Board/Committee Prompts Does the Board require any additional information reported in future papers?

Transcription

1 EXECUTIVE SUMMARY REPORT TO: Trust Board DATE: Tuesday 5 December 2017 AGENDA NO: 3.1 AGENDA ITEM: SPONSOR: Colin Dart, Acting PREPARED BY: Colin Dart, Acting PRESENTED BY: Colin Dart, Acting Purpose The purpose of this report is to present the Trust s financial position at 31 October Link to Strategic Objective(s) This paper supports delivery of the following strategic objectives: Decision Approval Receive Ratify 1. High quality 2. Sustainable local services 3. Integrated health and social care 4. Flexible, fulfilled and multi-skilled workforce 5. Efficient and effective 6. Promote independence and well-being. 7. Support individuals and communities to have more influence Key Issues The following key issues should be noted: The reporting is consistent with the submission of financial information to NHS Improvement (NHSI) this is a key requirement for NHSI. The Trust has achieved its bottom line surplus plan at the end of October. Medical agency variable pay expenditure, delivery of the Cost Improvement Programme and the go live of Trakcare are the main risks to manage. The underlying Single Operating Framework rating is 2 (3 with triggers) and forecast to be 1 at year end. The current forecast remains a 3,922k surplus. A number of actions are progressing to assess and mitigate the risks. A STP peer review process has been undertaken to test organisational risks, the ability to mitigate and the opportunity for a system solution to achieve the STP financial control total. Equality-Related Impact The Trust is committed to an inclusive NHS that is fair and accessible to all; to upholding the principles of human rights and equality of people who use our services and of those who work in them. This paper has been assessed to have the following equality-related impact: Positive Impact Negative Impact No Impact Risk Board/Committee Prompts Does the Board require any additional information reported in future papers? References None G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 1 of 14

2 1. Summary The main financial objectives for 2017/18 set out in the approved financial plan are: Deliver a 12m savings programme; Secure 3.9m of general System Transformation Funding through financial and operational performance; that Achieves a 3.9 m retained surplus. The following report outlines the financial position of the Trust at 31 October Tiverton PFI continues to be retained on the Balance Sheet at the month end with a potential date of transfer to NHS Property Services in December The current year end forecast achieves the above objectives though is subject to significant risk. 2. Key Data Key data Plan Actual Variance Plan Forecast Variance 31/10/ /10/ /10/ /03/ /03/ /03/2018 YTD YTD YTD Year ending Year ending Year ending '000 '000 '000 '000 '000 '000 Performance against control total Surplus/(deficit) before impairments and transfers 1,292 1, ,762 3, Adjusted financial performance surplus/(deficit) including STF 1,383 1, ,922 3,922 0 Control total 1,383 1, ,922 3,922 0 Performance against control total Capital Gross capital expenditure 4,515 2,385 2,130 7,751 5,311 2,440 Disposals / other deductions Charge after additions/deductions 4,515 2,385 2,130 7,751 5,311 2,440 Less donations and grants received (147) (77) (70) (250) (310) 60 Less PFI capital (IFRIC12) Plus PFI residual interest (212) (212) Other including additions to financial assets / prior period adjustments Total CDEL 4,368 2,520 1,848 7,501 5,213 2,288 Capital resource limit (NHS trusts only) Charge against the capital resource limit (CRL) incl IFRS impact 4,368 2,308 2,060 7,501 5,001 2,500 Capital resource limit (CRL) incl IFRS impact 4,368 2,308 2,060 7,501 5,001 2,500 Under/(over) spend against CRL Cash Cash and cash equivalents at period end 2,760 1,345 (1,415) 3,911 3,911 0 DH capital financing 2,500 0 (2,500) 2,500 0 (2,500) DH interim revenue financing Agency and contract Total agency costs excluding outsourced bank 2,961 2,991 (30) 4,776 6,486 (1,710) Agency ceiling 2,679 2, ,598 4,598 0 Agency costs as a percentage of gross payroll costs 4.3% 4.3% 0.1% 4.0% 5.5% 1.5% Use of resources risk rating summary Plan Actual Variance Plan Forecast Variance 31/10/ /10/ /10/ /03/ /03/ /03/2018 YTD YTD YTD Year ending Year ending Year ending '000 Capital service cover rating Liquidity rating I&E margin rating Variance from control total rating 1 2 Agency rating Risk rating after overrides 3 1 G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 2 of 14

3 3. Statement of Comprehensive Income (SOCI) The Statement of Comprehensive Income is attached as Appendix A. 3.1 Performance against Control Total Cumulative Performance against the Plan 1383K surplus achieved plan. 3.2 Total Income The adverse variance of 29k on income from patient care activities arises from phasing of the original plan. There is no change in the planned level of income forecast for the financial year. An evaluation is being undertaken of the impact of the depth of coding from discharge summaries and the impact on HSMR and income. Planning mitigations is in progress. Other operating income is forecast to exceed the annual plan by 1934k to reflect income receivable from tenants as a result of retaining Tiverton PFI. This will be adjusted for each month of future ownership until the point of transfer but is neutral to the Trust and is off-set by increases in expenditure as set out below. 3.3 Expenditure Employee Expenses The adverse variance of 918k arises from movements and phasing since the plan was submitted to NHSI in December There are a number of underlying pressures in medical staffing that are offsetting other operational benefits. A review of the monthly expenditure forecasts have taken place along with meetings to explore mitigations these are further being explored and will be included in forecasting Operating Expenses (Non Pay) There is no material change in the total planned level of pay expenditure for the financial year. The favourable variance of 1,665k arises from movements and phasing since the plan was submitted to NHSI in December Expenditure is forecast to over-spend the annual plan by 456k to reflect the impact of retaining Tiverton PFI. This is off-set by additional income receivable within other operating income above. G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 3 of 14

4 3.3.3 Finance Expense Forecast to exceed the annual plan by 636k to reflect costs incurred as a result of retaining Tiverton PFI. This will be adjusted for each month of future ownership until the point of transfer but is neutral to the Trust as this is off-set by additional income receivable within other operating income PDC The adverse variance of 245k arises from movements and phasing since the plan was submitted to NHSI in December The Trust accounts for the expenditure on an accruals basis the plan submitted required phasing in month 6 and month 12 to reflect an accurate cash flow impact. Forecast to exceed the annual plan by 128k to reflect costs incurred as a result of retaining Tiverton PFI. This will be adjusted for each month of future ownership until the point of transfer but is neutral to the Trust as this is off-set by additional income receivable within other operating income. 4. CIP Current Month Initial Plan Yr Forecast YTD M6 R 2,900,000 4,951,562 - A - 410,000 - G 9,100,000 6,638,438 4,657,981 12,000,000 12,000,000 4,657,981 Previous Month Initial Plan Yr Forecast YTD M5 R 4,050,000 4,201,562 - A 1,000,000 1,115,000 - G 6,950,000 6,683,438 4,657,981 12,000,000 12,000,000 4,657,981 The financial plan for 2017/18 requires a CIP of 12m. Following a thorough review of the CIP opportunities this is now assessed as being: 6,638k projects. 410k Amber projects requiring increased focus these are considered green There is a high level gap of 4,952k. 4,658k has been removed from full year budgets in the general ledger at month 6. There are 2.4m of under spend within divisional positions in addition to the 2m green movement between month 6 and month 12. G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 4 of 14

5 5. Statement of Financial Position (SOFP) The Statement of Financial Position is set out in Appendix B. 5.1 Cash and Liquidity Aged receivables The level of total aged debt stands at 4,528k being a decrease of 186k. The level of payables has increased by 1,877k in month ( 1,335k for non- NHS). Aged receivables/ payables: current month (days past invoice date) 19ACTD 19ACTD01 19ACTD02 19ACTD03 19ACTD04 19ACTD05 19ACTD06 19ACTD07 19ACTD08 Aged receivables/ payables: current month (days past invoice date) Total 0-30 days 0-30 days days days days days Over 90 days Over 90 days Actual Actual Actual Actual Actual Actual Actual Actual Actual 31/10/ /10/ /10/ /10/ /10/ /10/ /10/ /10/ /10/2017 YTD YTD YTD YTD YTD YTD YTD YTD YTD '000 '000 % '000 % '000 % '000 % Receivables non NHS % % 4 0.5% % Receivables NHS 3, % % % 1, % Payables non NHS (3,285) (2,185) 66.5% (1,052) 32.0% (36) 1.1% (12) 0.4% Payables NHS (1,947) (918) 47.1% (613) 31.5% (344) 17.7% (72) 3.7% Aged receivables/ payables: previous month (days past invoice date) 19ACTD 19ACTD01 19ACTD02 19ACTD03 19ACTD04 19ACTD05 19ACTD06 19ACTD07 19ACTD08 Aged receivables/ payables: previous month (days past invoice date) Total 0-30 days 0-30 days days days days days Over 90 days Over 90 days Actual Actual Actual Actual Actual Actual Actual Actual Actual 30/09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/2017 YTD YTD YTD YTD YTD YTD YTD YTD YTD '000 '000 % '000 % '000 % '000 % Receivables non NHS % % % % Receivables NHS 4,111 1, % 1, % % 1, % Payables non NHS (1,950) (1,904) 97.6% (22) 1.1% (14) 0.7% (10) 0.5% Payables NHS (1,405) (967) 68.8% (382) 27.2% (7) 0.5% (49) 3.5% G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 5 of 14

6 5.1.2 Cash - 1,336k The Trust continues to utilise its current Revolving Working Capital Facility though limits draw down to 4.7m being the revised deficit control total from 2015/ Better Payment Policy The Trust is undertaking cash flow forecasts to inform the cash requirement going forwards. Strong performance overall compared to 2016/17 with performance impacted by the cash consequences of the phased financial plan. Better payment practice code Actual Actual Actual Actual 31/10/ /10/ /09/ /09/2017 YTD YTD YTD YTD Number '000 Number '000 Non NHS Total bills paid in the year 28,628 38,390 25,979 32,551 Total bills paid within target 22,586 32,491 20,555 27,698 Percentage of bills paid within target 78.9% 84.6% 79.1% 85.1% NHS Total bills paid in the year 1,081 40, ,784 Total bills paid within target , ,341 Percentage of bills paid within target 44.6% 88.6% 43.6% 87.6% T ota l Total bills paid in the year 29,709 79,225 26,978 68,335 Total bills paid within target 23,068 68,690 20,991 59,039 Percentage of bills paid within target 77.6% 86.7% 77.8% 86.4% G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 6 of 14

7 6. NHSI Single Oversight Framework Amber Underlying segment rating of 2 that is forecast to achieve a rating of 1. Finance and use of resources metrics 03PLANYTD 03ACTYTD 03PLANCY 03FOTCY Maincode Finance and use of resources metrics Plan Actual Plan Forecast 30/09/ /09/ /03/ /03/2018 YTD YTD Year ending Year ending '000 '000 '000 '000 Subcode Capital service cover rating PRR0160 Liquidity rating PRR0170 I&E margin rating PRR0180 Distance from financial plan 1 2 PRR0190 Agency rating PRR0200 Plan risk ratings before overrides 3 1 PRR0206 Plan risk ratings overrides: Any ratings with a score of 4 override - maximum score override of 3 if any rating scored as a 4 Trigger No trigger PRR PRR0210 Is Trust under financial special measures No No PRR0218 Risk ratings after overrides 3 2 PRR Capital Service Cover The year to date rating has been impacted by changes from original planning assumption made in December regarding: Red Tiverton PFI financing costs PDC Repayment of 2016/17 STF advanced funding The indicator is fluctuating monthly from 4 to 3 and will continue to improve as the year progresses and the denominator increases. 6.2 Liquidity The Committee has been previously provided with assurance of the historic trends in this area that includes: Amber Cash management is a daily priority for the finance department; Trust contract income instalments are received by 15 th of the month; The highest payment volumes are either 19 th (PAYE and Pension) or 27 th G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 7 of 14

8 (Payroll) of the month; The Trust has historically had negative working capital as previously reported to the Committee; The Trust has increased its cash position over time within the financing constraints of the NHS. This has been impacted by the cash impact of the 2015/16 deficit. 6.3 Agency Rating Continued reductions in the use of Nurse Agency have been delivered in this financial year. Amber Agency expenditure is increasing in medical agency due to the recent issues requiring additional agency to the yearend that will breach the cap set by NHSI. Controls are in place for controlling other all agency expenditure. 7. Capital Programme The original gross annual Capital programme submitted to NHSI is 7,751k. The capital plan assumed 2.5m loan funding. Due to the uncertainty on the level of the national capital allocation the Trust has reviewed its plans accordingly. Discussions will continue with the local NHSI team regarding future funding and financing opportunities. 8. Risks and Opportunities The following risks exist: 5.0m combined impact of divisional overspends and unachieved CIP; Cash flow impact of not delivering the above requires an in-year solution. Mitigations and Controls The Trust has significant assurance from an assessment of controls that NHSI would expect to be in place; Detailed reviews of divisional forecasts continue to be undertaken to inform actions that can be taken to reduce the current level of costs being incurred in medical staffing; Plans are in place to close an Operating Theatre in December; Technical balance sheet reviews are progressing - led by the acting. Any in-year revenue benefit will be fully assessed against the longer term impact of any proposal. G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 8 of 14

9 Appendix A Statement of Comprehensive Income ST AT EMENT OF COMPREHENSIVE INCOME Plan Actual Variance Plan Forecast Variance 31/10/ /10/ /10/ /03/ /03/ /03/2018 YTD YTD YTD Year ending Year ending Year ending '000 '000 '000 '000 '000 '000 Operating income from patient care activities 107, ,019 (29) 183, ,511 0 Other operating income 9,281 9, ,812 18,746 1,934 Employee expenses (67,468) (68,386) (918) (115,064) (115,678) (614) Operating expenses excluding employee expenses (46,453) (44,788) 1,665 (81,263) (81,719) (456) OPERATING SURPLUS / (DEFICIT) 2,408 3, ,996 4, FINANCE COSTS Finance income Finance expense (103) (685) (582) (206) (842) (636) PDC dividends payable/refundable (1,020) (1,265) (245) (2,040) (2,168) (128) NET FINANCE COSTS (1,116) (1,943) (827) (2,234) (2,998) (764) SURPLUS/(DEFICIT) FOR THE PERIOD/YEAR 1,292 1, ,762 1, Plan Actual Variance Plan Forecast Variance Adjusted financial performance 30/09/ /09/ /09/ /03/ /03/ /03/2018 YTD YTD YTD Year ending Year ending Year ending '000 '000 '000 '000 '000 '000 Surplus/(deficit) for the period/year 1,292 1, ,762 1, Add back all I&E impairments/(reversals) ,000 2,000 0 Surplus/(deficit) before impairments and transfers 1,292 1, ,762 3, Remove capital donations/grants I&E impact (40) (100) Adjusted financial performance surplus/(deficit) 1,383 1, ,922 3,922 0 Control total 1,383 1, ,922 3,922 0 Performance against control total G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 9 of 14

10 Appendix B Statement of Financial Position STATEMENT OF FINANCIAL POSITION Actual 31/10/2017 YTD '000 Non-current assets Intangible assets 8,279 Property, plant and equipment: on-sofp IFRIC 12 assets 14,807 Property, plant and equipment: other 67,721 Trade and other receivables: non-nhs receivables 912 Total non-current assets 91,719 Current assets Inventories 3,008 Trade and other receivables: NHS receivables 5,426 Trade and other receivables: non-nhs receivables 22,970 Cash and cash equivalents: GBS/NLF 1,336 Cash and cash equivalents: commercial / in hand / other 9 Total current assets 32,749 Current liabilities Trade and other payables: capital (81) Trade and other payables: non-capital (35,007) Borrowings (1,053) Provisions (19) Total current liabilities (36,160) Total assets less current liabilities 88,308 Non-current liabilities Borrowings (14,435) Total non-current liabilities (14,435) Total net assets employed 73,873 Financed by Public dividend capital 55,040 Revaluation reserve 14,115 Income and expenditure reserve 4,717 Total taxpayers' and others' equity 73,872 G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 10 of 14

11 Appendix C Statement of Cash Flows STATEMENT OF CASH FLOWS Actual 31/10/2017 YTD '000 Cash flows from operating activities Operating surplus/(deficit) 3,276 Depreciation and amortisation 3,599 Income recognised in respect of capital donations (cash and non-cash) (77) (Increase)/decrease in trade and other receivables (6,499) (Increase)/decrease in inventories 86 Increase/(decrease) in trade and other payables 5,170 Net cash generated from / (used in) operations 5,555 Cash flows from investing activities Purchase of intangible assets (771) Purchase of property, plant and equipment and investment property (1,548) Net cash generated from/(used in) investing activities (2,312) Cash flows from financing activities Loans from Department of Health - repaid (3,188) Other loans repaid (712) Net cash generated from/(used in) financing activities (3,500) Increase/(decrease) in cash and cash equivalents (257) Cash and cash equivalents at start of period 1,602 Opening balance adjustment Restated cash and cash equivalents at start of period 1,602 Cash and cash equivalents at end of period 1,345 G:\Board Secretariat\Meetings\Board\Meetings\ \ Page 11 of 14

12 Finance Committee Executive Summary Finance Report June 2016 Appendix D Staff Costs EMPLOYEE EXPENSES Plan Actual Variance Plan Forecast Variance YTD YTD YTD Year ending Year ending Year ending '000 '000 '000 '000 '000 '000 Substantive staff including on-costs 64,739 63,553 1, , ,671 4,140 Bank staff including on-costs 2,050 3,047 (997) 3,389 4,587 (1,198) Agency / contract 2,961 2,991 (30) 4,776 6,486 (1,710) Total gross staff costs 69,750 69, , ,744 1,232 Less: Capitalised staff costs (2,282) (1,205) (1,077) (3,912) (2,066) (1,846) Total employee benefits excluding capitalised costs 67,468 68,386 (918) 115, ,678 (614) G:\BOARD SECRETARIAT\MEETINGS\Board\Meetings\ \ \Annex Board - OPEN Finance Report Oct 17.docx Page 12 of 14

13 Finance Committee Executive Summary Finance Report June 2016 Appendix E Summary of Controls G:\BOARD SECRETARIAT\MEETINGS\Board\Meetings\ \ \Annex Board - OPEN Finance Report Oct 17.docx Page 13 of 14

14 Finance Committee Executive Summary Finance Report June 2016 G:\BOARD SECRETARIAT\MEETINGS\Board\Meetings\ \ \Annex Board - OPEN Finance Report Oct 17.docx Page 14 of 14