1
Finance report for the month to 30 November 2011 – FOR
APPROVAL
Trust Board
11th January 2012
This Report enables the Trust Board to be assured that the Trust is
meeting its objective of:
• Providing a financial base that is robust for the future development
of the Trust and to provide economic and efficient services
Position overview
2
Monitor risk rating
3
Statement of Comprehensive Income
4
Statement of Financial Position
5
Capital Expenditure
6
Debtors and payments
7
Risks
8
App 1: Cash flow forecast
9
App 2: Rolling 12 month income
10
2
Position Overview
Having made a solid start to the financial year, at month 8 the Trust is still on track to deliver the
financial plan.
EBITDA
• The Trust’s EBITDA for the month ending 30 November 2011 was £14.35m (5.84%).
• This is ahead of the Monitor plan (£14.13m/ 5.74%)
Surplus
• The Trust has delivered a surplus of £10.85m, which is ahead of plan (£10.82m).
Cash
• Overall, the Trust had cash and short term investments of £44.2m at the end of Nov’11 which is
5.4m ahead of plan (£38m). The Trust continues to score a 4 for liquidity per Monitor’s financial risk
rating.
Monitor rating
• The Trust’s financial risk rating for the year is scored at 4, which is in line with the target set out in
the annual plan.
CIP and contract reductions delivery
• The Trust has a savings target of £19.7m for 11/12, which includes savings required due to
reduction in contract values, as well as internally generated efficiency requirements.
•CIPs to the value of £17.3m have been identified, but £1.1m of these are rated as high risk.
Therefore the potential gap at present is £3.5m, prior to additional new schemes being achieved
•Within the CIP schemes identified £2.7m are non recurrent.
3
Monitor Risk rating
• The Trust’s overall risk rating is scored at a 4 for the year to date, which is in line with the plan submitted to Monitor.
• It should be noted that profit on the sale of assets, restructuring costs, and asset impairments are excluded from the risk ratings as they are
not indicative of underlying financial performance.
Additional risk indicators
• In 10/11 Monitor introduced ten additional risk indicators that give an indication of whether there are financial risks within a Trust. They do not
have a bearing on the formal risk rating. These are reported in the table below on an exception basis.
• As at November ‘11, the Trust was compliant in 8 of the 10 additional risk indicators. It is expected that full compliance will be achieved in Q4.
• The Trust continues to miss the creditors target (less than 5% of total creditor balances). In Nov’11 the Trust reached 10% as compared to 12.6%
last month which is an improvement. The main reason that the target has not been achieved is due to an ongoing dispute with NHS Enfield as well
as disputes with NHS Hillingdon and Chelsea & Westminster, relating to contracts.
•The Trust still continues to miss the >90 days debtor target. In Nov’11 the Trust reached 24% as compared to 17% last month. This is largely due
to debt relating to NCL now becoming >90 days old.
4
Statement of comprehensive income –
Eight months to 30 November ‘11
Comparisons to plan
Comparisons have been made against plan as
it is against the plan, rather than operational
budgets, that the Trust is assessed by
Monitor.
EBITDA
• The Trust has recorded actual Earnings
before Interest Tax Depreciation and
Amortisation (EBITDA) of £14.35m for the
period to 30 November‘11, which is slightly
ahead of plan (£14.13)
• The Trust’s EBITDA return of 5.84% is
ahead of plan (5.74%)
•Surplus
• The Trust is reporting a surplus of £10.85m
for the year to date, which is ahead of plan
(£10.82m).
Income
Income (£245.66m) is slightly behind plan
(£246.18m). This is due in part to deferral of
sexual health and HIV income (£1.2m), in line
with activity, in particular drug spend and a
provision against CQUIN performance (£0.4m)
and a net favourable movement of under and
over performance against contract of £0.5m.
Foreign national income is ahead of plan
(£0.8M)
Expenditure
• Pay expenditure is £0.59m lower than plan, due to vacancies being held non recurrently to manage the CIP gap and lower than planned agency usage;
•In month 1 the cost of agency was £1.18m and fell to £1.15m in month 2 and from month three onwards remained at £1.3m. Having risen at month 7
to £1.2m it has now fallen to £1.06m;
•Bank costs rose from £0.7m to £1m at month 4 and have remained at this level since then;
•Non pay expenditure is slightly lower than plan as the CIPs start to take effect.
5
Statement of financial position
Summary
• Non current assets as at the end of Nov ‘11 stand at £160.5m which is in line with
plan.
•Trade & other receivables are 6.4m higher than plan but in line with the month on
month trend. This is largely due to Accrued income being £6m higher than plan which
is also in line with the month on month trend.
•Creditors < 1 year are £10.7m higher than plan. This is attributed to Deferred Income
running at £2.6m higher than plan but in line with month on month trend.
Cash
•As at 30 Nov’11 the Trust had £44.2m of cash, £5.4m higher than planned balance of
£38m. This is largely due to payments on account of £4.5m received from NCL.
•Although the Trust continues to score a 4 for liquidity per Monitor’s financial risk rating,
for block contracts, there is an year to date 3% shortfall on payments received
compared to billed invoices. As at Nov’11 cumulative receipts was £186m as compared
to cumulative billed of £192m.
6
Capital Expenditure
Summary
Cumulative spend to date on capital projects to October stood at £8.59m (PPE £6.7m
and Intangibles £1.9m) against a plan for the year of £15.2m. Expenditure on
Intangibles assets includes expenditure on JADE/QIS of £1,533k.
Cumulative depreciation/amortisation charged up to Nov’11 was £2.31m which is a 1.3%
increase when compared to the same period last year. The sale of Hopkinson House,
which took place in September, has reduced the monthly depreciation figure (from
£292k per month, to £289k per month). We now expect a constant month-on-month
depreciation charge for the rest of the financial year as additions are not depreciated in
the year of acquisition.
The Head of Financial Accounts is currently meeting with all project managers in order to
prepare a detailed capital forecast for 11-12, which will be included in next month’s
report. In addition we are required to submit a 3-year capital plan for 12-13 to 14-15 to
Monitor in mid January.
Detail:
At project level, the key trends in the Trust’s YTD capital expenditure are set out
below:
•Ellington Ward Refurbishment £1.68m (19.55%) of the total spend
•HQ Move has accounted for £1.44m (16.74%) which includes mainly IT expenditure
•JADE - £1.05m on items such as application licenses, and Jade support staff and
training. (12.22% of Expenditure)
•Northwick Park spend totals £435k (5.1%)
•SK&C VSC Relocation totals £404k (4.7%)
•Riverside Hillingdon - acute ward reception expenditure totals £355k (4.1%) of total
capital expenditure.
A detailed capital expenditure report is attached in the Appendix to this report.
Debtors & Payments
7
Debt summary
• Total debt is 20.6m as at the end of Nov’11. Total NCL debt as at the
date of this report stands at £12.7m of which £4.5m has been received
on account. (Appendix 4);
•The Monitor target is a >90 days debtor that is <5% of total net
debtors which equates to a debtor target of £679k for November. The
Trust had £3,263k of debtors >90 days which equates to 24%;
•The trust has bad debt provision of £2.9m to reflect its aging bad debt.
Aged debt
• The graphs opposite show the debt ageing profile and the type of debt.
•The key debts that are >90 days overdue are as follows:
-Hillingdon PCT - £1.1m (continuing care invoices under negotiation). A
meeting to finalise the agreement on these figures is taking place 20th
Dec.;
-Local Authorities £786k;
-£544k Barnet Overperformance (Under dispute);
-£300k NCL Cluster (chasing for urgent payment);
-£63k Harrow PCT (Under dispute)
Payments
• The Monitor target is a >90 days creditor that is less than 5% of total
creditors. As at the end of Nov this translated to a >90 creditor target of
£705k. The Trust achieved a >90 day creditor of £1,429k, which
equates to 10% of total creditors (which is an improvement from 12.6%
last month)
•The key credit balances under dispute are:
-Enfield PCT £394k (Seacole dispute)
-Chelsea & Westminster £352k (CNWL formally advised C&W these
invoices will not be paid still awaiting response)
-Hillingdon PCT £300k (Invoices under dispute awaiting Hillingdon
response)
Risks
8
Cost Improvement Programme 11/12
In order to achieve its financial plan and a Monitor risk rating of 4, the Trust must deliver significant cost improvements, including savings
required as a result of reductions in contract values. The target for 11/12 is £19.7m. Whilst the full target has not been identified to date for
2011/12 the trust is achieving its Monitor targets without the use of reserves, which are sufficient to cover the current shortfall.
Cost Improvement Programme 12/13
In the coming financial years the Trust will have to achieve material cost improvement plans. Whilst the three year business plans submitted
by directorates go some way to addressing this issue, there remains a significant proportion of CIP for 2012/13 that needs to be identified. The
SLM implementation and CIG work programme are the mechanisms being used to resolve this issue.
Quality, information reporting, & CQUIN
The 11/12 mental health and community contracts include a 1.5% (£3.5m) quality incentive (CQUIN). The Trust must meet the quality targets
that have been agreed with commissioners, and be able to evidence them. There is much work taking place to improve the Trust’s
information systems, however there is a risk that either the Trust will fall short of its CQUIN targets or will not be able to evidence the
achievement of the target; leading to a loss of income to the Trust. This is monitored by the Performance Management Committee, which
reports to the Board. A financial CQUIN risk assessment is carried out on a monthly basis and reported to the Business & Finance Committee.
Reduction in 12/13 contract values
Whilst the 11/12 contracting round has been relatively successful, there is uncertainty regarding the funding in the medium term. The Trust is
continuing to strengthen its relationships with Commissioners and GPs in order to ensure that it is in a position of influence and also to find
out about threats/ opportunities early. Commissioning intentions have been published and the likely implications are being discussed with
commissioners. The Operating Framework has now been published and implications of this are being modelled in the financial plan.
Potential increase in liability for early retirement pensions
When the Trust closed down two asylums in the early 1990s, the Trust became responsible for early retirement costs of approximately 250
staff. The Trust makes a quarterly payment to NHS Pensions Agency, and a provision (£5.8m) to cover these costs is held on the balance sheet.
The Trust is able to re-charge the large majority of these costs back to the local PCTs, as it was the local health board that took responsibility
for the decision to close down the asylums. An independent actuary has recently estimated that the liability is £9.2m, which leaves a
significant gap. The Trust has sought agreement from the PCTs to fund these increased costs. Although the PCTs have not refused to pay, if
they were not to agree to pay, there could be a non-recurrent charge to the I&E. If there is no change this will be removed at month 9.
Agency staff
The usage of agency staff poses a financial risk as in the main agency staff are considerably more expensive than permanent staff, due to
higher rates, agency commission, and VAT. All managers have been asked to review all agency staff working in their areas as a matter of
priority, and the importance of adhering to the correct process for booking and authorising agency staff has been re-enforced. Agency spend
is reported to the Exec Team on a monthly basis, with particular focus on medical, nursing and A&C. In addition a change in the law in relation
to the employment of agency workers is due to come into force which will have financial implications for the trust.
3x3
4x4
4x4
4x4
2x5
4x3
9
Appendix 1 – Cash flow forecast
Cash Flow Report as at 30 November 2011
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
Actual Actual
£m
£m
Forecast Forecast Forecast Forecast
£m
£m
£m
£m
Total
£m
M9
M10
M11
M12
M1
M2
M3
M4
M5
M6
M7
M8
M9
M10
M11
M12
M01
M02
M03
M04
M05
M06
M07
M08
M9
M10
M11
M12
11/12
2.79
1.96
0.00
3.79
3.54
3.44
7.72
2.93
0.39
2.90
0.00
0.01
0.02
0.00
2.90
6.87
0.00
4.35
0.00
1.88
0.40
2.81
2.97
0.07
0.00
0.00
0.00
0.00
12.48
15.52
16.37
25.71
19.71
22.05
20.69
17.95
28.03
23.55
23.32
23.32
23.32
23.32
267.32
Block Contract
14.04
10.92
12.37
15.15
11.18
12.66
12.82
8.72
10.71
15.54
12.87
15.77
15.49
15.79
18.77
Other Actvity
3.39
4.47
3.65
8.50
4.35
3.63
2.93
4.64
3.18
3.47
3.46
2.80
5.31
3.90
2.91
4.43
2.84
2.16
3.65
2.51
2.68
4.27
4.39
3.03
3.19
3.19
3.19
3.19
38.28
R&D, Education & Other
0.90
0.91
1.03
2.40
1.77
1.06
0.87
1.61
1.31
1.18
1.48
0.97
1.26
1.35
1.99
1.84
1.49
1.68
1.33
0.79
2.53
3.90
1.78
2.34
1.98
1.98
1.98
1.98
23.77
Cash receipts from Asset disposals
Receipts from HMRC for VAT Reclaims
0.00
0.30
0.00
0.49
0.00
0.29
0.00
0.39
0.00
0.22
0.00
0.59
0.00
0.32
0.00
0.46
0.00
0.57
0.00
0.25
0.00
0.23
0.00
0.52
0.00
0.28
0.00
0.00
1.82
0.87
0.00
0.30
0.00
0.00
0.00
0.50
0.00
0.33
0.00
0.36
0.00
0.00
4.66
1.21
0.00
0.88
0.08
0.43
0.00
0.46
0.00
0.46
0.00
0.46
0.00
0.46
4.74
5.55
PDC Receipts
2.45
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Other Receipts
0.66
0.12
0.06
0.48
0.09
0.06
0.09
0.40
0.22
0.03
0.03
0.12
0.01
0.02
0.02
0.27
0.00
0.01
0.00
0.10
0.06
0.01
0.01
0.05
0.03
0.03
0.03
0.03
0.34
24.54
18.88
17.40
30.71
21.15
21.44
24.75
18.76
16.37
23.38
18.07
20.18
22.37
21.05
29.28
29.24
20.70
34.40
25.02
27.68
26.36
34.80
38.06
29.55
28.97
28.97
28.97
28.97
352.47
Staff Salaries
(7.78)
(7.86)
(7.90)
(8.11)
(8.03)
(8.15)
(8.14)
(8.03)
(8.20)
(8.06)
(8.08)
(8.10)
(7.95)
(8.06)
(8.16)
(8.10) (13.54)
(9.79) (11.75) (12.85) (13.11) (11.03) (11.13) (11.19)
(11.12)
(11.12)
(11.12)
Payroll Taxes & NI Contributions
(3.67)
(3.57)
(3.65)
(3.62)
(3.75)
(3.83)
(3.82)
(3.86)
(3.78)
(3.84)
(3.79)
(3.84)
(3.77)
(3.70)
(3.80)
(3.84)
(3.79)
(4.65)
(4.69)
(4.70)
(5.11)
(5.16)
(5.12)
(5.22)
(5.14)
(5.14)
(5.14)
(5.14)
(59.00)
Pensions
(1.91)
(1.93)
(1.93)
(1.93)
(1.95)
(2.01)
(2.00)
(2.00)
(2.00)
(2.00)
(2.00)
(2.00)
(2.00)
(2.00)
(1.98)
(2.00)
(2.00)
(2.37)
(2.42)
(2.42)
(2.71)
(2.71)
(2.71)
(2.71)
(2.73)
(2.73)
(2.73)
(2.73)
(30.99)
Agency,Sessional Pay & Section 12
(1.78)
(0.96)
(1.29)
(2.21)
(2.16)
(2.10)
(1.05)
(1.80)
(1.41)
(1.69)
(1.14)
(1.80)
(1.18)
(1.15)
(1.38)
(1.40)
(1.09)
(1.35)
(1.53)
(1.54)
(1.57)
(1.85)
(1.54)
(1.37)
(1.48)
(1.48)
(1.48)
(1.48)
(17.77)
(15.13) (14.31) (14.77) (15.87) (15.89) (16.09) (15.01) (15.69) (15.39) (15.59) (15.00) (15.73) (14.89) (14.90) (15.31) (15.34) (20.43) (18.16) (20.39) (21.52) (22.50) (20.75) (20.51) (20.49)
(20.47)
(20.47)
(20.47)
Cash Inflow:
Operating:
Payments in Advance
Non-Operating:
Total Cash Inflow
0.00
Cash Outflow:
Operating:
Pay Sub-Total
(11.12) (138.86)
(20.47) (246.61)
Drugs
(0.48)
(0.09)
(0.76)
(0.15)
(0.32)
(0.60)
(0.37)
(0.49)
(0.33)
(0.07)
(0.18)
(0.88)
(0.16)
(0.82)
(0.22)
(0.58)
(0.22)
(1.27)
(1.95)
(1.69)
(0.36)
(2.67)
(1.57)
(2.16)
(1.48)
(1.48)
(1.48)
(1.48)
(17.79)
Clinical & Non-Clinical Supplies
(0.36)
(1.38)
(0.29)
(1.49)
(0.36)
(1.47)
(0.19)
(2.71)
(0.19)
(0.42)
(0.89)
(0.32)
(0.26)
(1.31)
(0.33)
(1.22)
(1.40)
(0.99)
(1.74)
(2.43)
(4.51)
(1.42)
(1.68)
(1.96)
(2.02)
(2.02)
(2.02)
(2.02)
(24.21)
Establishment,Premises, & Transport
(1.01)
(1.44)
(0.88)
(2.00)
(2.88)
(0.95)
(1.35)
(1.43)
(0.72)
(0.83)
(1.15)
(1.32)
(0.94)
(1.08)
(1.18)
(1.90)
(2.65)
(1.72)
(1.27)
(1.82)
(1.31)
(3.69)
(1.32)
(1.19)
(2.87)
(1.87)
(2.37)
(2.87)
(24.94)
Healthcare Purchase
(0.37)
(0.52)
(0.52)
(0.96)
(0.61)
(0.90)
(0.54)
(0.62)
(0.71)
(0.46)
(0.26)
(0.57)
(0.61)
(0.60)
(0.54)
(0.51)
(0.20)
(0.42)
(0.37)
(0.35)
(0.69)
(0.27)
(0.29)
(0.67)
(0.41)
(0.41)
(0.41)
(0.41)
(4.90)
Other Non-Pay
(1.32)
(1.19)
(0.85)
(1.61)
(1.05)
(1.04)
(1.13)
(1.10)
(1.51)
(1.34)
(2.54)
(1.35)
(1.48)
(2.23)
(1.81)
(4.92)
(1.00)
(1.67)
(1.97)
(1.16)
(1.22)
(1.26)
(1.01)
(2.04)
(1.42)
(1.42)
(1.42)
(1.42)
(17.01)
0.00
0.00
0.00
(2.23)
0.00
0.00
0.00
0.00
0.00
(2.28)
0.00
0.00
0.00
0.00
0.00
(2.30)
0.00
0.00
0.00
0.00
0.00
(2.00)
0.00
0.00
(2.30)
(4.30)
Payments to Acquire Plant,Property and Equipments
(0.89)
(0.58)
(0.59)
(0.62)
(0.82)
(0.59)
(1.13)
(0.27)
(0.64)
(0.64)
(1.51)
(0.86)
(0.91)
(0.97)
(0.85)
(1.20)
(0.28)
(1.17)
(1.17)
(1.14)
(1.11)
(1.46)
(1.13)
(2.14)
(1.20)
(1.20)
(1.20)
(1.20)
(14.40)
Other Miscellaneous Payments
(0.06)
(0.11)
(0.00)
(0.15)
0.00
0.00
(0.03)
(0.04)
(0.18)
(0.22)
(0.71)
(0.19)
(0.10)
(0.03)
(0.15)
(0.23)
(0.03)
(0.15)
(0.25)
(0.46)
(0.31)
(0.22)
(0.15)
(0.14)
(0.23)
(0.23)
(0.23)
(0.23)
(2.63)
(19.63) (19.61) (18.67) (25.07) (21.92) (21.63) (19.74) (22.35) (19.66) (21.84) (22.24) (21.23) (19.35) (21.94) (20.38) (28.18) (26.19) (25.55) (29.10) (30.56) (32.00) (33.74) (27.66) (30.79)
(30.10)
(29.10)
(29.60)
Non-Operating:
PDC Dividend
Total Cash Outflow
Net Movements in Cash
0.00
(32.40) (356.78)
4.90
(0.73)
(1.27)
5.63
(0.77)
(0.20)
5.01
(3.59)
(3.29)
1.54
(4.17)
(1.04)
3.01
(0.89)
8.89
1.06
(5.49)
8.85
(4.08)
(2.89)
(5.64)
1.06
10.41
(1.23)
(1.12)
(0.12)
(0.62)
(3.42)
(4.32)
Total Opening Cash
29.11
34.01
33.28
32.02
37.65
36.88
36.68
41.69
38.10
34.81
36.34
32.17
31.13
34.14
33.25
42.14
43.20
37.71
46.57
42.49
39.60
33.96
35.01
45.42
44.18
43.06
42.94
42.31
43.20
Total Closing Cash
34.01
33.28
32.02
37.65
36.88
36.68
41.69
38.10
34.81
36.34
32.17
31.13
34.14
33.25
42.14
43.20
37.71
46.56
42.49
39.60
33.96
35.01
45.42
44.18
43.06
42.94
42.31
38.89
38.88
Monitor Plan
31.89
30.68
31.95
29.64
30.61
37.98
39.49
39.60
39.60
2.12
6.97
9.74
6.70
13.58
4.51
3.57
(0.71)
(0.72)
Variance
10
Appendix 2 – Rolling 12 month statement of comprehensive income forecast