BHRUT annual report 2009 - Barking Havering and Redbridge ...

Barking, Havering and Redbridge
University Hospitals
NHS Trust
Annual Report and Accounts 2009 - 2010

Annual Report & Accounts 2009-2010
1
Contents
Section
Page
A message from the Chairman and Chief Executive 2
Healing, Caring, Serving 3
Hitting the targets 4
Celebrating our people 6
New developments 9
Improving patient experience 11
Our staff 12
Environment 14
The Trust Board Members 15
Operating and financial review 18
Remuneration report 19
Annual Accounts
Chief Executive's Responsibilities 24
Directors' Statements 25
Statement of Internal Control 26
Independent Auditors' Report 32
Statement of comprehensive income 35
Statement of financial position 36
Statement of changes in taxpayers’ equity 2009/10 37
Statement of changes in taxpayers’ equity 2008/09 38
Statement of cash flows 39
Notes to the Accounts 40
If you need help 73
Contents

2
Barking, Havering & Redbridge University Hospitals NHS Trust
A message from the Chairman
and Chief Executive
Welcome to our Annual Report for 2009/10.
There is no doubt that the year brought some
major successes.
Our performance across the board has improved,
which you can see detailed further on in this report.
Making these improvements while cutting waiting
times and working to a strict financial budget is due,
in no small part, to the dedication and hard work of
our staff and volunteers.
To work alongside our Clinical Divisions, we have a
new clinical leadership with Ian Abbs, Medical Director
(on secondment from Guy’s and St Thomas’
Foundation Trust), Deborah Wheeler, Director of
Nursing, Dylan Jenkins, Director of Emergency Care
and John Alcolado, Director of Medical Education.
We have introduced changes throughout the
organisation to ensure that patients are not staying in
hospital any longer than they need to. Diagnostic tests
are easier to access, results are available sooner, and
daily ward meetings have been arranged to discuss
the care and progress of every single inpatient.
The success of these individual changes has seen
waiting times being cut, most notably in Accident and
Emergency. There is still some way to go, but a
dedicated Emergency Care Transformation Team has
enabled improvements to be made and embedded
into the organisation.
The experience of people while they are with us is
hugely important, and something which we will
continue to focus on. We have introduced an
Improving Patient Experience Board, and Deborah
Wheeler also established a nursing visible leadership.
This sees senior nurses - including our Director of
Nursing - back in uniform and back on the wards.
Looking at issues from a grass roots level allows us to
see what our patients, visitors and staff see, and spot
any issues that need resolving or improving.
Services have continued to develop. Notably this year
we have been named as a Hyper Acute Stroke Unit for
London – one of only eight across the capital. This will
be a great boost for patients who suffer a stroke as
they will be able to access the very best treatment
right here on their doorstep - vastly improving clinical
outcomes.
We have continued to make much-needed financial
savings this year, and have hit the targets laid down
for us. The Trust is still in deficit, but is working
steadily towards a break-even position.
We would like to personally thank all our staff and
dedicated volunteers for bringing about these
improvements and for continuing to work tirelessly to
improve the services we offer.
We are also pleased to have strong relationships with
our primary and social care colleagues and with our
patients to help shape the future of healthcare in the
area.
We would like to thank Barbara Liggins for being
Acting Chair for the first nine months of 2009/10.
We place great emphasis on meeting and listening
to staff, patients, visitors and our partners and
stakeholders. The Trust Board is committed to
ensuring that we continue to improve the quality of
care and patients’ experience so that the care
delivered to all our patients is consistently of the
required standard.
Sir David Varney
John Goulston
A message from the Chairman and Chief Executive

Annual Report & Accounts 2009-2010
3
Healing, caring, serving
Serving 750,000 people from a variety of
backgrounds and across a wide area, this Trust is
one of the largest in the country.
We deliver services from two district general hospitals
– Queen’s in Romford and King George in
Goodmayes.
The Trust defines its vision as Healing, Caring, Serving
- and in 2009/10 we made major progress in
improving services to deliver these aims.
Our staff work tirelessly to ensure that patient care is
at the heart of everything we do, despite the high
number of people we treat 365 days a year.
Between April 2009 and March 2010, the Trust
recorded the following activity:
A&E attendances
King George saw 77,012 A&E attendances last year,
whilst Queen’s had 110,047 people through the
doors.
That is a total number of 187,059 attendances at
our Accident and Emergency departments.
Births
Midwives at King George delivered 2,622 babies,
with another 6,786 being born at Queen’s.
The total number of babies born at our hospitals
was 9,408.
Outpatients
King George had 52,569 new outpatient
appointments and 119,808 follow ups booked - a
total of 172,377 appointments booked.
Queen’s had 113,229 new and 285,469 follow up
outpatient appointments - a total of 398,698
appointments booked.
Inpatients
King George had 46,605 Inpatient Admissions
during the year, with 81,930 patients staying at
Queen’s.
Inpatient admission across the Trust totalled
128,535.
The Trust as a whole dealt with 571,075 booked
outpatient appointments
Healing, caring, serving

4
Barking, Havering & Redbridge University Hospitals NHS Trust
Hitting the targets
Like all Trusts, we work to meet national targets which
are set down by the Government. These cover a wide
range of services, and include the maximum amount
of time people should wait to be treated.
We have had great success in improving our
performance this year, which the table below shows.
Existing and national 2007/08 2008/09 2009/10 Target
priorities
18 week referral to treatment waiting times
Admitted N/A 94.50% 91.20% 90.00%
Non-admitted N/A 96.90% 97.23% 95.00%
(Q4 reporting (April-Feb)
period)
A&E waiting times
4-Hour max.wait in A&E from arrival to 91.90% 96.02% 97.31% 98.00%
admission, transfer or discharge
Access to genito-urinary 95.00% 99.16% 99.93% 98%
medicine (GUM) clinics
Cancer urgent referral to first outpatient
appointment waiting times
2-Week GP referral to first 99.90% 99.00% 99.75% 93%
outpatient appointment
Cancelled operations
Cancelled operations not 9.43% 2.87% 2.33% 5.00%
re-admitted within 28 days.
Cancer diagnosis to treatment waiting times
New target
31 Day diagnosis to 100% 95.40% 1 96.89% 1 96%
treatment - all cancers
Cancer urgent referral to
treatment waiting times
New target
62 Day urgent referral to 97.99% 82.10% 1 81.62% 1 85%
treatment – all cancers
1
New reporting arrangements to incorporate 18 week rules.
Continued . . .
Hitting the targets

Annual Report & Accounts 2009-2010
5
. . . continued
Existing and national 2007/08 2008/09 2009/10 Target
priorities
Clostridium difficile infections Cases identified Cases identified Cases identified
218 126 80 All targets
Max no of cases 2 Max no of cases 3 Max no of cases 3 achieved
597 219 145
2
The Department of Health given number for that period for both GPs, residential homes, community hospitals and the Trust
was no more than 597. Only 218 cases were identified.
3
Department of Health guidance changed splitting acute trust numbers from community numbers identifying hospital
acquired and community acquired infection.
Delayed transfers of care
Percentage of inpatients with
delayed transfer of care 3.51% 2.63% 3.78%

6
Barking, Havering & Redbridge University Hospitals NHS Trust
Celebrating our people
Innovations
The Trust has a long history of success in innovation -
with staff regularly recognised for developing groundbreaking
techniques and inventions to improve
healthcare.
In 2009 we were named as Innovative Trust of the
Year for submitting the highest number of ideas to
NHS Innovations in London.
Many of our doctors were also shortlisted or awarded
prizes for their individual ideas. These included a
cerebral aneurysm catheter system allowing greater
control in brain surgery and a web-based handover
system to increase efficiency and cut risk when
patients move from one doctor to another.
Being named Innovative Trust of the Year allowed us a
£25,000 prize to establish our own in-house
competition.
A Dragons’ Den-style Innovations Challenge was
won by Manoj Srivastava (pictured below).
Two neurosurgeons also won a coveted award for
innovation.
Harith Akram and Ian Low invented and developed
a positioning aid which helps physicians treat patients’
brains.
A stereotactic frame is attached to a patient’s head
using pins to keep it in a fixed position while they
receive treatment.
The positioning aid invented by Mr Low and Mr
Akram holds the frame in place and allows minute
adjustment, so it can be fitted more quickly and
accurately than ever before.
Using their new invention the frames - which are
regularly used around the world - can be fitted in just
ten minutes and by only one member of staff.
Previously it would have taken two or three members
of staff significantly longer.
The pair were awarded the Cutlers’ Surgical Prize
and the Clarke medal at the annual Surgical Award
Dinner (pictured below).
Celebrating our people

Annual Report & Accounts 2009-2010
7
Top employees
This year saw the Trust’s third annual Outstanding
Achievement Awards.
Working Smarter - Not Harder
Award. Winners: Lisa Pape-Orton and Team
- Sky A
The awards were devised to recognise and celebrate
outstanding individual or team achievement and
performance within the Trust.
More than 50 nominations were received in five
categories, with all professions represented, including
consultants, domestics, nurses and administration
staff.
BHR Outstanding Achievement
Award Winners 2009
Outstanding Patient Care award
Winner: Dr Mas Ahmed
Unsung Hero award. Winner:
18-Weeks Support Team
Most Improved Environment award
Winner: Breast Screening Team
Lifetime Achievement award
Winner: Jackie Blank
Celebrating our people

8
Barking, Havering & Redbridge University Hospitals NHS Trust
The winner of the Trust’s Employee of the Year
Award was surgeon Aman Bhargava (pictured
below).
Mr Bhargava was nominated for the accolade by
Stuart Wright - the son of one of his patients.
Mr Wright said: “Mr Bhargava is without doubt one
of the most talented surgeons in the UK. Twice he
saved my mother’s life with his expert surgical skill
when she has been so desperately ill we thought she
would not survive.
“He is outstandingly professional and shows unique
compassion and empathy at a very difficult and
upsetting time.”
The Trust runs an Employee of the Month scheme,
with 12 members of staff winning a prize for
outstanding service throughout the year.
They then go through to the Employee of the Year
final.
Celebrating our people

Annual Report & Accounts 2009-2010
9
New developments
Stroke unit
Queen’s Hospital has been named as one of only eight
in London to become a Hyper-Acute Stroke Centre.
The new unit will be fully operational by Autumn this
year, providing specialist 24-hour care to patients
following a stroke. This will include rapid assessment,
CT scan and early treatment with clot-busting drugs if
they are needed.
Healthcare for London decided to establish three types
of stroke unit across the capital:
• Hyper acute units to provide the best diagnostic
and clinical care in the first 72 hours after a stroke
WHO Safety Checklist
Queen’s and King George Hospital are two of the very
first in the country to fully utilise the World Health
Organisation’s surgical safety checklist. The checklist
aims to reduce the number of possible complications
in operating theatres. Every single patient undergoing
an operation can now be confident that the checklist
is completed at every stage of the procedure to ensure
their safety and that they receive the best possible
care. The WHO checklist has also been successfully
adopted in other specialist areas outside of the
operating theatres, such as when investigations are
needed using advanced radiological procedures.
• Local stroke units where patients can be cared for
while they are still very ill and start the recovery
process
• A TIA service for people who have had a Transient
Ischaemic Attack (TIA), or ‘mini stroke’
Queen’s is one of only eight hospitals across the
capital to be chosen to provide all three.
The new unit should see clinical outcomes improve,
with disabilities caused by a stroke significantly
reduced.
The unit is one of only two centres in the country
offering patients a revolutionary robotic arm to help
restore their movement after a stroke. These
pioneering machines assist patients to repeat arm and
shoulder exercises many hundreds of times to give
them the best possible chance of recovery.
New developments

10
Barking, Havering & Redbridge University Hospitals NHS Trust
Maternity Safety
The Trust’s maternity service - one of the busiest in the
country - has been given a glowing recommendation
by safety assessors.
This year the service was given an excellent safety
score of 44 out of 50.
Risk management assessors from the NHS Litigation
Authority looked at more than a thousand pieces of
evidence to check whether the service was running
safely and in line with national guidelines.
They were so impressed with what they found that
they have awarded the Trust a Level 2 for maternity
clinical risk management standards.
After a two-day visit to the Trust, lead assessor Lynne
Saunders said: “We have looked at a huge amount of
evidence and have decided that the Trust is compliant
at Level 2. This is no mean feat, particularly for a large
maternity service in a complex area. Forty-four out of
50 is an excellent score and the Trust is to be
congratulated.”
The maternity service is awarded marks out of ten for
five key areas. It had to reach an overall score of 35 to
pass.
• It achieved nine out of ten for ‘organisation’,
covering strategies, staffing and training
• Clinical care was given a score of eight, described
by the assessors as “a very excellent score. This
category can be very tough. There was particularly
good care of women in labour”.
• High risk care was given top marks of ten out of
ten
• Communications was awarded eight out of ten,
with particular praise given to mental health
services
• Post-natal and newborn care received a score of
nine.
Radiology
The Trust’s Radiology Service has implemented 12-
hour days and other changes to shift patterns,
including the introduction of core teams for CT and
MRI that have led to increased capacity and a
reduction in waiting times for both inpatients and
outpatients. Waiting times for examinations have also
been cut as scanners are now open 7 days a week.
More staff are available to report on images which
means that doctors can now access results earlier than
before.
With the opening of the Loxford Polyclinic, local
residents now have greater access to X-ray imaging
and ultrasound closer to their homes, in the local
community.
New developments

Annual Report & Accounts 2009-2010
11
Improving patient experience
This year the Trust has been focussing on the care our
patients receive, and ensuring they are having the best
possible experience while they are with us.
An Improving Patient Experience Board has been set
up, with staff and patients looking at better ways of
delivering care and communicating with patients and
visitors.
The group covers everything from patient information
to the quality of food. It is also planning to introduce
real time surveys so that we can get immediate
feedback from patients on how they are being treated
and what improvements they would like to see.
Our patient representatives also play an invaluable role
in giving us a service user’s perspective on our
hospitals and services.
Visible Leadership
This year a new programme was launched which sees
all matrons and senior nursing staff – including our
Director of Nursing – back on the wards.
Every Monday they join a ward to look at key
indicators of patient care, including pressure ulcer risk
assessment, nutrition assessment, patient
observations, and hand hygiene. The programme has
been received positively by the wards, who have
welcomed the additional support from senior nurses.
Standards of care are improving and ideas being
shared to improve the all round patient experience.
Building and redecoration work has taken place at
King George Hospital this year to ensure that patients
can be nursed in single sex areas, and do not have to
share bathrooms with people of the opposite sex.
New initiatives have also been introduced to make
sure that patients are treated with privacy and dignity,
such as protected meal times.
Although the initiatives will take time to embed, our
national patient survey results have improved year on
year (table below).
Patient experience 2007/08 2008/09 2009/10 Target
Number of formal complaints received 1068 940 566 636
Percentage of patients who always felt they N/A 70.00% 72.00% Not set
were treated with dignity and respect
(Annual Inpatient Survey)
Percentage of patients who were always N/A 63.00% 71.00% Not set
given enough privacy when discussing their
condition or treatment
Improving patient experience

12
Barking, Havering & Redbridge University Hospitals NHS Trust
Our staff
We employ over four and a half thousand Full Time
Equivalent (FTE) staff, who are our most important
resource. Without our skilled and dedicated workforce
we could not continue to make a difference to the
people who need to use our services. As a responsible
employer, we aim to provide opportunities for career
and personal development and to recognise the hard
work and commitment of our staff.
A Stroke Open Day was also held to attract Staff
Nurses, Clinical Nurse Specialists, Stroke Facilitators
and a Ward Sister.
Over the past 12 months the total number of Staff
Nurses appointed was 145 and the total number of
HCAs during the same period was 115.
Staff in post (FTE) March 31 2010
Unqualified Nurses
& Patient-care
Support Workers
643.8
13%
Allied Health
Professionals
315.0
6%
Professional, Technical
& Scientific
526.1
11%
Ancillary & Non-patient-care
Support Workers
30.0
1%
Midwives
226.9
5%
Admin, Clerical
& Maintenance
973.8
20%
Qualified Nurses
1396.9
27%
Medical Training grades
378.8
8%
Medical Career grades
417.9
8%
Despite a small overall growth in staff numbers, there
has been growth in front-line roles - those with direct
responsibility for patient care.
Recruitment Activities
A successful Maternity Open Day was held to recruit
midwives and Neonatal Nurses. The event led to the
recruitment of six substantive midwives, a Neonatal
Nurse and two Bank Midwives.
Sickness Absence
Trust-wide sickness absence for 2009/10 was 5.53%.
The rate is calculated using the Electronic Staff Record
(ESR) where all reported sickness absence is recorded.
ESR is able to calculate a percentage sickness absence
rate using the total number of days absence recorded
and total number of working days available.
The Trust is taking action to support staff returning to
work more quickly as well as instigating initiatives to
Our staff

Annual Report & Accounts 2009-2010
13
address the causes of sickness among the staff. A
revised Management of Sickness Absence policy and
procedure was adopted in 2009. This provides a
procedure for managing and supporting people who
are either persistently absent over short periods or
have a long period off sick. Managers are responsible
for monitoring sickness among their staff, being aware
when patterns are emerging and dealing with issues
quickly and informally so that a formal review is only
conducted in serious cases. Return to work meetings,
after every period of absence, strengthen the focus on
the ongoing management of attendance.
Staff Survey
The annual NHS staff survey - which gives staff a
confidential opportunity to record their views on being
employed by the Trust - highlighted the aspects of
performance that employees felt were good and
where management needed to concentrate efforts.
Staff at the Trust took part in the 2009 National Staff
Survey responding to questions about their
experiences of working at King George and Queen’s
hospitals. The survey showed the progress made in
the previous year had continued. It found six areas
where findings were better than average for acute
trusts, including four where the Trust’s findings were
in the top 20% including staff feeling their role makes
a difference to patients, staff witnessing and reporting
errors, near misses or incidents and staff experiencing
physical violence from staff.
Eighteen of the 40 key findings showed an
improvement, with only one worse than the previous
year. Improvements were seen in areas such as staff
receiving job-relevant training, learning or
development, having well structured appraisals, work
pressure felt by staff and percentage of staff having
experienced physical violence.
Our staff

14
Barking, Havering & Redbridge University Hospitals NHS Trust
Environment
Sustainability
The Trust has this year put together a Sustainable
Development Management Plan to support work
being done nationally to reduce carbon emissions.
The Trust is committed to sustainable development,
and the new plan builds upon the work we have
already done to protect and enhance the environment.
The plan applies to all Trust staff, contractors and
consultants and covers the following key areas of
activity:
• Transport and Procurement - Encouraging low
carbon lifestyles and travel habits, investing in
energy from sustainable sources, using the most
energy efficient goods and services
• Waste, Water and Energy - Using fewer material
goods, using locally produced goods and services,
minimising waste and maximising energy efficiency
• People and Community - The right to live and
work in a health promoting environment
• Buildings - Ensuring the focus of planning and
designing decisions supports physically active living,
reduces reliance on cars and increases energy
efficiency
Environmental, Social & Community
The Trust continues to implement the sustainability
agenda across the organisation, looking at the main
areas of travel, procurement, facilities, workforce and
community. Now with the new Energy & Waste
Management Specialist on board, the Trust has been
establishing commitment and accountability for
environmental impacts and improved efficiency. A
comprehensive strategy to address the sustainability
agenda is being developed. Implementing the strategy
and embedding sustainable development within the
Trust will introduce better management of the Trust’s
carbon footprint, as well as a more robust monitoring
system of key sustainability areas.
In 2009/10, the Trust commissioned energy
consultants to comply with new and revised energy
legislation and feasibility studies for improving energy
efficiency. Waste Management has been going
through various reviews to introduce new recycling
procedures throughout the Trust. The Trust has limited
car parking facilities, which encourage patients,
visitors and staff to travel by public transport, and the
Trust offers an interest-free season ticket loan. The
Trust also supports the Cycle to Work scheme in
partnership with Cycling Solutions, to encourage staff
to cycle. Under the scheme, the costs of buying bikes
and cycling accessories are deducted direct from
salaries, which means that staff benefit through the
non-payment of tax, national insurance and pension
contributions on this amount.
Environment

Annual Report & Accounts 2009-2010
15
The Trust Board members
Chairman: Sir David Varney
David joined the Trust as Chairman
in January 2010.
He joined Shell in 1968 after
graduating from the University of
Surrey with a degree in chemistry.
He has worked in Australia, Holland
and Sweden. In 1996, he left Shell and became Chief
Executive of BG Group (previously British Gas).
In 2001, he was appointed Executive Chairman of
MM02. He chaired Business in the Community, was
Chairman of HM Revenue and Customs between
2004 and 2006 and President of the Chartered
Management Institute.
Most recently, he was the Prime Minister’s Adviser on
Public Service Transformation until 2009.
Chief Executive: John Goulston
John Goulston joined the Trust as
Interim Chief Executive in October
2007. He was appointed
substantively as Chief Executive in
March 2008.
John worked at Barts and The London NHS Trust from
2002 to 2007. John graduated in economics at Hull
University before joining the Southeast Thames
Regional Health Authority’s finance training scheme.
Once qualified as an accountant he joined
accountancy firm Coopers and Lybrand, where he
spent three years in public sector audit and another
three in health consultancy.
He returned to the NHS in 1992, working as Finance
Director of the former Crawley and Horsham Trust for
three years. He took the same post at the Royal Free
Hampstead NHS Trust for seven years before moving
onto Barts and The London.
As Interim Chief Executive at the Trust, and previously
as Deputy Chief Executive, John led the £1bn
redevelopment programme for Barts and the Royal
London Hospitals, which includes a shared, long-term
service vision and plan with the North East London
primary care trusts.
Medical Director: Ian Abbs
Ian qualified in Medicine from
London University in 1984. He
undertook postgraduate research
training as a nephrologist at Guy’s
and St Thomas Hospitals, where he
was later appointed as a consultant
nephrologist in 1994.
His clinical and research interests are in transplantation
and immune renal disease, and Ian developed an
increasing interest in the organisation and
management of clinical services as a Clinical and
Divisional Director.
He was Director for Clinical Academic Group
Development for King’s Health Partners Academic
Health Sciences Centre (AHSC) and most recently, as
an Associate Medical Director at Guy’s and St Thomas,
he worked on the integration of the community
provider arm with the AHSC.
He joined the Trust as Medical Director in April 2010.
Director of Human Resources:
Ruth McAll
Ruth McAll joined the Trust in
December 2008 as an Interim HR
Director. Ruth has 15 years
experience as an HR Director with a
variety of NHS Trusts, including
mental health, community and
Foundation Trusts.
Ruth’s objectives at BHR are to develop a structure
and function for HR that is able to help staff and
managers deliver good practices in people
management.
Ruth was a member of the national pensions review,
lead in HR networks and NHS conference.
The Trust Board members

16
Barking, Havering & Redbridge University Hospitals NHS Trust
Director of Delivery:
Neill Moloney
Neill Moloney joined BHRUT in May
2008 from Barts and the London
NHS Trust where he was Head of
Information and Performance.
Responsibilities included leading the
contracting process with
commissioners for the Trust.
Prior to this he was a General Manager for over four
years at Mid Essex Hospitals NHS Trust in Chelmsford
and Birmingham Heartlands and Solihull NHS Trust,
managing a range of clinical and non-clinical services.
As a Commissioning Manager for Birmingham Health
Authority, Neill led on development of the winter and
emergency plans and was responsible for
commissioning specialised services.
With a background in business planning, information
provision and operational management Neill’s priorities
are to ensure plans and enabling strategies are in
place to support the delivery of the Trust’s clinical
services.
Director of Nursing:
Deborah Wheeler
Deborah Wheeler joined the Trust as
Director of Nursing in January 2010
from the Whittington NHS Trust
where she held the post of Director
of Nursing and Clinical
Development. Deborah trained as a
nurse at St Bartholomew's Hospital, and spent her
clinical career in orthopaedic nursing. She
subsequently held a variety of management posts at
the Royal National Orthopaedic Hospital, Stanmore.
Deborah has lived in the Barkingside area for the last
25 years. Her children were born in Barking Hospital
and King George Hospital.
Director of Finance:
David Wragg
David Wragg joined the Trust in
April 2009 after nine years as
Finance Director at the Queen
Elizabeth Hospital NHS Trust in
Woolwich, SE London, where he
also looked after estates and
facilities management.
David had a leading role in the project to merge the
Queen Elizabeth Hospital NHS Trust with Bromley
Hospitals NHS Trust and Queen Mary’s Hospital NHS
Trust to form South London Healthcare NHS Trust.
He has also contributed financial leadership to the
Picture of Health project, which has made important
and far reaching recommendations for the
reorganisation of acute hospital services in outer SE
London.
Before joining Queen Elizabeth, David spent 15 years
working in management consultancy and external
audit for NHS organisations.
David’s main priorities are helping to address the
service and financial challenges faced by BHRUT.
David is a keen football fan and makes no apologies
for being an Arsenal season ticket holder.
Director of Strategy and
Planning: Robert Royce
Robert Royce joined the Trust in
January 2010.
Previously, Robert was Director of
Operations, Planning, Estates and
Facilities in a large acute trust in
Wales. He has also been Interim Director of
Operations, Division of Emergency Care and Specialist
Medicine at South London Healthcare NHS Trust.
Robert’s key priorities are to drive forward the
implementation of the Trust’s clinical strategy and to
ensure the Trust has a robust process by which it’s
objectives are monitored and delivered
The Trust Board members

Annual Report & Accounts 2009-2010
17
Non-executive directors
Barbara Liggins has a business
background of 33 years in banking
and senior management. Since
1996 she has worked at board level,
initially as a Member of the Essex
Police Authority and since 2004 as a
BHRUT Non-Executive Director. She
is the Chair of Trustees at Essex
Police Museum and retired as a magistrate serving on
the South West Essex Bench at the end of 2008.
Barbara has 20 years NHS experience in various roles
including being a member of the Barking and
Havering Family Practitioners Committee, a conciliator
for North and South Essex Health Authorities as well
as being a convener for Southend General Hospital.
She spent the first nine months of 2009/10 as Acting
Chairman, prior to the appointment of Sir David
Varney.
Mark Hicks is a Senior Vice
President at Marsh Ltd, responsible
for placement and management of
risk and insurance programmes for
large corporate clients and lives in
Woodford Green.
Mark remains involved with
voluntary activities within the Trust.
Renata Drinkwater has 27 years
experience of providing strategic
business advice at Board level in
commercial, public sector, voluntary,
not-for-profit and charitable
organisations in the UK, Europe and
the Middle East. Most of her career
has been spent in management
consultancy with global professional services firms –
11 years with KPMG, and seven years with Ernst and
Young as the partner responsible for setting up and
managing its Leisure and Tourism sector management
consulting group.
Renata is an Associate Director of Capita Symonds
Consulting, and also runs her own consulting practice.
She is a Trustee of Diabetes UK.
Stuart Cruickshank was the
Director General and Chief Finance
Officer of HM Revenue and
Customs.
Trained as an accountant, Stuart
made it to the top of his
profession, and is now using his
skills to help steer the Trust through
the coming years.
Stuart was appointed in June 2008 and is the Chair of
the Audit Committee.
Keith Mahoney was appointed in
December 2008 and has 30 years
experience with major retail
organisations. In his role as Head
of Logistics (Food) for Marks and
Spencer, he managed a budget of
£200 million. Keith is also a
volunteer for many charities.
Professor Raymond Playford is the
Deputy Warden and Professor of
Medicine at Queen Mary’s School of
Medicine and Dentistry, and has had
a long and illustrious career within
the NHS and world-renowned
teaching hospitals and universities.
He officially began his four-year term
with the Trust in February 2009.
Farewell
During the year 2009/10 the Trust said farewell to
Director of Nursing Dickon Weir-Hughes and
Medical Director Yasmin Drabu. We would like to
thank them for their invaluable contribution to the
Trust.
Welcome
A warm welcome to Chairman Sir David Varney,
Medical Director Ian Abbs, Director of Nursing
Deborah Wheeler and Director of Strategy and
Planning Robert Royce.
The Trust Board members

18
Barking, Havering & Redbridge University Hospitals NHS Trust
Operating and Financial Review 2009/10
The requirement for NHS bodies to prepare an
Operating and Financial Review as part of the annual
report was introduced in 2005/6. The OFR seeks to
provide information on the developments, trends,
performance and business position of the Trust in
terms both of the year in question and future
development.
Review of 2009/10
The Trust agreed a Plan with NHS London for 2009/10
for an income and expenditure deficit of £8.0m,
excluding the technical impact of asset impairments
and of implementation of International Reporting
Standards (IFRS). The Plan compared with a deficit of
£29.1m in 2008/09 (IFRS re-stated and excluding
impairments) and an underlying deficit of £37.5m. The
planned improvement in 2009/10 was primarily driven
by a significant Cost Improvement Programme of
£33.3m.
As part of its contract agreement with the local
Primary Care Trusts for 2009/10, the Trust agreed to
jointly commission an independent review in to the
value of its non-PbR service agreements, which had
been subject to a long-standing dispute with the PCTs.
The outcome of this review was concluded in the last
quarter of the financial year and resulted in a £21m
adverse movement in the planned income position.
This was partially offset by £8m non-recurrent ‘risk
pool’ support from the PCTs, to mitigate the impact of
the review. The control total Plan deficit was adjusted
by NHS London for these factors, which together with
a favourable adjustment of £1.3m, gave a revised
target deficit for the Trust of £19.7m.
The Trust finished the year with a deficit of £22.3m,
excluding the technical impact of fixed asset
impairments (£31.9m) and IFRS (£2.1m). This was
£2.6m above the control total of £19.7m, with the
main reason being disputed income of £2.6m with
local PCTs at year end, which the Trust provided
against in the Accounts.
The Trust did not achieve its duty to break even over
the five year period ending 31 March 2010. The
relevant cumulative deficit was £116.9m. Accordingly,
the external auditor referred the Trust to the Secretary
of State under section 19 of the Audit Commission
Act 1998.
2010/11 Plans
The Trust has provisionally agreed a Plan deficit with
NHS London for 2009/10 of £19.4m (excluding
impairments and IFRS). Taking away the impact of the
PCT risk pool support and other non-recurrent
measures taken to meet the 09/10 control total, the
underlying position coming in to 2010/11 was a
£41.1m deficit. The Trust also has additional cost
pressures in 2010/11 of £19.2m and a reduced
income contribution of £10.5m arising from reduced
activity demand from PCTs. Against this, the Trust has
benefited from net pricing gains of around £13.0m
(including an increase in the Market Forces Factor
funding, removal of the out-patient scaling
adjustment, less £5m risk pool support to the PCTs)
and is planning for a Cost Improvement Programme of
£34.5m (8.5%) and £3.9m of other upside
adjustments. Excluding the £5m risk pool support, the
plan is therefore to improve the underlying deficit
position from £41.1m to £15.4m, a reduction of
£25.7m.
The cumulative deficit at the end of 2010/11 is
therefore planned to be £136.3m. As part of the
Medium Term Financial Strategy agreed in 2008/09,
NHS London, in conjunction with the Challenged Trust
Board of PCTs, earmarked £84m to eliminate the
accumulated deficit, based on the planned position as
at the beginning of 2009. The NHSLA and the CTB are
assessing the scope for use of further funds to
eliminate the planned deficit to the end of 2010/11.
The Trust’s role will be to deliver the control total for
2010/11
Operating and Financial Review

Annual Report & Accounts 2009-2010
19
IFRS Preparations
The Trust has prepared the Accounts under
International Financial Reporting Standards (IFRS) for
the first time in 2009/10. The Trust re-stated its
2008/09 comparative position and the 2009/10
opening balances under IFRS, which have been
externally audited. The main impact on the revenue
position in 2009/10 has been to account for the PFI
contract for Queen’s Hospital as a finance lease and
therefore as an asset on the balance sheet, which
impacts on the accounting transactions going through
the I&E position. Overall there was an adverse impact
of £2.0m in 2009/10, which is excluded from the
Trust’s position when assessing performance against
the control total.
Financial Governance
The Trust’s financial situation is monitored by its
Finance Committee, which was chaired by Non
Executive Director Mark Hicks, prior to the
appointment of the new Chairman, Sir David Varney
in January 2010, who took over the Chairmanship
from that point. There were eight meetings held in
2009/10, of which Mark Hicks chaired two, Barbara
Liggins (Acting Chairman) five and Sir David Varney
one. The Trust Audit Committee, which is chaired by
Stuart Cruickshank, monitors the Trusts governance
arrangements. Stuart resigned his chairmanship of the
Audit Committee in June 2010.
The Trust’s current external auditors are the Audit
Commission. The cost of their work performed
amounted to £311k for the year.
Pension liabilities have been accounted for in
accordance with note 1.7 of the Accounts.
Remuneration Report
The remuneration package and conditions of service
for Executive Directors is agreed by the Trust
Remuneration Committee, a Committee of the Board
of Directors consisting of the Non-Executive Directors,
including the Chairman of the Trust.
The remuneration for certain Executive Directors does
include performance related bonuses and none of the
Executives receives personal pension contributions
other than their entitlement under the NHS pension
scheme.
Each year, the Remuneration Committee considers the
contribution of each Director against the functions of
the post as defined in the current job description and
as foreseen for the future. This is carried out in
parallel with a review of the individual’s career
development and potential opportunities for
progression. The Remuneration Committee considers
the matter of succession planning, although all
Executive Directors hold permanent contracts.
The notice period for Executive Directors is six months
and there are no arrangements for termination
payments or compensation for early termination of
contract.
Non-Executive Directors, including the Chairman, are
appointed by The Appointments Commission for
specified terms subject to re-appointment thereafter at
intervals of no more than four years and to the
relevant laws relating to the removal of a Director.
The Constitution currently requires Non-Executive
Directors to retire after eight years’ service.
The Remuneration Committee met five times during
2009/10.
Remuneration Committee Members
Chair – Sir David Varney
Barbara Liggins
Ray Playford
John Goulston
Ruth McAll
Remuneration Report

20
Barking, Havering & Redbridge University Hospitals NHS Trust
In determining Directors’ pay and conditions, the
Remuneration Committee took into account
comparative information available from NHS Partners
survey and the IDS Boardroom Pay Report.
The level of remuneration for non-executive Board
Members is based on an average expected workload
of three to four days a month for Non-Executive
Directors and two to three days a week for the
Chairman.
The contracts of Directors who served during the year
are summarised in the table below.
Role Starting date Title First Name Surname
Director of Nursing 01-Nov-09 Professor Dickon Weir-Hughes
Chairman 14-Jan-10 Sir David Varney
Chief Executive 01-Mar-08 Mr. John Goulston
Director of Delivery 12-May-08 Mr. Neill Moloney
Director of Finance 01-Apr-09 Mr. David Wragg
Director of HR 01-Dec-08 Mrs. Ruth McAll
Director of Nursing 04-Jan-10 Ms. Deborah Wheeler
Medical Director 01-Mar-06 Dr Yasmin Drabu
Director of Strategy
and Planning 18-Jan-10 Mr Robert Royce
Non Executive Director 18-Jun-08 Mr. Stuart Cruickshank
Non Executive Director 01-Feb-06 Ms. Renata Drinkwater
Non Executive Director 01-Jan-04 Mr. Mark Hicks
Non Executive Director 01-Aug-04 Mrs. Barbara Liggins
Non Executive Director 01-Dec-08 Mr. Keith Mahoney
Non Executive Director 01-Feb-09 Professor Raymond Playford
Remuneration Report

Annual Report & Accounts 2009-2010
21
Directors’ salary table (this is audited)
2009/10 2008/09
Salary Other Benefits in Salary Other Benefits in
Name and Title (bands of Remuneration Kind (bands of Remuneration Kind
£5,000) (bands of (rounded to £5,000) (bands of (rounded to
£5,000) nearest £100) £5,000) nearest £100)
£000 £000 £00 £000 £000 £00
Chairman
D Varney (from January 2010) 0 - 5 - - - - -
B. Liggins (from May 2008 to Dec 2009) - - - 15 - 20 - -
Non-Executive Directors
R. Drinkwater 5 - 10 - - 5 - 10 - -
M. Hicks 5 - 10 - - 5 - 10 - -
B. Liggins (from January 2010) 15 - 20 - - 0 - 5 - -
S. Cruickshank 5 - 10 - - 0 - 5 - -
K. Mahoney 5 - 10 - - 0 - 5 - -
R. Playford 5 - 10 - - 0 - 5 - -
Chief Executive
J Goulston 180 - 185 - - 175 - 180 - -
Medical Director
Y. Drabu (seconded to DOH) 170 - 175 - - 145 - 150 - -
Director of Human Resources
R. McAll 95 - 100 - - 20 - 25 - -
P. Stone (until 31 August 2008) - - - 65 - 70 - -
Director of Finance
D. Wragg (from 1 April 2009) 150 - 155 - - - - -
P. Church (interim) (from 1 Jan 2009 to 31 March 2009) - - - 85 - 90 - -
T. Smith (until 31 December 2008) - - - 95 - 100 - -
Director of Nursing &
Clinical Governance
D. Wheeler (from 1 January 2010) 20 - 25 - - - - -
E. Wright (interim) (from 1 Nov 2009 to 31 Dec 2009) 15 - 20 - - - - -
D. Weir-Hughes (to 31 October 2009) 65 - 70 - - 105 - 110 - -
Director of Delivery
N. Moloney 115 - 120 - - 90 - 95 - -
Director of Strategy & Planning
R. Royce (interim) (from 18 January 2010) 30 - 35 - - - - -
Benefits-in-kind means the taxable value of benefits
provided. The values are calculated in accordance with
Inland Revenue rules and relate to leased cars less the
contribution made by the employee.
Remuneration Report

22
Barking, Havering & Redbridge University Hospitals NHS Trust
Directors’ pension table (this is audited)
Real
increase in
pension at
age 60
(bands of
£2,500)
Real
increase in
pension
lump sum at
age 60
(bands of
£2,500)
Total
accrued
pension at
age 60 at 31
March 2010
(bands of
£5,000)
Lump sum
at age 60 at
31 March
2010 (bands
of £5,000)
Cash
equivalent
transfer
value at 31
March 2010
Cash
equivalent
transfer
value at 31
March 2009
Real
increase in
cash
equivalent
transfer
value
(bands of
£5,000)
Employer’s
contribution
to stakeholder
pension
£000
£000
£000
£000
£000
£000
£000
£000
Chief Executive
J. Goulston
2.5 - 5
7.5 - 10
30 - 35
100 - 105
684
574
90 - 95
0
Medical Director
Y. Drabu
7.5 - 10
27.5 - 30
45 - 70
205 - 210
1,733
1,249
450 - 455
0
Director of Human
Resources
R. McAlll
5 - 7.5
17.5 - 20
30 - 35
95 - 10
667
492
160 - 165
0
Director of Finance
D. Wragg
5 - 7.5
7.5 - 10
25 - 30
80 - 85
468
347
110 - 115
0
Director of Nursing
D. Weir-Hughes
D. Wheeler
(0 - 2.5)
2.5 - 5
(2.5 - 5)
2.5 - 5
20 - 25
30 - 35
65 - 70
90 - 95
288
555
351
471
(70 - 75)
70 - 75
0
0
Director of Delivery
N. Moloney
5 - 7.5
15 - 17.5
25 - 30
75 - 80
361
259
95 - 100
0
E Wright’s pension has not been disclosed as she was
acting up for a very short period whilst the substantive
post was filled.
As Non Executive Directors do not receive pensionable
remuneration, there are no entries in respect of
pensions for them.
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. Where individuals have left the Trust
during the year the cash equivalent transfer values
provided by the NHS Business Services Authority (NHS
Pensions) at 31 March 2010 are reported and not at
the date of leaving.
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 include the value
of any pension benefits in another scheme or
arrangement that 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
Remuneration Report

Annual Report & Accounts 2009-2010
23
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 scheme or arrangement) and uses
common market valuation factors for the start and
end of the period.
The Trust has not made any contributions to
Stakeholder Pensions for senior managers during the
year.
Remuneration Report

24
Barking, Havering & Redbridge University Hospitals NHS Trust
Annual Accounts
Foreword to the accounts
These accounts for the year ended 31 March 2010
have been prepared by the Barking, Havering and
Redbridge University Hospitals NHS Trust under section
98(2) of the National Health Service Act 1977 (as
amended by section 24(2), schedule 2 of the National
Health Service and Community Care Act 1990) in the
form which the Secretary of State has, with the
approval of the Treasury, directed.
John Goulston
Chief Executive
Date: 9 June 2010
Statement of the Chief Executive's responsibilities
as the Accountable Officer of the Trust
The Chief Executive of the NHS has designated that
the Chief Executive should be the Accountable Officer
to the trust. The relevant responsibilities of
Accountable Officers are set out in the Accountable
Officers Memorandum issued by the Department of
Health. These include ensuring that:
• there are effective management systems in place to
safeguard public funds and assets and assist in the
implementation of corporate governance;
• value for money is achieved from the resources
available to the trust;
• effective and sound financial management systems
are in place; and
• annual statutory accounts are prepared in a format
directed by the Secretary of State with the approval
of the Treasury to give a true and fair view of the
state of affairs as at the end of the financial year
and the income and expenditure, recognised gains
and losses and cash flows for the year.
To the best of my knowledge and belief, I have
properly discharged the responsibilities set out in my
letter of appointment as an accountable officer.
• the expenditure and income of the trust has been
applied to the purposes intended by Parliament and
conform to the authorities which govern them;
John Goulston
Chief Executive
Date: 9 June 2010
Annual Accounts

Annual Report & Accounts 2009-2010
25
Annual Accounts
Statement of Directors’ responsibilities
in respect of the accounts
The directors are required under the National Health
Service Act 2006 to prepare accounts for each
financial year. The Secretary of State, with the
approval of the Treasury, directs that these accounts
give a true and fair view of the state of affairs of the
trust and of the income and expenditure, recognised
gains and losses and cash flows for the year. In
preparing those accounts, directors are required to:
- apply on a consistent basis accounting policies laid
down by the Secretary of State with the approval of
the Treasury;
- make judgements and estimates which are
reasonable and prudent;
- state whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the accounts.
The directors are responsible for keeping proper
accounting records which disclose with reasonable
accuracy at any time the financial position of the trust
and to enable them to ensure that the accounts
comply with requirements outlined in the above
mentioned direction of the Secretary of State. They
are also responsible for safeguarding the assets of the
trust and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The directors confirm to the best of their knowledge
and belief they have complied with the above
requirements in preparing the accounts.
By order of the Board
Date: 9 June 2010
Chief Executive
Date: 9 June 2010
Finance Director
Annual Accounts

26
Barking, Havering & Redbridge University Hospitals NHS Trust
Statement on Internal Control 2009/10
1. Scope of Responsibility
The whole Trust Board is accountable for internal
control. As Accountable Officer, and Chief Executive
of this Board, I have responsibility for maintaining a
sound system of internal control that supports the
achievement of the organisation’s policies, aims and
objectives. I also have responsibility for safeguarding
the public funds and the organisation’s assets for
which I am personally responsible, as set out in the
Accountable Officer Memorandum.
As designated Accountable Officer for the Trust I have
overall accountability for risk management in the
Trust. The Medical Director and Director of Nursing
lead on clinical risk management issues, whilst the
Finance Director is responsible for financial risk at
Board level. The operational responsibility for risk
management at corporate level is assigned to the
Clinical Governance Director in the Trust’s Clinical
Governance Directorate.
The Audit Committee oversees performance of the
risk management systems in place in the Trust, via the
Finance Director and the Clinical Governance Director.
The Clinical Governance Committee oversees the
regular and routine monitoring of detailed clinical
performance. The Clinical Governance Committee
provides exception reports of high-level clinical risks to
the Trust Board. Key risks are also highlighted to and
reviewed by the Audit Committee and the Trust Board
on a regular basis through the Assurance Framework
and Risk Register. Operationally risks are considered
through the Medical Assurance Board and Nursing
and Midwifery Board and the Divisional Boards to the
Trust’s Strategy and Service Improvement Board (SSIB).
The Trust has engaged with and participates in the
work of its Health and Social Care Partners across
North East London using established networks and
communication systems. The Trust meets regularly
with the Provider Agency working on behalf of NHS
London; Close working exists with ONEL, NHS Barking
& Dagenham, NHS Havering, NHS Redbridge and NHS
South West Essex in order to take forward the delivery
of healthcare, this takes place through regular
commissioning, operational and strategy meetings.
2. The Purpose of the System of
Internal Control
The system of internal control is designed to manage
risk to a reasonable level rather than to eliminate all
risk of failure to achieve policies, aims and objectives;
it can therefore only provide reasonable and not
absolute assurance of effectiveness. The system of
internal control is based on an ongoing process
designed to:
• identify and prioritise the risks to the achievement
of the organisation’s policies, aims and objectives,
• evaluate the likelihood of those risks being realised
and the impact should they be realised, and to
manage them efficiently, effectively and
economically.
The system of internal control has been in place in
Barking, Havering and Redbridge University NHS Trust
for the year ended 31 March 2010 and up to the date
of approval of the annual report and accounts.
3. Capacity to Handle Risk
The overall strategy of the Trust is to maintain
systematic and effective arrangements for managing
risks throughout the organisation, whether clinical or
non-clinical, financial or organisational, so as to ensure
they are reduced to a minimum practicable level. A
Risk Management Strategy and Policy was
implemented in 2004, against which the Trust reviews
progress annually, and updates the strategy
accordingly. Amendments and additions to the
Strategy are approved by the Trust Board.
I, as Accountable Officer, hold overall responsibility for
all areas of risk management and specific responsibility
for Health and Safety within the Trust. I am supported
by:-
• The Medical Director, who holds executive
responsibility for medical leadership and Clinical
Governance and Clinical Risk Management.
• The Director of Nursing, who holds executive
responsibility for nursing practice, the patient
experience and safeguarding vulnerable persons
and is the Trust nominated lead for Infection
Control. .
Annual Accounts

Annual Report & Accounts 2009-2010
27
• The Director of Finance, who holds executive
responsibility for financial risk management.
• The Director of Human Resources, who is the
executive responsible for employment and
implementation of employment legislation.
• The Director of Delivery is the executive responsible
for performance against targets and Information
Governance.
• The Director of Strategy and Planning holds
executive responsibility for business planning.
• The Clinical Governance Director holds operational
responsibility for Health & Safety and day-to-day
responsibility for co-ordinating and facilitating the
implementation of risk management and clinical
governance procedures; providing risk management
advice whilst maintaining the Trust’s register of
risks and the assurance framework.
I rely on Divisional Directors, Clinical Directors,
Divisional Nurses and Managers, Matrons and
ward/service managers to be alert to risk assessment,
management and reporting within their own areas,
and in turn they ensure their staff are alert to
identifying and reporting risks related to Health and
Safety, patient care or the hospital environment. The
Department of Health, professional bodies and various
regulatory bodies, such as the Health and Safety
Executive all offer guidance on good practice; this is
reinforced by workplace-based assessments and
training given at a local level.
There is a continuing programme of Risk Management
Training embedded into the Trust’s Corporate
Induction Programme for all staff, with risk
management training forming an integral part of the
risk management policy. The Trust Board receives
annual risk management training, which was
completed in October 2009.
The Trust participates in all required external quality
accreditation programmes and participates in British
Standards Institute accreditation. The Trust engages in
the Patient Safety First Campaign and has developed
an internal Patient Safety checklist that is used across
the Trust.
The Local Counter Fraud Service 2009/10 Work plan
provided 31 fraud awareness training sessions across
the Trust, covering 976 staff, including as part of the
Trust’s Induction Programme and with specific training
for various departments.
As part of the NHS Counter Fraud and Security
Management Services Annual Fraud Awareness Month
in June 2009, a link to the CFSMS homepage and
survey was established on the Trust intranet for staff
to use. In March 2010 the LCFS hosted a Fraud
Awareness stand at King George Hospital, with
attendance from the London Regional team of CFMS.
From December 2009, the Trust commenced a series
of Governance workshops for staff to raise awareness
of the Trust Governance Manual (approved by the
Trust Board in November 2008) and enforce principles
of sound governance.
There are clear objectives set each year and potential
risks to achieving these objectives are outlined in the
assurance framework and an action plan developed to
mitigate the risk.
4. The Risk and Control Framework
The risk and control framework existing within the
Trust has continued to develop over the year and a
higher degree of fine tuning has led to the
development of key performance indicators enabling a
more accurate level of risk prediction and assessment.
These systems are central to informing the decision
making process in the provision of a safe and secure
environment for patients, staff and visitors. The
corporate risk framework is comprised of the
following elements:
The Risk Management Strategy and Policy is in
line with and accredited by CNST level 1 accreditation.
It recognises the impact that local, corporate and
extreme risks may have on the finances, reputation or
both of the organisation and provides guidance on
measuring, mitigating and managing the residual risks.
This was reviewed, updated and received Trust Board
approval in September 2009.
The Board Assurance Framework (BAF) is a
cohesive document populated by the identified risks to
the Trust potentially not meeting its objectives, the
extreme risks identified through the risk register and
any risks to the Trust’s reputation through poor
publicity or external accreditation shortfalls. The
Internal Audit opinion of the framework for 2009/10
provided substantial assurance that there are strong
systems and processes in place to maintain the
framework accurately.
Annual Accounts

28
Barking, Havering & Redbridge University Hospitals NHS Trust
The Board Assurance Framework is presented to the
Audit Committee at each meeting and the Committee
receives a presentation of Divisional extreme and high
risks along with mitigating action plans via a rolling
programme of presentation.
The Risk Register is maintained as the focal point of
risk evaluation and is maintained as a “live
“document. New risks identified through changes in
service, SUI, incident and complaint investigation,
safety alerts and changes in control measures or
resources are added to the risk register as they arise,
supported by a risk assessment to ensure accurate and
reflective grading and where possible an action plan.
The risk register is reviewed quarterly through the
Divisional structure and amended accordingly. There is
also an annual programme of risk assessment, which
includes health and safety risk assessment carried out
at a local and corporate level to identify new risks.
There are two other risk registers which contribute to
the central process which are managed within the
disciplines that have created them; health and safety
and infection control.
The extreme components of the risk register are
transferred to the BAF and their associated action
plans are monitored either through the Strategy and
Service Improvement Board, the Audit or Clinical
Governance Committee and ultimately the Trust Board
for final decisions by exception.
The Audit Committee as a sub-committee of the
Trust Board holds delegated responsibility for the
monitoring and inquisition of the risk register and the
BAF. The Committee continues an established
programme of risk review. The process examines the
risks, the mitigating actions and future action plans for
appropriateness and strength seeking to identify any
further weakness or threat to patient safety, finance or
reputation. In this way the Audit Committee can
confidently provide assurance to the Trust Board of the
robustness of the control systems in place.
Financial Control
Following a review of all financial control systems
within the Trust and the implementation of the
Governance Manual a range of implemented actions
ensured that sound budgetary control and clear
financial reporting systems are in place and embedded
in working practice. The Internal Audit opinion
following review is that there is substantial assurance
of sound systems.
Counter Fraud systems of control are in place to
reduce and investigate incidents of fraud through
Parkhill Counter Fraud Services. A rolling programme
of staff training is in place to assist staff in identifying
potential fraudulent situations and identify
weaknesses in current systems. The systems of control
have led to high impact outcomes protecting Trust
assets.
The Committee Structure has been fully reviewed
and the Terms of Reference of all committees have
been aligned to meet the trust’s objectives and ensure
clarity and transparency of process.
Data Security
The Trust utilises the N3 network and NHS standards
to manage and control data security. The NHS
standard for encryption is 256AES bit encryption, the
Trust have encrypted all PC’s and Laptops and enforce
policies which prevent the ability to connect non
encrypted portable devices to the network, in order to
give greater security to patient data and other NHS
specific data.
The Trust’s primary responsibility is that the delivery of
patient care should remain the highest priority and
unaffected where possible by encryption. A balance of
risk to patient care against risk to personal data
security is used in determining whether the use of
unencrypted devices should continue as an interim
measure. Where it is felt that continued reliance upon
unencrypted data is necessary for the benefit of
patients, a risk assessment must be undertaken and
the outcome of the assessment must be reported to
the Information Governance Board.
Additional Internal Controls
Continued refinement of the key performance
indicators that form the performance dashboards for
clinical and non-clinical reporting has strengthened the
data analysis process. Data is reviewed monthly via the
committee structure to the Trust Board. Any changes
Annual Accounts

Annual Report & Accounts 2009-2010
29
outside agreed parameters triggers an exception
commentary and the application of root cause analysis
as required. A consistent and strong system of
monitoring complaints, incidents and safety alerts is in
place. The triaging of incidents and complaints
continues and all ‘red’ issues are circulated to the
executive and divisional teams for shared awareness
and action. The increased utilisation through staff
training of Dr Foster data and enhanced review of
mortality data allows for early identification of
potential problems which can be analysed and clinical
improvements made as needed. These processes help
support a ‘no surprises’ culture and the early
identification of trajectory change.
The Clinical Audit and NICE database maintains
progress against these key elements for clinical safety.
Internal Audit opinion provides adequate assurance
for these processes.
A “Visible Leadership” programme lead by the
Director of Nursing commenced in March and will
continue throughout the coming year. One day a
week all senior nursing staff spend dedicated time in
wards reviewing and assessing patient care against set
standards.
The Trust continues to participate in the ISO quality
framework, there are currently 8 areas accredited
through the British Standards Institute (BSI), with a
further 6 areas to achieve accreditation in 2010/11
and a further 3 in progress.
Full induction and statutory and mandatory training
programmes are in place for all staff.
The Clinical Governance Committee as a subcommittee
of the Trust Board has delegated
responsibility to interrogate and monitor the clinical
risk safety systems in place within the Trust to provide
assurance to the Board that clinical safety is
paramount and supported and there is early
identification of systemic weaknesses. The Price
Waterhouse Coopers report into deaths from
pneumonia, following identification of the Trust being
an outlier in Dr Foster data, made recommendation to
strengthen the Committee, which now meets monthly
with alternate meetings dedicated to patient safety
through surveillance of mortality data and SUI findings
to ensure continuous improvement in care is achieved.
Engagement with Patients and the Public has
continued to develop throughout the year. The
Improving Patient Experience Group (IPEG) set up in
2008 provides the Trust with feedback on a range of
patient related topics as well as participating in
surveys, sitting on the Clinical Governance Committee
and providing information on issues that impact on
how patients perceive and experience care and
treatment given by the Trust. The group is confident in
challenging Trust practices where necessary in a forum
that is open and honest.
To strengthen processes and capture patient
experience information an Associate Director of
Patient Involvement has been appointed to drive
forward new initiatives such as ‘real time surveys’ that
can provide large scale quality data to support
improvements in patient experience and to where
similar surveys of staff can identify areas where
additional support may be required.
Compliance with Equality, Diversity and Human
Rights, control measures are in place to ensure that
the organisation is working toward compliance with
all its obligations under equality, diversity and human
rights legislation. The Trust has worked closely with its
local health partners to fully implement the approved
Single Equality Scheme.
Compliance with the NHS Pension Scheme
regulations is in place. As an employer with staff
entitled to membership of the NHS Pension scheme,
control measures are in place to ensure all employer
obligations contained within the Scheme regulations
are complied with. This includes ensuring that
deductions from salary, employer’s contributions and
payments in to the Scheme are in accordance with the
Scheme rules, and that member Pension Scheme
records are accurately updated in accordance with the
timescales detailed in the Regulations.
Compliance with Climate Change Act 2008, in
response to the Act the Trust has factored climate
change adaptation into its strategic plans. The risks
climate change poses to the organisation will continue
to be assessed and actions taken to mitigate the
identified risks to ensure compliance with the
obligations identified under the Climate Change Act
and Adaptation Reporting Requirements.
Annual Accounts

30
Barking, Havering & Redbridge University Hospitals NHS Trust
5. Review of effectiveness and
significant control issues
As Accountable Officer, I have responsibility for
reviewing the effectiveness of the system of internal
control. My review is informed in a number of ways.
Executive managers within the organisation, who have
responsibility for the development and maintenance of
the system of internal control, provide me with
assurance. The Assurance Framework itself provides
me with evidence that the effectiveness of controls
that manage the risks to the organisation achieving its
principal objectives have been reviewed. My review is
also informed by the Head of Internal Audit’s Opinion
on the overall arrangements for gaining assurance
through the assurance framework and on the controls
reviewed as part of the Internal Audit Plan. The
External Auditor’s Local Evaluation Assessment of the
Trust’s ‘Use of Resources’, the Trust’s self assessment
against the Healthcare Commission’s Core Standards
and its performance reporting also informs my review.
The overall opinion of the Head of Internal Audit for
2009/10 is that significant assurance can be given
on the effectiveness of internal control for financial
year 2009/10. Substantial or adequate assurance was
provided on all of the relevant areas audited, other
than for three areas: temporary staffing, creditors and
provisions & accruals, where a limited assurance
opinion was given. However, taking into account the
action taken during the year to address these areas
and the number of audits with substantial / adequate
assurance, the HOIA was able to issue the significant
assurance opinion overall.
Significant control issues identified through the
Trust’s internal review include:
Finance: The Trust posted a deficit of £22.3M in
2009/10, excluding the technical impact of fixed asset
impairments (£31.9M) and the impact of IFRS (£2.1M).
The Trust had a deficit control total of £19.7M agreed
with NHS London, which was not achieved primarily
because of a £2.6m affordability issue with the local
PCTs, in respect of additional income recognised by
the Trust in Month 12, above the forecast outturn
previously projected by the Trust at Month 11.
As a result of the deficit incurred in 2009/10, the Trust
failed its statutory break-even duty at the end of the
financial year. This resulted in the raising of a s19
Report by the Audit Commission. Under s19 of the
Audit Commission Act 1988, an auditor of a health
service body annual accounts is required to refer the
body to the Secretary of State where there is reason to
believe that the body or an officer of the body is:
(i)
about to make, or has made, a decision which
involves or would involve the incurring of
expenditure which is unlawful, or
(ii) is about to take, or has taken, a course of
action which, if pursued to its conclusion,
would be unlawful and likely to cause a loss or
deficiency.
The Trust first incurred a material deficit in 2005/06
which marked the date of the statutory break even
period. The break even duty requires a Trust to ensure
that its revenue is not less than sufficient (taking one
financial year with another) to meet its outgoings.
The duty is met if, taking a rolling three year period,
expenditure is covered by income. From 2005/06 the
Trust would have been expected to achieve a breakeven
position by March 2008. However, Trust gained
agreement with the Strategic Health Authority to
extend its break even duty over a five year period,
thereby requiring it reach break even by March 2010.
Since 2005/06 the Trust has returned a deficit each
year.
The Trust has therefore been referred to the Secretary
of State because of the failure of its breakeven duty.
The Trust is currently in discussion with the Challenged
Trust Board (CTB) of London PCTs, as part of the
London PCTs’ Medium Term Financial Strategy (MTFS),
to agree a plan which will fund historic deficits, which
stood at £95M at 31st March 2009, plus the 2009/10
deficit of £22.3M (excluding the technical impact of
fixed asset impairments and the impact of IFRS).
The auditor is also required (under s8 of the 1988 Act)
to consider whether to issue a report in the public
interest on any significant matter coming to his notice
in the course of an audit and to bring the matter to
the attention of the audited body and the public.
Annual Accounts

Annual Report & Accounts 2009-2010
31
However, even though the financial position remains
extremely challenging, and given the actions of the
Trust and NHS London, the auditor does not believe it
would be appropriate to issue a public interest report
at this time, but will keep the position under review.
Targets: The emergency care target (98%) was not
achieved for 2009/10. The performance for quarter 4
was 96.73% with a year end performance at 97.31%
(King George was 98.95% and Queen’s 96.02%).
The Trust had 0 patients who were detained in the A
& E Department in excess of 12 hours during 2009/10.
18 week waits: The Trust met the Trust level targets
for both Admitted and Non-Admitted Pathways and
achieved the Non-Admitted target in all specialties.
The Trust met the specialty specific target for
Admitted Pathways in all specialties except ENT.
S4BH/Care Quality Commission Registration: The
Trust has self assessed against the Standards for Better
Health core standards element of the Annual Health
Check, throughout 2009/10. 22 of the 24 standards
were deemed to be compliant, with C5c – Clinician
Training, remaining ‘not met’ and C11c –staff
appraisal has “insufficient evidence”, until Q3 when a
compliance was deemed to have been achieved. This
self assessment process continued in tandem with the
developing guidance for registration requirement.
In January 2010, the Trust completed the self
assessment for registration and following careful
review declared non-compliance in 5 areas, including
staffing of medical wards in Queen’s and King George
Hospitals, Midwifery staffing shortfall in Queen’s
maternity unit and non-compliant areas for the
Sydenham Centre in relation to training and estates
prior to the move to a new building.
Following 3 unannounced visits based on compliance
with the hygiene code, the Care Quality Commission
(CQC) identified further areas of concern and in
conjunction with additional external evidence set
conditions on the Trust’s registration in the following 8
areas:
• Resuscitation training
• Appraisal
• Discharge Planning
• Pressure Damage
• Staffing Levels
• Child Protection Training
• Nurse Mandatory Training
• Use of Contingency Areas.
The CQC stipulated time frames for compliance and
the Trust has developed an action plan and monitoring
structures to ensure compliance in all areas. An
application was made in April to remove the ‘Use of
Contingency Areas’ condition.
In light of the CQC conditions the Trust reviewed the
S4BH compliance and declared insufficient evidence in
C5c and C11c, training and appraisal.
Case of Indentified Fraud: In March 2009, the Local
Security Management Services (LSMS) received
information from the Local Counter Fraud Specialist
(LCFS) that a Security Supervisor at King George
Hospital had been removing money from the King
George Hospital car park machines. This issue was
raised by members of the security staff team. During
the investigation by LCFS it was established that the
Security Supervisor had appropriated a set of keys for
the payment machines outside of Trust policy and had
been accessing them outside the official emptying
hours for a number of years, often taking up to
£1000.00 per week. Following police involvement the
Security Advisor was arrested on 7th July 2009 and
charged with theft. On 8th January 2010, the Security
Supervisor was given a 26 weeks sentence on a 2 year
suspension and an 18 month drug and alcohol
assessment order. The Judge directed that the monies
recovered from the police search be returned to the
Trust. All procedures were reviewed and new ones
implemented to prevent a re-occurrence.
This concludes the Statement of Internal Control for
Barking, Havering and Redbridge University Hospitals
Trust.
Signed
John Goulston
Chief Executive
Date: 9 June 2010
Annual Accounts

32
Barking, Havering & Redbridge University Hospitals NHS Trust
Independent Auditor’s Report
to the Board of Barking, Havering and Redbridge University Hospitals NHS Trust
Opinion on the financial statements
I have audited the financial statements of Barking, Havering and Redbridge University
Hospitals NHS Trust for the year ended 31 March 2010 under the Audit Commission Act
1998. The financial statements comprise the Statement of Comprehensive Income, the
Statement of Financial Position, the Statement of Changes in Taxpayers’ Equity, the
Statement of Cash Flows and the related notes. These financial statements have been
prepared in accordance with the accounting policies directed by the Secretary of State with
the consent of the Treasury as relevant to the National Health Service set out within them.
I have also audited the information in the Remuneration Report that is described as having
been audited.
This report is made solely to the Board of Directors of Barking, Havering and Redbridge
University Hospitals NHS Trust in accordance with Part II of the Audit Commission Act 1998
and for no other purpose, as set out in paragraph 49 of the Statement of Responsibilities of
Auditors and of Audited Bodies published by the Audit Commission in April 2008.
Respective responsibilities of directors and auditor
The directors’ responsibilities for preparing the financial statements in accordance with
directions made by the Secretary of State are set out in the Statement of Directors’
Responsibilities.
My responsibility is to audit the financial statements in accordance with relevant legal and
regulatory requirements and International Standards on Auditing (UK and Ireland).
I report to you my opinion as to whether the financial statements give a true and fair view in
accordance with the accounting policies directed by the Secretary of State as being relevant
to the National Health Service in England. I report whether the financial statements and the
part of the Remuneration Report to be audited have been properly prepared in accordance
with the accounting policies directed by the Secretary of State as being relevant to the
National Health Service in England. I also report to you whether, in my opinion, the
information which comprises the commentary on the financial performance for 2009/10
included within the Operating and Financial Review included in the Annual Report, is
consistent with the financial statements.
I review whether the directors' Statement on Internal Control reflects compliance with the
Department of Health's requirements, set out in ‘Guidance on Completing the Statement on
Internal Control 2009/10’ issued in February 2010. I report if it does not meet the
requirements specified by the Department of Health or if the statement is misleading or
inconsistent with other information I am aware of from my audit of the financial statements. I
am not required to consider, nor have I considered, whether the directors' Statement on
Internal Control covers all risks and controls. Neither am I required to form an opinion on the
effectiveness of the Trust’s corporate governance procedures or its risk and control
procedures.
I read the other information contained in the Annual Report and consider whether it is
consistent with the audited financial statements. This other information comprises the Annual
Report except for the commentary on the financial performance for 2009/10 included within
the Operating and Financial Review and the audited part of the Remuneration Report.
I consider the implications for my report if I become aware of any apparent misstatements or
material inconsistencies with the financial statements. My responsibilities do not extend to any
other information.
Annual Accounts

Annual Report & Accounts 2009-2010
33
Basis of audit opinion
I conducted my audit in accordance with the Audit Commission Act 1998, the Code of Audit
Practice issued by the Audit Commission and International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the financial statements and the
part of the Remuneration Report to be audited. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the Trust’s
circumstances, consistently applied and adequately disclosed.
I planned and performed my audit so as to obtain all the information and explanations which I
considered necessary in order to provide me with sufficient evidence to give reasonable
assurance that:
the financial statements are free from material misstatement, whether caused by
fraud or other irregularity or error; and
the financial statements and the part of the Remuneration Report to be audited have
been properly prepared.
In forming my opinion I also evaluated the overall adequacy of the presentation of information
in the financial statements and the part of the Remuneration Report to be audited.
Opinion
In my opinion:
the financial statements give a true and fair view, in accordance with the accounting
policies directed by the Secretary of State as being relevant to the National Health
Service in England, of the state of the Trust’s affairs as at 31 March 2010 and of its
income and expenditure for the year then ended;
the financial statements and the part of the Remuneration Report to be audited have
been properly prepared in accordance with the accounting policies directed by the
Secretary of State as being relevant to the National Health Service in England; and
information which comprises the commentary on the financial performance for
2009/10 included within the Operating and Financial Review included in the Annual
Report is consistent with the financial statements.
Conclusion on arrangements for securing economy, efficiency and effectiveness in the
use of resources
Directors’ Responsibilities
The directors are responsible for putting in place proper arrangements to secure economy,
efficiency and effectiveness in the Trust’s use of resources, to ensure proper stewardship and
governance and regularly to review the adequacy and effectiveness of these arrangements.
Annual Accounts

34
Barking, Havering & Redbridge University Hospitals NHS Trust
Auditor’s Responsibilities
I am required by the Audit Commission Act 1998 to be satisfied that proper arrangements
have been made by the Trust for securing economy, efficiency and effectiveness in its use of
resources. The Code of Audit Practice issued by the Audit Commission requires me to report
to you my conclusion in relation to proper arrangements, having regard to the criteria for NHS
bodies specified by the Audit Commission. I report if significant matters have come to my
attention which prevent me from concluding that the Trust has made such proper
arrangements. I am not required to consider, nor have I considered, whether all aspects of the
Trust’s arrangements for securing economy, efficiency and effectiveness in its use of
resources are operating effectively.
Adverse Conclusion
I have undertaken my audit in accordance with the Code of Audit Practice.
In so doing, I identified the following:
the Trust set a deficit budget for 2009/10 and incurred a deficit for the year of £22.3m
and has yet to agree a plan to recover its historic deficit;
the Trust has failed to meet its statutory breakeven duty under Paragraph 2(1) of
Schedule 5 to the National Health Service Act 2006 for the five years ended 31 March
2010;
weaknesses in clinical engagement with service line reporting and in realising the
benefits from revised employment contracts; and
the Care Quality Commission set conditions on the Trust's registration relating to
appraisal, discharge planning and staffing levels.
For the reasons set out above, and having regard to the criteria for NHS bodies specified by
the Audit Commission and published in December 2006, I am not satisfied that, in all
significant respects, Barking, Havering and Redbridge University Hospitals NHS Trust made
proper arrangements to secure economy, efficiency and effectiveness in its use of resources
for the year ending 31 March 2010, in that it did not put in place:
a medium-term financial strategy, budgets and a capital programme that was soundly
based and designed to deliver its strategic priorities;
adequate arrangements to ensure that its spending matched its available resources;
and
adequate arrangements for managing its financial and other resources which
demonstrate value for money is being managed and achieved.
Certificate
I certify that I have completed the audit of the accounts in accordance with the requirements
of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit
Commission.
Jon Hayes
District Auditor Audit Commission
1
Annual Accounts

Annual Report & Accounts 2009-2010
35
Statement of Comprehensive Income
for the year ended 31 March 2010
2009/10 2008/09
NOTE £000 £000
Revenue
Revenue from patient care activities 5 368,960 350,660
Other operating revenue 6 28,496 27,740
Operating expenses 8 (432,416) (403,968)
Operating surplus (deficit) (34,960) (25,568)
Finance costs:
Investment revenue 14 1,241 414
Other gains and (losses) 15 2,002 (2)
Finance costs 16 (19,977) (20,792)
Surplus/(deficit) for the financial year (51,694) (45,948)
Public dividend capital dividends payable (4,549) (8,059)
Retained surplus/(deficit) for the year (56,243) (54,007)
Other comprehensive income
Impairments and reversals (7,741) (40,110)
Gains on revaluations 0 0
Receipt of donated/government granted assets 0 48
Net gain/(loss) on other reserves (e.g. defined benefit pension scheme) 0 0
Net gains/(losses) on available for sale financial assets 0 0
Reclassification adjustments:
- Transfers from donated and government grant reserves (109) (141)
- On disposal of available for sale financial assets 0 0
Total comprehensive income for the year (64,093) (94,210)
The notes on pages 40 to 82 form part of these accounts.
Annual Accounts

36
Barking, Havering & Redbridge University Hospitals NHS Trust
Statement of Financial Position
as at 31 March 2010
31 March 2010 31 March 2009 1 April 2008
Note £000 £000 £000
Non-current assets
Property, plant and equipment 17 354,787 407,490 499,652
Intangible assets 18 3,529 1,528 342
Investment property 0 0 0
Other financial assets 23 0 0 0
Trade and other receivables 22 26,337 29,031 26,984
Total non-current assets 384,653 438,049 526,978
Current assets
Inventories 21 6,033 5,608 5,584
Trade and other receivables 22 33,284 50,022 45,857
Other financial assets 23 0 0 0
Other current assets 24 0 0 2,756
Cash and cash equivalents 25 2,098 1,370 1,771
41,415 57,000 55,968
Non-current assets held for sale 26 0 0 0
Total current assets 41,415 57,000 55,968
Total assets 426,068 495,049 582,947
Current liabilities
Trade and other payables 27 (48,322) (40,643) (42,921)
Other liabilities 29 0 0 0
DH Working capital loan 0 0 0
DH Capital loan 0 0 0
Borrowings 28 (5,021) (5,235) (4,128)
Other financial liabilities 34 0 0 0
Provisions 35 (2,140) (1,853) (1,757)
Net current assets/(liabilities) (14,068) 9,269 7,162
Total assets less current liabilities 370,585 447,318 534,141
Non-current liabilities
Borrowings 28 (264,019) (265,950) (271,293)
DH Working capital loan 0 0 0
DH Capital loan 0 0 0
Trade and other payables 27 (5,342) (6,025) 0
Other financial liabilities 34 0 0 0
Provisions 35 (5,312) (6,139) (6,706)
Other liabilities 29 0 0 (5,768)
Total assets employed 95,912 169,204 250,374
Financed by taxpayers' equity:
Public dividend capital 276,375 285,574 272,534
Retained earnings (190,922) (134,679) (91,134)
Revaluation reserve 9,547 17,209 67,708
Donated asset reserve 912 1,100 1,266
Government grant reserve 0 0 0
Other reserves 0 0 0
Total Taxpayers' Equity 95,912 169,204 250,374
The financial statements on pages 35 to 82 were approved by the Board on 7th June 2010 and signed on its behalf by:
John Goulston
Chief Executive
Date: 9 June 2010
Annual Accounts

Annual Report & Accounts 2009-2010
37
Statement of Changes in Taxpayers’ Equity
Public Retained Revaluation Donated Gov’t grant Other Total
dividend earnings reserve asset reserve reserves
capital (PDC)
reserve
£000 £000 £000 £000 £000 £000 £000
Balance at 31 March 2008
As previously stated 272,534 (91,134) 67,708 1,266 0 0 250,374
Prior Period Adjustment 0 0 0 0 0 0 0
Restated balance 272,534 (91,134) 67,708 1,266 0 0 250,374
Changes in taxpayers’ equity
Total Comprehensive Income for the year:
Retained surplus/(deficit) for the year 0 (54,007) 0 0 0 0 (54,007)
Transfers between reserves 0 10,462 (10,462) 0 0 0 0
Impairments and reversals 0 0 (40,037) (73) 0 0 (40,110)
Net gain on revaluation of property,
plant, equipment 0 0 0 0 0 0 0
Net gain on revaluation of intangible assets 0 0 0 0 0 0 0
Net gain on revaluation of financial assets 0 0 0 0 0 0 0
Net gain on revaluation of non current
assets held for sale 0 0 0 0 0 0 0
Receipt of donated/government
granted assets 0 0 0 48 0 0 48
Net gain/loss on other reserves
(e.g. defined benefit pension scheme) 0 0 0 0 0 0 0
Movements in other reserves 0 0 0 0 0 0 0
Reclassification adjustments:
- transfers from donated asset/government
grant reserve 0 0 0 (141) 0 0 (141)
- on disposal of available for sale
financial assets 0 0 0 0 0 0 0
Reserves eliminated on dissolution 0 0 0 0 0 0 0
Originating capital for Trust establishment
in year 0 0 0 0 0 0 0
New PDC received 29,340 0 0 0 0 0 29,340
PDC repaid in year (16,300) 0 0 0 0 0 (16,300)
PDC written off 0 0 0 0 0 0 0
Other movements in PDC in year 0 0 0 0 0 0 0
Balance at 31 March 2009 285,574 (134,679) 17,209 1,100 0 0 169,204
Annual Accounts

38
Barking, Havering & Redbridge University Hospitals NHS Trust
Statement of Changes in Taxpayers’ Equity 2008/9
Public Retained Revaluation Donated Gov’t grant Other Total
dividend earnings reserve asset reserve reserves
capital (PDC)
reserve
£000 £000 £000 £000 £000 £000 £000
Changes in taxpayers’ equity
for 2009/10
Balance at 1 April 2009 285,574 (134,679) 17,209 1,100 0 0 169,204
Total Comprehensive Income for the year
Retained surplus/(deficit) for the year 0 (56,243) 0 0 0 0 (56,243)
Transfers between reserves 0 0 0 0 0 0 0
Impairments and reversals 0 0 (7,662) (79) 0 0 (7,741)
Net gain on revaluation of property,
plant, equipment 0 0 0 0 0 0 0
Net gain on revaluation of intangible assets 0 0 0 0 0 0 0
Net gain on revaluation of financial assets 0 0 0 0 0 0 0
Net gain on revaluation of non current
assets held for sale 0 0 0 0 0 0 0
Receipt of donated/government
granted assets 0 0 0 0 0 0 0
Net gain/loss on other reserves
(e.g. defined benefit pension scheme) 0 0 0 0 0 0 0
Movements in other reserves 0 0 0 0 0 0 0
Reclassification adjustments:
- transfers from donated asset/
government grant reserve 0 0 0 (109) 0 0 (109)
- on disposal of available for
sale financial assets 0 0 0 0 0 0 0
Reserves eliminated on dissolution 0 0 0 0 0 0 0
Originating capital for Trust
establishment in year 0 0 0 0 0 0 0
New PDC received 5,000 0 0 0 0 0 5,000
PDC repaid in year (14,199) 0 0 0 0 0 (14,199)
PDC written off 0 0 0 0 0 0 0
Other movements in PDC in year 0 0 0 0 0 0 0
Balance at 31 March 2010 276,375 (190,922) 9,547 912 0 0 95,912
Annual Accounts

Annual Report & Accounts 2009-2010
39
Statement of Cash Flows
for the year ended 31 March 2010
2009/10 2008/09
NOTE £000 £000
Cash flows from operating activities
Operating surplus/(deficit) (34,960) (25,568)
Depreciation and amortisation 12,677 12,999
Impairments and reversals 31,834 24,900
Net foreign exchange gains/(losses) 0 0
Transfer from donated asset reserve (109) (141)
Transfer from government grant reserve 0 0
Interest paid (19,919) (20,651)
Dividends paid (4,423) (8,059)
(Increase)/decrease in inventories (425) (24)
(Increase)/decrease in trade and other receivables 19,432 (6,212)
(Increase)/decrease in other current assets 0 0
Increase/(decrease) in trade and other payables 6,380 4,589
Increase/(decrease) in other current liabilities 0 0
Increase/(decrease) in provisions 35 (673) (471)
Net cash inflow/(outflow) from operating activities 9,814 (18,638)
Cash flows from investing activities
Interest received 1,241 414
(Payments) for property, plant and equipment 17 (10,951) 0
Proceeds from disposal of plant, property and equipment 16,224 16,300
(Payments) for intangible assets 18 (2,231) (1,368)
Proceeds from disposal of intangible assets 0 0
(Payments) for investments with DH 0 0
(Payments) for other investments 0 0
Proceeds from disposal of investments with DH 0 0
Proceeds from disposal of other financial assets 0 0
Revenue rental income 0 0
Net cash inflow/(outflow) from investing activities 4,284 15,346
Net cash inflow/(outflow) before financing 14,098 (3,292)
Cash flows from financing activities
Public dividend capital received 5,000 29,340
Public dividend capital repaid (14,199) (16,300)
Loans received from the DH 0 0
Other loans received 0 0
Loans repaid to the DH 0 0
Other loans repaid 0 0
Other capital receipts 0 0
Capital element of finance leases and PFI (4,171) (10,149)
Cash transferred to NHS Foundation Trusts 0 0
Net cash inflow/(outflow) from financing (13,370) 2,891
Net increase/(decrease) in cash and cash equivalents 728 (401)
Cash (and) cash equivalents (and bank overdrafts)
at the beginning of the financial year 1,370 1,771
Effect of exchange rate changes on the balance of cash held in foreign currencies 0 0
Cash (and) cash equivalents (and bank overdrafts)
at the end of the financial year 25 2,098 1,370
Annual Accounts

40
Barking, Havering & Redbridge University Hospitals NHS Trust
Notes to the Accounts
1. Accounting Policies
The Secretary of State for Health has directed that the
financial statements of NHS Trusts shall meet the
accounting requirements of the NHS Trusts Manual for
Accounts, which shall be agreed with HM Treasury.
Consequently, the following financial statements have
been prepared in accordance with the 2009/10 NHS
Trusts Manual for Accounts issued by the Department
of Health. The accounting policies contained in that
manual follow International Financial Reporting
Standards to the extent that they are meaningful and
appropriate to the NHS, as determined by HM
Treasury, which is advised by the Financial Reporting
Advisory Board. Where the NHS Trusts Manual for
Accounts permits a choice of accounting policy, the
accounting policy which is judged to be most
appropriate to the particular circumstances of the trust
for the purpose of giving a true and fair view has
been selected. The particular policies adopted by the
trust are described below. They 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 property, plant and equipment,
intangible assets, inventories and certain financial
assets and financial liabilities
1.2 Acquisitions and discontinued
operations
Activities are considered to be ‘acquired’ only if they
are taken on from outside the public sector. Activities
are considered to be ‘discontinued’ only if they cease
entirely. They are not considered to be ‘discontinued’
if they transfer from one public sector body to
another.
1.3 Care Trust designation
The Trust is not designated as a Care Trust due to joint
activities.
1.4 Pooled Budgets
The Trust has no pooled budgets.
1.5 Critical accounting judgements and key
sources of estimation uncertainty
In the application of the Trust’s accounting policies,
management is required to make judgements,
estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and
associated assumptions are based on historical
experience and other factors that are considered to be
relevant. Actual results may differ from those
estimates and the estimates and underlying
assumptions are continually reviewed. Revisions to
accounting estimates are recognised in the period in
which the estimate is revised if the revision affects
only that period or in the period of the revision and
future periods if the revision affects both current and
future periods.
1.5.1 Critical judgements in applying accounting
policies
The following are the critical judgements, apart from
those involving estimations (see below) that
management has made in the process of applying the
Trust’s accounting policies and that have the most
significant effect on the amounts recognised in the
financial statements.
The management make judgements in terms of
approving new capital investment and variations to
the PFI Assets to maintain or enhance its asset base.
As part of the NHS contracting process the Trust
makes judgements on the resource base required to
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support such services, and the income expectations for
services delivered at the agreed activity levels.
During the year, the board entered into a 10 year
agreement to provide certain services to a private
healthcare provider. This has resulted in a long term
lease arrangement and a contractual commitment to
provide a range of clinical services. The management
believe they have sufficent capacity to support such
services.
1.5.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the
future, and other key sources of estimation
uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within
the next financial year
Non-current building and land assets are valued at at
market values. The property market has continued to
demonstrate volatility during the period, and
continues to be subject to uncertainty in the medium
term.
The Trust has a number operating leases and a Private
Finance Initiative (PFI) Agreement where the Trust is
the lessee. The PFI assets are held on-balance sheet,
and are valued at current values, either by obtaining
market valuations from appropriately qualified
independent valuers, or on a depreciated replacement
cost basis (see note 1.9). Valuations are therefore
subject to market fluctuation, which could result in
unforeseeable increases or decreases in valuation in
future periods. Any known impairments which are
not likely to be reversed in the near term, in excess of
any revaluation reserve, are accounted for in the
period in which they arise. Operating leases are
expensed in accordance with IAS 17 on a straight-line
line basis over the term of the lease.
Provisions are reviewed by management on a regular
basis using a combination of information provided by
appropriate third party sources. Any change in
circumstances related to these provisions is reflected in
the period in which it is identified.
The NHS Pensions Scheme provides cover for past and
present employees, and is subject to a full actuarial
valuation every five years (see note 11). The Trust
carries provisions in certain instances relating to early
retirement, based on latest actuarial information
provided by the NHS Pensions Agency. This is
therefore subject to change which is recognised in the
period to which it arises.
The Trust maintains insurance against potential legal
claims, which are managed by the NHS Litigation
Authority. The Trust makes provisions for the
estimated excess liabilties due under this policy, in line
with information provided by the NHS Litigation
Authority. Uncertainty in estimation may relate to the
timing of potential settlements, although the liability
to the Trust will be limited to the level of the excess.
PFI assets include buildings and medical equipment.
PFI buildings are treated in accordance with noncurrent
building and land assets, which are valued at
fair value on a modern equivalent asset basis, either
by a periodic professional valuation, or where this is
not done on an annual basis, by an estimate adjusting
the latest valuation reflecting changes in market
conditions. The Trust may determine when to
professionally revalue its land and buildings, but the
interval between profesional valuations will be no
more than five years. Equipment procured under the
Managed Equipment Service is valued as per the
contractor's financial model, including periodic
lifecycle refreshes.
A PFI liability is recognised at the same time as the PFI
assets are recognised. It is measured initially at the
same amount as the fair value of the PFI assets and is
subsequently treated similar to a finance lease liability
in accordance with IAS 17. The implicit rate of interest
is derived from the PFI provider's financial model and,
for the building, is taken as the implied project rate of
return. The liability is written down over the term of
the PFI Project Agreement with each unitary payment.
The liability is only increased if the Trust requests
further capital expenditure directly financed by the PFI
provider. For equipment within the PFI Managed
Equipment Service (MES), a liability is recognised at
the modelled asset replacement year and is measured
at the implied cost to the Trust according to the MES
provider's financial model. The implied rate of interest
used is taken directly from the MES provider's financial
model.
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1.6 Revenue
Revenue in respect of services provided is recognised
when, and to the extent that, performance occurs,
and is measured at the fair value of the consideration
receivable. The main source of revenue for the trust is
from commissioners for healthcare services. Revenue
relating to patient care spells that are part-completed
at the year end are apportioned across the financial
years on the basis of length of stay at the end of the
reporting period compared to expected total length of
stay/costs incurred to date compared to total expected
costs.
Where income is received for a specific activity that is
to be delivered in the following year, that income is
deferred.
The Trust receives income under the NHS Injury Cost
Recovery Scheme, designed to reclaim the cost of
treating injured individuals to whom personal injury
compensation has subsequently been paid e.g. by an
insurer. The Trust recognises the income when it
receives notification from the Department of Work
and Pension's Compensation Recovery Unit that the
individual has lodged a compensation claim. The
income is measured at the agreed tariff for the
treatments provided to the injured individual, less a
provision for unsuccessful compensation claims and
doubtful debts.
1.7 Employee Benefits
Short-term employee benefits
Salaries, wages and employment-related payments are
recognised in the period in which the service is
received from employees.
The cost of leave earned but not taken by employees
at the end of the period is recognised in the financial
statements to the extent that employees are permitted
to carry forward leave into the following period.
Retirement benefit costs
Past and present employees are covered by the
provisions of the NHS Pensions Scheme. The scheme
is an unfunded, defined benefit scheme that covers
NHS employers, General Practices and other bodies,
allowed under the direction of the Secretary of State,
in England and Wales. The scheme is not designed to
be run in a way that would enable NHS bodies to
identify their share of the underlying scheme assets
and liabilities. Therefore, the scheme is accounted for
as if it were a defined contribution scheme: the cost
to the NHS body of participating in the scheme is
taken as equal to the contributions payable to the
scheme for the accounting period.
For early retirements other than those due to ill health
the additional pension liabilities are not funded by the
scheme. The full amount of the liability for the
additional costs is charged to expenditure at the time
the Trust commits itself to the retirement, regardless of
the method of payment.
Some employees are members of the Local
Government Superannuation Scheme, which is a
defined benefit pension scheme. The scheme assets
and liabilities attributable to those employees can be
identified and are recognised in the trust’s accounts.
The assets are measured at fair value and the liabilities
at the present value of the future obligations. The
increase in the liability arising from pensionable service
earned during the year is recognised within operating
expenses. The expected gain during the year from
scheme assets is recognised within finance income.
The interest cost during the year arising from the
unwinding of the discount on the scheme liabilities is
recognised within finance costs. Actuarial gains and
losses during the year are recognised in the pensions
reserve and reported as an item of other
comprehensive income.
1.8 Other expenses
Other operating expenses are recognised when, and
to the extent that, the goods or services have been
received. They are measured at the fair value of the
consideration payable.
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1.9 Property, plant and equipment
Recognition
Property, plant and equipment is capitalised if:
• it is held for use in delivering services or for
administrative purposes;
• it is probable that future economic benefits will
flow to, or service potential will be supplied to, the
trust;
• it is expected to be used for more than one
financial year;
• the cost of the item can be measured reliably; and
• the item has cost of at least £5,000; or
• Collectively, a number of items have a cost of at
least £5,000 and individually have a cost of more
than £250, 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
• Items form part of the initial equipping and settingup
cost of a new building, ward or unit, irrespective
of their individual or collective cost.
Where a large asset, for example a building, includes a
number of components with significantly different
asset lives, the components are treated as separate
assets and depreciated over their own useful
economic lives.
Valuation
All property, plant and equipment are measured
initially at cost, representing the cost directly
attributable to acquiring or constructing the asset and
bringing it to the location and condition necessary for
it to be capable of operating in the manner intended
by management. All assets are measured
subsequently at fair value.
Land and buildings used for the trust’s services or for
administrative purposes are stated in the statement of
financial position at their revalued amounts, being the
fair value at the date of revaluation less any
subsequent accumulated depreciation and impairment
losses. Revaluations are performed with sufficient
regularity to ensure that carrying amounts are not
materially different from those that would be
determined at the end of the reporting period. Fair
values are determined as follows:
• Land and non-specialised buildings – market value
for existing use
• Specialised buildings – depreciated replacement
cost
Until 31 March 2008, the depreciated replacement
cost of specialised buildings has been estimated for an
exact replacement of the asset in its present location.
HM Treasury has adopted a standard approach to
depreciated replacement cost valuations based on
modern equivalent assets and, where it would meet
the location requirements of the service being
provided, an alternative site can be valued. HM
Treasury has agreed that NHS trusts must apply these
new valuation requirements by 1 April 2010 at the
latest.
The Trust engaged DTZ Debenham Tie Leung to act as
independent valuers for the estate to provide
valuation in accrodance with these requirements.
Properties in the course of construction for service or
administration purposes are carried at cost, less any
impairment loss. Cost includes professional fees but
not borrowing costs, which are recognised as
expenses immediately, as allowed by IAS 23 for assets
held at fair value. Assets are revalued and
depreciation commences when they are brought into
use.
Until 31 March 2008, fixtures and equipment were
carried at replacement cost, as assessed by indexation
and depreciation of historic cost. From 1 April 2008
indexation has ceased. The carrying value of existing
assets at that date will be written off over their
remaining useful lives and new fixtures and equipment
are carried at depreciated historic cost as this is not
considered to be materially different from fair value.
An increase arising on revaluation is taken to the
revaluation reserve except when it reverses an
impairment for the same asset previously recognised in
expenditure, in which case it is credited to expenditure
to the extent of the decrease previously charged there.
A revaluation decrease is recognised as an impairment
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Barking, Havering & Redbridge University Hospitals NHS Trust
charged to the revaluation reserve to the extent that
there is a balance on the reserve for the asset and,
thereafter, to expenditure. Gains and losses
recognised in the revaluation reserve are reported as
other comprehensive income in the Statement of
Comprehensive Income.
Subsequent expenditure
Where subsequent expenditure enhances an asset
beyond its original specification, the directly
attributable cost is capitalised. Where subsequent
expenditure restores the asset to its original
specification, the expenditure is capitalised and any
existing carrying value of the item replaced is writtenout
and charged to operating expenses.
1.10 Intangible assets
Recognition
Intangible assets are non-monetary assets without
physical substance, which are capable of sale
separately from the rest of the trust’s business or
which arise from contractual or other legal rights.
They are recognised only when it is probable that
future economic benefits will flow to, or service
potential be provided to, the trust; where the cost of
the asset can be measured reliably, and where the cost
is at least £5000.
Intangible assets acquired separately are initially
recognised at fair value. Software that is integral to
the operating of hardware, for example an operating
system, is capitalised as part of the relevant item of
property, plant and equipment. Software that is not
integral to the operation of hardware, for example
application software, is capitalised as an intangible
asset. Expenditure on research is not capitalised: it is
recognised as an operating expense in the period in
which it is incurred. Internally-generated assets are
recognised if, and only if, all of the following have
been demonstrated:
• the technical feasibility of completing the intangible
asset so that it will be available for use
• the intention to complete the intangible asset and
use it
• the ability to sell or use the intangible asset
• how the intangible asset will generate probable
future economic benefits or service potential
• the availability of adequate technical, financial and
other resources to complete the intangible asset
and sell or use it
• the ability to measure reliably the expenditure
attributable to the intangible asset during its
development
Measurement
The amount initially recognised for internallygenerated
intangible assets is the sum of the
expenditure incurred from the date when the criteria
above are initially met. Where no internally-generated
intangible asset can be recognised, the expenditure is
recognised in the period in which it is incurred.
Following initial recognition, intangible assets are
carried at fair value by reference to an active market,
or, where no active market exists, at amortised
replacement cost (modern equivalent assets basis),
indexed for relevant price increases, as a proxy for fair
value. Internally-developed software is held at historic
cost to reflect the opposing effects of increases in
development costs and technological advances.
1.11 Depreciation, amortisation and
impairments
Freehold land, properties under construction, and
assets held for sale are not depreciated.
Otherwise, depreciation and amortisation are charged
to write off the costs or valuation of property, plant
and equipment and intangible non-current assets, less
any residual value, over their estimated useful lives, in
a manner that reflects the consumption of economic
benefits or service potential of the assets. The
estimated useful life of an asset is the period over
which the Trust expects to obtain economic benefits
or service potential from the asset. This is specific to
the Trust and may be shorter than the physical life of
the asset itself. Estimated useful lives and residual
values are reviewed each year end, with the effect of
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any changes recognised on a prospective basis. Assets
held under finance leases are depreciated over their
estimated useful lives
At each reporting period end, the trust checks
whether there is any indication that any of its tangible
or intangible non-current assets have suffered an
impairment loss. If there is indication of an
impairment loss, the recoverable amount of the asset
is estimated to determine whether there has been a
loss and, if so, its amount. Intangible assets not yet
available for use are tested for impairment annually.
If there has been an impairment loss, the asset is
written down to its recoverable amount, with the loss
charged to the revaluation reserve to the extent that
there is a balance on the reserve for the asset and,
thereafter, to expenditure. Where an impairment loss
subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of the
recoverable amount but capped at the amount that
would have been determined had there been no initial
impairment loss. The reversal of the impairment loss
is credited to expenditure to the extent of the
decrease previously charged there and thereafter to
the revaluation reserve.
1.12 Donated assets
Donated non-current assets are capitalised at their fair
value on receipt, with a matching credit to the
donated asset reserve. They are valued, depreciated
and impaired as described above for purchased assets.
Gains and losses on revaluations and impairments are
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 offset
the expenditure. On sale of donated assets, the net
book value is transferred from the donated asset
reserve to retained earnings.
1.14 Non-current assets held for sale
Non-current assets are classified as held for sale if their
carrying amount will be recovered principally through
a sale transaction rather than through continuing use.
This condition is regarded as met when the sale is
highly probable, the asset is available for immediate
sale in its present condition and management is
committed to the sale, which is expected to qualify for
recognition as a completed sale within one year from
the date of classification. Non-current assets held for
sale are measured at the lower of their previous
carrying amount and fair value less costs to sell. Fair
value is open market value including alternative uses.
The profit or loss arising on disposal of an asset is the
difference between the sale proceeds and the carrying
amount and is recognised in the Statement of
Comprehensive Income. On disposal, the balance for
the asset on the revaluation reserve is transferred to
retained earnings. For donated and governmentgranted
assets, a transfer is made to or from the
relevant reserve to the profit/loss on disposal account
so that no profit or loss is recognised in income or
expenses. The remaining surplus or deficit in the
donated asset or government grant reserve is then
transferred to retained earnings.
Property, plant and equipment that is to be scrapped
or demolished does not qualify for recognition as held
for sale. Instead, it is retained as an operational asset
and its economic life is adjusted. The asset is derecognised
when it is scrapped or demolished.
1.15 Leases
Leases are classified as finance leases when
substantially all the risks and rewards of ownership are
transferred to the lessee. All other leases are classified
as operating leases.
1.13 Government grants
The Trust has no Government Grants.
The trust as lessee
Property, plant and equipment held under finance
leases are initially recognised, at the inception of the
lease, at fair value or, if lower, at the present value of
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Barking, Havering & Redbridge University Hospitals NHS Trust
the minimum lease payments, with a matching liability
for the lease obligation to the lessor. Lease payments
are apportioned between finance charges and
reduction of the lease obligation so as to achieve a
constant rate on interest on the remaining balance of
the liability. Finance charges are recognised in
calculating the trust’s surplus/deficit.
Operating lease payments are recognised as an
expense on a straight-line basis over the lease term.
Lease incentives are recognised initially as a liability
and subsequently as a reduction of rentals on a
straight-line basis over the lease term.
Contingent rentals are recognised as an expense in
the period in which they are incurred.
Where a lease is for land and buildings, the land and
building components are separated. Leased land is
treated as an operating lease. Leased buildings are
assessed as to whether they are operating or finance
leases.
The trust as lessor
Amounts due from lessees under finance leases are
recorded as receivables at the amount of the trust’s
net investment in the leases. Finance lease income is
allocated to accounting periods so as to reflect a
constant periodic rate of return on the trust’s net
investment outstanding in respect of the leases.
Rental income from operating leases is recognised on
a straight-line basis over the term of the lease. Initial
direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of
the leased asset and recognised on a straight-line basis
over the lease term.
1.16 Private Finance Initiative (PFI)
transactions
HM Treasury has determined that government bodies
shall account for infrastructure PFI schemes where the
government body controls the use of the
infrastructure and the residual interest in the
infrastructure at the end of the arrangement as service
concession arrangements, following the principles of
the requirements of IFRIC 12. The Trust therefore
recognises PFI assets as property, plant and equipment
together with a liability to pay for them. The services
received under the contract are recorded as operating
expenses.
The annual unitary payment is separated into the
following component parts, using appropriate
estimation techniques where necessary:
a) Payment for the fair value of services received;
b) Payment for the PFI assets, including finance costs;
and
c) Payment for the replacement of components of the
asset during the contract ‘lifecycle replacement’.
Services received
The fair value of services received in the year is
recorded under the relevant expenditure headings
within ‘operating expenses’.
PFI Asset
The PFI assets are recognised as property, plant and
equipment, when they come into use. The assets are
measured initially at fair value in accordance with the
principles of IAS 17. Subsequently, the assets are
measured at fair value, which is kept up to date in
accordance with the Trust’s approach for each relevant
class of asset in accordance with the principles of IAS
16.
PFI liability
A PFI liability is recognised at the same time as the PFI
assets are recognised. It is measured initially at the
same amount as the fair value of the PFI assets and is
subsequently measured as a finance lease liability in
accordance with IAS 17.
An annual finance cost is calculated by applying the
implicit interest rate in the lease to the opening lease
liability for the period, and is charged to ‘Finance
Costs’ within the Statement of Comprehensive
Income.
The element of the annual unitary payment that is
allocated as a finance lease rental is applied to meet
the annual finance cost and to repay the lease liability
over the contract term.
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An element of the annual unitary payment increase
due to cumulative indexation is allocated to the
finance lease. In accordance with IAS 17, this amount
is not included in the minimum lease payments, but is
instead expensed as incurred.
Lifecycle replacement
The Trust pays a contribution to the lifecycle
replacement costs of building assets requiring
replacement through the annual unitary payment. In
return, the PFI operator maintains a contractual
obligation to maintain the facility to an agreed
standard, but is under no direct obligation to spend
the lifecycle funds at pre-determined intervals. The
Trusts receives no financial benefit for any lifecycle
savings derived during the duration of the PFI
agreement. Conversely, the Trust does not bear the
the risk of additional lifecycle costs should the facility
require additional work. As a result, these lifecycle
replacement charges are recognised as an expense in
the period they arise.
The Managed Equipment Service agreement contained
within the PFI agreement includes expected lifecycle
replacement of medical equipment at specified times
at the expected end of useful life of the assets. Since
the Trust does not physically possess these future
assets at the same time, assets and liabilities are only
recognised to the extent that they relate to the
equipment available for use. In addition, future
replacement of these assets can be varied by
agreement. The lifecycle replacement of these assets
effectively results in a series of finance leases in
accordance with the individual replacement cycles.
Assets contributed by the Trust to the operator
for use in the scheme
Assets contributed for use in the scheme continue to
be recognised as items of property, plant and
equipment in the Trust’s Statement of Financial
Position.
Other assets contributed by the Trust to the
operator
Assets contributed (e.g. cash payments, surplus
property) by the trust to the operator before the asset
is brought into use, which are intended to defray the
operator’s capital costs, are recognised initially as
prepayments during the construction phase of the
contract. Subsequently, when the asset is made
available to the Trust, the prepayment is treated as an
initial payment towards the finance lease liability and
is set against the carrying value of the liability.
1.17 Inventories
Inventories are valued at the lower of cost and net
realisable value using the first-in first-out cost formula.
This is considered to be a reasonable approximation to
fair value due to the high turnover of stocks.
1.18 Cash and cash equivalents
Cash is cash in hand and deposits with any financial
institution repayable without penalty on notice of not
more than 24 hours. Cash equivalents are
investments that mature in 3 months or less from the
date of acquisition and that are readily convertible to
known amounts of cash with insignificant risk of
change in value.
In the Statement of Cash Flows, cash and cash
equivalents are shown net of bank overdrafts that are
repayable on demand and that form an integral part
of the Trust’s cash management.
1.19 Provisions
Provisions are recognised when the Trust has a present
legal or constructive obligation as a result of a past
event, it is probable that the Trust will be required to
settle the obligation, and a reliable estimate can be
made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the
expenditure required to settle the obligation at the
end of the reporting period, taking into account the
risks and uncertainties. Where a provision is measured
using the cash flows estimated to settle the obligation,
its carrying amount is the present value of those cash
flows using HM Treasury’s discount rate of 2.2% in
real terms.
When some or all of the economic benefits required
to settle a provision are expected to be recovered from
a third party, the receivable is recognised as an asset if
it is virtually certain that reimbursements will be
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Barking, Havering & Redbridge University Hospitals NHS Trust
received and the amount of the receivable can be
measured reliably.
1.20 Clinical negligence costs
The NHS Litigation Authority (NHSLA) operates a risk
pooling scheme under which the trust pays an annual
contribution to the NHSLA which in return settles all
clinical negligence claims. The contribution is charged
to expenditure. Although the NHSLA is
administratively responsible for all clinical negligence
cases the legal liability remains with the trust. The
total value of clinical negligence provisions carried by
the NHSLA on behalf of the trust is disclosed at note
35.
1.21 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 as and when
they become due.
1.22 EU Emissions Trading Scheme
The Trust is not part of the EU Emissions Trading
Scheme.
1.23 Contingencies
A contingent liability is a possible obligation that arises
from past events and whose existence will be
confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly
within the control of the trust, or a present obligation
that is not recognised because it is not probable that a
payment will be required to settle the obligation or
the amount of the obligation cannot be measured
sufficiently reliably. A contingent liability is disclosed
unless the possibility of a payment is remote.
A contingent asset is a possible asset that arises from
past events and whose existence will be confirmed by
the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control
of the trust. A contingent asset is disclosed where an
inflow of economic benefits is probable.
Where the time value of money is material,
contingencies are disclosed at their present value.
1.24 Financial assets
Financial assets are recognised when the Trust
becomes party to the financial instrument contract or,
in the case of trade receivables, when the goods or
services have been delivered. Financial assets are
derecognised when the contractual rights have expired
or the asset has been transferred.
Financial assets are initially recognised at fair value.
Financial assets are classified into the following
categories: financial assets at fair value through profit
and loss; held to maturity investments; available for
sale financial assets, and loans and receivables. The
classification depends on the nature and purpose of
the financial assets and is determined at the time of
initial recognition.
Financial assets at fair value through profit and
loss
Embedded derivatives that have different risks and
characteristics to their host contracts, and contracts
with embedded derivatives whose separate value
cannot be ascertained, are treated as financial assets
at fair value through profit and loss. They are held at
fair value, with any resultant gain or loss recognised in
calculating the trust’s surplus or deficit for the year.
The net gain or loss incorporates any interest earned
on the financial asset. Fair values have been
determined with reference to market values or
internally developed models to derive an
approximation to market values where not available
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Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments which are
not quoted in an active market. After initial
recognition, they are measured at amortised cost
using the effective interest method, less any
impairment. Interest is recognised using the effective
interest method.
The effective interest rate is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial asset, to the initial fair
value of the financial asset.
At the end of the reporting period, the trust assesses
whether any financial assets, other than those held at
‘fair value through profit and loss’ are impaired.
Financial assets are impaired and impairment losses
recognised if there is objective evidence of impairment
as a result of one or more events which occurred after
the initial recognition of the asset and which has an
impact on the estimated future cash flows of the
asset.
For financial assets carried at amortised cost, the
amount of the impairment loss is measured as the
difference between the asset’s carrying amount and
the present value of the revised future cash flows
discounted at the asset’s original effective interest rate.
The loss is recognised in expenditure and the carrying
amount of the asset is reduced directly/through a
provision for impairment of receivables.
If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be
related objectively to an event occurring after the
impairment was recognised, the previously recognised
impairment loss is reversed through expenditure to the
extent that the carrying amount of the receivable at
the date of the impairment is reversed does not
exceed what the amortised cost would have been had
the impairment not been recognised.
1.25 Financial liabilities
Financial liabilities are recognised on the statement of
financial position when the trust becomes party to the
contractual provisions of the financial instrument or, in
the case of trade payables, when the goods or services
have been received. Financial liabilities are derecognised
when the liability has been discharged,
that is, the liability has been paid or has expired.
Loans from the Department of Health are recognised
at historical cost. Otherwise, financial liabilities are
initially recognised at fair value.
Other financial liabilities
After initial recognition, all other financial liabilities are
measured at amortised cost using the effective interest
method, except for loans from Department of Health,
which are carried at historic cost. The effective
interest rate is the rate that exactly discounts
estimated future cash payments through the life of
the asset, to the net carrying amount of the financial
liability. Interest is recognised using the effective
interest method.
1.26 Value Added Tax
Most of the activities of the 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.
1.27 Foreign currencies
The Trust's functional currency and presentational
currency is sterling. Transactions denominated in a
foreign currency are translated into sterling at the
exchange rate ruling on the dates of the transactions.
At the end of the reporting period, monetary items
denominated in foreign currencies are retranslated at
the spot exchange rate on 31 March. Resulting
exchange gains and losses for either of these are
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50
Barking, Havering & Redbridge University Hospitals NHS Trust
recognised in the trust’s surplus/deficit in the period in
which they arise.
1.28 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. Details of third party assets are given in Note
41 to the accounts.
procedures compared with the generality of payments.
They are divided into different categories, which
govern the way that individual cases are handled.
Losses and special payments are charged to the
relevant functional headings in expenditure on an
accruals basis, 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).
1.29 Public Dividend Capital (PDC) and PDC
dividend
Public dividend capital represents taxpayers’ equity in
the NHS trust. At any time the Secretary of State can
issue new PDC to, and require repayments of PDC
from, the trust. PDC is recorded at the value received.
As PDC is issued under legislation rather than under
contract, it is not treated as an equity financial
instrument.
An annual charge, reflecting the cost of capital utilised
by the trust, is payable to the Department of Health as
public dividend capital dividend. The charge is
calculated at the real rate set by HM Treasury
(currently 3.5%) on the average carrying amount of all
assets less liabilities, except for donated assets and
cash balances with the Office of the Paymaster
General. The average carrying amount of assets is
calculated as a simple average of opening and closing
relevant net assets. Prior to 2009/10 the PDC
dividend was determined using forecast average
relevant net assets and a note to the accounts
discloses the rate that the dividend represents as a
percentage of the actual average carrying amount of
assets less liabilities in the year. From 1 April 2009, the
dividend payable is based on the actual average
relevant net assets for the year instead of forecast
amounts.
1.30 Losses and Special Payments
Losses and special payments are items that Parliament
would not have contemplated when it agreed funds
for the health service or passed legislation. By their
nature they are items that ideally should not arise.
They are therefore subject to special control
1.31 Subsidiaries
The Trust currently has no Subsidiaries.
For 2009/10, in accordance with the directed
accounting policy from the Secretary of State, the
Trust does not consolidate the NHS charitable funds
for which it is the corporate trustee.
1.32 Associates
The Trust has no associates.
1.33 Joint ventures
The Trust has no joint ventures.
1.34 Joint operations
The Trust has no joint operations.
1.35 Accounting standards that have been
issued but have not yet been adopted
The following standards and interpretations have been
adopted by the European Union but are not required
to be followed until 2010/11. None of them are
expected to impact upon the Trust financial
statements.
IAS 27 (Revised) Consolidated and separate financial
statements
Amendment to IAS 32 Financial instruments:
Presentation on classification or rights issues
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Amendment to IAS 39 Eligible hedged items
IFRS 3 (Revised) Business combinations
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 18 Transfer of assets from customers
1.36 Accounting standards issued that have
been adopted early
The amendment to IFRS 8 Operating segments that
was included in the April 2009 Improvements to IFRS
has been adopted early. As a result, total assets are
not reported by operating segment.
2. Pooled Budget
The Trust has no pooled budget arrangements.
3. Operating Segments
The Trust has only one operating segment, that of
Healthcare.
1.37 Research and Development
Research and development expenditure is charged
against income in the year in which it is incurred,
except in so far as development expenditure relates to
a clearly defined project and the benefits of it can
reasonably be regarded as assured. Expenditure so
deferred is limited to the value of future benefits
expected and is amortised through the Operating Cost
Statement on a systematic basis over the period
expected to benefit from the project. It should be
revalued on the basis of current cost. The amortisation
is calculated on the same basis as depreciation, on a
quarterly basis.
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Barking, Havering & Redbridge University Hospitals NHS Trust
4. Income Generating Activities
The trust undertakes income generation activities with an aim of achieving profit, which is then used in patient
care. The following provides details of income generation activities whose full cost exceeded £1m or was
otherwise material.
2009/10 2008/09
£000 £000
Income 3,462 0
Full cost 625 0
Surplus/(deficit) 2,837 0
The above relates to income generated through rental of space and provision of medical services to a private
healthcare contractor in respect of Oncology.
5. Revenue from Patient Care Activities
2009/10 2008/09
£000 £000
Strategic health authorities 205 222
NHS trusts 105 3,325
Primary care trusts 363,434 303,835
Foundation trusts 605 2,533
Local authorities 20 50
Department of Health 0 36,517
NHS other 263 0
Non-NHS:
Private patients 790 720
Overseas patients (non-reciprocal) 655 541
Injury costs recovery 2,184 2,163
Other 700 754
368,960 350,660
Injury cost recovery income is subject to a provision for impairment of receivables of 7.8% to reflect expected
rates of collection.
Revenue from Primary care trusts includes £8m non-recurrent risk pool in respect of non-PbR income.
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53
6. Other Operating Revenue
2009/10 2008/09
£000 £000
Patient transport services 0 0
Education, training and research 14,691 13,808
Charitable and other contributions to expenditure 372 279
Transfers from Donated Asset Reserve 109 141
Transfers from Government Grant Reserve 0 0
Non-patient care services to other bodies 1,519 9,011
Income generation 7,255 609
Rental revenue 1,981 595
Other revenue 2,569 3,297
28,496 27,740
7. Revenue
2009/10 2008/09
£000 £000
From rendering of services 396,221 350,660
From sale of goods 1,235 0
Sale of goods primarily relates to sale of locally manufactured pharmacy products.
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54
Barking, Havering & Redbridge University Hospitals NHS Trust
8. Operating Expenses
2009/10 2008/09
£000 £000
Services from other NHS Trusts 696 0
Services from PCTs 645 470
Services from other NHS bodies 2,687 1,049
Services from Foundation Trusts 1,044 0
Purchase of healthcare from non NHS bodies 1,777 24
Directors' costs 874 846
Other Employee Benefits 269,962 257,684
Supplies and services - clinical 53,123 51,594
Supplies and services - general 9,794 8,252
Consultancy services 2,468 2,820
Establishment 4,040 4,862
Transport 3,419 4,223
Premises 13,302 12,592
Provision for impairment of receivables 392 (810)
Inventories write offs 0 0
Depreciation 12,242 12,817
Amortisation 435 182
Impairments and reversals of property, plant and equipment 31,834 24,900
Impairments and reversals of intangible assets 0 0
Impairments and reversals of financial assets 0 0
Impairments and Reversals for Non Current Assets held for sale 0 0
Audit fees 311 324
Other auditor's remuneration 60 0
Clinical negligence 9,503 5,377
Research and development 0 0
Education and Training 397 0
Other (see below) 13,411 16,762
432,416 403,968
The majority of the other expenditure is the service element of the PFI contract.
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55
9. Operating Leases
9.1 As lessee
Significant leases are laundry, linen and sterile services.
Payments recognised as an expense
2009/10 2008/09
£000 £000
Minimum lease payments 1,160 2,058
Contingent rents 0 0
Sub-lease payments 0 0
1,160 2,058
Total future minimum lease payments
2009/10 2008/09
£000 £000
Payable:
Not later than one year 904 1,743
Between one and five years 757 2,349
After 5 years 0 33
Total 1,661 4,125
9.2 As lessor
The Trust has entered into a number of commercial agreements as part of its operations. In two instances, the
Trust acts as an operating lessor.
In 2006, the Trust entered into a 60 year lease for land at King George Hospital to allow for a independent
sector treatment centre (ISTC) for NHS patients.
In 2009, the Trust entered into a 10 year lease for facilities at Queens Hospital for private treatment of cancer
Rental revenue
2009/10 2008/09
£000 £000
Contingent rent 0 595
Other 1,981 0
Total rental revenue 1,981 595
Total future minimum lease payments
2009/10 2008/09
£000 £000
Receivable:
Not later than one year 726 0
Between one and five years 2,904 0
After 5 years 6,061 0
Total 9,691 0
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Barking, Havering & Redbridge University Hospitals NHS Trust
10. Employee costs and numbers
10.1 Employee costs
2009/10 2008/09
Total Permanently Other Total Permanently Other
Employed
Employed
£000 £000 £000 £000 £000 £000
Salaries and wages 233,802 192,254 41,548 223,118 184,789 38,329
Social Security Costs 16,219 16,219 0 16,244 16,244 0
Employer contributions to
NHS Pension scheme 20,719 20,719 0 19,544 19,544 0
Other pension costs 0 0 0 0 0 0
Other post-employment benefits 0 0 0 0 0 0
Other employment benefits 0 0 0 (721) (721) 0
Termination benefits 96 96 0 0 0 0
Employee benefits expense 270,836 229,288 41,548 258,185 219,856 38,329
Of the total above:
Charged to capital 1,379 0
Employee benefits charged
to revenue 269,457 258,185
270,836 258,185
10.2 Average number
of people employed
2009/10 2008/09
Total Permanently Other Total Permanently Other
Employed
Employed
Number Number Number Number Number Number
Medical and dental 886 784 101 849 665 184
Ambulance staff 0 0 0 0 0 0
Administration and estates 1,177 1,084 93 1,516 974 542
Healthcare assistants and
other support staff 414 397 18 172 107 65
Nursing, midwifery and
health visiting staff 2,616 2,372 243 2,796 2,332 464
Nursing, midwifery and
health visiting learners 194 0 194 0 0 0
Scientific, therapeutic and
technical staff 943 819 125 951 891 60
Social care staff 0 0 0 0 0 0
Other 1 0 1 0 0 0
Total 6,231 5,456 775 6,284 4,969 1,315
The 2009/10 permanently employed numbers include 336 in respect of contracted out services, which were not
included in the 2008/09 comparative numbers.
The methodology for calculating the average number of Other staff has been refined in 2009/10 and therefore is
not directly comparable to the 2009/09 comparative.
Of the above:
Number of staff (WTE)
engaged on capital projects
15 0
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57
10.3 Staff sickness absence
2009/10
Number
Total days lost 81,514
Total staff years 4,853
Average working days lost 16.80
Total staff employed in period (headcount) 6,491
Total staff employed in period with no absence (headcount) 2,709
Percentage staff with no sick leave 41.7%
10.4 Management costs
2009/10 2008/09
£000 £000
Management costs 21,030 20,095
Income 397,456 378,400
11. Pension costs
Past and present employees are covered by the
provisions of the NHS Pensions Scheme. Details of the
benefits payable under these provisions can be found
on the NHS Pensions website at
www.nhsbsa.nhs.uk/pensions.
The scheme is an unfunded, defined benefit scheme
that covers NHS employers, General Practices and
other bodies, allowed under the direction of the
Secretary of State, in England and Wales. The scheme
is not designed to be run in a way that would enable
NHS bodies to identify their share of the underlying
scheme assets and liabilities. Therefore, the scheme is
accounted for as if it were a defined contribution
scheme: the cost to the NHS Body of participating in
the scheme is taken as equal to the contributions
payable to the scheme for the accounting period.
The scheme is subject to a full actuarial valuation
every four years (until 2004, every five years) and an
accounting valuation every year. An outline of these
follows:
a) Full actuarial (funding) valuation
The purpose of this valuation is to assess the level of
liability in respect of the benefits due under the
scheme (taking into account its recent demographic
experience), and to recommend the contribution rates
to be paid by employers and scheme members. The
last such valuation, which determined current
contribution rates was undertaken as at 31 March
2004 and covered the period from 1 April 1999 to
that date. The conclusion from the 2004 valuation
was that the scheme had accumulated a notional
deficit of £3.3 billion against the notional assets as at
31 March 2004.
In order to defray the costs of benefits, employers pay
contributions at 14% of pensionable pay and most
employees had up to April 2008 paid 6%, with
manual staff paying 5%.
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58
Barking, Havering & Redbridge University Hospitals NHS Trust
Following the full actuarial review by the Government
Actuary undertaken as at 31 March 2004, and after
consideration of changes to the NHS Pension Scheme
taking effect from 1 April 2008, his Valuation report
recommended that employer contributions could
continue at the existing rate of 14% of pensionable
pay, from 1 April 2008, following the introduction of
employee contributions on a tiered scale from 5% up
to 8.5% of their pensionable pay depending on total
earnings. On advice from the scheme actuary, scheme
contributions may be varied from time to time to
reflect changes in the scheme’s liabilities.
b) Accounting valuation
A valuation of the scheme liability is carried out
annually by the scheme actuary as at the end of the
reporting period by updating the results of the full
actuarial valuation.
Between the full actuarial valuations at a two-year
midpoint, a full and detailed member data-set is
provided to the scheme actuary. At this point the
assumptions regarding the composition of the scheme
membership are updated to allow the scheme liability
to be valued.
The valuation of the scheme liability as at 31 March
2010, is based on detailed membership data as at 31
March 2008 (the latest midpoint) updated to 31
March 2010 with summary global member and
accounting data.
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 website.
Copies can also be obtained from The Stationery
Office.
c) Scheme provisions
In 2008-09 the NHS Pension Scheme provided defined
benefits, which are summarised below. This list is an
illustrative guide only, and is not intended to detail all
the benefits provided by the Scheme or the specific
conditions that must be met before these benefits can
be obtained:
Annual Pensions
The Scheme is a “final salary” scheme. Annual
pensions are normally based on 1/80th for the 1995
section and of the best of the last three years
pensionable pay for each year of service, and 1/60th
for the 2008 section of reckonable pay per year of
membership. Members who are practitioners as
defined by the Scheme Regulations have their annual
pensions based upon total pensionable earnings over
the relevant pensionable service.
With effect from 1 April 2008 members can choose to
give up some of their annual pension for an additional
tax free lump sum, up to a maximum amount
permitted under HMRC rules. This new provision is
known as “pension commutation”.
Pensions Indexation
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.
Lump Sum Allowance
A lump sum is payable on retirement which is
normally three times the annual pension payment.
Ill-Health Retirement
Early payment of a pension, with enhancement in
certain circumstances, is available to members of the
Scheme
who are permanently incapable of fulfilling their
duties or regular employment effectively through
illness or infirmity.
Death Benefits
A death gratuity of twice their final year’s pensionable
pay for death in service, and five times their annual
pension for death after retirement is payable.
Additional Voluntary Contributions (AVCs)
Members can purchase additional service in the NHS
Scheme and contribute to money purchase AVC’s run
by the Scheme’s approved providers or by other Free
Standing Additional Voluntary Contributions (FSAVC)
providers.
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Annual Report & Accounts 2009-2010
59
Transfer between Funds
Scheme members have the option to transfer their
pension between the NHS Pension Scheme and
another scheme when they move into or out of NHS
employment.
Preserved Benefits
Where a scheme member ceases NHS employment
with more than two years service they can preserve
their accrued NHS pension for payment when they
reach retirement age.
12. Retirement due to ill health
During 2009/10 there were 9 (2008/09, 11) early
retirements from the NHS Trust agreed on the grounds
of ill-health. The estimated additional pension
liabilities of these ill-health retirements will be
£440,133 (2008/09: £591,581). The cost of these illhealth
retirements will be borne by the NHS Business
Services Authority - Pensions Division.
Compensation for Early Retirement
Where a member of the Scheme is made redundant
they may be entitled to early receipt of their pension
plus enhancement, at the employer’s cost.
13. Better Payment Practice Code
13.1 Better Payment Practice Code - measure of compliance
009/10 2008/09
Number £000 Number £000
Total Non-NHS trade invoices paid in the year 71,108 161,919 77,725 155,200
Total Non NHS trade invoices paid within target 47,688 131,858 70,997 141,248
Percentage of Non-NHS trade invoices paid within target 67% 81% 91% 91%
Total NHS trade invoices paid in the year 2,817 57,991 3,042 40,628
Total NHS trade invoices paid within target 1,815 34,927 2,051 22,211
Percentage of NHS trade invoices paid within target 64% 60% 67% 55%
The Better Payment Practice Code requires the Trust to aim to pay all undisputed invoices by the due date or within 30 days of receipt of
goods or a valid invoice, whichever is later.
13.2 The Late Payment of Commercial Debts (Interest) Act 1998
2009/10 2008/09
£000 £000
Amounts included in finance costs from claims made under this legislation 1 0
Compensation paid to cover debt recovery costs under this legislation 0 0
Total 1 0
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60
Barking, Havering & Redbridge University Hospitals NHS Trust
14. Investment revenue
2009/10 2008/09
£000 £000
Rental revenue:
PFI finance lease revenue:
planned 0 0
contingent 0 0
Other finance lease revenue 0 0
Interest revenue:
Bank accounts 205 414
Other loans and receivables 1,036 0
Impaired financial assets 0 0
Other financial assets 0 0
Total 1,241 414
15. Other gains and losses
2009/10 2008/09
£000 £000
Gain/(loss) on disposal of property, plant and equipment 2,002 (2)
Gain/(loss) on disposal of intangible assets 0 0
Gain/(loss) on disposal of financial assets 0 0
Gain/(loss) on foreign exchange 0 0
Change in fair value of financial assets carried at fair value through profit and loss 0 0
Change in fair value of financial liabilities carried at fair value through profit and loss 0 0
Change in fair value of investment property 0 0
Recycling of gain/(loss) from equity on disposal of financial assets available for sale 0 0
Total 2,002 (2)
16. Finance costs
2009/10 2008/09
£000 £000
Interest on loans and overdrafts 0 2
Interest on obligations under finance leases 0 0
Interest on obligations under PFI contracts:
- main finance cost 19,843 20,649
- contingent finance cost 0 0
Interest on late payment of commercial debt 1 0
Other interest expense 0 0
Total interest expense 19,844 20,651
Other finance costs 133 141
Total 19,977 20,792
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17. Property, plant and
equipment 2009/10
Land Buildings Dwellings Assets Plant and Transport Information Furniture & Total
excluding under machinery equipment technology fittings
dwellings construction
and POA
£000 £000 £000 £000 £000 £000 £000 £000 £000
Cost or valuation at 1 April 2009 51,416 298,771 10,325 1,043 63,910 57 13,414 2,489 441,425
Additions purchased 0 2,966 0 2,049 5,528 0 2,059 386 12,988
Additions donated 0 0 0 0 0 0 0 0 0
Additions government granted 0 0 0 0 0 0 0 0 0
Reclassifications 0 0 0 370 0 0 3 0 373
Reclassified as held for sale 0 0 0 0 0 0 0 0 0
Disposals other than by sale (6,600) (7,599) 0 0 (3,366) 0 (132) (47) (17,744)
Revaluation/indexation gains 0 0 0 0 0 0 0 0 0
Impairments (732) (6,841) (103) 0 (65) 0 0 0 (7,741)
Reversal of impairments 0 0 0 0 0 0 0 0 0
Transfers to Foundation Trust 0 0 0 0 0 0 0 0 0
At 31 March 2010 44,084 287,297 10,222 3,462 66,007 57 15,344 2,828 429,301
Depreciation at 1 April 2009 0 0 0 0 27,711 36 5,500 688 33,935
Reclassifications 0 0 0 0 0 0 0 0 0
Reclassified as held for sale 0 0 0 0 0 0 0 0 0
Disposals other than by sale 0 0 0 0 (3,365) 0 (132) 0 (3,497)
Revaluation/indexation gains 0 0 0 0 0 0 0 0 0
Impairments 14,857 16,308 591 0 153 0 0 (47) 31,862
Reversal of Impairments 0 (28) 0 0 0 0 0 0 (28)
Charged during the year 0 3,619 214 0 5,912 4 2,170 323 12,242
Transfer to Foundation Trust 0 0 0 0 0 0 0 0 0
Depreciation at 31 March 2010 14,857 19,899 805 0 30,411 40 7,538 964 74,514
Net book value
Purchased 29,227 266,772 9,417 3,462 35,312 17 7,804 1,864 353,875
Donated 0 626 0 0 284 0 2 0 912
Government granted 0 0 0 0 0 0 0 0 0
Total at 31 March 2010 29,227 267,398 9,417 3,462 35,596 17 7,806 1,864 354,787
Asset financing
Owned 29,227 68,358 9,417 3,462 19,233 17 7,546 1,864 139,124
Finance Leased 0 0 0 0 0 0 0 0 0
Private finance initiative 0 199,040 0 0 16,363 0 260 0 215,663
PFI residual interests 0 0 0 0 0 0 0 0 0
Total 31 March 2010 29,227 267,398 9,417 3,462 35,596 17 7,806 1,864 354,787
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Barking, Havering & Redbridge University Hospitals NHS Trust
17. Property, plant
and equipment
- prior year 2008/09
Land Buildings Dwellings Assets Plant and Transport Information Furniture & Total
excluding under machinery equipment technology fittings
dwellings construction
and POA
£000 £000 £000 £000 £000 £000 £000 £000 £000
Cost or valuation at 1 April 2008 84,840 350,395 11,308 1,034 64,274 56 14,807 2,404 529,118
Additions purchased 0 334 0 223 2,692 0 104 36 3,389
Additions donated 0 0 0 0 48 0 0 0 48
Additions government granted 0 0 0 0 0 0 0 0 0
Reclassifications 0 0 0 0 0 0 0 0 0
Reclassified as held for sale 0 0 0 0 0 0 0 0 0
Disposals other than by sale (9,394) (8,147) 0 0 (3,949) 0 (1,497) (14) (23,001)
Revaluation/indexation gains 0 0 0 0 451 1 0 63 515
Impairments (24,030) (14,792) (754) (214) (320) 0 0 0 (40,110)
Reversal of impairments 0 0 0 0 0 0 0 0 0
At 31 March 2009 51,416 327,790 10,554 1,043 63,196 57 13,414 2,489 469,959
Depreciation at 1 April 2008 0 0 0 0 24,161 31 4,816 458 29,466
Reclassifications 0 0 0 0 0 0 0 0 0
Reclassified as held for sale 0 0 0 0 0 0 0 0 0
Disposals other than by sale 0 0 0 0 (3,718) 0 (1,497) (14) (5,229)
Revaluation/indexation gains 0 0 0 0 503 1 0 11 515
Impairments 0 24,900 0 0 0 0 0 0 24,900
Reversal of Impairments 0 0 0 0 0 0 0 0 0
Charged during the year 0 4,119 229 0 6,051 4 2,181 233 12,817
Depreciation at 31 March 2009 0 29,019 229 0 26,997 36 5,500 688 62,469
Net book value
Purchased 51,416 298,072 10,325 1,043 35,803 21 7,909 1,801 406,390
Donated 0 699 0 0 396 0 5 0 1,100
Government granted 0 0 0 0 0 0 0 0 0
Total at 31 March 2009 51,416 298,771 10,325 1,043 36,199 21 7,914 1,801 407,490
Asset financing
Owned 51,416 87,805 10,325 1,043 18,756 21 7,914 1,801 179,081
Finance Leased 0 0 0 0 0 0 0 0 0
Private finance initiative 0 210,966 0 0 17,443 0 0 0 228,409
PFI residual interests 0 0 0 0 0 0 0 0 0
Total 31 March 2009 51,416 298,771 10,325 1,043 36,199 21 7,914 1,801 407,490
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63
There were no additional capital items donated in the
current year.
The Trust's accounting policy for Asset lives is as
follows:-
Life Yrs Yrs
Category Max Min
Building (non dwelling) 15 70
Dwelling 15 50
Plant and Machinery 7 15
Information Technology 4 1
Intangible 3 5
Professional valuations have been carried out by DTZ
Debenham Tie Leung Limited, an independent third
party valuer. The valuations are carried out in
accordance with the Royal Institute of Chartered
Surveyors (RICS) Appraisal and Valuation Manual in so
far as these terms are consistent with the agreed
requirements of the Department of Health and HM
Treasury.
Where assets have been revalued during the period, in
line with Treasury guidance, the revaluation on 1 April
2010 was based on “modern equivalent assets” rather
then the “like for like” replacement basis used in
previous valuations. For other assets, 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. For non-operational
properties including surplus land, the valuations are
carried out at Open Market Value.
Gains arising from indexation and revaluations are
taken to the Revaluation Reserve. Losses arising from
revaluation and indexation are recognised as
impairments and are charged to the revaluation
reserve to the extent that a balance exists in relation
to the revalued asset. Losses in excess of that amount
are charged to the current year’s Income &
Expenditure account, unless it can be demonstrated
that the recoverable amount is greater than the
revalued amount in which case the impairment is
taken to the revaluation reserve. Diminutions in value
when newly constructed assets are brought into use
are charged in full to the Income & Expenditure
account. These falls in value result from the adoption
of ideal conditions as the basis for depreciated
replacement cost valuations.
Assets in the course of construction are valued at
current cost using the indexes as for land and
buildings, as above. These assets include any existing
land or buildings under the control of a contractor.
Treasury Indicies used
2005 - 06 105
2006 - 07 111
2007 - 08 117
2008 - 09 77
2009 - 10 65
The Trust leases out the following items of property,
plant and equipment on an operating lease basis.
HCA
ISTC
Gross carrying amount 2,811,305 889,493
Accumulated depreciation 0 0
Accumulated impairment loss 0 (366,215)
· Depreciation charge for the period 0 0
Impairment losses recognised
for the period 0 18,315
mpairment losses reversed
for the period 0 0
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Barking, Havering & Redbridge University Hospitals NHS Trust
18. Intangible assets 2009/10
Computer Computer Licences and Patents Development Total
software - software - trademarks expenditure
purchased (internally (internally
generated)
generated)
£000 £000 £000 £000 £000 £000
Gross cost at 1 April 2009 2,052 0 263 0 0 2,315
Additions purchased 2,436 0 0 0 0 2,436
Additions internally generated 0 0 0 0 0 0
Additions donated 0 0 0 0 0 0
Additions government granted 0 0 0 0 0 0
Reclassifications 0 0 0 0 0 0
Reclassified as held for sale 0 0 0 0 0 0
Disposals other than by sale 0 0 0 0 0 0
Revaluation/indexation 0 0 0 0 0 0
Impairments 0 0 0 0 0 0
Reversals of impairments 0 0 0 0 0 0
Gross cost at 31 March 2010 4,488 0 263 0 0 4,751
Amortisation at 1 April 2009 567 0 220 0 0 787
Reclassifications 0 0 0 0 0 0
Reclassifications as held for sale 0 0 0 0 0 0
Disposals other than by sale 0 0 0 0 0 0
Revaluation 0 0 0 0 0 0
Impairments 0 0 0 0 0 0
Reversal of impairments 0 0 0 0 0 0
Charged during the year 392 0 43 0 0 435
Amortisation at 31 March 2010 959 0 263 0 0 1,222
Net book value
Purchased 3,529 0 0 0 0 3,529
Donated 0 0 0 0 0 0
Government granted 0 0 0 0 0 0
Total at 31 March 2010 3,529 0 0 0 0 3,529
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65
Intangible assets 2008/09 (prior year)
Computer Computer Licences and Patents Development Total
software - software - trademarks expenditure
purchased (internally (internally
generated)
generated)
£000 £000 £000 £000 £000 £000
Gross cost at 1 April 2008 684 0 263 0 0 947
Additions purchased 1,368 0 0 0 0 1,368
Additions internally generated 0 0 0 0 0 0
Additions donated 0 0 0 0 0 0
Additions government granted 0 0 0 0 0 0
Reclassifications 0 0 0 0 0 0
Reclassified as held for sale 0 0 0 0 0 0
Disposals other than by sale 0 0 0 0 0 0
Revaluation / indexation 0 0 0 0 0 0
Impairments 0 0 0 0 0 0
Reversals of impairments 0 0 0 0 0 0
Gross cost at 31 March 2009 2,052 0 263 0 0 2,315
Amortisation at 1 April 2008 471 0 134 0 0 605
Reclassifications 0 0 0 0 0 0
Reclassifications as held for sale 0 0 0 0 0 0
Disposals other than by sale 0 0 0 0 0 0
Revaluation 0 0 0 0 0 0
Impairments 0 0 0 0 0 0
Reversal of impairments 0 0 0 0 0 0
Charged during the year 96 0 86 0 0 182
Amortisation at 31 March 2009 567 0 220 0 0 787
Net book value
Purchased 1,485 0 43 0 0 1,528
Donated 0 0 0 0 0 0
Government granted 0 0 0 0 0 0
Total at 31 March 2009 1,485 0 43 0 0 1,528
The increase in intangible Fixed Assets is mainly due to IT investment in E Rostering and Remote Access.
18.2 Revaluation reserve balance for intangible assets
2009/10 2008/09
£000 £000
At 1 April 0 0
Changes 0 0
At 31 March 0 0
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19. Impairments
Prospective Revaluation has been undertaken by the
Independent valuer DTZ which is effective as at 31st
March 2010. The overall impact reduced the value of
land and buildings by £39.58m.
Some asset values have been significantly reduced
through the revaluation particularly the PFI building,
the major proportion of the resulting impairment has
been written off against I&E in the draft accounts.
Description
Impaired to I & E
£m
Land 14.9
Owned building 7.2
PFI building 9.7
Total I & E impact 31.8
The impairment has arisen from a change in market conditions and not from a permanent consumption of
economic benefit.
20. Capital commitments
Contracted capital commitments at 31 March not otherwise included in these financial statements:
31 March 2010 31 March 2009
£000 £000
Property, plant and equipment 1,176 508
Intangible assets 0 0
Total 1,176 508
21. Inventories
21.1 Inventories
31 March 2010 31 March 2009
£000 £000
Drugs 2,069 2,326
Work in progress 0 0
Consumables 3,847 3,135
Energy 117 147
Other 0 0
Total 6,033 5,608
Of which held at net realisable value: 0 0
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21.2 Inventories recognised in expenses
31 March 2010 31 March 2009
£000 £000
Inventories recognised as an expense in the period 39,532 37,220
Write-down of inventories (including losses) 0 0
Reversal of write-downs that reduced the expense 0 0
Total 39,532 37,220
22 Trade and other recievables
22.1 Trade and other receivables
Current
Non-current
31 March 2010 31 March 2009 31 March 2010 31 March 2009
£000 £000 £000 £000
NHS receivables-revenue 26,359 10,271 0 1,658
NHS receivables-capital 0 0 0 0
Non-NHS receivables-revenue 6,332 4,092 0 0
Non-NHS receivables-capital 0 0 0 0
Provision for the impairment of receivables (2,747) (1,976) 0 (379)
Accrued income 657 5,158 0 0
Finance lease Receivables 0 0 0 0
Operating lease receivables 0 0 0 0
VAT 229 0 0 0
Other receivables 2,454 32,477 26,337 27,752
Total 33,284 50,022 26,337 29,031
The great majority of trade is with Primary Care Trusts, as commissioners for NHS patient care services. As Primary
Care Trusts are funded by Government to buy NHS patient care services, no credit scoring of them is considered
necessary.
22.2 Receivables past their due date but not impaired
31 March 2010 31 March 2009
£000 £000
By up to three months 2,474 5,781
By three to six months 549 863
By more than six months 304 671
Total 3,327 7,315
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Barking, Havering & Redbridge University Hospitals NHS Trust
22.3 Provision for impairment of receivables
31 March 2010 31 March 2009
£000 £000
Balance at 1 April (2,355) (3,165)
Amount written off during the year 0 0
Amount recovered during the year 0 0
(Increase)/decrease in receivables impaired (392) 810
Balance at 31 March (2,747) (2,355)
Every invoice has been analysed through a dunning level method in asertaining the impairment of receivables
figures.
23. Other financial assets
Current
Non-current
31 March 2010 31 March 2009 31 March 2010 31 March 2009
£000 £000 £000 £000
Embedded derivatives carried at fair value
through profit and loss 0 0 0 0
Financial assets carried at fair value
through profit and loss 0 0 0 0
Held to maturity investments at
amortised cost 0 0 0 0
Available for sale financial assets
carried at fair value 0 0 0 0
Loans carried at amortised cost 0 0 0 0
Total 0 0 0 0
24. Other current assets
31 March 2010 31 March 2009
£000 £000
EU Emissions trading scheme allowances 0 0
Other assets [specify] 0 0
Total 0 0
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69
25. Cash and cash equivalents
31 March 2010 31 March 2009
£000 £000
Balance at 1 April 1,370 1,771
Net change in year 728 (401)
Balance at 31 March 2,098 1,370
Made up of
Cash with Office of HM Paymaster General 1,990 1,158
Commercial banks and cash in hand 108 212
Current investments 0 0
Cash and cash equivalents as in statement of financial position 2,098 1,370
Bank overdraft - Office of HM Paymaster General 0 0
Bank overdraft - Commercial banks 0 0
Cash and cash equivalents as in statement of cash flows 2,098 1,370
26. Non-current assets held for sale
Land Buildings Dwellings Other Intagible Total
exc dwellings property assets
plant and
equipment
£000 £000 £000 £000 £000 £000
Balance brought forward 0 0 0 0 0 0
Plus assets classified as held for
sale in the year 0 0 0 0 0 0
Less assets sold in the year 0 0 0 0 0 0
Less Impairments of assets held for sale 0 0 0 0 0 0
Plus reversal of impairment of assets
held for sale 0 0 0 0 0 0
Less assets no longer classified as held for
sale, for reasons other than disposal by sale 0 0 0 0 0 0
Balance carried forward 0 0 0 0 0 0
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Barking, Havering & Redbridge University Hospitals NHS Trust
27. Trade and other payables
Current
Non-current
31 March 2010 31 March 2009 31 March 2010 31 March 2009
£000 £000 £000 £000
Interest payable 0 0 0 0
NHS payables-revenue 10,272 5,987 0 0
NHS payables-capital 655 0 0 0
Non NHS trade payables - revenue 16,904 14,698 0 0
Non NHS trade payables - capital 0 39 0 0
Accruals and deferred income 14,526 11,514 5,342 0
Social security costs 5,305 7,738 0 0
VAT 0 0 0 0
Tax 0 0
Other 660 667 0 6,025
Total 48,322 40,643 5,342 6,025
28. Borrowings
Current
Non-current
31 March 2010 31 March 2009 31 March 2010 31 March 2009
£000 £000 £000 £000
Bank overdraft -
Office of HM Paymaster General 0 0 0 0
Bank overdraft - Commercial banks 0 0 0 0
Loans from:
Department of Health 0 0 0 0
Other entities 235 0 235 0
PFI liabilities 4,786 5,235 263,784 265,950
LIFT 0 0 0 0
Finance lease liabilities 0 0 0 0
Other 0 0 0 0
Total 5,021 5,235 264,019 265,950
29. Other liabilities
Current
Non-current
31 March 2010 31 March 2009 31 March 2010 31 March 2009
£000 £000 £000 £000
PFI asset – deferred credit 0 0 0 0
Lease incentives 0 0 0 0
Other 0 0 0 0
Total 0 0 0 0
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71
30. Finance lease obligations
The Trust has no finance lease obligations other than PFI (note 33).
31. Finance lease receivables (i.e. as lessor)
The Trust has no finance lease receivables.
32. Finance lease commitments
The Trust has no finance lease commitments other than PFI (note 33).
33. Private finance initiative contracts
33.1 PFI schemes off-Statement of Financial Position
There are no "off statement of Financial Position" PFI schemes.
33.2 PFI schemes on-Statement of Financial Position
The PFI project relates to Queen's Hospital in Romford,
which was built by Catalyst Healthcare (Romford) Ltd,
(CHRL), completed in October 2006 and fully
operational by December 2006. CHRL is a consortium
comprising Bovis Lend Lease Limited (the constructor
and infrastructural lifecyle provider), Sodexo,
(providing a broad range of facilities management
services including "living-space" lifecycle) and Uberior
Investments, formerly part of HBOS, now part of the
Lloyds Banking Group. Bovis, Sodexo and Uberior
were original equity holders in CHRL. Bovis have in
2009/10 sold their CHRL equity interest to
Infrastructure Investments Ltd, a division of, HSBC.
The PFI Project Agreement, with Catalyst comprises a
design and build contract which provides Queen's
Hospital, a 930 bedded multi-specialty acute hospital
in Romford, supported by 16 operating theatres, an
Accident and Emergency department, ITU/ HDU
facilities, a renal dialysis unit with accompanying
diagnostic services such as pathology and radiology.
Siemens Healthcare Services Ltd provides a managed
equipment service to the Trust as part of the unitary
payment, but is not part of the CHRL consortium;
however Siemens is a sub-contractor to CHRL.
Although financed and managed by CHRL, the
hospital's main purpose is the treatment of NHS
patients and clinical services will continue to be run by
NHS staff. At the end of the Project Term, January
2040, CHML's interest in the facility ceases and no
further payments are due to them. CHRL are obliged
to maintain the hospital to a required standard
throughout the project timescale, and there is an
agreed handover commitment requiring this standard
to be maintained or made good at the end of the
contract.
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Barking, Havering & Redbridge University Hospitals NHS Trust
Within the contract, there is provision for the Trust to
elect to either benchmark or market-test certain
facities management services, which may affect the
price of services provided by the consortium.
From 1 April 2009, and the adoption of International
Financial Reporting Standards, the PFI hospital now
comes onto the Statement of Financial position.
Assets have been recognised for the building and
equipment under the scope of the Managed
Equipment Service, which are depreciated in
accordance with the Trust's accounting policies. The
substance of the contract is that the Trust has a
financial liability which is similar to a finance lease
over the Project term. Payments comprise two
elements - imputed finance lease charges and service
charges. The financial liability covers the financing cost
of the building and equipment, (as distinct from
service costs); the timing of the obligations are
disclosed below:-
Total obligations due for on-statement of financial position PFI contracts:
31 March 2010 31 March 2009
£000 £000
Not later than one year 24,513 23,453
Later than one year, not later than five years 96,193 99,788
Later than five years 525,800 546,739
Sub total 646,506 669,980
Less: interest element (377,936) (398,795)
Total 268,570 271,185
33.3 Charges to expenditure
The total charged in the year to expenditure in respect of the service element of the on-statement PFI contract was
£20.291m (prior year £19.176m).
The trust is committed to the following annual charges:
31 March 2010 31 March 2009
£000 £000
[1]
PFI scheme expiry date:
Not later than one year 0 0
Later than one year, not later than five years 0 0
Later than five years 21,103 20,291
Total 21,103 20,291
The annual payment is subject to an RPI-based
indexation in common with most other PFI schemes.
Apart from inflationary increases, any increases or
decreases in payments are determined by upward or
downward service variations, determined by the Trust.
[1] Note: there should only be an entry against one of
these lines for each PFI contract, for instance, a PFI
contract with 20 years to expiry at an annual service
charge of £100,000 would require a single entry of
100 against the later than five years line.
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73
34. Other financial liabilities
Current
Non-current
31 March 2010 31 March 2009 31 March 2010 31 March 2009
£000 £000 £000 £000
Financial liabilities carried at fair
value through profit and loss:
Embedded derivatives 0 0 0 0
Other financial liabilities 0 0 0 0
Authorised cost 0 0 0 0
Total 0 0 0 0
35. Provisions
Current
Non-current
31 March 2010 31 March 2009 31 March 2010 31 March 2009
£000 £000 £000 £000
Pensions relating to former directors 0 0 0 0
Pensions relating to other staff 777 715 5,312 5,040
Legal claims 875 520 0 789
Restructurings 0 0 0 0
Continuing care 0 0 0 0
Equal pay 0 0 0 0
Agenda for change 488 351 0 0
Other 0 267 0 310
Total 2,140 1,853 5,312 6,139
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Barking, Havering & Redbridge University Hospitals NHS Trust
Pensions Pensions Legal Restruc- Continuing Equal Agenda Other Total
relating to relating to claims turings care pay for change
former other
directors staff
£000 £000 £000 £000 £000 £000 £000 £000 £000
At 1 April 2008 0 6281 867 0 0 0 0 1315 8,463
Arising during the year 0 213 629 0 0 0 0 151 993
Used during the year 0 (794) (165) 0 0 0 0 (158) (1,117)
Reversed unused 0 (69) (40) 0 0 0 0 (380) (489)
Unwinding of discount 0 124 18 0 0 0 0 0 142
Transfers in year 0 0 0 0 0 0 0 0 0
At 1 April 2009 0 5,755 1,309 0 0 0 351 577 7,992
Arising during the year 0 132 74 0 0 0 137 0 343
Used during the year 0 (778) (238) 0 0 0 0 0 (1,016)
Reversed unused 0 0 0 0 0 0 0 0 0
Unwinding of discount 0 133 0 0 0 0 0 0 133
Transfers in year 0 847 (270) 0 0 0 0 (577) 0
At 31 March 2010 0 6,089 875 0 0 0 488 0 7,452
Expected timing of cash flows:
In the remainder of the spending review
period to 31 March 2011 0 156 874 0 0 0 487 0 1,517
Between 1 April 2011 and 31 March 2016 0 3,453 0 0 0 0 0 0 3,453
Between 1 April 2016 and 31 March 2021 0 2,708 0 0 0 0 0 0 2,708
Thereafter 0 (228) 1 0 0 0 1 0 (226)
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75
Legal claims include provisions for employer's liability,
public liability, injury benefits and employment tribunal
cases.
Employer's liabilty and public liabilty provisions are the
product of the best estimates of the NHS Litigation
Authority's claim managers. It is assumed that the
cases will complete in the timescale and costs forecast.
However, cases do change in value and timing
depending on the litigation process and the
complexity of the case.
Other Provisions include provisions for Agenda for
Change. The agenda for change provision is for salary
arrears due to ex-employees, whose posts had been
assimilated to Agenda For Change subsequent to their
leaving. These provisions have been determined after
making an assessment of the likely eventual outcome.
The expected reimbursement from commissioners
(Primary Care Trusts) for provisions covered by back-toback
arrangements is £1,707,214 (2009:
£1,868,000). This amount is included within NHS
debtors
Note. £77,425,087 is included in the provisions of the
NHS Litigation Authority at 31 March 2010 in respect
of clinical negligence liabilities of the NHS Trust (2009:
£74,453,000).
36. Contingent liabilities
36.1 Contingent liabilities
2009/100 2008/09
£000 £000
Equal pay cases 0 0
Other (specify) (28) (211)
Amounts recoverable against contingent liabilities 0 36
Total (28) (175)
The other amount referred to above relates to Legal
cases pending where probability of Trust losing is
graded as Medium.
Legal cases where the risk is considered high have
been accounted for under provisions.
The timing of this liability should it materialise will be
2010/2011.
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Barking, Havering & Redbridge University Hospitals NHS Trust
37. Financial Instruments
37.1 Financial assets
At fair value Loans and Available Total
through profit receivables for sale
and loss
£000 £000 £000 £000
Embedded derivatives 0 0 0 0
Receivables 0 76,028 0 76,028
Cash at bank and in hand 0 1,370 0 1,370
Other financial assets 0 0 0 0
Total at 31 March 2009 0 77,398 0 77,398
Embedded derivatives 0 0 0 0
Receivables 0 56,377 0 56,377
Cash at bank and in hand 0 2,098 0 2,098
Other financial assets 0 0 0 0
Total at 31 March 2010 0 58,475 0 58,475
37.2 Financial liabilities
At fair value Other Total
through profit
and loss
£000 £000 £000
Embedded derivatives 0 0 0
Payables 0 27,216 27,216
PFI and finance lease obligations 0 0 0
Other borrowings 0 271,185 271,185
Other financial liabilities 0 0 0
Total at 31 March 2009 0 298,401 298,401
Embedded derivatives 0 0 0
Payables 0 50,977 50,977
PFI and finance lease obligations 0 268,570 268,570
Other borrowings 0 470 470
Other financial liabilities 0 0 0
Total at 31 March 2010 0 320,017 320,017
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37.3 Financial risk management
Financial reporting standard IFRS 7 requires disclosure
of the role that financial instruments have had during
the period in creating or changing the risks a body
faces in undertaking its activities. Because of the
continuing service provider relationship that the NHS
trust has with primary care trusts and the way those
primary care trusts are financed, the NHS 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 listed companies, to which
the financial reporting standards mainly apply. The
NHS trust has limited powers to borrow or invest
surplus funds and financial assets and liabilities are
generated by day-to-day operational activities rather
than being held to change the risks facing the NHS
trust in undertaking its activities.
The trust’s treasury management operations are
carried out by the finance department, within
parameters defined formally within the trust’s standing
financial instructions and policies agreed by the board
of directors. Trust treasury activity is subject to review
by the trust’s internal auditors.
Currency risk
The trust is principally a domestic organisation with
the great majority of transactions, assets and liabilities
being in the UK and sterling based. The trust has no
overseas operations. The trust therefore has low
exposure to currency rate fluctuations.
Interest rate risk
The trust borrows from government for capital
expenditure, subject to affordability as confirmed by
the strategic health authority. The borrowings are for
1 – 25 years, in line with the life of the associated
assets, and interest is charged at the National Loans
Fund rate, fixed for the life of the loan. The trust
therefore has low exposure to interest rate
fluctuations
Credit risk
Because the majority of the trust’s income comes from
contracts with other public sector bodies, the trust has
low exposure to credit risk. The maximum exposures
as at 31 March 2010 are in receivables from
customers, as disclosed in the Trade and other
receivables note.
Liquidity risk
The trust’s operating costs are incurred under
contracts with primary care trusts, which are financed
from resources voted annually by Parliament . The
trust funds its capital expenditure from funds obtained
within its prudential borrowing limit. The trust is not,
therefore, exposed to significant liquidity risks.
37.4 Maturity of financial liabilities (need not be included if liquidity risk is not material)
31 March 2010 31 March 2009
£000 £000
In one year or less 0 0
In more than one year but not more than two years 0 0
In more than two years but not more than five years 0 0
In more than five years 0 0
Total 0 0
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78
Barking, Havering & Redbridge University Hospitals NHS Trust
38. Events after the reporting period
There are no events after the reporting period.
39. Financial performance targets
The figures given for periods prior to 2009/10 are on a UK GAAP basis as that is the basis on which the targets
were set for those years.
39.1 Breakeven performance
2005/06 2006/07 2007/08 2008/09 2009/10
£000 £000 £000 £000 £000
Turnover 334,815 351,780 345,451 378,400 397,456
Retained surplus/(deficit) for the year (16,009) (16,844) (35,621) (35,674) (56,243)
Adjustment for:
Timing/non-cash impacting distortions:
Use of pre - 1.4.97 surpluses (FDL(97)24 Agreements) 0 0 0 0 0
2006/07 PPA (relating to 1997/98 to 2005/06) 0 0 0 0 0
2007/08 PPA (relating to 1997/98 to 2006/07) 0 0 0 0 0
2008/09 PPA (relating to 1997/98 to 2007/08) 0 0 0 0 0
2009/10 PPA (relating to 1997/98 to 2008/09) 0 0 0 0 0
Adjustments for Impairments 0 0 0 9,460 31,862
Consolidated Budgetary Guidance -
Adjustment for Dual Accounting under IFRIC12* 0 0 0 0 2,100
PPAs from IFRS Transition not Included above
(for 09/10 Accounts) 0 0 0 0 0
Other agreed adjustments 0 0 0 0 0
Break-even in-year position (16,009) (16,844) (35,621) (26,214) (22,281)
Break-even cumulative position (15,989) (32,833) (68,454) (94,668) (116,949)
Due to the introduction of International Financial
Reporting Standards (IFRS) accounting in 2009/10,
NHS Trust’s financial performance measurement needs
to be aligned with the guidance issued by HM
Treasury measuring Departmental expenditure.
Therefore, the incremental revenue expenditure
resulting from the application of IFRS to IFRIC 12
schemes (which would include PFI schemes), which
has no cash impact and is not chargeable for overall
budgeting purposes, is excluded when measuring
Breakeven performance.
The Trust's recovery plan, approved by the SHA aims
to achieve break-even in 2011/12
If anticipated financial year of recovery is more than
two years state the period agreed with SHA
2005/06 2006/07 2007/08 2008/09 2009/10
% % % % %
Materiality test (I.e. is it equal to or less than 0.5%):
Break-even in-year position as a percentage of turnover -5% -5% -10% -7% -6%
Break-even cumulative position as a percentage of turnover -5% -9% -20% -25% -29%
The amounts in the above tables in respect of financial years 2005/06 to 2008/09 inclusive have not been restated
to IFRS and remain on a UK GAAP basis
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79
39.2 Capital cost absorption rate
The trust was required to absorb the cost of capital at
a rate of 3.5% of forecast average relevant net assets.
The rate is calculated as the percentage that dividends
paid on public dividend capital, totalling for 2009/10
£4549k, bearing to the actual average relevant net
assets of £129,978k, that is 3.5% (2008/09 3.1%)
From 2009/10 the dividend payable on public dividend
capital is based on the actual (rather than forecast)
average relevant net assets and therefore the actual
capital cost absorption rate is automatically 3.5%.
39.3 External financing
The Trust is given an external financing limit which it is permitted to undershoot
2009/10 2008/09
£000 £000
External financing limit (22,374) (20,388)
Cash flow financing (14,098) 13,441
Finance leases taken out in the year 2,026 0
Other capital receipts 0 0
External financing requirement (12,072) 13,441
Undershoot/(overshoot) (10,302) (33,829)
The EFL is set by the Department of Health and
determines how much (or less) cash than that
generated by its activites the Trust can spend in a year.
It is initially set at planning stage early in the year. The
Trust's EFL was based on its original planned deficit of
£24.7m, which would have led to a cash requirement
of £11.7m, allowing for non-cash items such as
impairments and depreciation plus capital expenditure.
The out-turn was a deficit of £56.2m, which with
non-cash items gives a cash requirement of £25.6m,
some £13.9m more than planned. Within the year, the
Trust received Public Dividend Captial of £5.0m, which
was covered by an EFL adjustment, leaving £8.9m
uncovered. In year, London SHA did recognise the
causes of the Trust's financial pressures and increased
the Trust's planned deficit from £24.7m to £54.1m.
£18m of this increase was due to non-cash items such
as unforeseen fixed asset impairments, the remaining
£11.4m requiring cash. Although the increased deficit
was supported by the SHA, the DH did not adjust the
Trust's EFL. Overshooting the EFL means that the Trust
has used more cash in year than the DH intended; it
does not give rise to a present or future liability to the
DH.
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39.4 Capital Resource Limit
The Trust is given a capital resource limit which it is not permitted to exceed.
2009/10 2008/09
£000 £000
Gross capital expenditure 15,424 6,094
Less: book value of assets disposed of (14,247) (16,300)
Plus: loss on disposal of donated assets 0 32
Less: capital grants 0 0
Less: donations towards the acquisition of non-current assets 0 (48)
Charge against the capital resource limit 1,177 (10,222)
Capital resource limit 1,799 (6,399)
(Over)/Underspend against the capital resource limit 622 3,823
40. Related party transactions
Barking, Havering and Redbridge Hospitals NHS Trust
is a body corporate established by order of the
Secretary of State for Health.
During the year none of the Board Members or
members of the key management staff or parties
related to them has undertaken any material
transactions with the Trust.
The Department of Health is regarded as a related
party. During the year the 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:
NHS London
Barking and Dagenham Primary Care Trust
Havering Primary Care Trust
Redbridge Primary Care Trust
South West Essex Primary Care Trust
West Essex Primary Care Trust
North East London Mental Health NHS Trust
NHS Professionals
NHS Litigation Authority
NHS Blood and Transplant
Other Primary Care, NHS and Foundation Trusts
London Strategic Health Authority
Newham PCT
Mid Essex PCT
South East Essex PCT
Tower Hamlets PCT
Waltham Forest PCT
NHS Purchasing and Supply Agency
In addition, the Trust has had a number of material
transactions with other Government Departments and
other central and local Government bodies. Such
transactions were performed in furtherance of the
Trust's normal activities.
The Trust has also received revenue and capital
payments from Barking, Havering and Redbridge
Hospitals NHS Trust Charity Fund, certain of the
Trustees for which are also members of the NHS Trust
Board.
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Annual Report & Accounts 2009-2010
81
41. Third Party Assets
The Trust held £1743 cash and cash equivalents at 31
March 2010 (£1645 - at 31 March 2009) which relates
to monies held by the NHS Trust on behalf of patients.
This has been excluded from the cash and cash
equivalents figure reported in the accounts.
42. Intra-Government and Other Balances
Current Non-current Current Non-current
receivables receivables payables payables
£000 £000 £000 £000
Balances with other Central Government Bodies 229 0 5,305 0
Balances with Local Authorities 0 0 0 0
Balances with NHS Trusts and Foundation Trusts 23,612 0 10,927 0
Balances with Public Corporations and Trading Funds 0 0 0 0
Intra Government balances 23,841 0 16,232 0
Balances with bodies external to Government 9,443 26,337 32,090 5,342
At 31 March 2010 33,284 26,337 48,322 5,342
Balances with other Central Government Bodies 625 0 3,053 0
Balances with Local Authorities 0 0 0 0
Balances with NHS Trusts and Foundation Trusts 9,646 1,658 2,934 0
Balances with Public Corporations and Trading Funds 0 0 0 0
Intra Government balances 10,271 1,658 5,987 0
Balances with bodies external to Government 39,751 27,373 34,656 6,025
At 31 March 2009 50,022 29,031 40,643 6,025
43. Losses and Special Payments
There were 177 cases of losses and special payments (2008/09: 354 cases) totalling £179,738 (2008/09:
£365,360) accrued during 2009/10.
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82
Barking, Havering & Redbridge University Hospitals NHS Trust
44. Transition to IFRS
The table below reconciles the movement in
taxpayers' equity as a result of the transition to
International Financial Reporting Standards with effect
from 1 April 2009.
IFRS has affected the Trust in two material ways, by
taking both the PFI and accrued employee benefits,
(annual leave) into the Statement of Financial Position,
not required by previous reporting requirements.
The PFI hospital was opened in 2006, and appear in
the re-stated comparatives for 2008/2009 under IFRS.
An impairment was recognised in these figures for a
downward valuation of the land and buildings as at 1
April 2008.
Because the accrued employee benefits were
recognised for the first time in the 2008/09
restatement, there would have been a retrospective
adjustment to the Income Statement for this.
Retained Revaluation Donated Government
earnings reserve asset grant
reserve reserve
£000 £000 £000 £000
Taxpayers’ equity at 31 March 2009 under UK GAAP: -75,322 16,148 1,100 0
Adjustments for IFRS changes:
Private finance initiative -58,308 1,061 0 0
Leases 0 0 0 0
Others : Accrued Employee Benefits -1,049 0 0 0
Adjustments for:
Impairments recognised on transition 0 0 0 0
UK GAAP errors 0 0 0 0
Taxpayers’ equity at 1 April 2009 under IFRS: -134,679 17,209 1,100 0
£000
Surplus/(deficit) for 2008/09 under UK GAAP -35,674
Adjustments for:
Private finance initiative -19,054
Leases 0
Others : Reduction in annual leave accrual 721
Surplus/(deficit) for 2008/09 under IFRS -54,007
The transition to IFRS has had no impact on payments, receipts or cash-flows.
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If you need help
This is the annual report for Barking, Havering and Redbridge University Hospitals NHS Trust. It is only available
in one, English format. However, if you would like someone to explain the content due to language difficulties
or sight impairment, please call the freephone number below (English-speaking only) and an interpreter will be
arranged.
Tel: 0800 389 8324 Text phone: 07932 942389
If you need help70

Produced by the communications department - June 2010
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