trusts, which are financed from resources voted annually by Parliament. The Trust also largely finances its capital expenditure from funds made available from Government under an agreed borrowing limit. Mid Staffordshire NHS Foundation Trust is not, therefore, exposed to significant liquidity risks. Interest-Rate Risk 100% of the Trust's financial assets and 100% of its financial liabilities carry nil or fixed rates of interest. Mid Staffordshire NHS Foundation Trust is not, therefore, exposed to significant interest-rate risk. The following two tables show the interest rate profiles of the Trust's financial assets and liabilities: Page A-28

32 25.1 Financial Assets Financial assets by category: NHS Debtors (net of provision for irrecoverable debts) 3,349 3,044 Accrued income Other debtors 1,720 2,489 Current asset investments 0 3,500 Cash at bank and in hand 7,575 3,725 Total at 31 March ,496 13, Financial Liabilities Financial liabilities by category: NHS Creditors 1,169 2,972 Other creditors 6,954 4,763 Accruals 0 3,212 Capital Creditors 685 1,482 Provision under Contract 2,842 3,353 Total at 31 March ,650 15,782 Page A-29

33 Mid Staffordshire NHS Foundation Trust - Twelve Month Accounts Covering the Period to 31 March 20 Foreign Currency Risk The Trust has no foreign currency income or expenditure Fair Values Set out below is a comparison, by category, of book values and fair values of the NHS Foundation Trust's financial assets and liabilities as at 31 March Book Value Fair Value Financial assets Debtors over 1 year: - Agreements with commissioners to cover creditors and provisions Investments 0 0 Total Financial liabilities Creditors over 1 year: - Finance leases 0 0 Provisions under contract 2,842 0 Loans 0 0 Total 2,842 0 Page A-30

34 26. Third Party Assets The Trust held 2,924 ( ,625) cash at bank and in hand at 31 March 2009 which relates to monies held by the NHS Foundation Trust on behalf of patients. This has been excluded from cash at bank and in hand figure reported in the accounts. 27. Intra-Government and Other Balances Debtors: amounts falling due within one year Debtors: amounts falling due after more than one year Creditors: amounts falling due within one year Creditors: amounts falling due after more than one year English NHS Foundation Trusts English NHS Trusts Department of Health English Strategic Health Authorities English Primary Care Trusts 2, RAB Special Health Authorities NHS CGA bodies NHS WGA bodies Total NHS debtors / creditors 3, ,169 0 Other WGA bodies ,937 0 At 31 March , ,106 0 Reconciliation of inter WGA Debtors and Creditors Due within one year Total NHS debtors / creditors 3,646 1,169 0 Less amounts included in other categories: Loans Other (please specify) Total NHS debtors / creditors 3, ,169 0 Add back: amounts included in other categories (as above) Analysis of other WGA bodies: Loans Other tax and social security costs 0 0 2,937 0 NHS Injury Scheme At 31 March , , Losses and Special Payments There were 640 cases of losses and special payments paid during the year totalling 143,000. (2007/ cases totalling 101,000). Page A-31