West Hertfordshire Hospitals NHS Trust. Finance Report. Period 12. April to March 2009

Transcription

1 West Hertfordshire Hospitals NHS Trust Finance Report Period 12 April to March 2009 Presented by Phil Bradley (Acting) Director of Finance 17 April

2 Summary Financial Overview as at 31 March 2009 Income & Expenditure Balance Sheet 2008/09 Income & Expenditure Description Plan Actual Variance Income Pay (146.9) (148.5) (1.6) Non Pay (87.6) (88.8) (1.2) Total Expenditure (234.5) (237.3) (2.8) Surplus/(Deficit) (0.0) Cumulative Surplus Income & Expenditure 2008/09 Actual Plan Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Capital Expenditure Cumulative Cash Resource Limit for year 37.8m Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Monitor Financial Risk Ratings 2008/09 Underlying Performance 4 Achievement of Plan 4 Financial Efficiency 3 Liquidity 1 Overall Rating 2 Risks and Assumptions Trust Savings 2008/09 Actual Target Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Year End 07/08 A nalysis of C ash, D eb t o rs & C red it o rs ( C red it ors sho wn as po sit ive) Jan Feb M ar 2008/09 Cash Stock Debtors Creditors Debtor Days: 13 Creditor Days: 33 Figures reported here are unaudited but based on a detailed review of the ledger. Variance By Division '000 () %Net Budget Summary Medicine (0.3) (0.7)% M12 M1-M12 Target Variance Surgery (5.2) (11.1)% Ave from Ave - The planned 4.4m surplus has been achieved. Women's (1.0) (4.3)% m savings have been delivered. C linical Support % By Value 71% 70% 95% 28% - 9.6m savings have been delivered recurrently. Other % By Volume 66% 67% 95% 25% - 5.3m of capital cash is reflected in the Balance Sheet Facilities % Estates (0.3) (3.2)% C entral % C orporate % Total Variance (0.0) 2 Cumulative Better Payment Performance

3 Introduction At Month 12, the Trust has achieved its budgeted surplus of 4.4m. The table below summarises the Trust s performance against key indicators. Section Target Performance Key Issues Performance Rating 1 Deliver a surplus Income & Expenditure position 4.4m surplus Normalised surplus is 0.5m Green 3 Remain within the External Financing Limit (EFL) 24.3m The Trust has contained expenditure within its allocated External Financing Limit. Green 4 Remain within the Capital Resource Limit (CRL) 32.9m The Trust has contained capital expenditure within the CRL. Green 5 Savings Plan 11.3m 11.3m savings have been delivered against planned schemes. 11.3m Green 0.3m Red 6 Better Payment code - Cumulative target 95% Number: 67% Value: 70% Delays in invoice sign off in those departments not yet using electronic authorisation Plans in place to migrate over the coming months Red Table 1 In the April 2008 Finance Report, the Board was advised that the Financial Risk Rating (FRR) was based on Strategic Health Authority calculations. As the Trust is moving towards Foundation Trust status, the FRR below has been calculated according to Monitor s methodology, as set out in its Long Term Financial model. 3

4 Financial Risk Ratios Monitor Calculation Financial Risk Ratings 2008/09 Criteria Metric Weight Score 08/09 Risk ratings 08/09 Underlying performance EBITDA margin % 25% <1 10.2% 4 Achievement of plan EBITDA achieved % 10% < % 4 Financial efficiency Return on assets % 20% <-2 5.1% 4 I&E surplus margin % 20% <-2 1.8% 3 Liquidity Liquid ratio days 25% < Average 3.1 Overriding rules Overriding rules At least one criteria on Plan 1 or 2 (1.1) Overall rating Table 2 Overall rating 2 For comparison, SHA FRR ratios are shown below: Financial Risk Ratios SHA Calculation Financial Risk Ratings Mar-09 Criteria Metric Weight Score 08/09 Risk ratings 08/09 Underlying performance EBITDA margin % 25% <1 10.2% 4 Achievement of plan EBITDA achieved % 10% < % 5 Financial efficiency Return on assets % 20% <-2 5.5% 4 I&E surplus margin % 20% <-2 1.8% 3 Liquidity Liquid ratio days 25% < Average 3.65 Overriding rules Overriding rules At least one criteria on Plan 1 or 2 0 Overall rating Table 3 Overall rating 4 4

5 The schedule below summarises differences between the two sets of ratios: Ratio Difference in Calculation Effect of Difference EBITDA achieved Return on Assets (ROA) Liquidity Table 4 In Year 1 Monitor calculate EBITDA achieved April to February. SHA s formula runs April to March. SHA calculate return on equity; Monitor calculates return on equity plus loans. The SHA s formula includes stock and is based on the current year. Monitor exclude stock from calculations and base the rating on the prior year s balance sheet. Due to the working of the models, March s improvement in EBITDA compared to budgeted EBITDA of 1.9m is included in the SHA calculation but excluded from Monitor s. The Monitor ratio is therefore lower. 0.4% difference that is not material The SHA s calculation is higher as the inclusion of stock gives a higher liquidity figure. The SHA s calculation also includes the reduction in net current liabilities in 2008/09. The most significant difference is how liquidity is calculated. Using the Monitor calculations, liquidity rates 1. This then triggers an overriding rule that the maximum overall score allowable is 2. The Board is asked to note an apparent contradiction in the Monitor Long Term Financial Model (LTFM) which appears to give a maximum allowable score of 3. This is being clarified for the next iteration of the LTFM. 1 Deliver a surplus Income & Expenditure position Summary Results 1.1 Summary results for 2008/09 are shown below. Appendix 1 gives a more detailed statement of Income and Expenditure. Category 2008/ /09 Variance Budget Actuals () () () Income SLA Income Other NHS Income (0.2) Other Non NHS Income (0.1) Expenditure Pay (146.4) (148.5) (2.1) Non-pay (67.5) (68.6) (1.1) Reserves (1.0) 1.0 Unidentified savings 0.3 (0.3) EBITDA Depreciation (10.5) (10.5) (0.0) Dividend Payable (8.8) (8.8) 0.0 Interest (0.6) (0.9) (0.3) Surplus (0.0) Table 5 5

6 Income 1.2 SLA income is based on provisional activity to March At month 12, contract income shows over performance against plan of 3.1m. The 3.1m income variance is due in the main to additional income from elective and outpatient activity in order to achieve 18-week waiting list targets. The table below sets out Divisional income performance: Divisional Income 2008/09 Income Budget 2008/09 Actual Income Variance Over / (Under) Reason Medicine Surgery (0.5) Lower recharge income Women's & Children's Clinical Support (0.2) Lower private patient income Estates Facilities Contract Income Income from achieving waiting list targets Corporate (1.0) Reduction in training income Total Table 6 Expenditure /09 pay and non-pay costs are shown in the tables below. Pay and Non Pay 2008/ Staffing Non Pay Pay Budget Non-Pay Budget 2 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Table 7 6

7 Bank & Agency Staffing Spend 2008/ Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Agency Bank Budget Table 8 Pay costs for the year are 1.6m over budget. Overspends on agency staff of 6.1m and bank staff of 5.5m are offset by under spends of 10m on permanent staff. In total, 11.2% of the Trust s 2008/09 staff costs represented overtime, agency or bank staff usage against an efficiency benchmark of 3%. Weekly meetings chaired by the Director of Workforce are being undertaken with the divisions to action reduced usage of temporary staff and to improve recruitment and retention of staff within the Trust. Appendix 1a provides an analysis by Division and staff group of cumulative staff costs and average paid whole time equivalents for 2008/09. Appendix 2 provides an analysis of non-pay. Divisional Position 1.4 The tables below analyse the Trust s year-end position by Division. The impact of unidentified savings has been shown against pay. Negative figures denote an overspend against expenditure or an under-recovery of income. 7

8 Financial Performance April 2008 to March 2009 by Division Division Pay Non-pay Income Grand Total % % % % Medicine (0.8) (1.9) (0.3) (0.7) Surgery (2.5) (6.5) (2.2) (18.9) (0.5) (15.9) (5.2) (11.1) Women's (0.5) (2.3) (0.7) (22.5) (1.0) (4.3) Clinical Support (0.1) (1.4) (0.2) (3.9) Facilities Estates (0.0) 0.0 (0.3) (4.9) (0.3) (3.2) Corporate / Central Total (2.4) (0.4) Table Budget Variance by Division (0.5 ) (1.5 ) Medicine Surgery Women's Clinical Support Facilities Estates Corporate / Central (2.5 ) (3.5 ) (4.5 ) (5.5 ) Table 10 Recurrent Financial Position 1.5 Appendix 1b shows the Trust s baseline run-rate, or underlying financial position, adjusted for non-recurrent income and expenditure. 2 Remain Within External Financing Limit (EFL) 2.1 This is a cash amount receivable based on the Trust s capital requirements. The Trust has met its financial duty to contain spend within this limit. 8

9 3 Remain Within Capital Resource Limit (CRL) 3.1 The Trust has met its financial duty to contain capital commitments within this limit. 4 Intelligent Savings Plan 4.1 The Trust has achieved 11.3m of its planned 11.6m 2008/09 Cost Improvements. Division Savings Target () Savings Delivered () Variance () Surgery (0.2) Medicine (0.6) Clinical Support Corporate Estates / Facilities Women s Total (0.3) Table The following table sets out the delivery of 2008/09 savings: Division Target Planned Gateway 3 Forecast Gateway 3 Non- Recurrent Savings Surgery Medicine Clin Supp Corporate Estates & Facilities Clinical Engineering Women & Children's Total Target KEY = RECURRENT SAVINGS = TARGET = NON RECURRENT SAVINGS Table 12Ta4.444.ble 19 9

10 5 Better Payment Practice Code (BPPC) (B 5.1 The cumulative target of paying 95% of invoices received within 30 days has not been achieved. 2008/09 cumulative figures are 67% by number and 70% by value. 5.2 The charts that follow set out performance against planned trajectories to achieve a 95% target. Payment of Non-NHS Creditors within 30 days 2008/09 100% 90% 80% 70% 60% Non-NHS Trajectory Target No. Non-NHS Achieved Value Non-NHS Achieved 50% 40% 30% Table 13 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Payment of NHS Creditors within 30 days 2008/09 100% 90% 80% 70% 60% 50% Target NHS Trajectory No. NHS Achieved Value NHS Achieved 40% 30% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Table Payment times have improved compared to 2007/08. However, the Trust is still not meeting the required payment times target. Existing delays within the Trust will be resolved through the planned roll-out of electronic authorisation of invoices, scheduled to be completed by the end of Quarter /10. Creditor days have reduced from 37 at Month 11 to 33 at the end of Month

11 5.4 The Strategic Health Authority s Director of Finance has advised all East of England Finance Directors to include a monthly update to their Boards on the payment record relating to the Small and Medium Enterprises 10-days payment initiative. Measurement of performance against this target will require extensive modification to the Purchase Ledger and will require time to allow for training. The Trust s current priority therefore remains to continue with ongoing schemes to improve payment times. These include invoice scanning and streamlining ordering processes as well as the electronic authorisation of invoices. Where it is identified that the invoice relates to a small / medium business, authorised invoices are paid within 10 days. 6 Cash Management 6.1 At 31 March, the Trust had a cash balance of 5.3m: Capital unspent 5.3 Prepayments (1.3) Revenue receipts in advance 2.1 VAT recoverable from HMRC (0.8) Total Cash Balance 5.3 Table A statement summarising the cash effect of 2008/09 operating activities is set out below: The year end cash balance of 5.3m relates to unspent capital. 6.3 At 31/03/2009, the Trust s Creditor days are 33 and the Trust s Debtor days are 13. The improvement in Creditor days represents work to improve the speed of invoice payments. The increase in Debtor days is due to the year-end effect of not raising SLA invoices in advance. 11

12 Cash Flow Reporting 2008/09 West Herts Hospitals NHS Trust Plan Actual 31/03/ /03/2009 EBITDA Excluding non cash operational items 24,518 24,194 Movement in Working Capital Stocks & work in progress 0 92 NHS trade debtors 865-1,027 Non NHS trade debtors -1,652 Accrued income 380 Prepayments 295 NHS Creditors -2,469 Trade creditors ,047 Other creditors 4,935 Accruals -2,369 Deferred income 27 Provisions & liabilities CF from operations 24,258 23,523 Capital expenditure Maintenance -331 Non maintenance -37,422-32,771 Cash receipt from asset sales CF before financing -13,164-9,368 Movement in LT debtors Interest Loans Other Interest paid on loans & leases -1,380-1,287 Interest received on cash balance Drawdown of Loans and leases 27,000 27,000 Repayment of loans & leases -4,301-4,301 Public Dividend Capital received 0 1,616 Dividends paid -8,849-8,849 Net cash outflow / inflow from financing 13,164 14,653 Opening cash balance 0 0 Net cash outflow / inflow 0 5,285 Closing cash balance 0 5,285 12

13 7 Balance Sheet 7.1 The opening and unaudited closing balance sheets for the 2008/09 financial year are set out below: West Herts Hospitals NHS Trust 2008/ /09 Opening Bal Actual as at as at 01/04/ /03/2009 Fixed assets Land 96, ,795 Buildings 114, ,437 Dwellings 10,326 10,413 Fixtures 3,025 3,368 Plant & Equipment 6,909 11,556 I.M. & T. 2,022 1,500 A.I.C.O.C. 19,344 12,174 A.I.C.O.C. from donations 0 17 Intangible Fixed Assets 3,311 3,044 A.I.C.O.C Intangible 763 1,048 Total fixed assets 257, ,352 Current assets Stocks and work in progress 2,987 2,895 NHS trade debtors 8,936 9,963 Non NHS trade debtors 1,879 2,111 Accrued income Prepayments Cash at bank and in hand 169 5,382 Total current assets 14,736 21,791 Current liabilities (amounts due in less than one year) Bank overdraft NHS Creditors 9,711 7,321 Trade creditors 2,830 2,990 Other creditors 443 5,378 Capital creditors 3,272 5,159 Interest payable creditor 21 0 Accruals 7,872 5,503 Deferred income Total current liabilities 24,467 26,624 Net current assets (liabilities) (9,731) (4,833) Long term debtors 1,408 1,618 Total assets less current liabilities 248, ,137 Provisions for liabilities and charges 7,185 6,255 Total assets employed 241, ,882 Financed by Balance Sheet Reporting 2008/09 Loans Total Loans 8,960 31,659 Total Loans 8,960 31,659 Taxpayers equity Public dividend capital 169, ,600 Income and expenditure reserve (44,306) (47,974) Revaluation reserve 105, ,840 Donated asset reserve 1,963 1,757 Total funds employed 241, ,882 13

14 8 Capital Spending 8.1 Capital spend to the end of March totalled 33.1m, of which 23.4m related to the Acute Admissions Unit. A summary of capital expenditure is set out below: Table 16 West Hertfordshire Hospitals NHS Trust 2008/09 Capital Expenditure 1 April 2008 to 31 March /09 Budget 2008/09 Commitments Variance '000 '000 '000 07/08 b/fwd Commitments PACS Other IT (95) HAI (Infection Control) (11) Other Backlog Maintenance 1,445 1,457 (12) Cath Lab 1, ,330 Total 07/08 b/f Commitments 2,992 1,748 1,244 08/09 Allocations Estates & Facilities 3, ,503 Equipment Replacement 1,879 2,270 (391) Service Developments 3,696 3, Information Technology (386) MRI 1, ,035 Other 207 1,009 (802) Approved Operational Capital 13,381 9,489 3,892 DAHF 24,371 23, Total Capital Expenditure 37,752 32,884 4, /09 Funding 000s Depreciation 10,374 Interest Bearing Debt 27,000 Planned I&E surplus 4,400 Decontamination allocation 1,288 Loan Repayments (4,301) Offset to anticipated 2007/08 overspend (1,337) Funding for transfer of PPAS build to Trust 328 Total Capital Resource Limit 37, Total capital cash is calculated as follows: Capital expenditure underspend Plus capital spend accrued but not paid Total capital cash carried forward 4.9m 0.4m 5.3m 14

15 9 Conclusion 9.1 At 31 March, the Trust has achieved: its planned surplus of 4.4m and therefore remains on track to deliver cumulative statutory break-even in 2009/10 remained within its 2008/09 EFL remained within its 2008/09 CRL. 9.2 The Trust Board is asked to note this report and raise any comments for discussion. In particular, the Board is asked to note that the year-end surplus has been achieved through a number of non-recurrent events, including one-off income receipts, and Balance Sheet management. Presented by: Phil Bradley (Acting) Director of Finance 17 April