Chesterfield Royal Hospital NHS Foundation Trust Annual accounts and financial statements. January to March

Transcription

1 Appendix B Annual accounts and financial statements January 2005 to March 2005

2 Chesterfield Royal Hospital NHS Foundation Trust Annual accounts and financial statements January to March Content: Letter of representation Statement of directors responsibilities in respect of the accounts Statement on internal control relating to Chesterfield Royal Hospital NHS Foundation Trust Independent Auditor s report to the Council of Governors of Chesterfield Royal Hospital NHS Foundation Trust Accounts Notes to the accounts 2

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13 FOREWORD TO THE ACCOUNTS Chesterfield Royal Hospital NHS Foundation Trust HEALTH AND SOCIAL CARE (COMMUNITY HEALTH AND STANDARDS) ACT 2003 DIRECTIONS BY MONITOR IN RESPECT OF NATIONAL HEALTH SERVICE FOUNDATION TRUSTS ACCOUNTS Monitor, the Independent Regulator of NHS Foundation Trusts, with the approval of the Treasury, in exercise of powers conferred on it by schedule 1 sections 24 and 25 of the Health and Social Care (Community Health and Standards) Act 2003, hereby gives the following Directions: 1. Application and interpretation 1. These Directions apply to NHS Foundation Trusts in England. 2. In these Directions: "The Accounts" means the accounts of an NHS Foundation Trust for the period from Authorisation until 31st March; "the NHS Foundation Trust" means the NHS Foundation Trust in question. 2. Form of Accounts 1. The Accounts submitted under section 25 of the 2003 Act shall show, and give a true and fair view of the NHS Foundation Trust s gains and losses, cash flows and financial state at the end of the financial year. 2. The Accounts shall meet the accounting requirements of the NHS Foundation Trusts Manual for Accounts and the Capital Accounting Manual that are in force for the relevant financial year, which shall be agreed with the Treasury. 3. Statement of Directors' Responsibilities 1. The statement of Board member s responsibilities in respect of the Accounts shall be signed and dated by the Chief Executive and Finance Director of the NHS Foundation Trust. Signed by the authority of Monitor, the Independent Regulator of NHS Foundation Trusts Signed: Dated: 12 April 2005 Approved on behalf of H.M. Treasury Signed: Dated: [ ] 13

14 INCOME AND EXPENDITURE ACCOUNT FOR THE PERIOD ENDED 31 March /01/05-31/03/05 NOTE 000 Income from activities 3 28,210 Other operating income 4 3,445 Operating expenses 5-7 (30,747) OPERATING SURPLUS 908 Exceptional Loss on revaluation of estate* 8 (339) SURPLUS BEFORE INTEREST 569 Interest receivable 73 Interest payable 9 0 Other finance costs - unwinding of discount (11) Other finance costs - change in discount rate on provisions SURPLUS FOR THE FINANCIAL PERIOD 631 Public Dividend Capital dividends payable (616) RETAINED SURPLUS FOR THE PERIOD 15 The notes on pages 5 to 36 form part of these accounts. All income and expenditure are derived from continuing operations. * The exceptional loss relates to the change in accounting policy interpretation that no longer allows temporary debit balances to be charged to the revaluation reserve. 14

15 FIXED ASSETS BALANCE SHEET AS AT 31 March /03/05 31/12/04 NOTE Intangible assets Tangible assets 11 81,959 78,722 Investments CURRENT ASSETS 82,317 79,057 Stocks and work in progress Debtors 14 4,514 5,569 Investments Cash at bank and in hand 19 6,137 3,051 11,485 9,540 CREDITORS: Amounts falling due within one year 16 (8,862) (9,064) NET CURRENT ASSETS 2, TOTAL ASSETS LESS CURRENT LIABILITIES 84,940 79,533 CREDITORS: Amounts falling due after more than one year PROVISIONS FOR LIABILITIES AND CHARGES 17 (2,640) (2,177) TOTAL ASSETS EMPLOYED 82,300 77,356 FINANCED BY: TAXPAYERS' EQUITY Public dividend capital 18 45,918 45,086 Revaluation reserve 18 30,993 28,214 Donated asset reserve 18 2,621 2,335 Government grant reserve 18 1,005 5 Other reserves Income and expenditure reserve 18 1,763 1,716 TOTAL TAXPAYERS EQUITY 82,300 77,356 Signed: (Chief Executive) Date: June

16 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE PERIOD ENDED 31 March /01/05-31/03/ Surplus for the financial period before dividend payments 631 Fixed asset impairment losses 0 Unrealised surplus on fixed asset revaluations/indexation 3,137 Increases in the donated asset and government grant reserve due to receipt of donated and government grant financed assets 1,056 Reductions in the donated asset and government grant reserve due to the depreciation, impairment and disposal of donated and government grant financed assets (96) Additions in "other reserves" 0 Total recognised gains for the financial period 4,728 16

17 CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 March /01/05-31/03/05 NOTE 000 OPERATING ACTIVITIES Net cash inflow from operating activities ,113 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE: Interest received 73 Interest paid 0 Interest element of finance leases 0 Net cash inflow from returns on investments and servicing of finance 73 CAPITAL EXPENDITURE Payments to acquire tangible fixed assets (1,713) Receipts from sale of tangible fixed assets 0 Payments to acquire intangible assets (44) Receipts from sale of intangible assets 0 Payments to acquire/receipts from sale of fixed asset investments 0 Net cash outflow from capital expenditure (1,757) DIVIDENDS PAID (1,231) Net cash inflow before management of liquid resources and financing 1,198 MANAGEMENT OF LIQUID RESOURCES Purchase of current asset investments 0 Sale of current asset investments 0 Net cash inflow from management of liquid resources 0 Net cash inflow before financing 1,198 FINANCING Public dividend capital received 832 Public dividend capital repaid (not previously accrued) 0 Public dividend capital repaid (accrued in prior period) 0 Loans received from Foundation Trust Financing Facility 0 Other loans received 0 Loans repaid to Foundation Trust Financing Facility 0 Other loans repaid 0 Other capital receipts (Donated & Government Grants) 1,056 Capital element of finance lease rental payments 0 Net cash inflow from financing 1,888 Increase in cash 3,086 17

18 NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES Monitor has directed that the financial statements of NHS Foundation Trusts shall meet the accounting requirements of the NHS Foundation Trusts Manual for Accounts which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the 2004/05 NHS Foundation Trusts Manual for Accounts issued by Monitor. The accounting policies contained in that manual follow UK generally accepted accounting practice for companies (UK GAAP) and HM Treasury's Resource Accounting Manual to the extent that they are meaningful and appropriate to the NHS. 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 Resource Accounting Manual, are not required to comply with FRS 3 requirements to report 'earnings per share' or historical profits and losses. 1.2 Acquisitions and discontinued operations Activities are considered to be 'discontinued' where they meet all of the following conditions: a. The sale (this may be at nil consideration for activities transferred to another public sector body) or termination is completed either in the period or before the earlier of three months after the commencement of the subsequent period and the date on which the financial statements are approved. b. If a termination, the former activities have ceased permanently. c. The sale or termination has a material effect on the nature and focus of the reporting NHS Foundation Trust's operations and represents a material reduction in its operating facilities resulting either from its withdrawal from a particular activity or from a material reduction in income in the NHS Foundation Trust's continuing operations. d. The assets, liabilities, results of operations and activities are clearly distinguishable, physically, operationally, and for financial reporting purposes. Operations not satisfying all these conditions are classified as continuing. Activities are considered to be 'acquired' whether or not they are acquired from outside the public sector. 1.3 Income Recognition Income is accounted for 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. 1.4 Care Trust designation Chesterfield Royal Hospital NHS Foundation Trust is not a Care Trust 18

19 1.5 Pooled Budgets The Trust has not entered into any pooled budget arrangements with Local Authorities. 1.6 Intangible fixed assets Intangible assets are capitalised when they are capable of being used in a Trust's activities for more than one year; they can be valued; and they have a cost of at least 5,000. Intangible fixed assets held for operational use are valued at historical cost and are depreciated over the estimated life of the asset on a straight line basis. The carrying value of intangible assets is reviewed for impairment at the end of the first full year following acquisition and in other periods if events or changes in circumstances indicate the carrying value may not be recoverable. Purchased computer software licences are capitalised as intangible fixed assets where expenditure of at least 5,000 is incurred and amortised over the shorter of the term of the licence and their useful economic lives. 1.7 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 equipping and setting-up cost of a new building, 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. They are restated to current value each year. 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. All land and buildings are restated to current value using professional valuations in accordance with FRS15 every five years. A three yearly interim valuation is also carried out. Professional valuations are carried out by the District Valuers of the Inland Revenue Government Department. The valuations are carried out in accordance with the Royal Institute of Chartered Surveyors (RICS) Appraisal and Valuation Manual insofar as these items are consistent with the agreed requirements of the Department of Health and HM Treasury. The last assets valuations were undertaken in 2004 as at the prospective valuation date of 1 April The revaluation undertaken at that date has been accounted for on 31 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 use purposes is assessed at Existing Use Value. 19

20 For non-operational properties including surplus land, the valuations are carried out at Open Market Value. Additional alternative Open Market Value figures have only been supplied for operational assets scheduled for imminent closure and subsequent disposal. All impairments resulting from price changes are charged to the Statement of Total Recognised Gains and Losses. If the balance on the revaluation reserve is less than the impairment the difference is taken to the Income and Expenditure Account. Assets in the course of construction are valued at cost and are valued by professional valuers as part of the 5 or 3-yearly valuation or when they are brought into use. Residual interests in off-balance sheet Private Finance Initiative properties are included in assets under construction within tangible fixed assets at the amount of unitary charge allocated for the acquisition of the residual with an adjustment. The adjustment is the net present value of the change in the fair value of the residual as estimated at the start of the contract and at the balance sheet date. Operational equipment is valued at net current replacement cost. Equipment surplus to requirements is valued at net recoverable amount. 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 advised by the District Valuer. Leaseholds are depreciated over the primary lease term. Equipment is depreciated on current cost evenly over the estimated life. Fixed asset impairments resulting from 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. 1.8 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 value of the sale proceeds is transferred from the Donated Asset Reserve to the Income and Expenditure Reserve. 20

21 1.9 Government Grants Government grants are grants from government bodies other than income from Primary Care Trusts or NHS Trusts for the provision of services. Grants from the Department of Health, including those for achieving three star status are accounted for as government grants. Where the government grant is used to fund revenue expenditure it is taken to the Income and Expenditure Account to match that expenditure. Where the grant is used to fund capital expenditure, the grant is taken to the Government Grant Reserve and released to the Income and Expenditure Account over the life of the asset on a basis consistent with the depreciation charge for that asset 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 the FRS 5 Amendment. The trust has no Private Finance transactions in year Stocks and work-in-progress Stocks and work-in-progress are valued at the lower of cost and net realisable value. This is considered to be a reasonable approximation to current cost due to the high turnover of stocks. Work-in-progress comprises goods in intermediate stages of production. Partially completed contracts for patient services are not accounted for as work in progress 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. Expenditure which does not meet the criteria for capitalisation is treated as an operating cost in the year in which it is incurred. Where possible, NHS Foundation Trusts disclose the total amount of research and development expenditure charged in the Income and Expenditure Account separately. However, where research and development activity cannot be separated from patient care activity it cannot be identified and is therefore not separately disclosed. Fixed assets acquired for use in research and development are amortised over the life of the associated project. 21

22 1.13 Provisions The 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 Treasury's discount rate of 3.5% in real terms. With effect from 1st April 2005 the rate changes to 2.2%. A disclosure is included for the effect of this. 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 NHS Foundation Trust is disclosed at note 17. 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 Pension Scheme. The Scheme is an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of Secretary of State, in England and Wales. As a consequence it is not possible for the NHS Foundation Trust to identify its share of the underlying scheme liabilities. The Scheme is subject to a full valuation every four years by the Government Actuary. The last published valuation relates to the period 1 April 1994 to 31 March The valuation at 31 March 2003 has not yet been published. Between valuations, the Government Actuary provides an update of the scheme liabilities. The latest assessment of the liabilities of the Scheme is contained in the Scheme Actuary report, which forms part of the annual NHS Pension Scheme (England and Wales) Resource Account, published annually. These accounts can be viewed on the NHS Pensions Agency website at Copies can also be obtained from The Stationery Office. Employers pension cost contributions are charged to operating expenses as and when they become due. Employer contribution rates are reviewed every four years following the scheme valuation, on advice from the actuary. At the last valuation on which contribution rates were rebased (31 March 1999) employer contribution rates from were set at 14% of pensionable pay. Employees pay contributions of 6% (manual staff 5%) of their pensionable pay. The Scheme is a "final salary" scheme. Annual pensions are normally based on 1/80th of the best of the last three years pensionable pay for each year of service. A lump sum normally equivalent to 3 years pension is payable on retirement. Annual increases are applied to pension payments at rates defined by the Pensions (Increase) Act 1971, and are based on changes in retail prices in the twelve months ending 30 September in the previous calendar year. On death, a pension of 50% of the member's pension is normally payable to the surviving spouse. 22

23 Early payments of a pension, with enhancement, is available to members of the Scheme who are permanently incapable of fulfilling their duties effectively through illness or infirmity. A death gratuity of twice final year pensionable pay for death in service, and up to five times their annual pension for death after retirement, is payable. The Scheme provides the opportunity to members to increase their benefits through money purchase Additional Voluntary Contributions (AVCs) provided by an approved panel of life companies. Under the arrangement, employees can make contributions to enhance their pension benefits. The benefits payable relate directly to the value of the investments made. 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 retirement, regardless of the method of payment 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 purchase 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 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, these third party assets are disclosed in a separate note to the accounts in accordance with the requirements of the Resource Accounting 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 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 Dividend A charge, reflecting the forecast cost of capital utilised by the NHS 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 forecast average carrying amount of all assets less liabilities, except for donated assets. 23

24 1.20 Losses and Special Payments Losses and Special Payments are charged to the relevant functional headings, including losses which would have been made good through insurance cover had NHS Trusts not been bearing their own risks (with insurance premiums then being included as normal revenue expenditure). 2 Segmental Analysis Chesterfield Royal Hospital NHS Foundation Trust does not act as a leading body for a consortium. All the Trust's activity is healthcare and there is therefore no need to report performance segmentally. 3.1 Income from Activities 01/01/05-31/03/ Elective income 6,007 Non elective income 9,916 Outpatient income 5,493 Other types of activity income* 5,401 A&E income 1,352 PBR transitional gain 0 PBR clawback 0 Private patient income 41 28,210 *Other types of activity include direct access services such as radiology and pathology 870,000, critical care services 2,040,000, child health services 1,330,000, community midwifery 500,000, screening services 290,000 and RTA/Private Patient income 250,000. Road Traffic Act income is subject to a provision for doubtful debts of 7.13 % to reflect expected rates of collection. The Terms of Authorisation set out the mandatory goods and services that the Trust is required to provide (protected services.) All of the income from activities shown above is derived from the provision of protected services. 24

25 3.2 Private Patient Income Total '000 Private patient income 41 Total patient related income 28,210 Proportion (as percentage) 0.15% Section 15 of the Health and Social Care (Community Health and Standards) Act 2003 requires that the proportion of private patient income to the total patient related income of NHS Foundation Trusts should not exceed its proportion during 2002/03. The allowable percentage for Chesterfield Royal Hospital NHS Foundation Trust was 0.2%. The note above shows that the Trust was compliant for 2004/ Income from Activities 01/01/05-31/03/ NHS Foundation Trusts 0 NHS Trusts 0 Strategic Health Authorities 0 Primary Care Trusts 27,943 Foundation Trusts 0 Local Authorities 0 Department of Health 0 NHS Other 0 Non NHS: - Private Patients 41 - Overseas patients (non-reciprocal) 18 - Road Traffic Act Other 0 28, Other Operating Income 01/01/05-31/03/ Research and development 0 Education and training 1,608 Charitable and other contributions to expenditure 8 Transfers from donated asset reserve 96 Transfers from government grant reserve 0 Non-patient care services to other bodies 1,196 Other income 537 3,445 The main elements of other income for the three month period to 31st March 2005 were: Car Parking Income - 92,700 Royalties, Accommodation & utility charges to external contractors - 95,500 Staff Residences Income - 61,200 25

26 5. Operating Expenses 5.1 Operating expenses comprise: 01/01/05-31/03/ Services from other NHS Trusts 236 Services from other NHS bodies 223 Services from Foundation Trusts 181 Purchase of healthcare from non NHS bodies 0 Directors' costs 171 Staff costs 20,450 Drug Costs 1,417 Supplies and services - clinical 3,093 Supplies and services - general 813 Establishment 533 Transport 27 Premises 1,177 Bad debts 93 Depreciation and amortisation 1,355 Fixed asset impairments and reversals 0 Audit fees 34 Other auditor's remuneration 0 Clinical negligence 405 Other ,747 The main elements included in other operating expenses were: Training costs - 253,000 Consultancy, Legal and Professional Fees - 63,600 Security services - 48,900 Insurance Costs - 35,300 The above directors and staff costs include 2,008,000 pension contributions ( 5,877,000 for April to December 2004) 5.2 Operating leases 5.2/1 Operating expenses include: 01/01/05-31/03/ Hire of plant and machinery 15 Other operating lease rentals

27 5.2/2 Annual commitments under non - cancellable operating leases are: Land and buildings Other leases 01/01/05 01/01/05-31/03/05-31/03/ Operating leases which expire: Within 1 year 0 46 Between 1 and 5 years After 5 years

28 5.3 Salary and Pension entitlements of senior managers A) Remuneration Name and Title 01/01/05-31/03/05 Salary (bands of 5000) 000 Other Remuneration (bands of 5000) 000 Benefits in kind Rounded to the nearest 100 Executive Directors Mr. E. Morton - Chief Executive Mr. P. Briddock - Director of Finance Mr. T. Alty - Director of Personnel & Hospital Services Mr. R. Clarke - Director of Nursing & Clinical Development Mr. W. Lambert - Medical Director Non - Executive Directors Mr. M. Wall - Chairman Dr. Y. Taktak - Non-Executive Director Mr. J. Raine - Non-Executive Director Mr. W. Webber - Non-Executive Director All the Benefits in Kind shown relate to lease car or travel expenses and the P11d benefits attained therein, and are shown in hundreds. 28

29 5.3 Salary and Pension entitlements of senior managers B) Pensions Name and title Real increase in pension and related lump sum at age 60 Total accrued pension and related lump sum at age 60 at 31 March 2005 Cash Equivalent Transfer Value at 31 March 2005 Cash Equivalent Transfer Value at 31 December 2004 Real Increase in Cash Equivalent Transfer Value Employers Contribution to Stakeholder Pension (bands of 2500) 000 (bands of 5000) To nearest 100 Mr. E. Morton Chief Executive Mr. P. Briddock Director of Finance & contracting Mr. T. Alty Corporate Secretary Mr. R. Clarke Director of Nursing & Clinical Development Mr. W. Lambert - See note below Medical Director A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member's accrued benefits and any contingent spouse's pension payable from the scheme. A CETV is a payment made by a pension scheme, or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which the disclosure applies. The CETV figures, and from the other pension details, include the value of any pension benefits in another scheme or arrangement which the individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries. Real Increase in CETV - This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension sheme or arrangement) and uses common market valuation factors for the start and end of the period. Medical Director The Medical Director wished to see disclosure figures for the whole year before agreeing to disclose. The full year information was not received until 28 June 05 by which time he was not available to give his consent to disclose. The Trust decided not to disclose. 29

30 6. Staff costs and numbers 6.1 Staff costs 01/01/05-31/03/05 Total Permanently Employed Other Salaries and wages 16,903 16, Social Security Costs 1,187 1,187 0 Employer contributions to NHSPA 2,008 2,008 0 Other pension costs Agency staff Seconded staff Note This includes 4,000 of capitalised salary. 20,616 20, Average number of persons employed 01/01/05-31/03/05 Total Permanently Other Employed WTE WTE WTE Medical and dental Ambulance staff Administration and estates Healthcare assistants & other support staff Nursing, midwifery & health visiting staff 1,138 1,138 Nursing, midwifery & health visiting learners Scientific, therapeutic and technical staff Social care staff 7 7 Agency Staff Seconded staff 1 1 Other Total 2,593 2, Included under permanently employed within Medical and Dental is 1 wte for the Medical Directors post Included under permanently employed within other is 4 wte for all other Executive Directors. The 26 wte lead unit specialist registrars are included for both wte and costs within the permanently employed staff group. 30

31 6.3 Employee benefits There are no schemes which provide an employee benefit. No facilities, amenities/events were provided/held in the period of account. 6.4 Management costs 01/01/05-31/03/ Management costs 1,146 Income 31,029 Percentage 3.69% 6.5 Retirements due to ill-health During the period 01 Jan Mar 2005 there were no early retirements from the trust agreed on the grounds of ill-health. 7. Public Sector Payment Policy 7.1 Better Payment Practice Code - measure of compliance 01/01/05-31/03/05 Number 000 Total bills paid in the period 12,789 9,489 Total bills paid within target 12,390 9,216 Percentage of bills paid within target The Better Payment Practice Code requires the Trust to aim to pay all valid non-nhs invoices by the due date or within 30 days of receipt of goods or a valid invoice, whichever is later. 7.2 The Late Payment of Commercial Debts (Interest) Act 1998 No payments were made in respect of the Late Payment of Commercial Debt (Interest) Act Profit (Loss) on Disposal of Fixed Assets There was no profit/(loss) on the disposal of fixed assets in the period of account. 9. Interest Payable The trust had no interest payable in the period of account. 31

32 10.1 Intangible Fixed Assets Software Licences & Patents Development Total Licences trademarks Expenditure 01/01/05-31/03/ Gross cost at 1 January Impairments Reclassifications Other revaluation Additions purchased Additions donated Additions government granted Disposals Gross cost at 31 March Amortisation at 1 January Impairments Reversal of impairments Reclassifications Other revaluation Provided during the period Disposals Amortisation at 31 March Net book value - Purchased at 1 January Donated at 1 January Government granted at 1 January Total at 1 January Purchased at 31 March Donated at 31 March Government granted at 31 March Total at 31 March Software Licences & Patents Development Total Licences trademarks Expenditure 01/01/05-31/03/ Analysis of Intangible Fixed Assets Net book value - Protected Assets as at 31 March Unprotected Assets as at 31 March Total at 31 March

33 11. Tangible Fixed Assets 11.1 Tangible fixed assets at the balance sheet date comprise the following elements: Land Buildings Dwellings Assets under Plant & Transport Information Furniture & Total 01/01/05-31/03/ Cost or valuation at 1 January ,063 55,197 2,990 1,889 16, , ,757 Additions purchased ,717 Additions donated Additions government granted Impairments Reclassifications (987) National Revaluation Exercise - depreciation 0 (3,172) (109) (3,281) Disposals (473) 0 (51) (12) (536) National Revaluation Exercise - effect on NBV 4,582 (3,927) 2, ,798 At 31 March ,645 48,781 5,024 1,332 17, , ,505 Depreciation at 1 January , , , ,035 Provided during the period ,328 Impairments Reversal of Impairments Reclassifications National Revaluation Exercise - depreciation 0 (3,172) (109) (3,281) Disposals (473) 0 (51) (12) (536) Depreciation at 31 March , , ,546 Net book value - Purchased at 1 January ,063 52,295 2,908 1,885 4, , ,380 - Donated at 1 January , ,337 - Government Granted at 1 January Total at 1 January ,063 52,830 2,908 1,889 5, , ,722 - Purchased at 31 March ,645 47,909 5,024 1,332 5, , ,337 - Donated at 31 March , ,617 - Government Granted at 31 March Total at 31 March ,645 48,760 5,024 1,332 6, , ,959 There were no residual interests of off balance sheet PFI schemes during the period of account. Land Buildings Dwellings Assets under Plant & Transport Information Furniture & Total 11.2 Analysis of tangible fixed assets 000 Net book value - Protected Assets as at 31 March ,901 42, ,843 - Unprotected Assets as at 31 March ,744 5,818 5,024 1,332 6, , ,116 - Total at 31 March ,645 48,760 5,024 1,332 6, , ,959 33

34 11.3 Assets held at open market value Of the totals at 31 March 2005, 1,310,000 related to land valued at open market value and 5,144,000 related to buildings and dwellings valued at open market value Assets held under finance leases and hire purchase contracts Chesterfield Royal Hospital NHS Foundation Trust held no assets under finance leases or hire purchase contracts The net book value of land, buildings and dwellings at 31 March 2005 comprises: 31 Mar Mar 2005 Protected Unprotected Freehold 57,843 14,586 Long leasehold 0 0 Short leasehold 0 0 TOTAL 57,843 14, Fixed asset investments 31 Mar Dec Net Book Value of Fixed Asset Investments Stocks and Work in Progress 31 Mar Dec Raw materials and consumables Work-in-progress 0 0 Finished goods 0 0 TOTAL

35 14. Debtors 31 Mar Dec Amounts falling due within one year: NHS debtors 1,681 2,419 Provision for irrecoverable debts (140) (72) Other prepayments and accrued income 846 1,007 Other debtors 994 1,216 Sub Total 3,381 4,570 Amounts falling due after more than one year: NHS debtors Provision for irrecoverable debts (39) (29) Other prepayments and accrued income 0 0 Other debtors Sub Total 1, TOTAL 4,514 5,569 There were no prepaid pension contributions as at 31 March Current Asset Investments No current asset investments were held at 31 March 2005 or at 31 December

36 16. Creditors 16.1 Creditors at the balance sheet date are made up of: As at As at 31/03/05 31/12/04 Amounts falling due within one year: Bank overdrafts 0 0 Current instalments due on loans 0 0 Interest payable 0 0 Payments received on account 0 0 NHS creditors 3,201 1,986 Tax and social security costs 1,697 1,334 Obligations under finance leases and hire purchase contracts 0 0 Other creditors 709 2,013 Accruals and deferred income 3,255 3,731 Sub Total 8,862 9,064 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 8,862 9,064 There are no payments due in future years under arrangements to buy out the liability for early retirements over 5 years. As at 31st of March 2005 NHS Creditors include 1,004,000 outstanding pensions contributions. The comparative figure of 947,000 was included in other creditors as at 31st December Loans and other long-term financial liabilities The Trust has no loans or other long-term liabilities in the period 1st January 2005 to 31st March

37 16.3 Prudential borrowing limit. The Trust has a prudential borrowing limit of 9 million for the three month period ending 31st March No borrowing has been undertaken in the period. The Trust has a 4 million approved working capital facility. This is in place but has not been used during the period 1 January 2005 to 31 March The financial ratios for 2004/05 as published in the Prudential Borrowing Code are shown below with the actual level of achievement for the three period to 31st March Financial Ratio Actual Ratio Approved PBL ratio Maximum Debt/Capital Ratio - 15% Minimum Dividend Cover 3.79 >1 Minimum Interest Cover - 3 Minimum Debt Service Cover - 2 Maximum Debt Service to Revenue - 3% As the Trust did not require any loans, only the minimum dividend cover ratio is applicable Finance lease obligations/commitments The Trust has not entered into any contracts to lease any assets under a finance lease, there are no future obligations. 37

38 17. Provisions for liabilities and charges Pensions relating to former directors Pensions relating to other staff Legal claims Restructurings Other Total 01/01/05-31/03/ At 1 January , ,100 2,177 Arising during the period Utilised during the period 0 (31) (20) 0 (151) (202) Reversed unused 0 0 (9) 0 (39) (48) Unwinding of discount At 31 March ,605 2,640 Expected timing of cashflows: Within one year ,245 1,431 Between one and five years After five years With respect to other legal claims, timings and amounts where possible are based on the latest information from the NHSLA and the Trust's insurers, else they are based upon guidelines for the assessment of general damages in personal injury claims. Within arising during the period 520,500 relates to Agenda for Change provision for back dated pay for 1st January - 31st March For Early Retirement provision 470,600 is expected to be reimbursed from local PCTs. For Personal Injury provisions 35,200 is expected to be reimbursed from local PCTs. For Injury Benefit provision 223,600 is expected to be reimbursed from local PCTs. 9,522,000 is included in the provisions of the NHS Litigation Authority at 31/03/05 in respect of clinical negligence and liabilities of the Trust. (See post balance sheet events for the total increase at 1st April 2005 due to the change in the discount rate) 38

39 01/01/05-31/03/ Movement in taxpayers' equity 000 Taxpayers' equity at start of period 77,356 Surplus/(deficit) for the financial year 631 Public dividend capital dividends (616) Gains from revaluation of fixed assets and current asset investments 2,811 New public dividend capital received 832 Public dividend capital repaid in year 0 Public dividend capital repayable (creditor) 0 Public dividend capital written off 0 Other movements in public dividend capital in year 0 Additions in donated asset reserve 286 Additions in government grant reserve 1,000 Additions in other reserves 0 Taxpayers' equity at 31 March ,300 01/01/05-31/03/ Movements in public dividend capital: 000 Public dividend capital at start of period 45,086 New public dividend capital received 832 Public dividend capital repaid in year 0 Public dividend capital repayable (creditor) 0 Public dividend capital written off 0 Other movements in public dividend capital in year 0 Public dividend capital at 31 March ,918 39

40 18.3 Movements on Reserves Movements on reserves in the year comprised the following: Revaluation reserve Donated Asset reserve Government Grant reserve Other reserves Income and Expenditure reserve Total At 1 January 2005 as previously stated 28,214 2, ,716 32,270 Prior Period Adjustments 0 At 1 January 2005 as restated 28,214 2, ,716 32,270 Transfer from the income and expenditure account Fixed asset impairments Surplus on other revaluations/indexation of fixed assets 2, ,137 Transfer of realised profits (losses) to the Income and Expenditure reserve (32) Receipt of donated/government granted assets 56 1, ,056 Transfers to the Income and Expenditure Account for depreciation, impairment, and disposal of donated/government granted assets (96) 0 (96) Other transfers between reserves Other reserve movements 0 0 At 31 March ,993 2,621 1, ,763 36,382 40

41 19. Notes to the cash flow statement 19.1 Reconciliation of operating surplus to net cash flow from operating activities: 01/01/05-31/03/ Total operating surplus 908 Depreciation and amortisation charge 1,355 Fixed asset impairments and reversals 0 Transfer from donated asset reserve (96) Transfer from the government grant reserve 0 Decrease in stocks 86 Decrease in debtors 1,055 Increase in creditors 354 Increase in provisions 451 Net cash inflow from operating activities before restructuring costs 4,113 Payments in respect of fundamental reorganisation/restructuring 0 Net cash inflow from operating activities 4, Reconciliation of net cash flow to movement in net debt 01/01/05-31/03/ Increase in cash in the period 3,086 Cash inflow from new debt 0 Cash outflow from debt repaid and finance lease capital payments 0 Cash inflow from increase in liquid resources 0 Change in net debt resulting from cashflows 3,086 Non - cash changes in debt 0 Net debt at 1 January ,051 Net debt at 31 March ,137 41

42 19.3 Analysis of changes in net debt At 1 January 2005 Cash changes in year Non-cash changes in year At 31 March Commercial cash at bank and in hand OPG cash at bank 2,980 2, ,946 Bank overdraft Debt due within one year Debt due after one year Finance leases Current asset investments ,051 3, ,137 42

43 20. Contractual Capital Commitments Commitments under capital expenditure contracts at the balance sheet date were 108,000 Material projects included in the above March 2005 commitment were:- Building New Orthopaedic Ward 76,000, temporary relocation of the Mortuary 24,000, and A& E build 8, Post Balance Sheet Events There are no post balance sheet events having a material effect on the accounts. However from 1 April 2005 HM Treasury changed the discount rate used in calculating provisions from 3.5% to 2.2%. This change will result in an increase in our provisions of 185,000 which will be charged to the Income and Expenditure Account in National funding of NHS commissioners will be increased by the total estimated effect to offset this charge. 22. Contingencies As at 31/03/ Gross Value (39) Amounts recoverable (if any) 0 Net contingent liability (39) 39,000 contingencies relate to Personal Injury legal claims 43

44 23. Related Party Transactions Chesterfield Royal Hospital NHS Foundation Trust is a public benefit corporation authorised by Monitor - the Independent Regulator for NHS Foundation Trusts. During the year none of the Board Members or members of the key management staff or parties related to them has undertaken any material transactions with Chesterfield Royal Hospital NHS Foundation Trust. The Department of Health is regarded as a related party. During the period Chesterfield Royal Hospital NHS Foundation Trust has had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent department. These entities are listed below: Chesterfield PCT North Eastern Derbyshire PCT High Peak and Dales PCT NHS Logistics Authority NHS Litigation Authority (NHSLA) National Blood Service Amber Valley PCT Sheffield Teaching Hospitals NHS Foundation Trust Doncaster and Bassetlaw Hospitals NHS Foundation Trust Calderdale and Huddersfield NHS Trust Trent SHA East Midlands Ambulance Service In addition, the Trust has had a number of material transactions with other Government Departments and other central and local Government bodies. Most of these transactions have been with the Compensation Recovery Unit in respect of road traffic accidents. The Trust has also received revenue and capital payments from Chesterfield Royal Hospital charitable funds (Charity Reg NO ). Some of the Trustees of the charitable organisation are also members of the NHS Foundation Trust Board. 24. Private Finance Transactions & Pooled Budgets 24.1 Private Finance Transactions The trust had no PFI transactions either on or off balance sheet Pooled Budget Projects The Trust had no pooled budget projects requiring memorandum trading accounts. 44

45 25 Financial Instruments FRS 13, Derivatives and Other Financial Instruments, requires 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 Trust has with the local Primary Care Trust and the way those PCTs are financed the 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 FRS13 mainly applies. Financial Assets and liabilities are generated by day-to-day operational activities rather than being held to change the risk facing the Trust in undertaking its activities. As allowed by FRS 13, 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. Liquidity risk The NHS Foundation Trust's net operating costs are incurred under three year service agreement contracts 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, in the form of additional Public Dividend Capital. In addition the Trust can borrow from the Department of Health financing facility and commercially to finance capital schemes. Financing is drawn down to match the spend profile of the scheme concerned and the Trust is not, therefore, exposed to significant liquidity risks in this area. Interest-Rate Risk 9% of the Trust's financial assets and 100% of its financial liabilities carry nil or fixed rates of interest. The remainder of the financial assets carry a relatively stable interest rate. Chesterfield Royal Hospital NHS Foundation Trust is not, therfore, exposed to significant interest rate risk. The following two tables show the interest rate profiles of the Trust's financial assets and liabilities. Foreign Currency Risk The Trust has negligible foreign currency income or expenditure. 45

46 25.1 Financial Assets Currency Total Floating rate Fixed rate Noninterest bearing Weighted average interest rate Fixed rate Weighted average period for which fixed Non-interest bearing Weighted average term % Years Years At 31 March 2005 Sterling 6,757 6, % n/a n/a Other % n/a n/a Gross financial assets 6,757 6, Financial Liabilities Currency Total Floating rate Fixed rate Noninterest bearing Weighted average interest rate Fixed rate Weighted average period for which fixed Non-interest bearing Weighted average term % Years Years At 31 March 2005 Sterling (47,127) 0 (1,209) (45,918) 3.50% n/a n/a Other % n/a n/a Gross financial liabilities (47,127) 0 (1,209) (45,918) Note: The public dividend capital is of unlimited term. The interest rate used for determining the book value of fixed rate financial liabilities is dictated by the Financial Reporting Advisory Board for public sector bodies. The rate for 2004/05 is 3.5%. It has been changed to 2.2% from 1 Apr Future rate changes beyond 2005/06 are not know and therefore the period for which the rate is fixed is not determinable. 46

47 Foreign Currency Risk The Trust has negligible foreign currency income or expenditure Fair Values Set out below is a comparison, by category, of book values and fair values of the NHS Trust's financial assets and liabilities as at 31 March Book Value Fair Value Basis of fair valuation 000s 000s Financial assets Cash 6,137 6,137 Debtors over 1 year: - Agreements with commissioners to cover creditors and provisions Note a Investments 0 0 Total 6,757 6,757 Financial liabilities Overdraft 0 0 Creditors over 1 year: - Early retirements Finance leases 0 0 Provisions under contract (1,209) (1,209) Note b Loans 0 0 Public dividend capital (45,918) (45,918) Note c Total (47,127) (47,127) a b c These debtors reflect agreements with commissioners to cover creditors over 1 year for early retirements and provisions under contract, and their related interest charge/unwinding of discount. In line with notes c and e, below, fair value is not significantly different from book value. Fair value is not significantly different from book value since, in the calculation of book value, the expected cash flows have been discounted by the Treasury discount rate of 3.5% in real terms. The figure here should be the full value of PDC in the balance sheet and 'book value' should equal 'fair value'. 47

48 26 Third Party Assets The Trust held cash at bank and in hand at 31/03/05 which relates to monies held by the NHS Trust on behalf of patients. This has been excluded from cash at bank and in hand figure reported in the accounts. 27 Losses and Special Payments There were 39 cases of losses and special payments totalling 21,647 approved during the three month period 1st January 2005 to 31st March There were no cases of clinical negligence, fraud, compensation under legal obligation, or fruitless payments where the net payment exceeded 100,000. There were no cases in April to December 2004 either. 48

49 Chesterfield Royal Hospital NHS Foundation Trust, Calow, Chesterfield, Derbyshire S44 5BL Telephone: