BHRUT annual report 2009 - Barking Havering and Redbridge ...
BHRUT annual report 2009 - Barking Havering and Redbridge ...
BHRUT annual report 2009 - Barking Havering and Redbridge ...
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<strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong><br />
University Hospitals<br />
NHS Trust<br />
Annual Report <strong>and</strong> Accounts <strong>2009</strong> - 2010
Annual Report & Accounts <strong>2009</strong>-2010<br />
1<br />
Contents<br />
Section<br />
Page<br />
A message from the Chairman <strong>and</strong> Chief Executive 2<br />
Healing, Caring, Serving 3<br />
Hitting the targets 4<br />
Celebrating our people 6<br />
New developments 9<br />
Improving patient experience 11<br />
Our staff 12<br />
Environment 14<br />
The Trust Board Members 15<br />
Operating <strong>and</strong> financial review 18<br />
Remuneration <strong>report</strong> 19<br />
Annual Accounts<br />
Chief Executive's Responsibilities 24<br />
Directors' Statements 25<br />
Statement of Internal Control 26<br />
Independent Auditors' Report 32<br />
Statement of comprehensive income 35<br />
Statement of financial position 36<br />
Statement of changes in taxpayers’ equity <strong>2009</strong>/10 37<br />
Statement of changes in taxpayers’ equity 2008/09 38<br />
Statement of cash flows 39<br />
Notes to the Accounts 40<br />
If you need help 73<br />
Contents
2<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
A message from the Chairman<br />
<strong>and</strong> Chief Executive<br />
Welcome to our Annual Report for <strong>2009</strong>/10.<br />
There is no doubt that the year brought some<br />
major successes.<br />
Our performance across the board has improved,<br />
which you can see detailed further on in this <strong>report</strong>.<br />
Making these improvements while cutting waiting<br />
times <strong>and</strong> working to a strict financial budget is due,<br />
in no small part, to the dedication <strong>and</strong> hard work of<br />
our staff <strong>and</strong> volunteers.<br />
To work alongside our Clinical Divisions, we have a<br />
new clinical leadership with Ian Abbs, Medical Director<br />
(on secondment from Guy’s <strong>and</strong> St Thomas’<br />
Foundation Trust), Deborah Wheeler, Director of<br />
Nursing, Dylan Jenkins, Director of Emergency Care<br />
<strong>and</strong> John Alcolado, Director of Medical Education.<br />
We have introduced changes throughout the<br />
organisation to ensure that patients are not staying in<br />
hospital any longer than they need to. Diagnostic tests<br />
are easier to access, results are available sooner, <strong>and</strong><br />
daily ward meetings have been arranged to discuss<br />
the care <strong>and</strong> progress of every single inpatient.<br />
The success of these individual changes has seen<br />
waiting times being cut, most notably in Accident <strong>and</strong><br />
Emergency. There is still some way to go, but a<br />
dedicated Emergency Care Transformation Team has<br />
enabled improvements to be made <strong>and</strong> embedded<br />
into the organisation.<br />
The experience of people while they are with us is<br />
hugely important, <strong>and</strong> something which we will<br />
continue to focus on. We have introduced an<br />
Improving Patient Experience Board, <strong>and</strong> Deborah<br />
Wheeler also established a nursing visible leadership.<br />
This sees senior nurses - including our Director of<br />
Nursing - back in uniform <strong>and</strong> back on the wards.<br />
Looking at issues from a grass roots level allows us to<br />
see what our patients, visitors <strong>and</strong> staff see, <strong>and</strong> spot<br />
any issues that need resolving or improving.<br />
Services have continued to develop. Notably this year<br />
we have been named as a Hyper Acute Stroke Unit for<br />
London – one of only eight across the capital. This will<br />
be a great boost for patients who suffer a stroke as<br />
they will be able to access the very best treatment<br />
right here on their doorstep - vastly improving clinical<br />
outcomes.<br />
We have continued to make much-needed financial<br />
savings this year, <strong>and</strong> have hit the targets laid down<br />
for us. The Trust is still in deficit, but is working<br />
steadily towards a break-even position.<br />
We would like to personally thank all our staff <strong>and</strong><br />
dedicated volunteers for bringing about these<br />
improvements <strong>and</strong> for continuing to work tirelessly to<br />
improve the services we offer.<br />
We are also pleased to have strong relationships with<br />
our primary <strong>and</strong> social care colleagues <strong>and</strong> with our<br />
patients to help shape the future of healthcare in the<br />
area.<br />
We would like to thank Barbara Liggins for being<br />
Acting Chair for the first nine months of <strong>2009</strong>/10.<br />
We place great emphasis on meeting <strong>and</strong> listening<br />
to staff, patients, visitors <strong>and</strong> our partners <strong>and</strong><br />
stakeholders. The Trust Board is committed to<br />
ensuring that we continue to improve the quality of<br />
care <strong>and</strong> patients’ experience so that the care<br />
delivered to all our patients is consistently of the<br />
required st<strong>and</strong>ard.<br />
Sir David Varney<br />
John Goulston<br />
A message from the Chairman <strong>and</strong> Chief Executive
Annual Report & Accounts <strong>2009</strong>-2010<br />
3<br />
Healing, caring, serving<br />
Serving 750,000 people from a variety of<br />
backgrounds <strong>and</strong> across a wide area, this Trust is<br />
one of the largest in the country.<br />
We deliver services from two district general hospitals<br />
– Queen’s in Romford <strong>and</strong> King George in<br />
Goodmayes.<br />
The Trust defines its vision as Healing, Caring, Serving<br />
- <strong>and</strong> in <strong>2009</strong>/10 we made major progress in<br />
improving services to deliver these aims.<br />
Our staff work tirelessly to ensure that patient care is<br />
at the heart of everything we do, despite the high<br />
number of people we treat 365 days a year.<br />
Between April <strong>2009</strong> <strong>and</strong> March 2010, the Trust<br />
recorded the following activity:<br />
A&E attendances<br />
King George saw 77,012 A&E attendances last year,<br />
whilst Queen’s had 110,047 people through the<br />
doors.<br />
That is a total number of 187,059 attendances at<br />
our Accident <strong>and</strong> Emergency departments.<br />
Births<br />
Midwives at King George delivered 2,622 babies,<br />
with another 6,786 being born at Queen’s.<br />
The total number of babies born at our hospitals<br />
was 9,408.<br />
Outpatients<br />
King George had 52,569 new outpatient<br />
appointments <strong>and</strong> 119,808 follow ups booked - a<br />
total of 172,377 appointments booked.<br />
Queen’s had 113,229 new <strong>and</strong> 285,469 follow up<br />
outpatient appointments - a total of 398,698<br />
appointments booked.<br />
Inpatients<br />
King George had 46,605 Inpatient Admissions<br />
during the year, with 81,930 patients staying at<br />
Queen’s.<br />
Inpatient admission across the Trust totalled<br />
128,535.<br />
The Trust as a whole dealt with 571,075 booked<br />
outpatient appointments<br />
Healing, caring, serving
4<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Hitting the targets<br />
Like all Trusts, we work to meet national targets which<br />
are set down by the Government. These cover a wide<br />
range of services, <strong>and</strong> include the maximum amount<br />
of time people should wait to be treated.<br />
We have had great success in improving our<br />
performance this year, which the table below shows.<br />
Existing <strong>and</strong> national 2007/08 2008/09 <strong>2009</strong>/10 Target<br />
priorities<br />
18 week referral to treatment waiting times<br />
Admitted N/A 94.50% 91.20% 90.00%<br />
Non-admitted N/A 96.90% 97.23% 95.00%<br />
(Q4 <strong>report</strong>ing (April-Feb)<br />
period)<br />
A&E waiting times<br />
4-Hour max.wait in A&E from arrival to 91.90% 96.02% 97.31% 98.00%<br />
admission, transfer or discharge<br />
Access to genito-urinary 95.00% 99.16% 99.93% 98%<br />
medicine (GUM) clinics<br />
Cancer urgent referral to first outpatient<br />
appointment waiting times<br />
2-Week GP referral to first 99.90% 99.00% 99.75% 93%<br />
outpatient appointment<br />
Cancelled operations<br />
Cancelled operations not 9.43% 2.87% 2.33% 5.00%<br />
re-admitted within 28 days.<br />
Cancer diagnosis to treatment waiting times<br />
New target<br />
31 Day diagnosis to 100% 95.40% 1 96.89% 1 96%<br />
treatment - all cancers<br />
Cancer urgent referral to<br />
treatment waiting times<br />
New target<br />
62 Day urgent referral to 97.99% 82.10% 1 81.62% 1 85%<br />
treatment – all cancers<br />
1<br />
New <strong>report</strong>ing arrangements to incorporate 18 week rules.<br />
Continued . . .<br />
Hitting the targets
Annual Report & Accounts <strong>2009</strong>-2010<br />
5<br />
. . . continued<br />
Existing <strong>and</strong> national 2007/08 2008/09 <strong>2009</strong>/10 Target<br />
priorities<br />
Clostridium difficile infections Cases identified Cases identified Cases identified<br />
218 126 80 All targets<br />
Max no of cases 2 Max no of cases 3 Max no of cases 3 achieved<br />
597 219 145<br />
2<br />
The Department of Health given number for that period for both GPs, residential homes, community hospitals <strong>and</strong> the Trust<br />
was no more than 597. Only 218 cases were identified.<br />
3<br />
Department of Health guidance changed splitting acute trust numbers from community numbers identifying hospital<br />
acquired <strong>and</strong> community acquired infection.<br />
Delayed transfers of care<br />
Percentage of inpatients with<br />
delayed transfer of care 3.51% 2.63% 3.78%
6<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Celebrating our people<br />
Innovations<br />
The Trust has a long history of success in innovation -<br />
with staff regularly recognised for developing groundbreaking<br />
techniques <strong>and</strong> inventions to improve<br />
healthcare.<br />
In <strong>2009</strong> we were named as Innovative Trust of the<br />
Year for submitting the highest number of ideas to<br />
NHS Innovations in London.<br />
Many of our doctors were also shortlisted or awarded<br />
prizes for their individual ideas. These included a<br />
cerebral aneurysm catheter system allowing greater<br />
control in brain surgery <strong>and</strong> a web-based h<strong>and</strong>over<br />
system to increase efficiency <strong>and</strong> cut risk when<br />
patients move from one doctor to another.<br />
Being named Innovative Trust of the Year allowed us a<br />
£25,000 prize to establish our own in-house<br />
competition.<br />
A Dragons’ Den-style Innovations Challenge was<br />
won by Manoj Srivastava (pictured below).<br />
Two neurosurgeons also won a coveted award for<br />
innovation.<br />
Harith Akram <strong>and</strong> Ian Low invented <strong>and</strong> developed<br />
a positioning aid which helps physicians treat patients’<br />
brains.<br />
A stereotactic frame is attached to a patient’s head<br />
using pins to keep it in a fixed position while they<br />
receive treatment.<br />
The positioning aid invented by Mr Low <strong>and</strong> Mr<br />
Akram holds the frame in place <strong>and</strong> allows minute<br />
adjustment, so it can be fitted more quickly <strong>and</strong><br />
accurately than ever before.<br />
Using their new invention the frames - which are<br />
regularly used around the world - can be fitted in just<br />
ten minutes <strong>and</strong> by only one member of staff.<br />
Previously it would have taken two or three members<br />
of staff significantly longer.<br />
The pair were awarded the Cutlers’ Surgical Prize<br />
<strong>and</strong> the Clarke medal at the <strong>annual</strong> Surgical Award<br />
Dinner (pictured below).<br />
Celebrating our people
Annual Report & Accounts <strong>2009</strong>-2010<br />
7<br />
Top employees<br />
This year saw the Trust’s third <strong>annual</strong> Outst<strong>and</strong>ing<br />
Achievement Awards.<br />
Working Smarter - Not Harder<br />
Award. Winners: Lisa Pape-Orton <strong>and</strong> Team<br />
- Sky A<br />
The awards were devised to recognise <strong>and</strong> celebrate<br />
outst<strong>and</strong>ing individual or team achievement <strong>and</strong><br />
performance within the Trust.<br />
More than 50 nominations were received in five<br />
categories, with all professions represented, including<br />
consultants, domestics, nurses <strong>and</strong> administration<br />
staff.<br />
BHR Outst<strong>and</strong>ing Achievement<br />
Award Winners <strong>2009</strong><br />
Outst<strong>and</strong>ing Patient Care award<br />
Winner: Dr Mas Ahmed<br />
Unsung Hero award. Winner:<br />
18-Weeks Support Team<br />
Most Improved Environment award<br />
Winner: Breast Screening Team<br />
Lifetime Achievement award<br />
Winner: Jackie Blank<br />
Celebrating our people
8<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
The winner of the Trust’s Employee of the Year<br />
Award was surgeon Aman Bhargava (pictured<br />
below).<br />
Mr Bhargava was nominated for the accolade by<br />
Stuart Wright - the son of one of his patients.<br />
Mr Wright said: “Mr Bhargava is without doubt one<br />
of the most talented surgeons in the UK. Twice he<br />
saved my mother’s life with his expert surgical skill<br />
when she has been so desperately ill we thought she<br />
would not survive.<br />
“He is outst<strong>and</strong>ingly professional <strong>and</strong> shows unique<br />
compassion <strong>and</strong> empathy at a very difficult <strong>and</strong><br />
upsetting time.”<br />
The Trust runs an Employee of the Month scheme,<br />
with 12 members of staff winning a prize for<br />
outst<strong>and</strong>ing service throughout the year.<br />
They then go through to the Employee of the Year<br />
final.<br />
Celebrating our people
Annual Report & Accounts <strong>2009</strong>-2010<br />
9<br />
New developments<br />
Stroke unit<br />
Queen’s Hospital has been named as one of only eight<br />
in London to become a Hyper-Acute Stroke Centre.<br />
The new unit will be fully operational by Autumn this<br />
year, providing specialist 24-hour care to patients<br />
following a stroke. This will include rapid assessment,<br />
CT scan <strong>and</strong> early treatment with clot-busting drugs if<br />
they are needed.<br />
Healthcare for London decided to establish three types<br />
of stroke unit across the capital:<br />
• Hyper acute units to provide the best diagnostic<br />
<strong>and</strong> clinical care in the first 72 hours after a stroke<br />
WHO Safety Checklist<br />
Queen’s <strong>and</strong> King George Hospital are two of the very<br />
first in the country to fully utilise the World Health<br />
Organisation’s surgical safety checklist. The checklist<br />
aims to reduce the number of possible complications<br />
in operating theatres. Every single patient undergoing<br />
an operation can now be confident that the checklist<br />
is completed at every stage of the procedure to ensure<br />
their safety <strong>and</strong> that they receive the best possible<br />
care. The WHO checklist has also been successfully<br />
adopted in other specialist areas outside of the<br />
operating theatres, such as when investigations are<br />
needed using advanced radiological procedures.<br />
• Local stroke units where patients can be cared for<br />
while they are still very ill <strong>and</strong> start the recovery<br />
process<br />
• A TIA service for people who have had a Transient<br />
Ischaemic Attack (TIA), or ‘mini stroke’<br />
Queen’s is one of only eight hospitals across the<br />
capital to be chosen to provide all three.<br />
The new unit should see clinical outcomes improve,<br />
with disabilities caused by a stroke significantly<br />
reduced.<br />
The unit is one of only two centres in the country<br />
offering patients a revolutionary robotic arm to help<br />
restore their movement after a stroke. These<br />
pioneering machines assist patients to repeat arm <strong>and</strong><br />
shoulder exercises many hundreds of times to give<br />
them the best possible chance of recovery.<br />
New developments
10<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Maternity Safety<br />
The Trust’s maternity service - one of the busiest in the<br />
country - has been given a glowing recommendation<br />
by safety assessors.<br />
This year the service was given an excellent safety<br />
score of 44 out of 50.<br />
Risk management assessors from the NHS Litigation<br />
Authority looked at more than a thous<strong>and</strong> pieces of<br />
evidence to check whether the service was running<br />
safely <strong>and</strong> in line with national guidelines.<br />
They were so impressed with what they found that<br />
they have awarded the Trust a Level 2 for maternity<br />
clinical risk management st<strong>and</strong>ards.<br />
After a two-day visit to the Trust, lead assessor Lynne<br />
Saunders said: “We have looked at a huge amount of<br />
evidence <strong>and</strong> have decided that the Trust is compliant<br />
at Level 2. This is no mean feat, particularly for a large<br />
maternity service in a complex area. Forty-four out of<br />
50 is an excellent score <strong>and</strong> the Trust is to be<br />
congratulated.”<br />
The maternity service is awarded marks out of ten for<br />
five key areas. It had to reach an overall score of 35 to<br />
pass.<br />
• It achieved nine out of ten for ‘organisation’,<br />
covering strategies, staffing <strong>and</strong> training<br />
• Clinical care was given a score of eight, described<br />
by the assessors as “a very excellent score. This<br />
category can be very tough. There was particularly<br />
good care of women in labour”.<br />
• High risk care was given top marks of ten out of<br />
ten<br />
• Communications was awarded eight out of ten,<br />
with particular praise given to mental health<br />
services<br />
• Post-natal <strong>and</strong> newborn care received a score of<br />
nine.<br />
Radiology<br />
The Trust’s Radiology Service has implemented 12-<br />
hour days <strong>and</strong> other changes to shift patterns,<br />
including the introduction of core teams for CT <strong>and</strong><br />
MRI that have led to increased capacity <strong>and</strong> a<br />
reduction in waiting times for both inpatients <strong>and</strong><br />
outpatients. Waiting times for examinations have also<br />
been cut as scanners are now open 7 days a week.<br />
More staff are available to <strong>report</strong> on images which<br />
means that doctors can now access results earlier than<br />
before.<br />
With the opening of the Loxford Polyclinic, local<br />
residents now have greater access to X-ray imaging<br />
<strong>and</strong> ultrasound closer to their homes, in the local<br />
community.<br />
New developments
Annual Report & Accounts <strong>2009</strong>-2010<br />
11<br />
Improving patient experience<br />
This year the Trust has been focussing on the care our<br />
patients receive, <strong>and</strong> ensuring they are having the best<br />
possible experience while they are with us.<br />
An Improving Patient Experience Board has been set<br />
up, with staff <strong>and</strong> patients looking at better ways of<br />
delivering care <strong>and</strong> communicating with patients <strong>and</strong><br />
visitors.<br />
The group covers everything from patient information<br />
to the quality of food. It is also planning to introduce<br />
real time surveys so that we can get immediate<br />
feedback from patients on how they are being treated<br />
<strong>and</strong> what improvements they would like to see.<br />
Our patient representatives also play an invaluable role<br />
in giving us a service user’s perspective on our<br />
hospitals <strong>and</strong> services.<br />
Visible Leadership<br />
This year a new programme was launched which sees<br />
all matrons <strong>and</strong> senior nursing staff – including our<br />
Director of Nursing – back on the wards.<br />
Every Monday they join a ward to look at key<br />
indicators of patient care, including pressure ulcer risk<br />
assessment, nutrition assessment, patient<br />
observations, <strong>and</strong> h<strong>and</strong> hygiene. The programme has<br />
been received positively by the wards, who have<br />
welcomed the additional support from senior nurses.<br />
St<strong>and</strong>ards of care are improving <strong>and</strong> ideas being<br />
shared to improve the all round patient experience.<br />
Building <strong>and</strong> redecoration work has taken place at<br />
King George Hospital this year to ensure that patients<br />
can be nursed in single sex areas, <strong>and</strong> do not have to<br />
share bathrooms with people of the opposite sex.<br />
New initiatives have also been introduced to make<br />
sure that patients are treated with privacy <strong>and</strong> dignity,<br />
such as protected meal times.<br />
Although the initiatives will take time to embed, our<br />
national patient survey results have improved year on<br />
year (table below).<br />
Patient experience 2007/08 2008/09 <strong>2009</strong>/10 Target<br />
Number of formal complaints received 1068 940 566 636<br />
Percentage of patients who always felt they N/A 70.00% 72.00% Not set<br />
were treated with dignity <strong>and</strong> respect<br />
(Annual Inpatient Survey)<br />
Percentage of patients who were always N/A 63.00% 71.00% Not set<br />
given enough privacy when discussing their<br />
condition or treatment<br />
Improving patient experience
12<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Our staff<br />
We employ over four <strong>and</strong> a half thous<strong>and</strong> Full Time<br />
Equivalent (FTE) staff, who are our most important<br />
resource. Without our skilled <strong>and</strong> dedicated workforce<br />
we could not continue to make a difference to the<br />
people who need to use our services. As a responsible<br />
employer, we aim to provide opportunities for career<br />
<strong>and</strong> personal development <strong>and</strong> to recognise the hard<br />
work <strong>and</strong> commitment of our staff.<br />
A Stroke Open Day was also held to attract Staff<br />
Nurses, Clinical Nurse Specialists, Stroke Facilitators<br />
<strong>and</strong> a Ward Sister.<br />
Over the past 12 months the total number of Staff<br />
Nurses appointed was 145 <strong>and</strong> the total number of<br />
HCAs during the same period was 115.<br />
Staff in post (FTE) March 31 2010<br />
Unqualified Nurses<br />
& Patient-care<br />
Support Workers<br />
643.8<br />
13%<br />
Allied Health<br />
Professionals<br />
315.0<br />
6%<br />
Professional, Technical<br />
& Scientific<br />
526.1<br />
11%<br />
Ancillary & Non-patient-care<br />
Support Workers<br />
30.0<br />
1%<br />
Midwives<br />
226.9<br />
5%<br />
Admin, Clerical<br />
& Maintenance<br />
973.8<br />
20%<br />
Qualified Nurses<br />
1396.9<br />
27%<br />
Medical Training grades<br />
378.8<br />
8%<br />
Medical Career grades<br />
417.9<br />
8%<br />
Despite a small overall growth in staff numbers, there<br />
has been growth in front-line roles - those with direct<br />
responsibility for patient care.<br />
Recruitment Activities<br />
A successful Maternity Open Day was held to recruit<br />
midwives <strong>and</strong> Neonatal Nurses. The event led to the<br />
recruitment of six substantive midwives, a Neonatal<br />
Nurse <strong>and</strong> two Bank Midwives.<br />
Sickness Absence<br />
Trust-wide sickness absence for <strong>2009</strong>/10 was 5.53%.<br />
The rate is calculated using the Electronic Staff Record<br />
(ESR) where all <strong>report</strong>ed sickness absence is recorded.<br />
ESR is able to calculate a percentage sickness absence<br />
rate using the total number of days absence recorded<br />
<strong>and</strong> total number of working days available.<br />
The Trust is taking action to support staff returning to<br />
work more quickly as well as instigating initiatives to<br />
Our staff
Annual Report & Accounts <strong>2009</strong>-2010<br />
13<br />
address the causes of sickness among the staff. A<br />
revised Management of Sickness Absence policy <strong>and</strong><br />
procedure was adopted in <strong>2009</strong>. This provides a<br />
procedure for managing <strong>and</strong> supporting people who<br />
are either persistently absent over short periods or<br />
have a long period off sick. Managers are responsible<br />
for monitoring sickness among their staff, being aware<br />
when patterns are emerging <strong>and</strong> dealing with issues<br />
quickly <strong>and</strong> informally so that a formal review is only<br />
conducted in serious cases. Return to work meetings,<br />
after every period of absence, strengthen the focus on<br />
the ongoing management of attendance.<br />
Staff Survey<br />
The <strong>annual</strong> NHS staff survey - which gives staff a<br />
confidential opportunity to record their views on being<br />
employed by the Trust - highlighted the aspects of<br />
performance that employees felt were good <strong>and</strong><br />
where management needed to concentrate efforts.<br />
Staff at the Trust took part in the <strong>2009</strong> National Staff<br />
Survey responding to questions about their<br />
experiences of working at King George <strong>and</strong> Queen’s<br />
hospitals. The survey showed the progress made in<br />
the previous year had continued. It found six areas<br />
where findings were better than average for acute<br />
trusts, including four where the Trust’s findings were<br />
in the top 20% including staff feeling their role makes<br />
a difference to patients, staff witnessing <strong>and</strong> <strong>report</strong>ing<br />
errors, near misses or incidents <strong>and</strong> staff experiencing<br />
physical violence from staff.<br />
Eighteen of the 40 key findings showed an<br />
improvement, with only one worse than the previous<br />
year. Improvements were seen in areas such as staff<br />
receiving job-relevant training, learning or<br />
development, having well structured appraisals, work<br />
pressure felt by staff <strong>and</strong> percentage of staff having<br />
experienced physical violence.<br />
Our staff
14<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Environment<br />
Sustainability<br />
The Trust has this year put together a Sustainable<br />
Development Management Plan to support work<br />
being done nationally to reduce carbon emissions.<br />
The Trust is committed to sustainable development,<br />
<strong>and</strong> the new plan builds upon the work we have<br />
already done to protect <strong>and</strong> enhance the environment.<br />
The plan applies to all Trust staff, contractors <strong>and</strong><br />
consultants <strong>and</strong> covers the following key areas of<br />
activity:<br />
• Transport <strong>and</strong> Procurement - Encouraging low<br />
carbon lifestyles <strong>and</strong> travel habits, investing in<br />
energy from sustainable sources, using the most<br />
energy efficient goods <strong>and</strong> services<br />
• Waste, Water <strong>and</strong> Energy - Using fewer material<br />
goods, using locally produced goods <strong>and</strong> services,<br />
minimising waste <strong>and</strong> maximising energy efficiency<br />
• People <strong>and</strong> Community - The right to live <strong>and</strong><br />
work in a health promoting environment<br />
• Buildings - Ensuring the focus of planning <strong>and</strong><br />
designing decisions supports physically active living,<br />
reduces reliance on cars <strong>and</strong> increases energy<br />
efficiency<br />
Environmental, Social & Community<br />
The Trust continues to implement the sustainability<br />
agenda across the organisation, looking at the main<br />
areas of travel, procurement, facilities, workforce <strong>and</strong><br />
community. Now with the new Energy & Waste<br />
Management Specialist on board, the Trust has been<br />
establishing commitment <strong>and</strong> accountability for<br />
environmental impacts <strong>and</strong> improved efficiency. A<br />
comprehensive strategy to address the sustainability<br />
agenda is being developed. Implementing the strategy<br />
<strong>and</strong> embedding sustainable development within the<br />
Trust will introduce better management of the Trust’s<br />
carbon footprint, as well as a more robust monitoring<br />
system of key sustainability areas.<br />
In <strong>2009</strong>/10, the Trust commissioned energy<br />
consultants to comply with new <strong>and</strong> revised energy<br />
legislation <strong>and</strong> feasibility studies for improving energy<br />
efficiency. Waste Management has been going<br />
through various reviews to introduce new recycling<br />
procedures throughout the Trust. The Trust has limited<br />
car parking facilities, which encourage patients,<br />
visitors <strong>and</strong> staff to travel by public transport, <strong>and</strong> the<br />
Trust offers an interest-free season ticket loan. The<br />
Trust also supports the Cycle to Work scheme in<br />
partnership with Cycling Solutions, to encourage staff<br />
to cycle. Under the scheme, the costs of buying bikes<br />
<strong>and</strong> cycling accessories are deducted direct from<br />
salaries, which means that staff benefit through the<br />
non-payment of tax, national insurance <strong>and</strong> pension<br />
contributions on this amount.<br />
Environment
Annual Report & Accounts <strong>2009</strong>-2010<br />
15<br />
The Trust Board members<br />
Chairman: Sir David Varney<br />
David joined the Trust as Chairman<br />
in January 2010.<br />
He joined Shell in 1968 after<br />
graduating from the University of<br />
Surrey with a degree in chemistry.<br />
He has worked in Australia, Holl<strong>and</strong><br />
<strong>and</strong> Sweden. In 1996, he left Shell <strong>and</strong> became Chief<br />
Executive of BG Group (previously British Gas).<br />
In 2001, he was appointed Executive Chairman of<br />
MM02. He chaired Business in the Community, was<br />
Chairman of HM Revenue <strong>and</strong> Customs between<br />
2004 <strong>and</strong> 2006 <strong>and</strong> President of the Chartered<br />
Management Institute.<br />
Most recently, he was the Prime Minister’s Adviser on<br />
Public Service Transformation until <strong>2009</strong>.<br />
Chief Executive: John Goulston<br />
John Goulston joined the Trust as<br />
Interim Chief Executive in October<br />
2007. He was appointed<br />
substantively as Chief Executive in<br />
March 2008.<br />
John worked at Barts <strong>and</strong> The London NHS Trust from<br />
2002 to 2007. John graduated in economics at Hull<br />
University before joining the Southeast Thames<br />
Regional Health Authority’s finance training scheme.<br />
Once qualified as an accountant he joined<br />
accountancy firm Coopers <strong>and</strong> Lybr<strong>and</strong>, where he<br />
spent three years in public sector audit <strong>and</strong> another<br />
three in health consultancy.<br />
He returned to the NHS in 1992, working as Finance<br />
Director of the former Crawley <strong>and</strong> Horsham Trust for<br />
three years. He took the same post at the Royal Free<br />
Hampstead NHS Trust for seven years before moving<br />
onto Barts <strong>and</strong> The London.<br />
As Interim Chief Executive at the Trust, <strong>and</strong> previously<br />
as Deputy Chief Executive, John led the £1bn<br />
redevelopment programme for Barts <strong>and</strong> the Royal<br />
London Hospitals, which includes a shared, long-term<br />
service vision <strong>and</strong> plan with the North East London<br />
primary care trusts.<br />
Medical Director: Ian Abbs<br />
Ian qualified in Medicine from<br />
London University in 1984. He<br />
undertook postgraduate research<br />
training as a nephrologist at Guy’s<br />
<strong>and</strong> St Thomas Hospitals, where he<br />
was later appointed as a consultant<br />
nephrologist in 1994.<br />
His clinical <strong>and</strong> research interests are in transplantation<br />
<strong>and</strong> immune renal disease, <strong>and</strong> Ian developed an<br />
increasing interest in the organisation <strong>and</strong><br />
management of clinical services as a Clinical <strong>and</strong><br />
Divisional Director.<br />
He was Director for Clinical Academic Group<br />
Development for King’s Health Partners Academic<br />
Health Sciences Centre (AHSC) <strong>and</strong> most recently, as<br />
an Associate Medical Director at Guy’s <strong>and</strong> St Thomas,<br />
he worked on the integration of the community<br />
provider arm with the AHSC.<br />
He joined the Trust as Medical Director in April 2010.<br />
Director of Human Resources:<br />
Ruth McAll<br />
Ruth McAll joined the Trust in<br />
December 2008 as an Interim HR<br />
Director. Ruth has 15 years<br />
experience as an HR Director with a<br />
variety of NHS Trusts, including<br />
mental health, community <strong>and</strong><br />
Foundation Trusts.<br />
Ruth’s objectives at BHR are to develop a structure<br />
<strong>and</strong> function for HR that is able to help staff <strong>and</strong><br />
managers deliver good practices in people<br />
management.<br />
Ruth was a member of the national pensions review,<br />
lead in HR networks <strong>and</strong> NHS conference.<br />
The Trust Board members
16<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Director of Delivery:<br />
Neill Moloney<br />
Neill Moloney joined <strong>BHRUT</strong> in May<br />
2008 from Barts <strong>and</strong> the London<br />
NHS Trust where he was Head of<br />
Information <strong>and</strong> Performance.<br />
Responsibilities included leading the<br />
contracting process with<br />
commissioners for the Trust.<br />
Prior to this he was a General Manager for over four<br />
years at Mid Essex Hospitals NHS Trust in Chelmsford<br />
<strong>and</strong> Birmingham Heartl<strong>and</strong>s <strong>and</strong> Solihull NHS Trust,<br />
managing a range of clinical <strong>and</strong> non-clinical services.<br />
As a Commissioning Manager for Birmingham Health<br />
Authority, Neill led on development of the winter <strong>and</strong><br />
emergency plans <strong>and</strong> was responsible for<br />
commissioning specialised services.<br />
With a background in business planning, information<br />
provision <strong>and</strong> operational management Neill’s priorities<br />
are to ensure plans <strong>and</strong> enabling strategies are in<br />
place to support the delivery of the Trust’s clinical<br />
services.<br />
Director of Nursing:<br />
Deborah Wheeler<br />
Deborah Wheeler joined the Trust as<br />
Director of Nursing in January 2010<br />
from the Whittington NHS Trust<br />
where she held the post of Director<br />
of Nursing <strong>and</strong> Clinical<br />
Development. Deborah trained as a<br />
nurse at St Bartholomew's Hospital, <strong>and</strong> spent her<br />
clinical career in orthopaedic nursing. She<br />
subsequently held a variety of management posts at<br />
the Royal National Orthopaedic Hospital, Stanmore.<br />
Deborah has lived in the <strong>Barking</strong>side area for the last<br />
25 years. Her children were born in <strong>Barking</strong> Hospital<br />
<strong>and</strong> King George Hospital.<br />
Director of Finance:<br />
David Wragg<br />
David Wragg joined the Trust in<br />
April <strong>2009</strong> after nine years as<br />
Finance Director at the Queen<br />
Elizabeth Hospital NHS Trust in<br />
Woolwich, SE London, where he<br />
also looked after estates <strong>and</strong><br />
facilities management.<br />
David had a leading role in the project to merge the<br />
Queen Elizabeth Hospital NHS Trust with Bromley<br />
Hospitals NHS Trust <strong>and</strong> Queen Mary’s Hospital NHS<br />
Trust to form South London Healthcare NHS Trust.<br />
He has also contributed financial leadership to the<br />
Picture of Health project, which has made important<br />
<strong>and</strong> far reaching recommendations for the<br />
reorganisation of acute hospital services in outer SE<br />
London.<br />
Before joining Queen Elizabeth, David spent 15 years<br />
working in management consultancy <strong>and</strong> external<br />
audit for NHS organisations.<br />
David’s main priorities are helping to address the<br />
service <strong>and</strong> financial challenges faced by <strong>BHRUT</strong>.<br />
David is a keen football fan <strong>and</strong> makes no apologies<br />
for being an Arsenal season ticket holder.<br />
Director of Strategy <strong>and</strong><br />
Planning: Robert Royce<br />
Robert Royce joined the Trust in<br />
January 2010.<br />
Previously, Robert was Director of<br />
Operations, Planning, Estates <strong>and</strong><br />
Facilities in a large acute trust in<br />
Wales. He has also been Interim Director of<br />
Operations, Division of Emergency Care <strong>and</strong> Specialist<br />
Medicine at South London Healthcare NHS Trust.<br />
Robert’s key priorities are to drive forward the<br />
implementation of the Trust’s clinical strategy <strong>and</strong> to<br />
ensure the Trust has a robust process by which it’s<br />
objectives are monitored <strong>and</strong> delivered<br />
The Trust Board members
Annual Report & Accounts <strong>2009</strong>-2010<br />
17<br />
Non-executive directors<br />
Barbara Liggins has a business<br />
background of 33 years in banking<br />
<strong>and</strong> senior management. Since<br />
1996 she has worked at board level,<br />
initially as a Member of the Essex<br />
Police Authority <strong>and</strong> since 2004 as a<br />
<strong>BHRUT</strong> Non-Executive Director. She<br />
is the Chair of Trustees at Essex<br />
Police Museum <strong>and</strong> retired as a magistrate serving on<br />
the South West Essex Bench at the end of 2008.<br />
Barbara has 20 years NHS experience in various roles<br />
including being a member of the <strong>Barking</strong> <strong>and</strong><br />
<strong>Havering</strong> Family Practitioners Committee, a conciliator<br />
for North <strong>and</strong> South Essex Health Authorities as well<br />
as being a convener for Southend General Hospital.<br />
She spent the first nine months of <strong>2009</strong>/10 as Acting<br />
Chairman, prior to the appointment of Sir David<br />
Varney.<br />
Mark Hicks is a Senior Vice<br />
President at Marsh Ltd, responsible<br />
for placement <strong>and</strong> management of<br />
risk <strong>and</strong> insurance programmes for<br />
large corporate clients <strong>and</strong> lives in<br />
Woodford Green.<br />
Mark remains involved with<br />
voluntary activities within the Trust.<br />
Renata Drinkwater has 27 years<br />
experience of providing strategic<br />
business advice at Board level in<br />
commercial, public sector, voluntary,<br />
not-for-profit <strong>and</strong> charitable<br />
organisations in the UK, Europe <strong>and</strong><br />
the Middle East. Most of her career<br />
has been spent in management<br />
consultancy with global professional services firms –<br />
11 years with KPMG, <strong>and</strong> seven years with Ernst <strong>and</strong><br />
Young as the partner responsible for setting up <strong>and</strong><br />
managing its Leisure <strong>and</strong> Tourism sector management<br />
consulting group.<br />
Renata is an Associate Director of Capita Symonds<br />
Consulting, <strong>and</strong> also runs her own consulting practice.<br />
She is a Trustee of Diabetes UK.<br />
Stuart Cruickshank was the<br />
Director General <strong>and</strong> Chief Finance<br />
Officer of HM Revenue <strong>and</strong><br />
Customs.<br />
Trained as an accountant, Stuart<br />
made it to the top of his<br />
profession, <strong>and</strong> is now using his<br />
skills to help steer the Trust through<br />
the coming years.<br />
Stuart was appointed in June 2008 <strong>and</strong> is the Chair of<br />
the Audit Committee.<br />
Keith Mahoney was appointed in<br />
December 2008 <strong>and</strong> has 30 years<br />
experience with major retail<br />
organisations. In his role as Head<br />
of Logistics (Food) for Marks <strong>and</strong><br />
Spencer, he managed a budget of<br />
£200 million. Keith is also a<br />
volunteer for many charities.<br />
Professor Raymond Playford is the<br />
Deputy Warden <strong>and</strong> Professor of<br />
Medicine at Queen Mary’s School of<br />
Medicine <strong>and</strong> Dentistry, <strong>and</strong> has had<br />
a long <strong>and</strong> illustrious career within<br />
the NHS <strong>and</strong> world-renowned<br />
teaching hospitals <strong>and</strong> universities.<br />
He officially began his four-year term<br />
with the Trust in February <strong>2009</strong>.<br />
Farewell<br />
During the year <strong>2009</strong>/10 the Trust said farewell to<br />
Director of Nursing Dickon Weir-Hughes <strong>and</strong><br />
Medical Director Yasmin Drabu. We would like to<br />
thank them for their invaluable contribution to the<br />
Trust.<br />
Welcome<br />
A warm welcome to Chairman Sir David Varney,<br />
Medical Director Ian Abbs, Director of Nursing<br />
Deborah Wheeler <strong>and</strong> Director of Strategy <strong>and</strong><br />
Planning Robert Royce.<br />
The Trust Board members
18<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Operating <strong>and</strong> Financial Review <strong>2009</strong>/10<br />
The requirement for NHS bodies to prepare an<br />
Operating <strong>and</strong> Financial Review as part of the <strong>annual</strong><br />
<strong>report</strong> was introduced in 2005/6. The OFR seeks to<br />
provide information on the developments, trends,<br />
performance <strong>and</strong> business position of the Trust in<br />
terms both of the year in question <strong>and</strong> future<br />
development.<br />
Review of <strong>2009</strong>/10<br />
The Trust agreed a Plan with NHS London for <strong>2009</strong>/10<br />
for an income <strong>and</strong> expenditure deficit of £8.0m,<br />
excluding the technical impact of asset impairments<br />
<strong>and</strong> of implementation of International Reporting<br />
St<strong>and</strong>ards (IFRS). The Plan compared with a deficit of<br />
£29.1m in 2008/09 (IFRS re-stated <strong>and</strong> excluding<br />
impairments) <strong>and</strong> an underlying deficit of £37.5m. The<br />
planned improvement in <strong>2009</strong>/10 was primarily driven<br />
by a significant Cost Improvement Programme of<br />
£33.3m.<br />
As part of its contract agreement with the local<br />
Primary Care Trusts for <strong>2009</strong>/10, the Trust agreed to<br />
jointly commission an independent review in to the<br />
value of its non-PbR service agreements, which had<br />
been subject to a long-st<strong>and</strong>ing dispute with the PCTs.<br />
The outcome of this review was concluded in the last<br />
quarter of the financial year <strong>and</strong> resulted in a £21m<br />
adverse movement in the planned income position.<br />
This was partially offset by £8m non-recurrent ‘risk<br />
pool’ support from the PCTs, to mitigate the impact of<br />
the review. The control total Plan deficit was adjusted<br />
by NHS London for these factors, which together with<br />
a favourable adjustment of £1.3m, gave a revised<br />
target deficit for the Trust of £19.7m.<br />
The Trust finished the year with a deficit of £22.3m,<br />
excluding the technical impact of fixed asset<br />
impairments (£31.9m) <strong>and</strong> IFRS (£2.1m). This was<br />
£2.6m above the control total of £19.7m, with the<br />
main reason being disputed income of £2.6m with<br />
local PCTs at year end, which the Trust provided<br />
against in the Accounts.<br />
The Trust did not achieve its duty to break even over<br />
the five year period ending 31 March 2010. The<br />
relevant cumulative deficit was £116.9m. Accordingly,<br />
the external auditor referred the Trust to the Secretary<br />
of State under section 19 of the Audit Commission<br />
Act 1998.<br />
2010/11 Plans<br />
The Trust has provisionally agreed a Plan deficit with<br />
NHS London for <strong>2009</strong>/10 of £19.4m (excluding<br />
impairments <strong>and</strong> IFRS). Taking away the impact of the<br />
PCT risk pool support <strong>and</strong> other non-recurrent<br />
measures taken to meet the 09/10 control total, the<br />
underlying position coming in to 2010/11 was a<br />
£41.1m deficit. The Trust also has additional cost<br />
pressures in 2010/11 of £19.2m <strong>and</strong> a reduced<br />
income contribution of £10.5m arising from reduced<br />
activity dem<strong>and</strong> from PCTs. Against this, the Trust has<br />
benefited from net pricing gains of around £13.0m<br />
(including an increase in the Market Forces Factor<br />
funding, removal of the out-patient scaling<br />
adjustment, less £5m risk pool support to the PCTs)<br />
<strong>and</strong> is planning for a Cost Improvement Programme of<br />
£34.5m (8.5%) <strong>and</strong> £3.9m of other upside<br />
adjustments. Excluding the £5m risk pool support, the<br />
plan is therefore to improve the underlying deficit<br />
position from £41.1m to £15.4m, a reduction of<br />
£25.7m.<br />
The cumulative deficit at the end of 2010/11 is<br />
therefore planned to be £136.3m. As part of the<br />
Medium Term Financial Strategy agreed in 2008/09,<br />
NHS London, in conjunction with the Challenged Trust<br />
Board of PCTs, earmarked £84m to eliminate the<br />
accumulated deficit, based on the planned position as<br />
at the beginning of <strong>2009</strong>. The NHSLA <strong>and</strong> the CTB are<br />
assessing the scope for use of further funds to<br />
eliminate the planned deficit to the end of 2010/11.<br />
The Trust’s role will be to deliver the control total for<br />
2010/11<br />
Operating <strong>and</strong> Financial Review
Annual Report & Accounts <strong>2009</strong>-2010<br />
19<br />
IFRS Preparations<br />
The Trust has prepared the Accounts under<br />
International Financial Reporting St<strong>and</strong>ards (IFRS) for<br />
the first time in <strong>2009</strong>/10. The Trust re-stated its<br />
2008/09 comparative position <strong>and</strong> the <strong>2009</strong>/10<br />
opening balances under IFRS, which have been<br />
externally audited. The main impact on the revenue<br />
position in <strong>2009</strong>/10 has been to account for the PFI<br />
contract for Queen’s Hospital as a finance lease <strong>and</strong><br />
therefore as an asset on the balance sheet, which<br />
impacts on the accounting transactions going through<br />
the I&E position. Overall there was an adverse impact<br />
of £2.0m in <strong>2009</strong>/10, which is excluded from the<br />
Trust’s position when assessing performance against<br />
the control total.<br />
Financial Governance<br />
The Trust’s financial situation is monitored by its<br />
Finance Committee, which was chaired by Non<br />
Executive Director Mark Hicks, prior to the<br />
appointment of the new Chairman, Sir David Varney<br />
in January 2010, who took over the Chairmanship<br />
from that point. There were eight meetings held in<br />
<strong>2009</strong>/10, of which Mark Hicks chaired two, Barbara<br />
Liggins (Acting Chairman) five <strong>and</strong> Sir David Varney<br />
one. The Trust Audit Committee, which is chaired by<br />
Stuart Cruickshank, monitors the Trusts governance<br />
arrangements. Stuart resigned his chairmanship of the<br />
Audit Committee in June 2010.<br />
The Trust’s current external auditors are the Audit<br />
Commission. The cost of their work performed<br />
amounted to £311k for the year.<br />
Pension liabilities have been accounted for in<br />
accordance with note 1.7 of the Accounts.<br />
Remuneration Report<br />
The remuneration package <strong>and</strong> conditions of service<br />
for Executive Directors is agreed by the Trust<br />
Remuneration Committee, a Committee of the Board<br />
of Directors consisting of the Non-Executive Directors,<br />
including the Chairman of the Trust.<br />
The remuneration for certain Executive Directors does<br />
include performance related bonuses <strong>and</strong> none of the<br />
Executives receives personal pension contributions<br />
other than their entitlement under the NHS pension<br />
scheme.<br />
Each year, the Remuneration Committee considers the<br />
contribution of each Director against the functions of<br />
the post as defined in the current job description <strong>and</strong><br />
as foreseen for the future. This is carried out in<br />
parallel with a review of the individual’s career<br />
development <strong>and</strong> potential opportunities for<br />
progression. The Remuneration Committee considers<br />
the matter of succession planning, although all<br />
Executive Directors hold permanent contracts.<br />
The notice period for Executive Directors is six months<br />
<strong>and</strong> there are no arrangements for termination<br />
payments or compensation for early termination of<br />
contract.<br />
Non-Executive Directors, including the Chairman, are<br />
appointed by The Appointments Commission for<br />
specified terms subject to re-appointment thereafter at<br />
intervals of no more than four years <strong>and</strong> to the<br />
relevant laws relating to the removal of a Director.<br />
The Constitution currently requires Non-Executive<br />
Directors to retire after eight years’ service.<br />
The Remuneration Committee met five times during<br />
<strong>2009</strong>/10.<br />
Remuneration Committee Members<br />
Chair – Sir David Varney<br />
Barbara Liggins<br />
Ray Playford<br />
John Goulston<br />
Ruth McAll<br />
Remuneration Report
20<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
In determining Directors’ pay <strong>and</strong> conditions, the<br />
Remuneration Committee took into account<br />
comparative information available from NHS Partners<br />
survey <strong>and</strong> the IDS Boardroom Pay Report.<br />
The level of remuneration for non-executive Board<br />
Members is based on an average expected workload<br />
of three to four days a month for Non-Executive<br />
Directors <strong>and</strong> two to three days a week for the<br />
Chairman.<br />
The contracts of Directors who served during the year<br />
are summarised in the table below.<br />
Role Starting date Title First Name Surname<br />
Director of Nursing 01-Nov-09 Professor Dickon Weir-Hughes<br />
Chairman 14-Jan-10 Sir David Varney<br />
Chief Executive 01-Mar-08 Mr. John Goulston<br />
Director of Delivery 12-May-08 Mr. Neill Moloney<br />
Director of Finance 01-Apr-09 Mr. David Wragg<br />
Director of HR 01-Dec-08 Mrs. Ruth McAll<br />
Director of Nursing 04-Jan-10 Ms. Deborah Wheeler<br />
Medical Director 01-Mar-06 Dr Yasmin Drabu<br />
Director of Strategy<br />
<strong>and</strong> Planning 18-Jan-10 Mr Robert Royce<br />
Non Executive Director 18-Jun-08 Mr. Stuart Cruickshank<br />
Non Executive Director 01-Feb-06 Ms. Renata Drinkwater<br />
Non Executive Director 01-Jan-04 Mr. Mark Hicks<br />
Non Executive Director 01-Aug-04 Mrs. Barbara Liggins<br />
Non Executive Director 01-Dec-08 Mr. Keith Mahoney<br />
Non Executive Director 01-Feb-09 Professor Raymond Playford<br />
Remuneration Report
Annual Report & Accounts <strong>2009</strong>-2010<br />
21<br />
Directors’ salary table (this is audited)<br />
<strong>2009</strong>/10 2008/09<br />
Salary Other Benefits in Salary Other Benefits in<br />
Name <strong>and</strong> Title (b<strong>and</strong>s of Remuneration Kind (b<strong>and</strong>s of Remuneration Kind<br />
£5,000) (b<strong>and</strong>s of (rounded to £5,000) (b<strong>and</strong>s of (rounded to<br />
£5,000) nearest £100) £5,000) nearest £100)<br />
£000 £000 £00 £000 £000 £00<br />
Chairman<br />
D Varney (from January 2010) 0 - 5 - - - - -<br />
B. Liggins (from May 2008 to Dec <strong>2009</strong>) - - - 15 - 20 - -<br />
Non-Executive Directors<br />
R. Drinkwater 5 - 10 - - 5 - 10 - -<br />
M. Hicks 5 - 10 - - 5 - 10 - -<br />
B. Liggins (from January 2010) 15 - 20 - - 0 - 5 - -<br />
S. Cruickshank 5 - 10 - - 0 - 5 - -<br />
K. Mahoney 5 - 10 - - 0 - 5 - -<br />
R. Playford 5 - 10 - - 0 - 5 - -<br />
Chief Executive<br />
J Goulston 180 - 185 - - 175 - 180 - -<br />
Medical Director<br />
Y. Drabu (seconded to DOH) 170 - 175 - - 145 - 150 - -<br />
Director of Human Resources<br />
R. McAll 95 - 100 - - 20 - 25 - -<br />
P. Stone (until 31 August 2008) - - - 65 - 70 - -<br />
Director of Finance<br />
D. Wragg (from 1 April <strong>2009</strong>) 150 - 155 - - - - -<br />
P. Church (interim) (from 1 Jan <strong>2009</strong> to 31 March <strong>2009</strong>) - - - 85 - 90 - -<br />
T. Smith (until 31 December 2008) - - - 95 - 100 - -<br />
Director of Nursing &<br />
Clinical Governance<br />
D. Wheeler (from 1 January 2010) 20 - 25 - - - - -<br />
E. Wright (interim) (from 1 Nov <strong>2009</strong> to 31 Dec <strong>2009</strong>) 15 - 20 - - - - -<br />
D. Weir-Hughes (to 31 October <strong>2009</strong>) 65 - 70 - - 105 - 110 - -<br />
Director of Delivery<br />
N. Moloney 115 - 120 - - 90 - 95 - -<br />
Director of Strategy & Planning<br />
R. Royce (interim) (from 18 January 2010) 30 - 35 - - - - -<br />
Benefits-in-kind means the taxable value of benefits<br />
provided. The values are calculated in accordance with<br />
Inl<strong>and</strong> Revenue rules <strong>and</strong> relate to leased cars less the<br />
contribution made by the employee.<br />
Remuneration Report
22<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Directors’ pension table (this is audited)<br />
Real<br />
increase in<br />
pension at<br />
age 60<br />
(b<strong>and</strong>s of<br />
£2,500)<br />
Real<br />
increase in<br />
pension<br />
lump sum at<br />
age 60<br />
(b<strong>and</strong>s of<br />
£2,500)<br />
Total<br />
accrued<br />
pension at<br />
age 60 at 31<br />
March 2010<br />
(b<strong>and</strong>s of<br />
£5,000)<br />
Lump sum<br />
at age 60 at<br />
31 March<br />
2010 (b<strong>and</strong>s<br />
of £5,000)<br />
Cash<br />
equivalent<br />
transfer<br />
value at 31<br />
March 2010<br />
Cash<br />
equivalent<br />
transfer<br />
value at 31<br />
March <strong>2009</strong><br />
Real<br />
increase in<br />
cash<br />
equivalent<br />
transfer<br />
value<br />
(b<strong>and</strong>s of<br />
£5,000)<br />
Employer’s<br />
contribution<br />
to stakeholder<br />
pension<br />
£000<br />
£000<br />
£000<br />
£000<br />
£000<br />
£000<br />
£000<br />
£000<br />
Chief Executive<br />
J. Goulston<br />
2.5 - 5<br />
7.5 - 10<br />
30 - 35<br />
100 - 105<br />
684<br />
574<br />
90 - 95<br />
0<br />
Medical Director<br />
Y. Drabu<br />
7.5 - 10<br />
27.5 - 30<br />
45 - 70<br />
205 - 210<br />
1,733<br />
1,249<br />
450 - 455<br />
0<br />
Director of Human<br />
Resources<br />
R. McAlll<br />
5 - 7.5<br />
17.5 - 20<br />
30 - 35<br />
95 - 10<br />
667<br />
492<br />
160 - 165<br />
0<br />
Director of Finance<br />
D. Wragg<br />
5 - 7.5<br />
7.5 - 10<br />
25 - 30<br />
80 - 85<br />
468<br />
347<br />
110 - 115<br />
0<br />
Director of Nursing<br />
D. Weir-Hughes<br />
D. Wheeler<br />
(0 - 2.5)<br />
2.5 - 5<br />
(2.5 - 5)<br />
2.5 - 5<br />
20 - 25<br />
30 - 35<br />
65 - 70<br />
90 - 95<br />
288<br />
555<br />
351<br />
471<br />
(70 - 75)<br />
70 - 75<br />
0<br />
0<br />
Director of Delivery<br />
N. Moloney<br />
5 - 7.5<br />
15 - 17.5<br />
25 - 30<br />
75 - 80<br />
361<br />
259<br />
95 - 100<br />
0<br />
E Wright’s pension has not been disclosed as she was<br />
acting up for a very short period whilst the substantive<br />
post was filled.<br />
As Non Executive Directors do not receive pensionable<br />
remuneration, there are no entries in respect of<br />
pensions for them.<br />
A cash equivalent transfer value (“CETV”) is the<br />
actuarially assessed capital value of the pension<br />
scheme benefits accrued by a member at a particular<br />
point in time. The benefits valued are the member's<br />
accrued benefits <strong>and</strong> any contingent spouse's pension<br />
payable from the scheme. A CETV is a payment made<br />
by a pension scheme, or arrangement to secure<br />
pension benefits in another pension scheme or<br />
arrangement when the member leaves a scheme <strong>and</strong><br />
chooses to transfer the benefits accrued in their<br />
former scheme. Where individuals have left the Trust<br />
during the year the cash equivalent transfer values<br />
provided by the NHS Business Services Authority (NHS<br />
Pensions) at 31 March 2010 are <strong>report</strong>ed <strong>and</strong> not at<br />
the date of leaving.<br />
The pension figures shown relate to the benefits that<br />
the individual has accrued as a consequence of their<br />
total membership of the pension scheme, not just<br />
their service in a senior capacity to which the<br />
disclosure applies. The CETV figures include the value<br />
of any pension benefits in another scheme or<br />
arrangement that the individual has transferred to the<br />
NHS pension scheme. They also include any<br />
additional pension benefit accrued to the member as a<br />
result of their purchasing additional years of pension<br />
service in the scheme at their own cost. CETVs are<br />
Remuneration Report
Annual Report & Accounts <strong>2009</strong>-2010<br />
23<br />
calculated within the guidelines <strong>and</strong> framework<br />
prescribed by the Institute <strong>and</strong> Faculty of Actuaries.<br />
Real increase in CETV – This reflects the increase in<br />
CETV effectively funded by the employer. It takes<br />
account of the increase in accrued pension due to<br />
inflation, contributions paid by the employee<br />
(including the value of any benefits transferred from<br />
another pension scheme or arrangement) <strong>and</strong> uses<br />
common market valuation factors for the start <strong>and</strong><br />
end of the period.<br />
The Trust has not made any contributions to<br />
Stakeholder Pensions for senior managers during the<br />
year.<br />
Remuneration Report
24<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Annual Accounts<br />
Foreword to the accounts<br />
These accounts for the year ended 31 March 2010<br />
have been prepared by the <strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong><br />
<strong>Redbridge</strong> University Hospitals NHS Trust under section<br />
98(2) of the National Health Service Act 1977 (as<br />
amended by section 24(2), schedule 2 of the National<br />
Health Service <strong>and</strong> Community Care Act 1990) in the<br />
form which the Secretary of State has, with the<br />
approval of the Treasury, directed.<br />
John Goulston<br />
Chief Executive<br />
Date: 9 June 2010<br />
Statement of the Chief Executive's responsibilities<br />
as the Accountable Officer of the Trust<br />
The Chief Executive of the NHS has designated that<br />
the Chief Executive should be the Accountable Officer<br />
to the trust. The relevant responsibilities of<br />
Accountable Officers are set out in the Accountable<br />
Officers Memor<strong>and</strong>um issued by the Department of<br />
Health. These include ensuring that:<br />
• there are effective management systems in place to<br />
safeguard public funds <strong>and</strong> assets <strong>and</strong> assist in the<br />
implementation of corporate governance;<br />
• value for money is achieved from the resources<br />
available to the trust;<br />
• effective <strong>and</strong> sound financial management systems<br />
are in place; <strong>and</strong><br />
• <strong>annual</strong> statutory accounts are prepared in a format<br />
directed by the Secretary of State with the approval<br />
of the Treasury to give a true <strong>and</strong> fair view of the<br />
state of affairs as at the end of the financial year<br />
<strong>and</strong> the income <strong>and</strong> expenditure, recognised gains<br />
<strong>and</strong> losses <strong>and</strong> cash flows for the year.<br />
To the best of my knowledge <strong>and</strong> belief, I have<br />
properly discharged the responsibilities set out in my<br />
letter of appointment as an accountable officer.<br />
• the expenditure <strong>and</strong> income of the trust has been<br />
applied to the purposes intended by Parliament <strong>and</strong><br />
conform to the authorities which govern them;<br />
John Goulston<br />
Chief Executive<br />
Date: 9 June 2010<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
25<br />
Annual Accounts<br />
Statement of Directors’ responsibilities<br />
in respect of the accounts<br />
The directors are required under the National Health<br />
Service Act 2006 to prepare accounts for each<br />
financial year. The Secretary of State, with the<br />
approval of the Treasury, directs that these accounts<br />
give a true <strong>and</strong> fair view of the state of affairs of the<br />
trust <strong>and</strong> of the income <strong>and</strong> expenditure, recognised<br />
gains <strong>and</strong> losses <strong>and</strong> cash flows for the year. In<br />
preparing those accounts, directors are required to:<br />
- apply on a consistent basis accounting policies laid<br />
down by the Secretary of State with the approval of<br />
the Treasury;<br />
- make judgements <strong>and</strong> estimates which are<br />
reasonable <strong>and</strong> prudent;<br />
- state whether applicable accounting st<strong>and</strong>ards have<br />
been followed, subject to any material departures<br />
disclosed <strong>and</strong> explained in the accounts.<br />
The directors are responsible for keeping proper<br />
accounting records which disclose with reasonable<br />
accuracy at any time the financial position of the trust<br />
<strong>and</strong> to enable them to ensure that the accounts<br />
comply with requirements outlined in the above<br />
mentioned direction of the Secretary of State. They<br />
are also responsible for safeguarding the assets of the<br />
trust <strong>and</strong> hence for taking reasonable steps for the<br />
prevention <strong>and</strong> detection of fraud <strong>and</strong> other<br />
irregularities.<br />
The directors confirm to the best of their knowledge<br />
<strong>and</strong> belief they have complied with the above<br />
requirements in preparing the accounts.<br />
By order of the Board<br />
Date: 9 June 2010<br />
Chief Executive<br />
Date: 9 June 2010<br />
Finance Director<br />
Annual Accounts
26<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Statement on Internal Control <strong>2009</strong>/10<br />
1. Scope of Responsibility<br />
The whole Trust Board is accountable for internal<br />
control. As Accountable Officer, <strong>and</strong> Chief Executive<br />
of this Board, I have responsibility for maintaining a<br />
sound system of internal control that supports the<br />
achievement of the organisation’s policies, aims <strong>and</strong><br />
objectives. I also have responsibility for safeguarding<br />
the public funds <strong>and</strong> the organisation’s assets for<br />
which I am personally responsible, as set out in the<br />
Accountable Officer Memor<strong>and</strong>um.<br />
As designated Accountable Officer for the Trust I have<br />
overall accountability for risk management in the<br />
Trust. The Medical Director <strong>and</strong> Director of Nursing<br />
lead on clinical risk management issues, whilst the<br />
Finance Director is responsible for financial risk at<br />
Board level. The operational responsibility for risk<br />
management at corporate level is assigned to the<br />
Clinical Governance Director in the Trust’s Clinical<br />
Governance Directorate.<br />
The Audit Committee oversees performance of the<br />
risk management systems in place in the Trust, via the<br />
Finance Director <strong>and</strong> the Clinical Governance Director.<br />
The Clinical Governance Committee oversees the<br />
regular <strong>and</strong> routine monitoring of detailed clinical<br />
performance. The Clinical Governance Committee<br />
provides exception <strong>report</strong>s of high-level clinical risks to<br />
the Trust Board. Key risks are also highlighted to <strong>and</strong><br />
reviewed by the Audit Committee <strong>and</strong> the Trust Board<br />
on a regular basis through the Assurance Framework<br />
<strong>and</strong> Risk Register. Operationally risks are considered<br />
through the Medical Assurance Board <strong>and</strong> Nursing<br />
<strong>and</strong> Midwifery Board <strong>and</strong> the Divisional Boards to the<br />
Trust’s Strategy <strong>and</strong> Service Improvement Board (SSIB).<br />
The Trust has engaged with <strong>and</strong> participates in the<br />
work of its Health <strong>and</strong> Social Care Partners across<br />
North East London using established networks <strong>and</strong><br />
communication systems. The Trust meets regularly<br />
with the Provider Agency working on behalf of NHS<br />
London; Close working exists with ONEL, NHS <strong>Barking</strong><br />
& Dagenham, NHS <strong>Havering</strong>, NHS <strong>Redbridge</strong> <strong>and</strong> NHS<br />
South West Essex in order to take forward the delivery<br />
of healthcare, this takes place through regular<br />
commissioning, operational <strong>and</strong> strategy meetings.<br />
2. The Purpose of the System of<br />
Internal Control<br />
The system of internal control is designed to manage<br />
risk to a reasonable level rather than to eliminate all<br />
risk of failure to achieve policies, aims <strong>and</strong> objectives;<br />
it can therefore only provide reasonable <strong>and</strong> not<br />
absolute assurance of effectiveness. The system of<br />
internal control is based on an ongoing process<br />
designed to:<br />
• identify <strong>and</strong> prioritise the risks to the achievement<br />
of the organisation’s policies, aims <strong>and</strong> objectives,<br />
• evaluate the likelihood of those risks being realised<br />
<strong>and</strong> the impact should they be realised, <strong>and</strong> to<br />
manage them efficiently, effectively <strong>and</strong><br />
economically.<br />
The system of internal control has been in place in<br />
<strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong> University NHS Trust<br />
for the year ended 31 March 2010 <strong>and</strong> up to the date<br />
of approval of the <strong>annual</strong> <strong>report</strong> <strong>and</strong> accounts.<br />
3. Capacity to H<strong>and</strong>le Risk<br />
The overall strategy of the Trust is to maintain<br />
systematic <strong>and</strong> effective arrangements for managing<br />
risks throughout the organisation, whether clinical or<br />
non-clinical, financial or organisational, so as to ensure<br />
they are reduced to a minimum practicable level. A<br />
Risk Management Strategy <strong>and</strong> Policy was<br />
implemented in 2004, against which the Trust reviews<br />
progress <strong>annual</strong>ly, <strong>and</strong> updates the strategy<br />
accordingly. Amendments <strong>and</strong> additions to the<br />
Strategy are approved by the Trust Board.<br />
I, as Accountable Officer, hold overall responsibility for<br />
all areas of risk management <strong>and</strong> specific responsibility<br />
for Health <strong>and</strong> Safety within the Trust. I am supported<br />
by:-<br />
• The Medical Director, who holds executive<br />
responsibility for medical leadership <strong>and</strong> Clinical<br />
Governance <strong>and</strong> Clinical Risk Management.<br />
• The Director of Nursing, who holds executive<br />
responsibility for nursing practice, the patient<br />
experience <strong>and</strong> safeguarding vulnerable persons<br />
<strong>and</strong> is the Trust nominated lead for Infection<br />
Control. .<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
27<br />
• The Director of Finance, who holds executive<br />
responsibility for financial risk management.<br />
• The Director of Human Resources, who is the<br />
executive responsible for employment <strong>and</strong><br />
implementation of employment legislation.<br />
• The Director of Delivery is the executive responsible<br />
for performance against targets <strong>and</strong> Information<br />
Governance.<br />
• The Director of Strategy <strong>and</strong> Planning holds<br />
executive responsibility for business planning.<br />
• The Clinical Governance Director holds operational<br />
responsibility for Health & Safety <strong>and</strong> day-to-day<br />
responsibility for co-ordinating <strong>and</strong> facilitating the<br />
implementation of risk management <strong>and</strong> clinical<br />
governance procedures; providing risk management<br />
advice whilst maintaining the Trust’s register of<br />
risks <strong>and</strong> the assurance framework.<br />
I rely on Divisional Directors, Clinical Directors,<br />
Divisional Nurses <strong>and</strong> Managers, Matrons <strong>and</strong><br />
ward/service managers to be alert to risk assessment,<br />
management <strong>and</strong> <strong>report</strong>ing within their own areas,<br />
<strong>and</strong> in turn they ensure their staff are alert to<br />
identifying <strong>and</strong> <strong>report</strong>ing risks related to Health <strong>and</strong><br />
Safety, patient care or the hospital environment. The<br />
Department of Health, professional bodies <strong>and</strong> various<br />
regulatory bodies, such as the Health <strong>and</strong> Safety<br />
Executive all offer guidance on good practice; this is<br />
reinforced by workplace-based assessments <strong>and</strong><br />
training given at a local level.<br />
There is a continuing programme of Risk Management<br />
Training embedded into the Trust’s Corporate<br />
Induction Programme for all staff, with risk<br />
management training forming an integral part of the<br />
risk management policy. The Trust Board receives<br />
<strong>annual</strong> risk management training, which was<br />
completed in October <strong>2009</strong>.<br />
The Trust participates in all required external quality<br />
accreditation programmes <strong>and</strong> participates in British<br />
St<strong>and</strong>ards Institute accreditation. The Trust engages in<br />
the Patient Safety First Campaign <strong>and</strong> has developed<br />
an internal Patient Safety checklist that is used across<br />
the Trust.<br />
The Local Counter Fraud Service <strong>2009</strong>/10 Work plan<br />
provided 31 fraud awareness training sessions across<br />
the Trust, covering 976 staff, including as part of the<br />
Trust’s Induction Programme <strong>and</strong> with specific training<br />
for various departments.<br />
As part of the NHS Counter Fraud <strong>and</strong> Security<br />
Management Services Annual Fraud Awareness Month<br />
in June <strong>2009</strong>, a link to the CFSMS homepage <strong>and</strong><br />
survey was established on the Trust intranet for staff<br />
to use. In March 2010 the LCFS hosted a Fraud<br />
Awareness st<strong>and</strong> at King George Hospital, with<br />
attendance from the London Regional team of CFMS.<br />
From December <strong>2009</strong>, the Trust commenced a series<br />
of Governance workshops for staff to raise awareness<br />
of the Trust Governance Manual (approved by the<br />
Trust Board in November 2008) <strong>and</strong> enforce principles<br />
of sound governance.<br />
There are clear objectives set each year <strong>and</strong> potential<br />
risks to achieving these objectives are outlined in the<br />
assurance framework <strong>and</strong> an action plan developed to<br />
mitigate the risk.<br />
4. The Risk <strong>and</strong> Control Framework<br />
The risk <strong>and</strong> control framework existing within the<br />
Trust has continued to develop over the year <strong>and</strong> a<br />
higher degree of fine tuning has led to the<br />
development of key performance indicators enabling a<br />
more accurate level of risk prediction <strong>and</strong> assessment.<br />
These systems are central to informing the decision<br />
making process in the provision of a safe <strong>and</strong> secure<br />
environment for patients, staff <strong>and</strong> visitors. The<br />
corporate risk framework is comprised of the<br />
following elements:<br />
The Risk Management Strategy <strong>and</strong> Policy is in<br />
line with <strong>and</strong> accredited by CNST level 1 accreditation.<br />
It recognises the impact that local, corporate <strong>and</strong><br />
extreme risks may have on the finances, reputation or<br />
both of the organisation <strong>and</strong> provides guidance on<br />
measuring, mitigating <strong>and</strong> managing the residual risks.<br />
This was reviewed, updated <strong>and</strong> received Trust Board<br />
approval in September <strong>2009</strong>.<br />
The Board Assurance Framework (BAF) is a<br />
cohesive document populated by the identified risks to<br />
the Trust potentially not meeting its objectives, the<br />
extreme risks identified through the risk register <strong>and</strong><br />
any risks to the Trust’s reputation through poor<br />
publicity or external accreditation shortfalls. The<br />
Internal Audit opinion of the framework for <strong>2009</strong>/10<br />
provided substantial assurance that there are strong<br />
systems <strong>and</strong> processes in place to maintain the<br />
framework accurately.<br />
Annual Accounts
28<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
The Board Assurance Framework is presented to the<br />
Audit Committee at each meeting <strong>and</strong> the Committee<br />
receives a presentation of Divisional extreme <strong>and</strong> high<br />
risks along with mitigating action plans via a rolling<br />
programme of presentation.<br />
The Risk Register is maintained as the focal point of<br />
risk evaluation <strong>and</strong> is maintained as a “live<br />
“document. New risks identified through changes in<br />
service, SUI, incident <strong>and</strong> complaint investigation,<br />
safety alerts <strong>and</strong> changes in control measures or<br />
resources are added to the risk register as they arise,<br />
supported by a risk assessment to ensure accurate <strong>and</strong><br />
reflective grading <strong>and</strong> where possible an action plan.<br />
The risk register is reviewed quarterly through the<br />
Divisional structure <strong>and</strong> amended accordingly. There is<br />
also an <strong>annual</strong> programme of risk assessment, which<br />
includes health <strong>and</strong> safety risk assessment carried out<br />
at a local <strong>and</strong> corporate level to identify new risks.<br />
There are two other risk registers which contribute to<br />
the central process which are managed within the<br />
disciplines that have created them; health <strong>and</strong> safety<br />
<strong>and</strong> infection control.<br />
The extreme components of the risk register are<br />
transferred to the BAF <strong>and</strong> their associated action<br />
plans are monitored either through the Strategy <strong>and</strong><br />
Service Improvement Board, the Audit or Clinical<br />
Governance Committee <strong>and</strong> ultimately the Trust Board<br />
for final decisions by exception.<br />
The Audit Committee as a sub-committee of the<br />
Trust Board holds delegated responsibility for the<br />
monitoring <strong>and</strong> inquisition of the risk register <strong>and</strong> the<br />
BAF. The Committee continues an established<br />
programme of risk review. The process examines the<br />
risks, the mitigating actions <strong>and</strong> future action plans for<br />
appropriateness <strong>and</strong> strength seeking to identify any<br />
further weakness or threat to patient safety, finance or<br />
reputation. In this way the Audit Committee can<br />
confidently provide assurance to the Trust Board of the<br />
robustness of the control systems in place.<br />
Financial Control<br />
Following a review of all financial control systems<br />
within the Trust <strong>and</strong> the implementation of the<br />
Governance Manual a range of implemented actions<br />
ensured that sound budgetary control <strong>and</strong> clear<br />
financial <strong>report</strong>ing systems are in place <strong>and</strong> embedded<br />
in working practice. The Internal Audit opinion<br />
following review is that there is substantial assurance<br />
of sound systems.<br />
Counter Fraud systems of control are in place to<br />
reduce <strong>and</strong> investigate incidents of fraud through<br />
Parkhill Counter Fraud Services. A rolling programme<br />
of staff training is in place to assist staff in identifying<br />
potential fraudulent situations <strong>and</strong> identify<br />
weaknesses in current systems. The systems of control<br />
have led to high impact outcomes protecting Trust<br />
assets.<br />
The Committee Structure has been fully reviewed<br />
<strong>and</strong> the Terms of Reference of all committees have<br />
been aligned to meet the trust’s objectives <strong>and</strong> ensure<br />
clarity <strong>and</strong> transparency of process.<br />
Data Security<br />
The Trust utilises the N3 network <strong>and</strong> NHS st<strong>and</strong>ards<br />
to manage <strong>and</strong> control data security. The NHS<br />
st<strong>and</strong>ard for encryption is 256AES bit encryption, the<br />
Trust have encrypted all PC’s <strong>and</strong> Laptops <strong>and</strong> enforce<br />
policies which prevent the ability to connect non<br />
encrypted portable devices to the network, in order to<br />
give greater security to patient data <strong>and</strong> other NHS<br />
specific data.<br />
The Trust’s primary responsibility is that the delivery of<br />
patient care should remain the highest priority <strong>and</strong><br />
unaffected where possible by encryption. A balance of<br />
risk to patient care against risk to personal data<br />
security is used in determining whether the use of<br />
unencrypted devices should continue as an interim<br />
measure. Where it is felt that continued reliance upon<br />
unencrypted data is necessary for the benefit of<br />
patients, a risk assessment must be undertaken <strong>and</strong><br />
the outcome of the assessment must be <strong>report</strong>ed to<br />
the Information Governance Board.<br />
Additional Internal Controls<br />
Continued refinement of the key performance<br />
indicators that form the performance dashboards for<br />
clinical <strong>and</strong> non-clinical <strong>report</strong>ing has strengthened the<br />
data analysis process. Data is reviewed monthly via the<br />
committee structure to the Trust Board. Any changes<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
29<br />
outside agreed parameters triggers an exception<br />
commentary <strong>and</strong> the application of root cause analysis<br />
as required. A consistent <strong>and</strong> strong system of<br />
monitoring complaints, incidents <strong>and</strong> safety alerts is in<br />
place. The triaging of incidents <strong>and</strong> complaints<br />
continues <strong>and</strong> all ‘red’ issues are circulated to the<br />
executive <strong>and</strong> divisional teams for shared awareness<br />
<strong>and</strong> action. The increased utilisation through staff<br />
training of Dr Foster data <strong>and</strong> enhanced review of<br />
mortality data allows for early identification of<br />
potential problems which can be analysed <strong>and</strong> clinical<br />
improvements made as needed. These processes help<br />
support a ‘no surprises’ culture <strong>and</strong> the early<br />
identification of trajectory change.<br />
The Clinical Audit <strong>and</strong> NICE database maintains<br />
progress against these key elements for clinical safety.<br />
Internal Audit opinion provides adequate assurance<br />
for these processes.<br />
A “Visible Leadership” programme lead by the<br />
Director of Nursing commenced in March <strong>and</strong> will<br />
continue throughout the coming year. One day a<br />
week all senior nursing staff spend dedicated time in<br />
wards reviewing <strong>and</strong> assessing patient care against set<br />
st<strong>and</strong>ards.<br />
The Trust continues to participate in the ISO quality<br />
framework, there are currently 8 areas accredited<br />
through the British St<strong>and</strong>ards Institute (BSI), with a<br />
further 6 areas to achieve accreditation in 2010/11<br />
<strong>and</strong> a further 3 in progress.<br />
Full induction <strong>and</strong> statutory <strong>and</strong> m<strong>and</strong>atory training<br />
programmes are in place for all staff.<br />
The Clinical Governance Committee as a subcommittee<br />
of the Trust Board has delegated<br />
responsibility to interrogate <strong>and</strong> monitor the clinical<br />
risk safety systems in place within the Trust to provide<br />
assurance to the Board that clinical safety is<br />
paramount <strong>and</strong> supported <strong>and</strong> there is early<br />
identification of systemic weaknesses. The Price<br />
Waterhouse Coopers <strong>report</strong> into deaths from<br />
pneumonia, following identification of the Trust being<br />
an outlier in Dr Foster data, made recommendation to<br />
strengthen the Committee, which now meets monthly<br />
with alternate meetings dedicated to patient safety<br />
through surveillance of mortality data <strong>and</strong> SUI findings<br />
to ensure continuous improvement in care is achieved.<br />
Engagement with Patients <strong>and</strong> the Public has<br />
continued to develop throughout the year. The<br />
Improving Patient Experience Group (IPEG) set up in<br />
2008 provides the Trust with feedback on a range of<br />
patient related topics as well as participating in<br />
surveys, sitting on the Clinical Governance Committee<br />
<strong>and</strong> providing information on issues that impact on<br />
how patients perceive <strong>and</strong> experience care <strong>and</strong><br />
treatment given by the Trust. The group is confident in<br />
challenging Trust practices where necessary in a forum<br />
that is open <strong>and</strong> honest.<br />
To strengthen processes <strong>and</strong> capture patient<br />
experience information an Associate Director of<br />
Patient Involvement has been appointed to drive<br />
forward new initiatives such as ‘real time surveys’ that<br />
can provide large scale quality data to support<br />
improvements in patient experience <strong>and</strong> to where<br />
similar surveys of staff can identify areas where<br />
additional support may be required.<br />
Compliance with Equality, Diversity <strong>and</strong> Human<br />
Rights, control measures are in place to ensure that<br />
the organisation is working toward compliance with<br />
all its obligations under equality, diversity <strong>and</strong> human<br />
rights legislation. The Trust has worked closely with its<br />
local health partners to fully implement the approved<br />
Single Equality Scheme.<br />
Compliance with the NHS Pension Scheme<br />
regulations is in place. As an employer with staff<br />
entitled to membership of the NHS Pension scheme,<br />
control measures are in place to ensure all employer<br />
obligations contained within the Scheme regulations<br />
are complied with. This includes ensuring that<br />
deductions from salary, employer’s contributions <strong>and</strong><br />
payments in to the Scheme are in accordance with the<br />
Scheme rules, <strong>and</strong> that member Pension Scheme<br />
records are accurately updated in accordance with the<br />
timescales detailed in the Regulations.<br />
Compliance with Climate Change Act 2008, in<br />
response to the Act the Trust has factored climate<br />
change adaptation into its strategic plans. The risks<br />
climate change poses to the organisation will continue<br />
to be assessed <strong>and</strong> actions taken to mitigate the<br />
identified risks to ensure compliance with the<br />
obligations identified under the Climate Change Act<br />
<strong>and</strong> Adaptation Reporting Requirements.<br />
Annual Accounts
30<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
5. Review of effectiveness <strong>and</strong><br />
significant control issues<br />
As Accountable Officer, I have responsibility for<br />
reviewing the effectiveness of the system of internal<br />
control. My review is informed in a number of ways.<br />
Executive managers within the organisation, who have<br />
responsibility for the development <strong>and</strong> maintenance of<br />
the system of internal control, provide me with<br />
assurance. The Assurance Framework itself provides<br />
me with evidence that the effectiveness of controls<br />
that manage the risks to the organisation achieving its<br />
principal objectives have been reviewed. My review is<br />
also informed by the Head of Internal Audit’s Opinion<br />
on the overall arrangements for gaining assurance<br />
through the assurance framework <strong>and</strong> on the controls<br />
reviewed as part of the Internal Audit Plan. The<br />
External Auditor’s Local Evaluation Assessment of the<br />
Trust’s ‘Use of Resources’, the Trust’s self assessment<br />
against the Healthcare Commission’s Core St<strong>and</strong>ards<br />
<strong>and</strong> its performance <strong>report</strong>ing also informs my review.<br />
The overall opinion of the Head of Internal Audit for<br />
<strong>2009</strong>/10 is that significant assurance can be given<br />
on the effectiveness of internal control for financial<br />
year <strong>2009</strong>/10. Substantial or adequate assurance was<br />
provided on all of the relevant areas audited, other<br />
than for three areas: temporary staffing, creditors <strong>and</strong><br />
provisions & accruals, where a limited assurance<br />
opinion was given. However, taking into account the<br />
action taken during the year to address these areas<br />
<strong>and</strong> the number of audits with substantial / adequate<br />
assurance, the HOIA was able to issue the significant<br />
assurance opinion overall.<br />
Significant control issues identified through the<br />
Trust’s internal review include:<br />
Finance: The Trust posted a deficit of £22.3M in<br />
<strong>2009</strong>/10, excluding the technical impact of fixed asset<br />
impairments (£31.9M) <strong>and</strong> the impact of IFRS (£2.1M).<br />
The Trust had a deficit control total of £19.7M agreed<br />
with NHS London, which was not achieved primarily<br />
because of a £2.6m affordability issue with the local<br />
PCTs, in respect of additional income recognised by<br />
the Trust in Month 12, above the forecast outturn<br />
previously projected by the Trust at Month 11.<br />
As a result of the deficit incurred in <strong>2009</strong>/10, the Trust<br />
failed its statutory break-even duty at the end of the<br />
financial year. This resulted in the raising of a s19<br />
Report by the Audit Commission. Under s19 of the<br />
Audit Commission Act 1988, an auditor of a health<br />
service body <strong>annual</strong> accounts is required to refer the<br />
body to the Secretary of State where there is reason to<br />
believe that the body or an officer of the body is:<br />
(i)<br />
about to make, or has made, a decision which<br />
involves or would involve the incurring of<br />
expenditure which is unlawful, or<br />
(ii) is about to take, or has taken, a course of<br />
action which, if pursued to its conclusion,<br />
would be unlawful <strong>and</strong> likely to cause a loss or<br />
deficiency.<br />
The Trust first incurred a material deficit in 2005/06<br />
which marked the date of the statutory break even<br />
period. The break even duty requires a Trust to ensure<br />
that its revenue is not less than sufficient (taking one<br />
financial year with another) to meet its outgoings.<br />
The duty is met if, taking a rolling three year period,<br />
expenditure is covered by income. From 2005/06 the<br />
Trust would have been expected to achieve a breakeven<br />
position by March 2008. However, Trust gained<br />
agreement with the Strategic Health Authority to<br />
extend its break even duty over a five year period,<br />
thereby requiring it reach break even by March 2010.<br />
Since 2005/06 the Trust has returned a deficit each<br />
year.<br />
The Trust has therefore been referred to the Secretary<br />
of State because of the failure of its breakeven duty.<br />
The Trust is currently in discussion with the Challenged<br />
Trust Board (CTB) of London PCTs, as part of the<br />
London PCTs’ Medium Term Financial Strategy (MTFS),<br />
to agree a plan which will fund historic deficits, which<br />
stood at £95M at 31st March <strong>2009</strong>, plus the <strong>2009</strong>/10<br />
deficit of £22.3M (excluding the technical impact of<br />
fixed asset impairments <strong>and</strong> the impact of IFRS).<br />
The auditor is also required (under s8 of the 1988 Act)<br />
to consider whether to issue a <strong>report</strong> in the public<br />
interest on any significant matter coming to his notice<br />
in the course of an audit <strong>and</strong> to bring the matter to<br />
the attention of the audited body <strong>and</strong> the public.<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
31<br />
However, even though the financial position remains<br />
extremely challenging, <strong>and</strong> given the actions of the<br />
Trust <strong>and</strong> NHS London, the auditor does not believe it<br />
would be appropriate to issue a public interest <strong>report</strong><br />
at this time, but will keep the position under review.<br />
Targets: The emergency care target (98%) was not<br />
achieved for <strong>2009</strong>/10. The performance for quarter 4<br />
was 96.73% with a year end performance at 97.31%<br />
(King George was 98.95% <strong>and</strong> Queen’s 96.02%).<br />
The Trust had 0 patients who were detained in the A<br />
& E Department in excess of 12 hours during <strong>2009</strong>/10.<br />
18 week waits: The Trust met the Trust level targets<br />
for both Admitted <strong>and</strong> Non-Admitted Pathways <strong>and</strong><br />
achieved the Non-Admitted target in all specialties.<br />
The Trust met the specialty specific target for<br />
Admitted Pathways in all specialties except ENT.<br />
S4BH/Care Quality Commission Registration: The<br />
Trust has self assessed against the St<strong>and</strong>ards for Better<br />
Health core st<strong>and</strong>ards element of the Annual Health<br />
Check, throughout <strong>2009</strong>/10. 22 of the 24 st<strong>and</strong>ards<br />
were deemed to be compliant, with C5c – Clinician<br />
Training, remaining ‘not met’ <strong>and</strong> C11c –staff<br />
appraisal has “insufficient evidence”, until Q3 when a<br />
compliance was deemed to have been achieved. This<br />
self assessment process continued in t<strong>and</strong>em with the<br />
developing guidance for registration requirement.<br />
In January 2010, the Trust completed the self<br />
assessment for registration <strong>and</strong> following careful<br />
review declared non-compliance in 5 areas, including<br />
staffing of medical wards in Queen’s <strong>and</strong> King George<br />
Hospitals, Midwifery staffing shortfall in Queen’s<br />
maternity unit <strong>and</strong> non-compliant areas for the<br />
Sydenham Centre in relation to training <strong>and</strong> estates<br />
prior to the move to a new building.<br />
Following 3 unannounced visits based on compliance<br />
with the hygiene code, the Care Quality Commission<br />
(CQC) identified further areas of concern <strong>and</strong> in<br />
conjunction with additional external evidence set<br />
conditions on the Trust’s registration in the following 8<br />
areas:<br />
• Resuscitation training<br />
• Appraisal<br />
• Discharge Planning<br />
• Pressure Damage<br />
• Staffing Levels<br />
• Child Protection Training<br />
• Nurse M<strong>and</strong>atory Training<br />
• Use of Contingency Areas.<br />
The CQC stipulated time frames for compliance <strong>and</strong><br />
the Trust has developed an action plan <strong>and</strong> monitoring<br />
structures to ensure compliance in all areas. An<br />
application was made in April to remove the ‘Use of<br />
Contingency Areas’ condition.<br />
In light of the CQC conditions the Trust reviewed the<br />
S4BH compliance <strong>and</strong> declared insufficient evidence in<br />
C5c <strong>and</strong> C11c, training <strong>and</strong> appraisal.<br />
Case of Indentified Fraud: In March <strong>2009</strong>, the Local<br />
Security Management Services (LSMS) received<br />
information from the Local Counter Fraud Specialist<br />
(LCFS) that a Security Supervisor at King George<br />
Hospital had been removing money from the King<br />
George Hospital car park machines. This issue was<br />
raised by members of the security staff team. During<br />
the investigation by LCFS it was established that the<br />
Security Supervisor had appropriated a set of keys for<br />
the payment machines outside of Trust policy <strong>and</strong> had<br />
been accessing them outside the official emptying<br />
hours for a number of years, often taking up to<br />
£1000.00 per week. Following police involvement the<br />
Security Advisor was arrested on 7th July <strong>2009</strong> <strong>and</strong><br />
charged with theft. On 8th January 2010, the Security<br />
Supervisor was given a 26 weeks sentence on a 2 year<br />
suspension <strong>and</strong> an 18 month drug <strong>and</strong> alcohol<br />
assessment order. The Judge directed that the monies<br />
recovered from the police search be returned to the<br />
Trust. All procedures were reviewed <strong>and</strong> new ones<br />
implemented to prevent a re-occurrence.<br />
This concludes the Statement of Internal Control for<br />
<strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong> University Hospitals<br />
Trust.<br />
Signed<br />
John Goulston<br />
Chief Executive<br />
Date: 9 June 2010<br />
Annual Accounts
32<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Independent Auditor’s Report<br />
to the Board of <strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Opinion on the financial statements<br />
I have audited the financial statements of <strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong> University<br />
Hospitals NHS Trust for the year ended 31 March 2010 under the Audit Commission Act<br />
1998. The financial statements comprise the Statement of Comprehensive Income, the<br />
Statement of Financial Position, the Statement of Changes in Taxpayers’ Equity, the<br />
Statement of Cash Flows <strong>and</strong> the related notes. These financial statements have been<br />
prepared in accordance with the accounting policies directed by the Secretary of State with<br />
the consent of the Treasury as relevant to the National Health Service set out within them.<br />
I have also audited the information in the Remuneration Report that is described as having<br />
been audited.<br />
This <strong>report</strong> is made solely to the Board of Directors of <strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong><br />
University Hospitals NHS Trust in accordance with Part II of the Audit Commission Act 1998<br />
<strong>and</strong> for no other purpose, as set out in paragraph 49 of the Statement of Responsibilities of<br />
Auditors <strong>and</strong> of Audited Bodies published by the Audit Commission in April 2008.<br />
Respective responsibilities of directors <strong>and</strong> auditor<br />
The directors’ responsibilities for preparing the financial statements in accordance with<br />
directions made by the Secretary of State are set out in the Statement of Directors’<br />
Responsibilities.<br />
My responsibility is to audit the financial statements in accordance with relevant legal <strong>and</strong><br />
regulatory requirements <strong>and</strong> International St<strong>and</strong>ards on Auditing (UK <strong>and</strong> Irel<strong>and</strong>).<br />
I <strong>report</strong> to you my opinion as to whether the financial statements give a true <strong>and</strong> fair view in<br />
accordance with the accounting policies directed by the Secretary of State as being relevant<br />
to the National Health Service in Engl<strong>and</strong>. I <strong>report</strong> whether the financial statements <strong>and</strong> the<br />
part of the Remuneration Report to be audited have been properly prepared in accordance<br />
with the accounting policies directed by the Secretary of State as being relevant to the<br />
National Health Service in Engl<strong>and</strong>. I also <strong>report</strong> to you whether, in my opinion, the<br />
information which comprises the commentary on the financial performance for <strong>2009</strong>/10<br />
included within the Operating <strong>and</strong> Financial Review included in the Annual Report, is<br />
consistent with the financial statements.<br />
I review whether the directors' Statement on Internal Control reflects compliance with the<br />
Department of Health's requirements, set out in ‘Guidance on Completing the Statement on<br />
Internal Control <strong>2009</strong>/10’ issued in February 2010. I <strong>report</strong> if it does not meet the<br />
requirements specified by the Department of Health or if the statement is misleading or<br />
inconsistent with other information I am aware of from my audit of the financial statements. I<br />
am not required to consider, nor have I considered, whether the directors' Statement on<br />
Internal Control covers all risks <strong>and</strong> controls. Neither am I required to form an opinion on the<br />
effectiveness of the Trust’s corporate governance procedures or its risk <strong>and</strong> control<br />
procedures.<br />
I read the other information contained in the Annual Report <strong>and</strong> consider whether it is<br />
consistent with the audited financial statements. This other information comprises the Annual<br />
Report except for the commentary on the financial performance for <strong>2009</strong>/10 included within<br />
the Operating <strong>and</strong> Financial Review <strong>and</strong> the audited part of the Remuneration Report.<br />
I consider the implications for my <strong>report</strong> if I become aware of any apparent misstatements or<br />
material inconsistencies with the financial statements. My responsibilities do not extend to any<br />
other information.<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
33<br />
Basis of audit opinion<br />
I conducted my audit in accordance with the Audit Commission Act 1998, the Code of Audit<br />
Practice issued by the Audit Commission <strong>and</strong> International St<strong>and</strong>ards on Auditing (UK <strong>and</strong><br />
Irel<strong>and</strong>) issued by the Auditing Practices Board. An audit includes examination, on a test<br />
basis, of evidence relevant to the amounts <strong>and</strong> disclosures in the financial statements <strong>and</strong> the<br />
part of the Remuneration Report to be audited. It also includes an assessment of the<br />
significant estimates <strong>and</strong> judgments made by the directors in the preparation of the financial<br />
statements, <strong>and</strong> of whether the accounting policies are appropriate to the Trust’s<br />
circumstances, consistently applied <strong>and</strong> adequately disclosed.<br />
I planned <strong>and</strong> performed my audit so as to obtain all the information <strong>and</strong> explanations which I<br />
considered necessary in order to provide me with sufficient evidence to give reasonable<br />
assurance that:<br />
<br />
<br />
the financial statements are free from material misstatement, whether caused by<br />
fraud or other irregularity or error; <strong>and</strong><br />
the financial statements <strong>and</strong> the part of the Remuneration Report to be audited have<br />
been properly prepared.<br />
In forming my opinion I also evaluated the overall adequacy of the presentation of information<br />
in the financial statements <strong>and</strong> the part of the Remuneration Report to be audited.<br />
Opinion<br />
In my opinion:<br />
<br />
<br />
<br />
the financial statements give a true <strong>and</strong> fair view, in accordance with the accounting<br />
policies directed by the Secretary of State as being relevant to the National Health<br />
Service in Engl<strong>and</strong>, of the state of the Trust’s affairs as at 31 March 2010 <strong>and</strong> of its<br />
income <strong>and</strong> expenditure for the year then ended;<br />
the financial statements <strong>and</strong> the part of the Remuneration Report to be audited have<br />
been properly prepared in accordance with the accounting policies directed by the<br />
Secretary of State as being relevant to the National Health Service in Engl<strong>and</strong>; <strong>and</strong><br />
information which comprises the commentary on the financial performance for<br />
<strong>2009</strong>/10 included within the Operating <strong>and</strong> Financial Review included in the Annual<br />
Report is consistent with the financial statements.<br />
Conclusion on arrangements for securing economy, efficiency <strong>and</strong> effectiveness in the<br />
use of resources<br />
Directors’ Responsibilities<br />
The directors are responsible for putting in place proper arrangements to secure economy,<br />
efficiency <strong>and</strong> effectiveness in the Trust’s use of resources, to ensure proper stewardship <strong>and</strong><br />
governance <strong>and</strong> regularly to review the adequacy <strong>and</strong> effectiveness of these arrangements.<br />
Annual Accounts
34<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Auditor’s Responsibilities<br />
I am required by the Audit Commission Act 1998 to be satisfied that proper arrangements<br />
have been made by the Trust for securing economy, efficiency <strong>and</strong> effectiveness in its use of<br />
resources. The Code of Audit Practice issued by the Audit Commission requires me to <strong>report</strong><br />
to you my conclusion in relation to proper arrangements, having regard to the criteria for NHS<br />
bodies specified by the Audit Commission. I <strong>report</strong> if significant matters have come to my<br />
attention which prevent me from concluding that the Trust has made such proper<br />
arrangements. I am not required to consider, nor have I considered, whether all aspects of the<br />
Trust’s arrangements for securing economy, efficiency <strong>and</strong> effectiveness in its use of<br />
resources are operating effectively.<br />
Adverse Conclusion<br />
I have undertaken my audit in accordance with the Code of Audit Practice.<br />
In so doing, I identified the following:<br />
<br />
<br />
<br />
<br />
the Trust set a deficit budget for <strong>2009</strong>/10 <strong>and</strong> incurred a deficit for the year of £22.3m<br />
<strong>and</strong> has yet to agree a plan to recover its historic deficit;<br />
the Trust has failed to meet its statutory breakeven duty under Paragraph 2(1) of<br />
Schedule 5 to the National Health Service Act 2006 for the five years ended 31 March<br />
2010;<br />
weaknesses in clinical engagement with service line <strong>report</strong>ing <strong>and</strong> in realising the<br />
benefits from revised employment contracts; <strong>and</strong><br />
the Care Quality Commission set conditions on the Trust's registration relating to<br />
appraisal, discharge planning <strong>and</strong> staffing levels.<br />
For the reasons set out above, <strong>and</strong> having regard to the criteria for NHS bodies specified by<br />
the Audit Commission <strong>and</strong> published in December 2006, I am not satisfied that, in all<br />
significant respects, <strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong> University Hospitals NHS Trust made<br />
proper arrangements to secure economy, efficiency <strong>and</strong> effectiveness in its use of resources<br />
for the year ending 31 March 2010, in that it did not put in place:<br />
<br />
<br />
<br />
a medium-term financial strategy, budgets <strong>and</strong> a capital programme that was soundly<br />
based <strong>and</strong> designed to deliver its strategic priorities;<br />
adequate arrangements to ensure that its spending matched its available resources;<br />
<strong>and</strong><br />
adequate arrangements for managing its financial <strong>and</strong> other resources which<br />
demonstrate value for money is being managed <strong>and</strong> achieved.<br />
Certificate<br />
I certify that I have completed the audit of the accounts in accordance with the requirements<br />
of the Audit Commission Act 1998 <strong>and</strong> the Code of Audit Practice issued by the Audit<br />
Commission.<br />
Jon Hayes<br />
District Auditor Audit Commission<br />
1<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
35<br />
Statement of Comprehensive Income<br />
for the year ended 31 March 2010<br />
<strong>2009</strong>/10 2008/09<br />
NOTE £000 £000<br />
Revenue<br />
Revenue from patient care activities 5 368,960 350,660<br />
Other operating revenue 6 28,496 27,740<br />
Operating expenses 8 (432,416) (403,968)<br />
Operating surplus (deficit) (34,960) (25,568)<br />
Finance costs:<br />
Investment revenue 14 1,241 414<br />
Other gains <strong>and</strong> (losses) 15 2,002 (2)<br />
Finance costs 16 (19,977) (20,792)<br />
Surplus/(deficit) for the financial year (51,694) (45,948)<br />
Public dividend capital dividends payable (4,549) (8,059)<br />
Retained surplus/(deficit) for the year (56,243) (54,007)<br />
Other comprehensive income<br />
Impairments <strong>and</strong> reversals (7,741) (40,110)<br />
Gains on revaluations 0 0<br />
Receipt of donated/government granted assets 0 48<br />
Net gain/(loss) on other reserves (e.g. defined benefit pension scheme) 0 0<br />
Net gains/(losses) on available for sale financial assets 0 0<br />
Reclassification adjustments:<br />
- Transfers from donated <strong>and</strong> government grant reserves (109) (141)<br />
- On disposal of available for sale financial assets 0 0<br />
Total comprehensive income for the year (64,093) (94,210)<br />
The notes on pages 40 to 82 form part of these accounts.<br />
Annual Accounts
36<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Statement of Financial Position<br />
as at 31 March 2010<br />
31 March 2010 31 March <strong>2009</strong> 1 April 2008<br />
Note £000 £000 £000<br />
Non-current assets<br />
Property, plant <strong>and</strong> equipment 17 354,787 407,490 499,652<br />
Intangible assets 18 3,529 1,528 342<br />
Investment property 0 0 0<br />
Other financial assets 23 0 0 0<br />
Trade <strong>and</strong> other receivables 22 26,337 29,031 26,984<br />
Total non-current assets 384,653 438,049 526,978<br />
Current assets<br />
Inventories 21 6,033 5,608 5,584<br />
Trade <strong>and</strong> other receivables 22 33,284 50,022 45,857<br />
Other financial assets 23 0 0 0<br />
Other current assets 24 0 0 2,756<br />
Cash <strong>and</strong> cash equivalents 25 2,098 1,370 1,771<br />
41,415 57,000 55,968<br />
Non-current assets held for sale 26 0 0 0<br />
Total current assets 41,415 57,000 55,968<br />
Total assets 426,068 495,049 582,947<br />
Current liabilities<br />
Trade <strong>and</strong> other payables 27 (48,322) (40,643) (42,921)<br />
Other liabilities 29 0 0 0<br />
DH Working capital loan 0 0 0<br />
DH Capital loan 0 0 0<br />
Borrowings 28 (5,021) (5,235) (4,128)<br />
Other financial liabilities 34 0 0 0<br />
Provisions 35 (2,140) (1,853) (1,757)<br />
Net current assets/(liabilities) (14,068) 9,269 7,162<br />
Total assets less current liabilities 370,585 447,318 534,141<br />
Non-current liabilities<br />
Borrowings 28 (264,019) (265,950) (271,293)<br />
DH Working capital loan 0 0 0<br />
DH Capital loan 0 0 0<br />
Trade <strong>and</strong> other payables 27 (5,342) (6,025) 0<br />
Other financial liabilities 34 0 0 0<br />
Provisions 35 (5,312) (6,139) (6,706)<br />
Other liabilities 29 0 0 (5,768)<br />
Total assets employed 95,912 169,204 250,374<br />
Financed by taxpayers' equity:<br />
Public dividend capital 276,375 285,574 272,534<br />
Retained earnings (190,922) (134,679) (91,134)<br />
Revaluation reserve 9,547 17,209 67,708<br />
Donated asset reserve 912 1,100 1,266<br />
Government grant reserve 0 0 0<br />
Other reserves 0 0 0<br />
Total Taxpayers' Equity 95,912 169,204 250,374<br />
The financial statements on pages 35 to 82 were approved by the Board on 7th June 2010 <strong>and</strong> signed on its behalf by:<br />
John Goulston<br />
Chief Executive<br />
Date: 9 June 2010<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
37<br />
Statement of Changes in Taxpayers’ Equity<br />
Public Retained Revaluation Donated Gov’t grant Other Total<br />
dividend earnings reserve asset reserve reserves<br />
capital (PDC)<br />
reserve<br />
£000 £000 £000 £000 £000 £000 £000<br />
Balance at 31 March 2008<br />
As previously stated 272,534 (91,134) 67,708 1,266 0 0 250,374<br />
Prior Period Adjustment 0 0 0 0 0 0 0<br />
Restated balance 272,534 (91,134) 67,708 1,266 0 0 250,374<br />
Changes in taxpayers’ equity<br />
Total Comprehensive Income for the year:<br />
Retained surplus/(deficit) for the year 0 (54,007) 0 0 0 0 (54,007)<br />
Transfers between reserves 0 10,462 (10,462) 0 0 0 0<br />
Impairments <strong>and</strong> reversals 0 0 (40,037) (73) 0 0 (40,110)<br />
Net gain on revaluation of property,<br />
plant, equipment 0 0 0 0 0 0 0<br />
Net gain on revaluation of intangible assets 0 0 0 0 0 0 0<br />
Net gain on revaluation of financial assets 0 0 0 0 0 0 0<br />
Net gain on revaluation of non current<br />
assets held for sale 0 0 0 0 0 0 0<br />
Receipt of donated/government<br />
granted assets 0 0 0 48 0 0 48<br />
Net gain/loss on other reserves<br />
(e.g. defined benefit pension scheme) 0 0 0 0 0 0 0<br />
Movements in other reserves 0 0 0 0 0 0 0<br />
Reclassification adjustments:<br />
- transfers from donated asset/government<br />
grant reserve 0 0 0 (141) 0 0 (141)<br />
- on disposal of available for sale<br />
financial assets 0 0 0 0 0 0 0<br />
Reserves eliminated on dissolution 0 0 0 0 0 0 0<br />
Originating capital for Trust establishment<br />
in year 0 0 0 0 0 0 0<br />
New PDC received 29,340 0 0 0 0 0 29,340<br />
PDC repaid in year (16,300) 0 0 0 0 0 (16,300)<br />
PDC written off 0 0 0 0 0 0 0<br />
Other movements in PDC in year 0 0 0 0 0 0 0<br />
Balance at 31 March <strong>2009</strong> 285,574 (134,679) 17,209 1,100 0 0 169,204<br />
Annual Accounts
38<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Statement of Changes in Taxpayers’ Equity 2008/9<br />
Public Retained Revaluation Donated Gov’t grant Other Total<br />
dividend earnings reserve asset reserve reserves<br />
capital (PDC)<br />
reserve<br />
£000 £000 £000 £000 £000 £000 £000<br />
Changes in taxpayers’ equity<br />
for <strong>2009</strong>/10<br />
Balance at 1 April <strong>2009</strong> 285,574 (134,679) 17,209 1,100 0 0 169,204<br />
Total Comprehensive Income for the year<br />
Retained surplus/(deficit) for the year 0 (56,243) 0 0 0 0 (56,243)<br />
Transfers between reserves 0 0 0 0 0 0 0<br />
Impairments <strong>and</strong> reversals 0 0 (7,662) (79) 0 0 (7,741)<br />
Net gain on revaluation of property,<br />
plant, equipment 0 0 0 0 0 0 0<br />
Net gain on revaluation of intangible assets 0 0 0 0 0 0 0<br />
Net gain on revaluation of financial assets 0 0 0 0 0 0 0<br />
Net gain on revaluation of non current<br />
assets held for sale 0 0 0 0 0 0 0<br />
Receipt of donated/government<br />
granted assets 0 0 0 0 0 0 0<br />
Net gain/loss on other reserves<br />
(e.g. defined benefit pension scheme) 0 0 0 0 0 0 0<br />
Movements in other reserves 0 0 0 0 0 0 0<br />
Reclassification adjustments:<br />
- transfers from donated asset/<br />
government grant reserve 0 0 0 (109) 0 0 (109)<br />
- on disposal of available for<br />
sale financial assets 0 0 0 0 0 0 0<br />
Reserves eliminated on dissolution 0 0 0 0 0 0 0<br />
Originating capital for Trust<br />
establishment in year 0 0 0 0 0 0 0<br />
New PDC received 5,000 0 0 0 0 0 5,000<br />
PDC repaid in year (14,199) 0 0 0 0 0 (14,199)<br />
PDC written off 0 0 0 0 0 0 0<br />
Other movements in PDC in year 0 0 0 0 0 0 0<br />
Balance at 31 March 2010 276,375 (190,922) 9,547 912 0 0 95,912<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
39<br />
Statement of Cash Flows<br />
for the year ended 31 March 2010<br />
<strong>2009</strong>/10 2008/09<br />
NOTE £000 £000<br />
Cash flows from operating activities<br />
Operating surplus/(deficit) (34,960) (25,568)<br />
Depreciation <strong>and</strong> amortisation 12,677 12,999<br />
Impairments <strong>and</strong> reversals 31,834 24,900<br />
Net foreign exchange gains/(losses) 0 0<br />
Transfer from donated asset reserve (109) (141)<br />
Transfer from government grant reserve 0 0<br />
Interest paid (19,919) (20,651)<br />
Dividends paid (4,423) (8,059)<br />
(Increase)/decrease in inventories (425) (24)<br />
(Increase)/decrease in trade <strong>and</strong> other receivables 19,432 (6,212)<br />
(Increase)/decrease in other current assets 0 0<br />
Increase/(decrease) in trade <strong>and</strong> other payables 6,380 4,589<br />
Increase/(decrease) in other current liabilities 0 0<br />
Increase/(decrease) in provisions 35 (673) (471)<br />
Net cash inflow/(outflow) from operating activities 9,814 (18,638)<br />
Cash flows from investing activities<br />
Interest received 1,241 414<br />
(Payments) for property, plant <strong>and</strong> equipment 17 (10,951) 0<br />
Proceeds from disposal of plant, property <strong>and</strong> equipment 16,224 16,300<br />
(Payments) for intangible assets 18 (2,231) (1,368)<br />
Proceeds from disposal of intangible assets 0 0<br />
(Payments) for investments with DH 0 0<br />
(Payments) for other investments 0 0<br />
Proceeds from disposal of investments with DH 0 0<br />
Proceeds from disposal of other financial assets 0 0<br />
Revenue rental income 0 0<br />
Net cash inflow/(outflow) from investing activities 4,284 15,346<br />
Net cash inflow/(outflow) before financing 14,098 (3,292)<br />
Cash flows from financing activities<br />
Public dividend capital received 5,000 29,340<br />
Public dividend capital repaid (14,199) (16,300)<br />
Loans received from the DH 0 0<br />
Other loans received 0 0<br />
Loans repaid to the DH 0 0<br />
Other loans repaid 0 0<br />
Other capital receipts 0 0<br />
Capital element of finance leases <strong>and</strong> PFI (4,171) (10,149)<br />
Cash transferred to NHS Foundation Trusts 0 0<br />
Net cash inflow/(outflow) from financing (13,370) 2,891<br />
Net increase/(decrease) in cash <strong>and</strong> cash equivalents 728 (401)<br />
Cash (<strong>and</strong>) cash equivalents (<strong>and</strong> bank overdrafts)<br />
at the beginning of the financial year 1,370 1,771<br />
Effect of exchange rate changes on the balance of cash held in foreign currencies 0 0<br />
Cash (<strong>and</strong>) cash equivalents (<strong>and</strong> bank overdrafts)<br />
at the end of the financial year 25 2,098 1,370<br />
Annual Accounts
40<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Notes to the Accounts<br />
1. Accounting Policies<br />
The Secretary of State for Health has directed that the<br />
financial statements of NHS Trusts shall meet the<br />
accounting requirements of the NHS Trusts Manual for<br />
Accounts, which shall be agreed with HM Treasury.<br />
Consequently, the following financial statements have<br />
been prepared in accordance with the <strong>2009</strong>/10 NHS<br />
Trusts Manual for Accounts issued by the Department<br />
of Health. The accounting policies contained in that<br />
manual follow International Financial Reporting<br />
St<strong>and</strong>ards to the extent that they are meaningful <strong>and</strong><br />
appropriate to the NHS, as determined by HM<br />
Treasury, which is advised by the Financial Reporting<br />
Advisory Board. Where the NHS Trusts Manual for<br />
Accounts permits a choice of accounting policy, the<br />
accounting policy which is judged to be most<br />
appropriate to the particular circumstances of the trust<br />
for the purpose of giving a true <strong>and</strong> fair view has<br />
been selected. The particular policies adopted by the<br />
trust are described below. They have been applied<br />
consistently in dealing with items considered material<br />
in relation to the accounts.<br />
1.1 Accounting convention<br />
These accounts have been prepared under the<br />
historical cost convention modified to account for the<br />
revaluation of property, plant <strong>and</strong> equipment,<br />
intangible assets, inventories <strong>and</strong> certain financial<br />
assets <strong>and</strong> financial liabilities<br />
1.2 Acquisitions <strong>and</strong> discontinued<br />
operations<br />
Activities are considered to be ‘acquired’ only if they<br />
are taken on from outside the public sector. Activities<br />
are considered to be ‘discontinued’ only if they cease<br />
entirely. They are not considered to be ‘discontinued’<br />
if they transfer from one public sector body to<br />
another.<br />
1.3 Care Trust designation<br />
The Trust is not designated as a Care Trust due to joint<br />
activities.<br />
1.4 Pooled Budgets<br />
The Trust has no pooled budgets.<br />
1.5 Critical accounting judgements <strong>and</strong> key<br />
sources of estimation uncertainty<br />
In the application of the Trust’s accounting policies,<br />
management is required to make judgements,<br />
estimates <strong>and</strong> assumptions about the carrying<br />
amounts of assets <strong>and</strong> liabilities that are not readily<br />
apparent from other sources. The estimates <strong>and</strong><br />
associated assumptions are based on historical<br />
experience <strong>and</strong> other factors that are considered to be<br />
relevant. Actual results may differ from those<br />
estimates <strong>and</strong> the estimates <strong>and</strong> underlying<br />
assumptions are continually reviewed. Revisions to<br />
accounting estimates are recognised in the period in<br />
which the estimate is revised if the revision affects<br />
only that period or in the period of the revision <strong>and</strong><br />
future periods if the revision affects both current <strong>and</strong><br />
future periods.<br />
1.5.1 Critical judgements in applying accounting<br />
policies<br />
The following are the critical judgements, apart from<br />
those involving estimations (see below) that<br />
management has made in the process of applying the<br />
Trust’s accounting policies <strong>and</strong> that have the most<br />
significant effect on the amounts recognised in the<br />
financial statements.<br />
The management make judgements in terms of<br />
approving new capital investment <strong>and</strong> variations to<br />
the PFI Assets to maintain or enhance its asset base.<br />
As part of the NHS contracting process the Trust<br />
makes judgements on the resource base required to<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
41<br />
support such services, <strong>and</strong> the income expectations for<br />
services delivered at the agreed activity levels.<br />
During the year, the board entered into a 10 year<br />
agreement to provide certain services to a private<br />
healthcare provider. This has resulted in a long term<br />
lease arrangement <strong>and</strong> a contractual commitment to<br />
provide a range of clinical services. The management<br />
believe they have sufficent capacity to support such<br />
services.<br />
1.5.2 Key sources of estimation uncertainty<br />
The following are the key assumptions concerning the<br />
future, <strong>and</strong> other key sources of estimation<br />
uncertainty at the end of the <strong>report</strong>ing period, that<br />
have a significant risk of causing a material adjustment<br />
to the carrying amounts of assets <strong>and</strong> liabilities within<br />
the next financial year<br />
Non-current building <strong>and</strong> l<strong>and</strong> assets are valued at at<br />
market values. The property market has continued to<br />
demonstrate volatility during the period, <strong>and</strong><br />
continues to be subject to uncertainty in the medium<br />
term.<br />
The Trust has a number operating leases <strong>and</strong> a Private<br />
Finance Initiative (PFI) Agreement where the Trust is<br />
the lessee. The PFI assets are held on-balance sheet,<br />
<strong>and</strong> are valued at current values, either by obtaining<br />
market valuations from appropriately qualified<br />
independent valuers, or on a depreciated replacement<br />
cost basis (see note 1.9). Valuations are therefore<br />
subject to market fluctuation, which could result in<br />
unforeseeable increases or decreases in valuation in<br />
future periods. Any known impairments which are<br />
not likely to be reversed in the near term, in excess of<br />
any revaluation reserve, are accounted for in the<br />
period in which they arise. Operating leases are<br />
expensed in accordance with IAS 17 on a straight-line<br />
line basis over the term of the lease.<br />
Provisions are reviewed by management on a regular<br />
basis using a combination of information provided by<br />
appropriate third party sources. Any change in<br />
circumstances related to these provisions is reflected in<br />
the period in which it is identified.<br />
The NHS Pensions Scheme provides cover for past <strong>and</strong><br />
present employees, <strong>and</strong> is subject to a full actuarial<br />
valuation every five years (see note 11). The Trust<br />
carries provisions in certain instances relating to early<br />
retirement, based on latest actuarial information<br />
provided by the NHS Pensions Agency. This is<br />
therefore subject to change which is recognised in the<br />
period to which it arises.<br />
The Trust maintains insurance against potential legal<br />
claims, which are managed by the NHS Litigation<br />
Authority. The Trust makes provisions for the<br />
estimated excess liabilties due under this policy, in line<br />
with information provided by the NHS Litigation<br />
Authority. Uncertainty in estimation may relate to the<br />
timing of potential settlements, although the liability<br />
to the Trust will be limited to the level of the excess.<br />
PFI assets include buildings <strong>and</strong> medical equipment.<br />
PFI buildings are treated in accordance with noncurrent<br />
building <strong>and</strong> l<strong>and</strong> assets, which are valued at<br />
fair value on a modern equivalent asset basis, either<br />
by a periodic professional valuation, or where this is<br />
not done on an <strong>annual</strong> basis, by an estimate adjusting<br />
the latest valuation reflecting changes in market<br />
conditions. The Trust may determine when to<br />
professionally revalue its l<strong>and</strong> <strong>and</strong> buildings, but the<br />
interval between profesional valuations will be no<br />
more than five years. Equipment procured under the<br />
Managed Equipment Service is valued as per the<br />
contractor's financial model, including periodic<br />
lifecycle refreshes.<br />
A PFI liability is recognised at the same time as the PFI<br />
assets are recognised. It is measured initially at the<br />
same amount as the fair value of the PFI assets <strong>and</strong> is<br />
subsequently treated similar to a finance lease liability<br />
in accordance with IAS 17. The implicit rate of interest<br />
is derived from the PFI provider's financial model <strong>and</strong>,<br />
for the building, is taken as the implied project rate of<br />
return. The liability is written down over the term of<br />
the PFI Project Agreement with each unitary payment.<br />
The liability is only increased if the Trust requests<br />
further capital expenditure directly financed by the PFI<br />
provider. For equipment within the PFI Managed<br />
Equipment Service (MES), a liability is recognised at<br />
the modelled asset replacement year <strong>and</strong> is measured<br />
at the implied cost to the Trust according to the MES<br />
provider's financial model. The implied rate of interest<br />
used is taken directly from the MES provider's financial<br />
model.<br />
Annual Accounts
42<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
1.6 Revenue<br />
Revenue in respect of services provided is recognised<br />
when, <strong>and</strong> to the extent that, performance occurs,<br />
<strong>and</strong> is measured at the fair value of the consideration<br />
receivable. The main source of revenue for the trust is<br />
from commissioners for healthcare services. Revenue<br />
relating to patient care spells that are part-completed<br />
at the year end are apportioned across the financial<br />
years on the basis of length of stay at the end of the<br />
<strong>report</strong>ing period compared to expected total length of<br />
stay/costs incurred to date compared to total expected<br />
costs.<br />
Where income is received for a specific activity that is<br />
to be delivered in the following year, that income is<br />
deferred.<br />
The Trust receives income under the NHS Injury Cost<br />
Recovery Scheme, designed to reclaim the cost of<br />
treating injured individuals to whom personal injury<br />
compensation has subsequently been paid e.g. by an<br />
insurer. The Trust recognises the income when it<br />
receives notification from the Department of Work<br />
<strong>and</strong> Pension's Compensation Recovery Unit that the<br />
individual has lodged a compensation claim. The<br />
income is measured at the agreed tariff for the<br />
treatments provided to the injured individual, less a<br />
provision for unsuccessful compensation claims <strong>and</strong><br />
doubtful debts.<br />
1.7 Employee Benefits<br />
Short-term employee benefits<br />
Salaries, wages <strong>and</strong> employment-related payments are<br />
recognised in the period in which the service is<br />
received from employees.<br />
The cost of leave earned but not taken by employees<br />
at the end of the period is recognised in the financial<br />
statements to the extent that employees are permitted<br />
to carry forward leave into the following period.<br />
Retirement benefit costs<br />
Past <strong>and</strong> present employees are covered by the<br />
provisions of the NHS Pensions Scheme. The scheme<br />
is an unfunded, defined benefit scheme that covers<br />
NHS employers, General Practices <strong>and</strong> other bodies,<br />
allowed under the direction of the Secretary of State,<br />
in Engl<strong>and</strong> <strong>and</strong> Wales. The scheme is not designed to<br />
be run in a way that would enable NHS bodies to<br />
identify their share of the underlying scheme assets<br />
<strong>and</strong> liabilities. Therefore, the scheme is accounted for<br />
as if it were a defined contribution scheme: the cost<br />
to the NHS body of participating in the scheme is<br />
taken as equal to the contributions payable to the<br />
scheme for the accounting period.<br />
For early retirements other than those due to ill health<br />
the additional pension liabilities are not funded by the<br />
scheme. The full amount of the liability for the<br />
additional costs is charged to expenditure at the time<br />
the Trust commits itself to the retirement, regardless of<br />
the method of payment.<br />
Some employees are members of the Local<br />
Government Superannuation Scheme, which is a<br />
defined benefit pension scheme. The scheme assets<br />
<strong>and</strong> liabilities attributable to those employees can be<br />
identified <strong>and</strong> are recognised in the trust’s accounts.<br />
The assets are measured at fair value <strong>and</strong> the liabilities<br />
at the present value of the future obligations. The<br />
increase in the liability arising from pensionable service<br />
earned during the year is recognised within operating<br />
expenses. The expected gain during the year from<br />
scheme assets is recognised within finance income.<br />
The interest cost during the year arising from the<br />
unwinding of the discount on the scheme liabilities is<br />
recognised within finance costs. Actuarial gains <strong>and</strong><br />
losses during the year are recognised in the pensions<br />
reserve <strong>and</strong> <strong>report</strong>ed as an item of other<br />
comprehensive income.<br />
1.8 Other expenses<br />
Other operating expenses are recognised when, <strong>and</strong><br />
to the extent that, the goods or services have been<br />
received. They are measured at the fair value of the<br />
consideration payable.<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
43<br />
1.9 Property, plant <strong>and</strong> equipment<br />
Recognition<br />
Property, plant <strong>and</strong> equipment is capitalised if:<br />
• it is held for use in delivering services or for<br />
administrative purposes;<br />
• it is probable that future economic benefits will<br />
flow to, or service potential will be supplied to, the<br />
trust;<br />
• it is expected to be used for more than one<br />
financial year;<br />
• the cost of the item can be measured reliably; <strong>and</strong><br />
• the item has cost of at least £5,000; or<br />
• Collectively, a number of items have a cost of at<br />
least £5,000 <strong>and</strong> individually have a cost of more<br />
than £250, where the assets are functionally<br />
interdependent, they had broadly simultaneous<br />
purchase dates, are anticipated to have<br />
simultaneous disposal dates <strong>and</strong> are under single<br />
managerial control; or<br />
• Items form part of the initial equipping <strong>and</strong> settingup<br />
cost of a new building, ward or unit, irrespective<br />
of their individual or collective cost.<br />
Where a large asset, for example a building, includes a<br />
number of components with significantly different<br />
asset lives, the components are treated as separate<br />
assets <strong>and</strong> depreciated over their own useful<br />
economic lives.<br />
Valuation<br />
All property, plant <strong>and</strong> equipment are measured<br />
initially at cost, representing the cost directly<br />
attributable to acquiring or constructing the asset <strong>and</strong><br />
bringing it to the location <strong>and</strong> condition necessary for<br />
it to be capable of operating in the manner intended<br />
by management. All assets are measured<br />
subsequently at fair value.<br />
L<strong>and</strong> <strong>and</strong> buildings used for the trust’s services or for<br />
administrative purposes are stated in the statement of<br />
financial position at their revalued amounts, being the<br />
fair value at the date of revaluation less any<br />
subsequent accumulated depreciation <strong>and</strong> impairment<br />
losses. Revaluations are performed with sufficient<br />
regularity to ensure that carrying amounts are not<br />
materially different from those that would be<br />
determined at the end of the <strong>report</strong>ing period. Fair<br />
values are determined as follows:<br />
• L<strong>and</strong> <strong>and</strong> non-specialised buildings – market value<br />
for existing use<br />
• Specialised buildings – depreciated replacement<br />
cost<br />
Until 31 March 2008, the depreciated replacement<br />
cost of specialised buildings has been estimated for an<br />
exact replacement of the asset in its present location.<br />
HM Treasury has adopted a st<strong>and</strong>ard approach to<br />
depreciated replacement cost valuations based on<br />
modern equivalent assets <strong>and</strong>, where it would meet<br />
the location requirements of the service being<br />
provided, an alternative site can be valued. HM<br />
Treasury has agreed that NHS trusts must apply these<br />
new valuation requirements by 1 April 2010 at the<br />
latest.<br />
The Trust engaged DTZ Debenham Tie Leung to act as<br />
independent valuers for the estate to provide<br />
valuation in accrodance with these requirements.<br />
Properties in the course of construction for service or<br />
administration purposes are carried at cost, less any<br />
impairment loss. Cost includes professional fees but<br />
not borrowing costs, which are recognised as<br />
expenses immediately, as allowed by IAS 23 for assets<br />
held at fair value. Assets are revalued <strong>and</strong><br />
depreciation commences when they are brought into<br />
use.<br />
Until 31 March 2008, fixtures <strong>and</strong> equipment were<br />
carried at replacement cost, as assessed by indexation<br />
<strong>and</strong> depreciation of historic cost. From 1 April 2008<br />
indexation has ceased. The carrying value of existing<br />
assets at that date will be written off over their<br />
remaining useful lives <strong>and</strong> new fixtures <strong>and</strong> equipment<br />
are carried at depreciated historic cost as this is not<br />
considered to be materially different from fair value.<br />
An increase arising on revaluation is taken to the<br />
revaluation reserve except when it reverses an<br />
impairment for the same asset previously recognised in<br />
expenditure, in which case it is credited to expenditure<br />
to the extent of the decrease previously charged there.<br />
A revaluation decrease is recognised as an impairment<br />
Annual Accounts
44<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
charged to the revaluation reserve to the extent that<br />
there is a balance on the reserve for the asset <strong>and</strong>,<br />
thereafter, to expenditure. Gains <strong>and</strong> losses<br />
recognised in the revaluation reserve are <strong>report</strong>ed as<br />
other comprehensive income in the Statement of<br />
Comprehensive Income.<br />
Subsequent expenditure<br />
Where subsequent expenditure enhances an asset<br />
beyond its original specification, the directly<br />
attributable cost is capitalised. Where subsequent<br />
expenditure restores the asset to its original<br />
specification, the expenditure is capitalised <strong>and</strong> any<br />
existing carrying value of the item replaced is writtenout<br />
<strong>and</strong> charged to operating expenses.<br />
1.10 Intangible assets<br />
Recognition<br />
Intangible assets are non-monetary assets without<br />
physical substance, which are capable of sale<br />
separately from the rest of the trust’s business or<br />
which arise from contractual or other legal rights.<br />
They are recognised only when it is probable that<br />
future economic benefits will flow to, or service<br />
potential be provided to, the trust; where the cost of<br />
the asset can be measured reliably, <strong>and</strong> where the cost<br />
is at least £5000.<br />
Intangible assets acquired separately are initially<br />
recognised at fair value. Software that is integral to<br />
the operating of hardware, for example an operating<br />
system, is capitalised as part of the relevant item of<br />
property, plant <strong>and</strong> equipment. Software that is not<br />
integral to the operation of hardware, for example<br />
application software, is capitalised as an intangible<br />
asset. Expenditure on research is not capitalised: it is<br />
recognised as an operating expense in the period in<br />
which it is incurred. Internally-generated assets are<br />
recognised if, <strong>and</strong> only if, all of the following have<br />
been demonstrated:<br />
• the technical feasibility of completing the intangible<br />
asset so that it will be available for use<br />
• the intention to complete the intangible asset <strong>and</strong><br />
use it<br />
• the ability to sell or use the intangible asset<br />
• how the intangible asset will generate probable<br />
future economic benefits or service potential<br />
• the availability of adequate technical, financial <strong>and</strong><br />
other resources to complete the intangible asset<br />
<strong>and</strong> sell or use it<br />
• the ability to measure reliably the expenditure<br />
attributable to the intangible asset during its<br />
development<br />
Measurement<br />
The amount initially recognised for internallygenerated<br />
intangible assets is the sum of the<br />
expenditure incurred from the date when the criteria<br />
above are initially met. Where no internally-generated<br />
intangible asset can be recognised, the expenditure is<br />
recognised in the period in which it is incurred.<br />
Following initial recognition, intangible assets are<br />
carried at fair value by reference to an active market,<br />
or, where no active market exists, at amortised<br />
replacement cost (modern equivalent assets basis),<br />
indexed for relevant price increases, as a proxy for fair<br />
value. Internally-developed software is held at historic<br />
cost to reflect the opposing effects of increases in<br />
development costs <strong>and</strong> technological advances.<br />
1.11 Depreciation, amortisation <strong>and</strong><br />
impairments<br />
Freehold l<strong>and</strong>, properties under construction, <strong>and</strong><br />
assets held for sale are not depreciated.<br />
Otherwise, depreciation <strong>and</strong> amortisation are charged<br />
to write off the costs or valuation of property, plant<br />
<strong>and</strong> equipment <strong>and</strong> intangible non-current assets, less<br />
any residual value, over their estimated useful lives, in<br />
a manner that reflects the consumption of economic<br />
benefits or service potential of the assets. The<br />
estimated useful life of an asset is the period over<br />
which the Trust expects to obtain economic benefits<br />
or service potential from the asset. This is specific to<br />
the Trust <strong>and</strong> may be shorter than the physical life of<br />
the asset itself. Estimated useful lives <strong>and</strong> residual<br />
values are reviewed each year end, with the effect of<br />
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45<br />
any changes recognised on a prospective basis. Assets<br />
held under finance leases are depreciated over their<br />
estimated useful lives<br />
At each <strong>report</strong>ing period end, the trust checks<br />
whether there is any indication that any of its tangible<br />
or intangible non-current assets have suffered an<br />
impairment loss. If there is indication of an<br />
impairment loss, the recoverable amount of the asset<br />
is estimated to determine whether there has been a<br />
loss <strong>and</strong>, if so, its amount. Intangible assets not yet<br />
available for use are tested for impairment <strong>annual</strong>ly.<br />
If there has been an impairment loss, the asset is<br />
written down to its recoverable amount, with the loss<br />
charged to the revaluation reserve to the extent that<br />
there is a balance on the reserve for the asset <strong>and</strong>,<br />
thereafter, to expenditure. Where an impairment loss<br />
subsequently reverses, the carrying amount of the<br />
asset is increased to the revised estimate of the<br />
recoverable amount but capped at the amount that<br />
would have been determined had there been no initial<br />
impairment loss. The reversal of the impairment loss<br />
is credited to expenditure to the extent of the<br />
decrease previously charged there <strong>and</strong> thereafter to<br />
the revaluation reserve.<br />
1.12 Donated assets<br />
Donated non-current assets are capitalised at their fair<br />
value on receipt, with a matching credit to the<br />
donated asset reserve. They are valued, depreciated<br />
<strong>and</strong> impaired as described above for purchased assets.<br />
Gains <strong>and</strong> losses on revaluations <strong>and</strong> impairments are<br />
taken to the donated asset reserve <strong>and</strong>, each year, an<br />
amount equal to the depreciation charge on the asset<br />
is released from the donated asset reserve to offset<br />
the expenditure. On sale of donated assets, the net<br />
book value is transferred from the donated asset<br />
reserve to retained earnings.<br />
1.14 Non-current assets held for sale<br />
Non-current assets are classified as held for sale if their<br />
carrying amount will be recovered principally through<br />
a sale transaction rather than through continuing use.<br />
This condition is regarded as met when the sale is<br />
highly probable, the asset is available for immediate<br />
sale in its present condition <strong>and</strong> management is<br />
committed to the sale, which is expected to qualify for<br />
recognition as a completed sale within one year from<br />
the date of classification. Non-current assets held for<br />
sale are measured at the lower of their previous<br />
carrying amount <strong>and</strong> fair value less costs to sell. Fair<br />
value is open market value including alternative uses.<br />
The profit or loss arising on disposal of an asset is the<br />
difference between the sale proceeds <strong>and</strong> the carrying<br />
amount <strong>and</strong> is recognised in the Statement of<br />
Comprehensive Income. On disposal, the balance for<br />
the asset on the revaluation reserve is transferred to<br />
retained earnings. For donated <strong>and</strong> governmentgranted<br />
assets, a transfer is made to or from the<br />
relevant reserve to the profit/loss on disposal account<br />
so that no profit or loss is recognised in income or<br />
expenses. The remaining surplus or deficit in the<br />
donated asset or government grant reserve is then<br />
transferred to retained earnings.<br />
Property, plant <strong>and</strong> equipment that is to be scrapped<br />
or demolished does not qualify for recognition as held<br />
for sale. Instead, it is retained as an operational asset<br />
<strong>and</strong> its economic life is adjusted. The asset is derecognised<br />
when it is scrapped or demolished.<br />
1.15 Leases<br />
Leases are classified as finance leases when<br />
substantially all the risks <strong>and</strong> rewards of ownership are<br />
transferred to the lessee. All other leases are classified<br />
as operating leases.<br />
1.13 Government grants<br />
The Trust has no Government Grants.<br />
The trust as lessee<br />
Property, plant <strong>and</strong> equipment held under finance<br />
leases are initially recognised, at the inception of the<br />
lease, at fair value or, if lower, at the present value of<br />
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the minimum lease payments, with a matching liability<br />
for the lease obligation to the lessor. Lease payments<br />
are apportioned between finance charges <strong>and</strong><br />
reduction of the lease obligation so as to achieve a<br />
constant rate on interest on the remaining balance of<br />
the liability. Finance charges are recognised in<br />
calculating the trust’s surplus/deficit.<br />
Operating lease payments are recognised as an<br />
expense on a straight-line basis over the lease term.<br />
Lease incentives are recognised initially as a liability<br />
<strong>and</strong> subsequently as a reduction of rentals on a<br />
straight-line basis over the lease term.<br />
Contingent rentals are recognised as an expense in<br />
the period in which they are incurred.<br />
Where a lease is for l<strong>and</strong> <strong>and</strong> buildings, the l<strong>and</strong> <strong>and</strong><br />
building components are separated. Leased l<strong>and</strong> is<br />
treated as an operating lease. Leased buildings are<br />
assessed as to whether they are operating or finance<br />
leases.<br />
The trust as lessor<br />
Amounts due from lessees under finance leases are<br />
recorded as receivables at the amount of the trust’s<br />
net investment in the leases. Finance lease income is<br />
allocated to accounting periods so as to reflect a<br />
constant periodic rate of return on the trust’s net<br />
investment outst<strong>and</strong>ing in respect of the leases.<br />
Rental income from operating leases is recognised on<br />
a straight-line basis over the term of the lease. Initial<br />
direct costs incurred in negotiating <strong>and</strong> arranging an<br />
operating lease are added to the carrying amount of<br />
the leased asset <strong>and</strong> recognised on a straight-line basis<br />
over the lease term.<br />
1.16 Private Finance Initiative (PFI)<br />
transactions<br />
HM Treasury has determined that government bodies<br />
shall account for infrastructure PFI schemes where the<br />
government body controls the use of the<br />
infrastructure <strong>and</strong> the residual interest in the<br />
infrastructure at the end of the arrangement as service<br />
concession arrangements, following the principles of<br />
the requirements of IFRIC 12. The Trust therefore<br />
recognises PFI assets as property, plant <strong>and</strong> equipment<br />
together with a liability to pay for them. The services<br />
received under the contract are recorded as operating<br />
expenses.<br />
The <strong>annual</strong> unitary payment is separated into the<br />
following component parts, using appropriate<br />
estimation techniques where necessary:<br />
a) Payment for the fair value of services received;<br />
b) Payment for the PFI assets, including finance costs;<br />
<strong>and</strong><br />
c) Payment for the replacement of components of the<br />
asset during the contract ‘lifecycle replacement’.<br />
Services received<br />
The fair value of services received in the year is<br />
recorded under the relevant expenditure headings<br />
within ‘operating expenses’.<br />
PFI Asset<br />
The PFI assets are recognised as property, plant <strong>and</strong><br />
equipment, when they come into use. The assets are<br />
measured initially at fair value in accordance with the<br />
principles of IAS 17. Subsequently, the assets are<br />
measured at fair value, which is kept up to date in<br />
accordance with the Trust’s approach for each relevant<br />
class of asset in accordance with the principles of IAS<br />
16.<br />
PFI liability<br />
A PFI liability is recognised at the same time as the PFI<br />
assets are recognised. It is measured initially at the<br />
same amount as the fair value of the PFI assets <strong>and</strong> is<br />
subsequently measured as a finance lease liability in<br />
accordance with IAS 17.<br />
An <strong>annual</strong> finance cost is calculated by applying the<br />
implicit interest rate in the lease to the opening lease<br />
liability for the period, <strong>and</strong> is charged to ‘Finance<br />
Costs’ within the Statement of Comprehensive<br />
Income.<br />
The element of the <strong>annual</strong> unitary payment that is<br />
allocated as a finance lease rental is applied to meet<br />
the <strong>annual</strong> finance cost <strong>and</strong> to repay the lease liability<br />
over the contract term.<br />
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47<br />
An element of the <strong>annual</strong> unitary payment increase<br />
due to cumulative indexation is allocated to the<br />
finance lease. In accordance with IAS 17, this amount<br />
is not included in the minimum lease payments, but is<br />
instead expensed as incurred.<br />
Lifecycle replacement<br />
The Trust pays a contribution to the lifecycle<br />
replacement costs of building assets requiring<br />
replacement through the <strong>annual</strong> unitary payment. In<br />
return, the PFI operator maintains a contractual<br />
obligation to maintain the facility to an agreed<br />
st<strong>and</strong>ard, but is under no direct obligation to spend<br />
the lifecycle funds at pre-determined intervals. The<br />
Trusts receives no financial benefit for any lifecycle<br />
savings derived during the duration of the PFI<br />
agreement. Conversely, the Trust does not bear the<br />
the risk of additional lifecycle costs should the facility<br />
require additional work. As a result, these lifecycle<br />
replacement charges are recognised as an expense in<br />
the period they arise.<br />
The Managed Equipment Service agreement contained<br />
within the PFI agreement includes expected lifecycle<br />
replacement of medical equipment at specified times<br />
at the expected end of useful life of the assets. Since<br />
the Trust does not physically possess these future<br />
assets at the same time, assets <strong>and</strong> liabilities are only<br />
recognised to the extent that they relate to the<br />
equipment available for use. In addition, future<br />
replacement of these assets can be varied by<br />
agreement. The lifecycle replacement of these assets<br />
effectively results in a series of finance leases in<br />
accordance with the individual replacement cycles.<br />
Assets contributed by the Trust to the operator<br />
for use in the scheme<br />
Assets contributed for use in the scheme continue to<br />
be recognised as items of property, plant <strong>and</strong><br />
equipment in the Trust’s Statement of Financial<br />
Position.<br />
Other assets contributed by the Trust to the<br />
operator<br />
Assets contributed (e.g. cash payments, surplus<br />
property) by the trust to the operator before the asset<br />
is brought into use, which are intended to defray the<br />
operator’s capital costs, are recognised initially as<br />
prepayments during the construction phase of the<br />
contract. Subsequently, when the asset is made<br />
available to the Trust, the prepayment is treated as an<br />
initial payment towards the finance lease liability <strong>and</strong><br />
is set against the carrying value of the liability.<br />
1.17 Inventories<br />
Inventories are valued at the lower of cost <strong>and</strong> net<br />
realisable value using the first-in first-out cost formula.<br />
This is considered to be a reasonable approximation to<br />
fair value due to the high turnover of stocks.<br />
1.18 Cash <strong>and</strong> cash equivalents<br />
Cash is cash in h<strong>and</strong> <strong>and</strong> deposits with any financial<br />
institution repayable without penalty on notice of not<br />
more than 24 hours. Cash equivalents are<br />
investments that mature in 3 months or less from the<br />
date of acquisition <strong>and</strong> that are readily convertible to<br />
known amounts of cash with insignificant risk of<br />
change in value.<br />
In the Statement of Cash Flows, cash <strong>and</strong> cash<br />
equivalents are shown net of bank overdrafts that are<br />
repayable on dem<strong>and</strong> <strong>and</strong> that form an integral part<br />
of the Trust’s cash management.<br />
1.19 Provisions<br />
Provisions are recognised when the Trust has a present<br />
legal or constructive obligation as a result of a past<br />
event, it is probable that the Trust will be required to<br />
settle the obligation, <strong>and</strong> a reliable estimate can be<br />
made of the amount of the obligation. The amount<br />
recognised as a provision is the best estimate of the<br />
expenditure required to settle the obligation at the<br />
end of the <strong>report</strong>ing period, taking into account the<br />
risks <strong>and</strong> uncertainties. Where a provision is measured<br />
using the cash flows estimated to settle the obligation,<br />
its carrying amount is the present value of those cash<br />
flows using HM Treasury’s discount rate of 2.2% in<br />
real terms.<br />
When some or all of the economic benefits required<br />
to settle a provision are expected to be recovered from<br />
a third party, the receivable is recognised as an asset if<br />
it is virtually certain that reimbursements will be<br />
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received <strong>and</strong> the amount of the receivable can be<br />
measured reliably.<br />
1.20 Clinical negligence costs<br />
The NHS Litigation Authority (NHSLA) operates a risk<br />
pooling scheme under which the trust pays an <strong>annual</strong><br />
contribution to the NHSLA which in return settles all<br />
clinical negligence claims. The contribution is charged<br />
to expenditure. Although the NHSLA is<br />
administratively responsible for all clinical negligence<br />
cases the legal liability remains with the trust. The<br />
total value of clinical negligence provisions carried by<br />
the NHSLA on behalf of the trust is disclosed at note<br />
35.<br />
1.21 Non-clinical risk pooling<br />
The Trust participates in the Property Expenses Scheme<br />
<strong>and</strong> the Liabilities to Third Parties Scheme. Both are<br />
risk pooling schemes under which the trust pays an<br />
<strong>annual</strong> contribution to the NHS Litigation Authority<br />
<strong>and</strong>, in return, receives assistance with the costs of<br />
claims arising. The <strong>annual</strong> membership contributions,<br />
<strong>and</strong> any excesses payable in respect of particular<br />
claims are charged to operating expenses as <strong>and</strong> when<br />
they become due.<br />
1.22 EU Emissions Trading Scheme<br />
The Trust is not part of the EU Emissions Trading<br />
Scheme.<br />
1.23 Contingencies<br />
A contingent liability is a possible obligation that arises<br />
from past events <strong>and</strong> whose existence will be<br />
confirmed only by the occurrence or non-occurrence<br />
of one or more uncertain future events not wholly<br />
within the control of the trust, or a present obligation<br />
that is not recognised because it is not probable that a<br />
payment will be required to settle the obligation or<br />
the amount of the obligation cannot be measured<br />
sufficiently reliably. A contingent liability is disclosed<br />
unless the possibility of a payment is remote.<br />
A contingent asset is a possible asset that arises from<br />
past events <strong>and</strong> whose existence will be confirmed by<br />
the occurrence or non-occurrence of one or more<br />
uncertain future events not wholly within the control<br />
of the trust. A contingent asset is disclosed where an<br />
inflow of economic benefits is probable.<br />
Where the time value of money is material,<br />
contingencies are disclosed at their present value.<br />
1.24 Financial assets<br />
Financial assets are recognised when the Trust<br />
becomes party to the financial instrument contract or,<br />
in the case of trade receivables, when the goods or<br />
services have been delivered. Financial assets are<br />
derecognised when the contractual rights have expired<br />
or the asset has been transferred.<br />
Financial assets are initially recognised at fair value.<br />
Financial assets are classified into the following<br />
categories: financial assets at fair value through profit<br />
<strong>and</strong> loss; held to maturity investments; available for<br />
sale financial assets, <strong>and</strong> loans <strong>and</strong> receivables. The<br />
classification depends on the nature <strong>and</strong> purpose of<br />
the financial assets <strong>and</strong> is determined at the time of<br />
initial recognition.<br />
Financial assets at fair value through profit <strong>and</strong><br />
loss<br />
Embedded derivatives that have different risks <strong>and</strong><br />
characteristics to their host contracts, <strong>and</strong> contracts<br />
with embedded derivatives whose separate value<br />
cannot be ascertained, are treated as financial assets<br />
at fair value through profit <strong>and</strong> loss. They are held at<br />
fair value, with any resultant gain or loss recognised in<br />
calculating the trust’s surplus or deficit for the year.<br />
The net gain or loss incorporates any interest earned<br />
on the financial asset. Fair values have been<br />
determined with reference to market values or<br />
internally developed models to derive an<br />
approximation to market values where not available<br />
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Loans <strong>and</strong> receivables<br />
Loans <strong>and</strong> receivables are non-derivative financial<br />
assets with fixed or determinable payments which are<br />
not quoted in an active market. After initial<br />
recognition, they are measured at amortised cost<br />
using the effective interest method, less any<br />
impairment. Interest is recognised using the effective<br />
interest method.<br />
The effective interest rate is the rate that exactly<br />
discounts estimated future cash receipts through the<br />
expected life of the financial asset, to the initial fair<br />
value of the financial asset.<br />
At the end of the <strong>report</strong>ing period, the trust assesses<br />
whether any financial assets, other than those held at<br />
‘fair value through profit <strong>and</strong> loss’ are impaired.<br />
Financial assets are impaired <strong>and</strong> impairment losses<br />
recognised if there is objective evidence of impairment<br />
as a result of one or more events which occurred after<br />
the initial recognition of the asset <strong>and</strong> which has an<br />
impact on the estimated future cash flows of the<br />
asset.<br />
For financial assets carried at amortised cost, the<br />
amount of the impairment loss is measured as the<br />
difference between the asset’s carrying amount <strong>and</strong><br />
the present value of the revised future cash flows<br />
discounted at the asset’s original effective interest rate.<br />
The loss is recognised in expenditure <strong>and</strong> the carrying<br />
amount of the asset is reduced directly/through a<br />
provision for impairment of receivables.<br />
If, in a subsequent period, the amount of the<br />
impairment loss decreases <strong>and</strong> the decrease can be<br />
related objectively to an event occurring after the<br />
impairment was recognised, the previously recognised<br />
impairment loss is reversed through expenditure to the<br />
extent that the carrying amount of the receivable at<br />
the date of the impairment is reversed does not<br />
exceed what the amortised cost would have been had<br />
the impairment not been recognised.<br />
1.25 Financial liabilities<br />
Financial liabilities are recognised on the statement of<br />
financial position when the trust becomes party to the<br />
contractual provisions of the financial instrument or, in<br />
the case of trade payables, when the goods or services<br />
have been received. Financial liabilities are derecognised<br />
when the liability has been discharged,<br />
that is, the liability has been paid or has expired.<br />
Loans from the Department of Health are recognised<br />
at historical cost. Otherwise, financial liabilities are<br />
initially recognised at fair value.<br />
Other financial liabilities<br />
After initial recognition, all other financial liabilities are<br />
measured at amortised cost using the effective interest<br />
method, except for loans from Department of Health,<br />
which are carried at historic cost. The effective<br />
interest rate is the rate that exactly discounts<br />
estimated future cash payments through the life of<br />
the asset, to the net carrying amount of the financial<br />
liability. Interest is recognised using the effective<br />
interest method.<br />
1.26 Value Added Tax<br />
Most of the activities of the trust are outside the<br />
scope of VAT <strong>and</strong>, in general, output tax does not<br />
apply <strong>and</strong> input tax on purchases is not recoverable.<br />
Irrecoverable VAT is charged to the relevant<br />
expenditure category or included in the capitalised<br />
purchase cost of fixed assets. Where output tax is<br />
charged or input VAT is recoverable, the amounts are<br />
stated net of VAT.<br />
1.27 Foreign currencies<br />
The Trust's functional currency <strong>and</strong> presentational<br />
currency is sterling. Transactions denominated in a<br />
foreign currency are translated into sterling at the<br />
exchange rate ruling on the dates of the transactions.<br />
At the end of the <strong>report</strong>ing period, monetary items<br />
denominated in foreign currencies are retranslated at<br />
the spot exchange rate on 31 March. Resulting<br />
exchange gains <strong>and</strong> losses for either of these are<br />
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recognised in the trust’s surplus/deficit in the period in<br />
which they arise.<br />
1.28 Third party assets<br />
Assets belonging to third parties (such as money held<br />
on behalf of patients) are not recognised in the<br />
accounts since the trust has no beneficial interest in<br />
them. Details of third party assets are given in Note<br />
41 to the accounts.<br />
procedures compared with the generality of payments.<br />
They are divided into different categories, which<br />
govern the way that individual cases are h<strong>and</strong>led.<br />
Losses <strong>and</strong> special payments are charged to the<br />
relevant functional headings in expenditure on an<br />
accruals basis, including losses which would have been<br />
made good through insurance cover had NHS trusts<br />
not been bearing their own risks (with insurance<br />
premiums then being included as normal revenue<br />
expenditure).<br />
1.29 Public Dividend Capital (PDC) <strong>and</strong> PDC<br />
dividend<br />
Public dividend capital represents taxpayers’ equity in<br />
the NHS trust. At any time the Secretary of State can<br />
issue new PDC to, <strong>and</strong> require repayments of PDC<br />
from, the trust. PDC is recorded at the value received.<br />
As PDC is issued under legislation rather than under<br />
contract, it is not treated as an equity financial<br />
instrument.<br />
An <strong>annual</strong> charge, reflecting the cost of capital utilised<br />
by the trust, is payable to the Department of Health as<br />
public dividend capital dividend. The charge is<br />
calculated at the real rate set by HM Treasury<br />
(currently 3.5%) on the average carrying amount of all<br />
assets less liabilities, except for donated assets <strong>and</strong><br />
cash balances with the Office of the Paymaster<br />
General. The average carrying amount of assets is<br />
calculated as a simple average of opening <strong>and</strong> closing<br />
relevant net assets. Prior to <strong>2009</strong>/10 the PDC<br />
dividend was determined using forecast average<br />
relevant net assets <strong>and</strong> a note to the accounts<br />
discloses the rate that the dividend represents as a<br />
percentage of the actual average carrying amount of<br />
assets less liabilities in the year. From 1 April <strong>2009</strong>, the<br />
dividend payable is based on the actual average<br />
relevant net assets for the year instead of forecast<br />
amounts.<br />
1.30 Losses <strong>and</strong> Special Payments<br />
Losses <strong>and</strong> special payments are items that Parliament<br />
would not have contemplated when it agreed funds<br />
for the health service or passed legislation. By their<br />
nature they are items that ideally should not arise.<br />
They are therefore subject to special control<br />
1.31 Subsidiaries<br />
The Trust currently has no Subsidiaries.<br />
For <strong>2009</strong>/10, in accordance with the directed<br />
accounting policy from the Secretary of State, the<br />
Trust does not consolidate the NHS charitable funds<br />
for which it is the corporate trustee.<br />
1.32 Associates<br />
The Trust has no associates.<br />
1.33 Joint ventures<br />
The Trust has no joint ventures.<br />
1.34 Joint operations<br />
The Trust has no joint operations.<br />
1.35 Accounting st<strong>and</strong>ards that have been<br />
issued but have not yet been adopted<br />
The following st<strong>and</strong>ards <strong>and</strong> interpretations have been<br />
adopted by the European Union but are not required<br />
to be followed until 2010/11. None of them are<br />
expected to impact upon the Trust financial<br />
statements.<br />
IAS 27 (Revised) Consolidated <strong>and</strong> separate financial<br />
statements<br />
Amendment to IAS 32 Financial instruments:<br />
Presentation on classification or rights issues<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
51<br />
Amendment to IAS 39 Eligible hedged items<br />
IFRS 3 (Revised) Business combinations<br />
IFRIC 17 Distributions of Non-cash Assets to Owners<br />
IFRIC 18 Transfer of assets from customers<br />
1.36 Accounting st<strong>and</strong>ards issued that have<br />
been adopted early<br />
The amendment to IFRS 8 Operating segments that<br />
was included in the April <strong>2009</strong> Improvements to IFRS<br />
has been adopted early. As a result, total assets are<br />
not <strong>report</strong>ed by operating segment.<br />
2. Pooled Budget<br />
The Trust has no pooled budget arrangements.<br />
3. Operating Segments<br />
The Trust has only one operating segment, that of<br />
Healthcare.<br />
1.37 Research <strong>and</strong> Development<br />
Research <strong>and</strong> development expenditure is charged<br />
against income in the year in which it is incurred,<br />
except in so far as development expenditure relates to<br />
a clearly defined project <strong>and</strong> the benefits of it can<br />
reasonably be regarded as assured. Expenditure so<br />
deferred is limited to the value of future benefits<br />
expected <strong>and</strong> is amortised through the Operating Cost<br />
Statement on a systematic basis over the period<br />
expected to benefit from the project. It should be<br />
revalued on the basis of current cost. The amortisation<br />
is calculated on the same basis as depreciation, on a<br />
quarterly basis.<br />
Annual Accounts
52<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
4. Income Generating Activities<br />
The trust undertakes income generation activities with an aim of achieving profit, which is then used in patient<br />
care. The following provides details of income generation activities whose full cost exceeded £1m or was<br />
otherwise material.<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Income 3,462 0<br />
Full cost 625 0<br />
Surplus/(deficit) 2,837 0<br />
The above relates to income generated through rental of space <strong>and</strong> provision of medical services to a private<br />
healthcare contractor in respect of Oncology.<br />
5. Revenue from Patient Care Activities<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Strategic health authorities 205 222<br />
NHS trusts 105 3,325<br />
Primary care trusts 363,434 303,835<br />
Foundation trusts 605 2,533<br />
Local authorities 20 50<br />
Department of Health 0 36,517<br />
NHS other 263 0<br />
Non-NHS:<br />
Private patients 790 720<br />
Overseas patients (non-reciprocal) 655 541<br />
Injury costs recovery 2,184 2,163<br />
Other 700 754<br />
368,960 350,660<br />
Injury cost recovery income is subject to a provision for impairment of receivables of 7.8% to reflect expected<br />
rates of collection.<br />
Revenue from Primary care trusts includes £8m non-recurrent risk pool in respect of non-PbR income.<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
53<br />
6. Other Operating Revenue<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Patient transport services 0 0<br />
Education, training <strong>and</strong> research 14,691 13,808<br />
Charitable <strong>and</strong> other contributions to expenditure 372 279<br />
Transfers from Donated Asset Reserve 109 141<br />
Transfers from Government Grant Reserve 0 0<br />
Non-patient care services to other bodies 1,519 9,011<br />
Income generation 7,255 609<br />
Rental revenue 1,981 595<br />
Other revenue 2,569 3,297<br />
28,496 27,740<br />
7. Revenue<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
From rendering of services 396,221 350,660<br />
From sale of goods 1,235 0<br />
Sale of goods primarily relates to sale of locally manufactured pharmacy products.<br />
Annual Accounts
54<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
8. Operating Expenses<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Services from other NHS Trusts 696 0<br />
Services from PCTs 645 470<br />
Services from other NHS bodies 2,687 1,049<br />
Services from Foundation Trusts 1,044 0<br />
Purchase of healthcare from non NHS bodies 1,777 24<br />
Directors' costs 874 846<br />
Other Employee Benefits 269,962 257,684<br />
Supplies <strong>and</strong> services - clinical 53,123 51,594<br />
Supplies <strong>and</strong> services - general 9,794 8,252<br />
Consultancy services 2,468 2,820<br />
Establishment 4,040 4,862<br />
Transport 3,419 4,223<br />
Premises 13,302 12,592<br />
Provision for impairment of receivables 392 (810)<br />
Inventories write offs 0 0<br />
Depreciation 12,242 12,817<br />
Amortisation 435 182<br />
Impairments <strong>and</strong> reversals of property, plant <strong>and</strong> equipment 31,834 24,900<br />
Impairments <strong>and</strong> reversals of intangible assets 0 0<br />
Impairments <strong>and</strong> reversals of financial assets 0 0<br />
Impairments <strong>and</strong> Reversals for Non Current Assets held for sale 0 0<br />
Audit fees 311 324<br />
Other auditor's remuneration 60 0<br />
Clinical negligence 9,503 5,377<br />
Research <strong>and</strong> development 0 0<br />
Education <strong>and</strong> Training 397 0<br />
Other (see below) 13,411 16,762<br />
432,416 403,968<br />
The majority of the other expenditure is the service element of the PFI contract.<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
55<br />
9. Operating Leases<br />
9.1 As lessee<br />
Significant leases are laundry, linen <strong>and</strong> sterile services.<br />
Payments recognised as an expense<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Minimum lease payments 1,160 2,058<br />
Contingent rents 0 0<br />
Sub-lease payments 0 0<br />
1,160 2,058<br />
Total future minimum lease payments<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Payable:<br />
Not later than one year 904 1,743<br />
Between one <strong>and</strong> five years 757 2,349<br />
After 5 years 0 33<br />
Total 1,661 4,125<br />
9.2 As lessor<br />
The Trust has entered into a number of commercial agreements as part of its operations. In two instances, the<br />
Trust acts as an operating lessor.<br />
In 2006, the Trust entered into a 60 year lease for l<strong>and</strong> at King George Hospital to allow for a independent<br />
sector treatment centre (ISTC) for NHS patients.<br />
In <strong>2009</strong>, the Trust entered into a 10 year lease for facilities at Queens Hospital for private treatment of cancer<br />
Rental revenue<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Contingent rent 0 595<br />
Other 1,981 0<br />
Total rental revenue 1,981 595<br />
Total future minimum lease payments<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Receivable:<br />
Not later than one year 726 0<br />
Between one <strong>and</strong> five years 2,904 0<br />
After 5 years 6,061 0<br />
Total 9,691 0<br />
Annual Accounts
56<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
10. Employee costs <strong>and</strong> numbers<br />
10.1 Employee costs<br />
<strong>2009</strong>/10 2008/09<br />
Total Permanently Other Total Permanently Other<br />
Employed<br />
Employed<br />
£000 £000 £000 £000 £000 £000<br />
Salaries <strong>and</strong> wages 233,802 192,254 41,548 223,118 184,789 38,329<br />
Social Security Costs 16,219 16,219 0 16,244 16,244 0<br />
Employer contributions to<br />
NHS Pension scheme 20,719 20,719 0 19,544 19,544 0<br />
Other pension costs 0 0 0 0 0 0<br />
Other post-employment benefits 0 0 0 0 0 0<br />
Other employment benefits 0 0 0 (721) (721) 0<br />
Termination benefits 96 96 0 0 0 0<br />
Employee benefits expense 270,836 229,288 41,548 258,185 219,856 38,329<br />
Of the total above:<br />
Charged to capital 1,379 0<br />
Employee benefits charged<br />
to revenue 269,457 258,185<br />
270,836 258,185<br />
10.2 Average number<br />
of people employed<br />
<strong>2009</strong>/10 2008/09<br />
Total Permanently Other Total Permanently Other<br />
Employed<br />
Employed<br />
Number Number Number Number Number Number<br />
Medical <strong>and</strong> dental 886 784 101 849 665 184<br />
Ambulance staff 0 0 0 0 0 0<br />
Administration <strong>and</strong> estates 1,177 1,084 93 1,516 974 542<br />
Healthcare assistants <strong>and</strong><br />
other support staff 414 397 18 172 107 65<br />
Nursing, midwifery <strong>and</strong><br />
health visiting staff 2,616 2,372 243 2,796 2,332 464<br />
Nursing, midwifery <strong>and</strong><br />
health visiting learners 194 0 194 0 0 0<br />
Scientific, therapeutic <strong>and</strong><br />
technical staff 943 819 125 951 891 60<br />
Social care staff 0 0 0 0 0 0<br />
Other 1 0 1 0 0 0<br />
Total 6,231 5,456 775 6,284 4,969 1,315<br />
The <strong>2009</strong>/10 permanently employed numbers include 336 in respect of contracted out services, which were not<br />
included in the 2008/09 comparative numbers.<br />
The methodology for calculating the average number of Other staff has been refined in <strong>2009</strong>/10 <strong>and</strong> therefore is<br />
not directly comparable to the <strong>2009</strong>/09 comparative.<br />
Of the above:<br />
Number of staff (WTE)<br />
engaged on capital projects<br />
15 0<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
57<br />
10.3 Staff sickness absence<br />
<strong>2009</strong>/10<br />
Number<br />
Total days lost 81,514<br />
Total staff years 4,853<br />
Average working days lost 16.80<br />
Total staff employed in period (headcount) 6,491<br />
Total staff employed in period with no absence (headcount) 2,709<br />
Percentage staff with no sick leave 41.7%<br />
10.4 Management costs<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Management costs 21,030 20,095<br />
Income 397,456 378,400<br />
11. Pension costs<br />
Past <strong>and</strong> present employees are covered by the<br />
provisions of the NHS Pensions Scheme. Details of the<br />
benefits payable under these provisions can be found<br />
on the NHS Pensions website at<br />
www.nhsbsa.nhs.uk/pensions.<br />
The scheme is an unfunded, defined benefit scheme<br />
that covers NHS employers, General Practices <strong>and</strong><br />
other bodies, allowed under the direction of the<br />
Secretary of State, in Engl<strong>and</strong> <strong>and</strong> Wales. The scheme<br />
is not designed to be run in a way that would enable<br />
NHS bodies to identify their share of the underlying<br />
scheme assets <strong>and</strong> liabilities. Therefore, the scheme is<br />
accounted for as if it were a defined contribution<br />
scheme: the cost to the NHS Body of participating in<br />
the scheme is taken as equal to the contributions<br />
payable to the scheme for the accounting period.<br />
The scheme is subject to a full actuarial valuation<br />
every four years (until 2004, every five years) <strong>and</strong> an<br />
accounting valuation every year. An outline of these<br />
follows:<br />
a) Full actuarial (funding) valuation<br />
The purpose of this valuation is to assess the level of<br />
liability in respect of the benefits due under the<br />
scheme (taking into account its recent demographic<br />
experience), <strong>and</strong> to recommend the contribution rates<br />
to be paid by employers <strong>and</strong> scheme members. The<br />
last such valuation, which determined current<br />
contribution rates was undertaken as at 31 March<br />
2004 <strong>and</strong> covered the period from 1 April 1999 to<br />
that date. The conclusion from the 2004 valuation<br />
was that the scheme had accumulated a notional<br />
deficit of £3.3 billion against the notional assets as at<br />
31 March 2004.<br />
In order to defray the costs of benefits, employers pay<br />
contributions at 14% of pensionable pay <strong>and</strong> most<br />
employees had up to April 2008 paid 6%, with<br />
manual staff paying 5%.<br />
Annual Accounts
58<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Following the full actuarial review by the Government<br />
Actuary undertaken as at 31 March 2004, <strong>and</strong> after<br />
consideration of changes to the NHS Pension Scheme<br />
taking effect from 1 April 2008, his Valuation <strong>report</strong><br />
recommended that employer contributions could<br />
continue at the existing rate of 14% of pensionable<br />
pay, from 1 April 2008, following the introduction of<br />
employee contributions on a tiered scale from 5% up<br />
to 8.5% of their pensionable pay depending on total<br />
earnings. On advice from the scheme actuary, scheme<br />
contributions may be varied from time to time to<br />
reflect changes in the scheme’s liabilities.<br />
b) Accounting valuation<br />
A valuation of the scheme liability is carried out<br />
<strong>annual</strong>ly by the scheme actuary as at the end of the<br />
<strong>report</strong>ing period by updating the results of the full<br />
actuarial valuation.<br />
Between the full actuarial valuations at a two-year<br />
midpoint, a full <strong>and</strong> detailed member data-set is<br />
provided to the scheme actuary. At this point the<br />
assumptions regarding the composition of the scheme<br />
membership are updated to allow the scheme liability<br />
to be valued.<br />
The valuation of the scheme liability as at 31 March<br />
2010, is based on detailed membership data as at 31<br />
March 2008 (the latest midpoint) updated to 31<br />
March 2010 with summary global member <strong>and</strong><br />
accounting data.<br />
The latest assessment of the liabilities of the scheme is<br />
contained in the scheme actuary <strong>report</strong>, which forms<br />
part of the <strong>annual</strong> NHS Pension Scheme (Engl<strong>and</strong> <strong>and</strong><br />
Wales) Resource Account, published <strong>annual</strong>ly. These<br />
accounts can be viewed on the NHS Pensions website.<br />
Copies can also be obtained from The Stationery<br />
Office.<br />
c) Scheme provisions<br />
In 2008-09 the NHS Pension Scheme provided defined<br />
benefits, which are summarised below. This list is an<br />
illustrative guide only, <strong>and</strong> is not intended to detail all<br />
the benefits provided by the Scheme or the specific<br />
conditions that must be met before these benefits can<br />
be obtained:<br />
Annual Pensions<br />
The Scheme is a “final salary” scheme. Annual<br />
pensions are normally based on 1/80th for the 1995<br />
section <strong>and</strong> of the best of the last three years<br />
pensionable pay for each year of service, <strong>and</strong> 1/60th<br />
for the 2008 section of reckonable pay per year of<br />
membership. Members who are practitioners as<br />
defined by the Scheme Regulations have their <strong>annual</strong><br />
pensions based upon total pensionable earnings over<br />
the relevant pensionable service.<br />
With effect from 1 April 2008 members can choose to<br />
give up some of their <strong>annual</strong> pension for an additional<br />
tax free lump sum, up to a maximum amount<br />
permitted under HMRC rules. This new provision is<br />
known as “pension commutation”.<br />
Pensions Indexation<br />
Annual increases are applied to pension payments at<br />
rates defined by the Pensions (Increase) Act 1971, <strong>and</strong><br />
are based on changes in retail prices in the twelve<br />
months ending 30 September in the previous calendar<br />
year.<br />
Lump Sum Allowance<br />
A lump sum is payable on retirement which is<br />
normally three times the <strong>annual</strong> pension payment.<br />
Ill-Health Retirement<br />
Early payment of a pension, with enhancement in<br />
certain circumstances, is available to members of the<br />
Scheme<br />
who are permanently incapable of fulfilling their<br />
duties or regular employment effectively through<br />
illness or infirmity.<br />
Death Benefits<br />
A death gratuity of twice their final year’s pensionable<br />
pay for death in service, <strong>and</strong> five times their <strong>annual</strong><br />
pension for death after retirement is payable.<br />
Additional Voluntary Contributions (AVCs)<br />
Members can purchase additional service in the NHS<br />
Scheme <strong>and</strong> contribute to money purchase AVC’s run<br />
by the Scheme’s approved providers or by other Free<br />
St<strong>and</strong>ing Additional Voluntary Contributions (FSAVC)<br />
providers.<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
59<br />
Transfer between Funds<br />
Scheme members have the option to transfer their<br />
pension between the NHS Pension Scheme <strong>and</strong><br />
another scheme when they move into or out of NHS<br />
employment.<br />
Preserved Benefits<br />
Where a scheme member ceases NHS employment<br />
with more than two years service they can preserve<br />
their accrued NHS pension for payment when they<br />
reach retirement age.<br />
12. Retirement due to ill health<br />
During <strong>2009</strong>/10 there were 9 (2008/09, 11) early<br />
retirements from the NHS Trust agreed on the grounds<br />
of ill-health. The estimated additional pension<br />
liabilities of these ill-health retirements will be<br />
£440,133 (2008/09: £591,581). The cost of these illhealth<br />
retirements will be borne by the NHS Business<br />
Services Authority - Pensions Division.<br />
Compensation for Early Retirement<br />
Where a member of the Scheme is made redundant<br />
they may be entitled to early receipt of their pension<br />
plus enhancement, at the employer’s cost.<br />
13. Better Payment Practice Code<br />
13.1 Better Payment Practice Code - measure of compliance<br />
009/10 2008/09<br />
Number £000 Number £000<br />
Total Non-NHS trade invoices paid in the year 71,108 161,919 77,725 155,200<br />
Total Non NHS trade invoices paid within target 47,688 131,858 70,997 141,248<br />
Percentage of Non-NHS trade invoices paid within target 67% 81% 91% 91%<br />
Total NHS trade invoices paid in the year 2,817 57,991 3,042 40,628<br />
Total NHS trade invoices paid within target 1,815 34,927 2,051 22,211<br />
Percentage of NHS trade invoices paid within target 64% 60% 67% 55%<br />
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<br />
goods or a valid invoice, whichever is later.<br />
13.2 The Late Payment of Commercial Debts (Interest) Act 1998<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Amounts included in finance costs from claims made under this legislation 1 0<br />
Compensation paid to cover debt recovery costs under this legislation 0 0<br />
Total 1 0<br />
Annual Accounts
60<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
14. Investment revenue<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Rental revenue:<br />
PFI finance lease revenue:<br />
planned 0 0<br />
contingent 0 0<br />
Other finance lease revenue 0 0<br />
Interest revenue:<br />
Bank accounts 205 414<br />
Other loans <strong>and</strong> receivables 1,036 0<br />
Impaired financial assets 0 0<br />
Other financial assets 0 0<br />
Total 1,241 414<br />
15. Other gains <strong>and</strong> losses<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Gain/(loss) on disposal of property, plant <strong>and</strong> equipment 2,002 (2)<br />
Gain/(loss) on disposal of intangible assets 0 0<br />
Gain/(loss) on disposal of financial assets 0 0<br />
Gain/(loss) on foreign exchange 0 0<br />
Change in fair value of financial assets carried at fair value through profit <strong>and</strong> loss 0 0<br />
Change in fair value of financial liabilities carried at fair value through profit <strong>and</strong> loss 0 0<br />
Change in fair value of investment property 0 0<br />
Recycling of gain/(loss) from equity on disposal of financial assets available for sale 0 0<br />
Total 2,002 (2)<br />
16. Finance costs<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Interest on loans <strong>and</strong> overdrafts 0 2<br />
Interest on obligations under finance leases 0 0<br />
Interest on obligations under PFI contracts:<br />
- main finance cost 19,843 20,649<br />
- contingent finance cost 0 0<br />
Interest on late payment of commercial debt 1 0<br />
Other interest expense 0 0<br />
Total interest expense 19,844 20,651<br />
Other finance costs 133 141<br />
Total 19,977 20,792<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
61<br />
17. Property, plant <strong>and</strong><br />
equipment <strong>2009</strong>/10<br />
L<strong>and</strong> Buildings Dwellings Assets Plant <strong>and</strong> Transport Information Furniture & Total<br />
excluding under machinery equipment technology fittings<br />
dwellings construction<br />
<strong>and</strong> POA<br />
£000 £000 £000 £000 £000 £000 £000 £000 £000<br />
Cost or valuation at 1 April <strong>2009</strong> 51,416 298,771 10,325 1,043 63,910 57 13,414 2,489 441,425<br />
Additions purchased 0 2,966 0 2,049 5,528 0 2,059 386 12,988<br />
Additions donated 0 0 0 0 0 0 0 0 0<br />
Additions government granted 0 0 0 0 0 0 0 0 0<br />
Reclassifications 0 0 0 370 0 0 3 0 373<br />
Reclassified as held for sale 0 0 0 0 0 0 0 0 0<br />
Disposals other than by sale (6,600) (7,599) 0 0 (3,366) 0 (132) (47) (17,744)<br />
Revaluation/indexation gains 0 0 0 0 0 0 0 0 0<br />
Impairments (732) (6,841) (103) 0 (65) 0 0 0 (7,741)<br />
Reversal of impairments 0 0 0 0 0 0 0 0 0<br />
Transfers to Foundation Trust 0 0 0 0 0 0 0 0 0<br />
At 31 March 2010 44,084 287,297 10,222 3,462 66,007 57 15,344 2,828 429,301<br />
Depreciation at 1 April <strong>2009</strong> 0 0 0 0 27,711 36 5,500 688 33,935<br />
Reclassifications 0 0 0 0 0 0 0 0 0<br />
Reclassified as held for sale 0 0 0 0 0 0 0 0 0<br />
Disposals other than by sale 0 0 0 0 (3,365) 0 (132) 0 (3,497)<br />
Revaluation/indexation gains 0 0 0 0 0 0 0 0 0<br />
Impairments 14,857 16,308 591 0 153 0 0 (47) 31,862<br />
Reversal of Impairments 0 (28) 0 0 0 0 0 0 (28)<br />
Charged during the year 0 3,619 214 0 5,912 4 2,170 323 12,242<br />
Transfer to Foundation Trust 0 0 0 0 0 0 0 0 0<br />
Depreciation at 31 March 2010 14,857 19,899 805 0 30,411 40 7,538 964 74,514<br />
Net book value<br />
Purchased 29,227 266,772 9,417 3,462 35,312 17 7,804 1,864 353,875<br />
Donated 0 626 0 0 284 0 2 0 912<br />
Government granted 0 0 0 0 0 0 0 0 0<br />
Total at 31 March 2010 29,227 267,398 9,417 3,462 35,596 17 7,806 1,864 354,787<br />
Asset financing<br />
Owned 29,227 68,358 9,417 3,462 19,233 17 7,546 1,864 139,124<br />
Finance Leased 0 0 0 0 0 0 0 0 0<br />
Private finance initiative 0 199,040 0 0 16,363 0 260 0 215,663<br />
PFI residual interests 0 0 0 0 0 0 0 0 0<br />
Total 31 March 2010 29,227 267,398 9,417 3,462 35,596 17 7,806 1,864 354,787<br />
Annual Accounts
62<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
17. Property, plant<br />
<strong>and</strong> equipment<br />
- prior year 2008/09<br />
L<strong>and</strong> Buildings Dwellings Assets Plant <strong>and</strong> Transport Information Furniture & Total<br />
excluding under machinery equipment technology fittings<br />
dwellings construction<br />
<strong>and</strong> POA<br />
£000 £000 £000 £000 £000 £000 £000 £000 £000<br />
Cost or valuation at 1 April 2008 84,840 350,395 11,308 1,034 64,274 56 14,807 2,404 529,118<br />
Additions purchased 0 334 0 223 2,692 0 104 36 3,389<br />
Additions donated 0 0 0 0 48 0 0 0 48<br />
Additions government granted 0 0 0 0 0 0 0 0 0<br />
Reclassifications 0 0 0 0 0 0 0 0 0<br />
Reclassified as held for sale 0 0 0 0 0 0 0 0 0<br />
Disposals other than by sale (9,394) (8,147) 0 0 (3,949) 0 (1,497) (14) (23,001)<br />
Revaluation/indexation gains 0 0 0 0 451 1 0 63 515<br />
Impairments (24,030) (14,792) (754) (214) (320) 0 0 0 (40,110)<br />
Reversal of impairments 0 0 0 0 0 0 0 0 0<br />
At 31 March <strong>2009</strong> 51,416 327,790 10,554 1,043 63,196 57 13,414 2,489 469,959<br />
Depreciation at 1 April 2008 0 0 0 0 24,161 31 4,816 458 29,466<br />
Reclassifications 0 0 0 0 0 0 0 0 0<br />
Reclassified as held for sale 0 0 0 0 0 0 0 0 0<br />
Disposals other than by sale 0 0 0 0 (3,718) 0 (1,497) (14) (5,229)<br />
Revaluation/indexation gains 0 0 0 0 503 1 0 11 515<br />
Impairments 0 24,900 0 0 0 0 0 0 24,900<br />
Reversal of Impairments 0 0 0 0 0 0 0 0 0<br />
Charged during the year 0 4,119 229 0 6,051 4 2,181 233 12,817<br />
Depreciation at 31 March <strong>2009</strong> 0 29,019 229 0 26,997 36 5,500 688 62,469<br />
Net book value<br />
Purchased 51,416 298,072 10,325 1,043 35,803 21 7,909 1,801 406,390<br />
Donated 0 699 0 0 396 0 5 0 1,100<br />
Government granted 0 0 0 0 0 0 0 0 0<br />
Total at 31 March <strong>2009</strong> 51,416 298,771 10,325 1,043 36,199 21 7,914 1,801 407,490<br />
Asset financing<br />
Owned 51,416 87,805 10,325 1,043 18,756 21 7,914 1,801 179,081<br />
Finance Leased 0 0 0 0 0 0 0 0 0<br />
Private finance initiative 0 210,966 0 0 17,443 0 0 0 228,409<br />
PFI residual interests 0 0 0 0 0 0 0 0 0<br />
Total 31 March <strong>2009</strong> 51,416 298,771 10,325 1,043 36,199 21 7,914 1,801 407,490<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
63<br />
There were no additional capital items donated in the<br />
current year.<br />
The Trust's accounting policy for Asset lives is as<br />
follows:-<br />
Life Yrs Yrs<br />
Category Max Min<br />
Building (non dwelling) 15 70<br />
Dwelling 15 50<br />
Plant <strong>and</strong> Machinery 7 15<br />
Information Technology 4 1<br />
Intangible 3 5<br />
Professional valuations have been carried out by DTZ<br />
Debenham Tie Leung Limited, an independent third<br />
party valuer. The valuations are carried out in<br />
accordance with the Royal Institute of Chartered<br />
Surveyors (RICS) Appraisal <strong>and</strong> Valuation Manual in so<br />
far as these terms are consistent with the agreed<br />
requirements of the Department of Health <strong>and</strong> HM<br />
Treasury.<br />
Where assets have been revalued during the period, in<br />
line with Treasury guidance, the revaluation on 1 April<br />
2010 was based on “modern equivalent assets” rather<br />
then the “like for like” replacement basis used in<br />
previous valuations. For other assets, the valuations<br />
are carried out primarily on the basis of Depreciated<br />
Replacement Cost for specialised operational property<br />
<strong>and</strong> Existing Use Value for non-specialised operational<br />
property. The value of l<strong>and</strong> for existing use purposes<br />
is assessed at Existing Use Value. For non-operational<br />
properties including surplus l<strong>and</strong>, the valuations are<br />
carried out at Open Market Value.<br />
Gains arising from indexation <strong>and</strong> revaluations are<br />
taken to the Revaluation Reserve. Losses arising from<br />
revaluation <strong>and</strong> indexation are recognised as<br />
impairments <strong>and</strong> are charged to the revaluation<br />
reserve to the extent that a balance exists in relation<br />
to the revalued asset. Losses in excess of that amount<br />
are charged to the current year’s Income &<br />
Expenditure account, unless it can be demonstrated<br />
that the recoverable amount is greater than the<br />
revalued amount in which case the impairment is<br />
taken to the revaluation reserve. Diminutions in value<br />
when newly constructed assets are brought into use<br />
are charged in full to the Income & Expenditure<br />
account. These falls in value result from the adoption<br />
of ideal conditions as the basis for depreciated<br />
replacement cost valuations.<br />
Assets in the course of construction are valued at<br />
current cost using the indexes as for l<strong>and</strong> <strong>and</strong><br />
buildings, as above. These assets include any existing<br />
l<strong>and</strong> or buildings under the control of a contractor.<br />
Treasury Indicies used<br />
2005 - 06 105<br />
2006 - 07 111<br />
2007 - 08 117<br />
2008 - 09 77<br />
<strong>2009</strong> - 10 65<br />
The Trust leases out the following items of property,<br />
plant <strong>and</strong> equipment on an operating lease basis.<br />
HCA<br />
ISTC<br />
Gross carrying amount 2,811,305 889,493<br />
Accumulated depreciation 0 0<br />
Accumulated impairment loss 0 (366,215)<br />
· Depreciation charge for the period 0 0<br />
Impairment losses recognised<br />
for the period 0 18,315<br />
mpairment losses reversed<br />
for the period 0 0<br />
Annual Accounts
64<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
18. Intangible assets <strong>2009</strong>/10<br />
Computer Computer Licences <strong>and</strong> Patents Development Total<br />
software - software - trademarks expenditure<br />
purchased (internally (internally<br />
generated)<br />
generated)<br />
£000 £000 £000 £000 £000 £000<br />
Gross cost at 1 April <strong>2009</strong> 2,052 0 263 0 0 2,315<br />
Additions purchased 2,436 0 0 0 0 2,436<br />
Additions internally generated 0 0 0 0 0 0<br />
Additions donated 0 0 0 0 0 0<br />
Additions government granted 0 0 0 0 0 0<br />
Reclassifications 0 0 0 0 0 0<br />
Reclassified as held for sale 0 0 0 0 0 0<br />
Disposals other than by sale 0 0 0 0 0 0<br />
Revaluation/indexation 0 0 0 0 0 0<br />
Impairments 0 0 0 0 0 0<br />
Reversals of impairments 0 0 0 0 0 0<br />
Gross cost at 31 March 2010 4,488 0 263 0 0 4,751<br />
Amortisation at 1 April <strong>2009</strong> 567 0 220 0 0 787<br />
Reclassifications 0 0 0 0 0 0<br />
Reclassifications as held for sale 0 0 0 0 0 0<br />
Disposals other than by sale 0 0 0 0 0 0<br />
Revaluation 0 0 0 0 0 0<br />
Impairments 0 0 0 0 0 0<br />
Reversal of impairments 0 0 0 0 0 0<br />
Charged during the year 392 0 43 0 0 435<br />
Amortisation at 31 March 2010 959 0 263 0 0 1,222<br />
Net book value<br />
Purchased 3,529 0 0 0 0 3,529<br />
Donated 0 0 0 0 0 0<br />
Government granted 0 0 0 0 0 0<br />
Total at 31 March 2010 3,529 0 0 0 0 3,529<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
65<br />
Intangible assets 2008/09 (prior year)<br />
Computer Computer Licences <strong>and</strong> Patents Development Total<br />
software - software - trademarks expenditure<br />
purchased (internally (internally<br />
generated)<br />
generated)<br />
£000 £000 £000 £000 £000 £000<br />
Gross cost at 1 April 2008 684 0 263 0 0 947<br />
Additions purchased 1,368 0 0 0 0 1,368<br />
Additions internally generated 0 0 0 0 0 0<br />
Additions donated 0 0 0 0 0 0<br />
Additions government granted 0 0 0 0 0 0<br />
Reclassifications 0 0 0 0 0 0<br />
Reclassified as held for sale 0 0 0 0 0 0<br />
Disposals other than by sale 0 0 0 0 0 0<br />
Revaluation / indexation 0 0 0 0 0 0<br />
Impairments 0 0 0 0 0 0<br />
Reversals of impairments 0 0 0 0 0 0<br />
Gross cost at 31 March <strong>2009</strong> 2,052 0 263 0 0 2,315<br />
Amortisation at 1 April 2008 471 0 134 0 0 605<br />
Reclassifications 0 0 0 0 0 0<br />
Reclassifications as held for sale 0 0 0 0 0 0<br />
Disposals other than by sale 0 0 0 0 0 0<br />
Revaluation 0 0 0 0 0 0<br />
Impairments 0 0 0 0 0 0<br />
Reversal of impairments 0 0 0 0 0 0<br />
Charged during the year 96 0 86 0 0 182<br />
Amortisation at 31 March <strong>2009</strong> 567 0 220 0 0 787<br />
Net book value<br />
Purchased 1,485 0 43 0 0 1,528<br />
Donated 0 0 0 0 0 0<br />
Government granted 0 0 0 0 0 0<br />
Total at 31 March <strong>2009</strong> 1,485 0 43 0 0 1,528<br />
The increase in intangible Fixed Assets is mainly due to IT investment in E Rostering <strong>and</strong> Remote Access.<br />
18.2 Revaluation reserve balance for intangible assets<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
At 1 April 0 0<br />
Changes 0 0<br />
At 31 March 0 0<br />
Annual Accounts
66<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
19. Impairments<br />
Prospective Revaluation has been undertaken by the<br />
Independent valuer DTZ which is effective as at 31st<br />
March 2010. The overall impact reduced the value of<br />
l<strong>and</strong> <strong>and</strong> buildings by £39.58m.<br />
Some asset values have been significantly reduced<br />
through the revaluation particularly the PFI building,<br />
the major proportion of the resulting impairment has<br />
been written off against I&E in the draft accounts.<br />
Description<br />
Impaired to I & E<br />
£m<br />
L<strong>and</strong> 14.9<br />
Owned building 7.2<br />
PFI building 9.7<br />
Total I & E impact 31.8<br />
The impairment has arisen from a change in market conditions <strong>and</strong> not from a permanent consumption of<br />
economic benefit.<br />
20. Capital commitments<br />
Contracted capital commitments at 31 March not otherwise included in these financial statements:<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
Property, plant <strong>and</strong> equipment 1,176 508<br />
Intangible assets 0 0<br />
Total 1,176 508<br />
21. Inventories<br />
21.1 Inventories<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
Drugs 2,069 2,326<br />
Work in progress 0 0<br />
Consumables 3,847 3,135<br />
Energy 117 147<br />
Other 0 0<br />
Total 6,033 5,608<br />
Of which held at net realisable value: 0 0<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
67<br />
21.2 Inventories recognised in expenses<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
Inventories recognised as an expense in the period 39,532 37,220<br />
Write-down of inventories (including losses) 0 0<br />
Reversal of write-downs that reduced the expense 0 0<br />
Total 39,532 37,220<br />
22 Trade <strong>and</strong> other recievables<br />
22.1 Trade <strong>and</strong> other receivables<br />
Current<br />
Non-current<br />
31 March 2010 31 March <strong>2009</strong> 31 March 2010 31 March <strong>2009</strong><br />
£000 £000 £000 £000<br />
NHS receivables-revenue 26,359 10,271 0 1,658<br />
NHS receivables-capital 0 0 0 0<br />
Non-NHS receivables-revenue 6,332 4,092 0 0<br />
Non-NHS receivables-capital 0 0 0 0<br />
Provision for the impairment of receivables (2,747) (1,976) 0 (379)<br />
Accrued income 657 5,158 0 0<br />
Finance lease Receivables 0 0 0 0<br />
Operating lease receivables 0 0 0 0<br />
VAT 229 0 0 0<br />
Other receivables 2,454 32,477 26,337 27,752<br />
Total 33,284 50,022 26,337 29,031<br />
The great majority of trade is with Primary Care Trusts, as commissioners for NHS patient care services. As Primary<br />
Care Trusts are funded by Government to buy NHS patient care services, no credit scoring of them is considered<br />
necessary.<br />
22.2 Receivables past their due date but not impaired<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
By up to three months 2,474 5,781<br />
By three to six months 549 863<br />
By more than six months 304 671<br />
Total 3,327 7,315<br />
Annual Accounts
68<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
22.3 Provision for impairment of receivables<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
Balance at 1 April (2,355) (3,165)<br />
Amount written off during the year 0 0<br />
Amount recovered during the year 0 0<br />
(Increase)/decrease in receivables impaired (392) 810<br />
Balance at 31 March (2,747) (2,355)<br />
Every invoice has been analysed through a dunning level method in asertaining the impairment of receivables<br />
figures.<br />
23. Other financial assets<br />
Current<br />
Non-current<br />
31 March 2010 31 March <strong>2009</strong> 31 March 2010 31 March <strong>2009</strong><br />
£000 £000 £000 £000<br />
Embedded derivatives carried at fair value<br />
through profit <strong>and</strong> loss 0 0 0 0<br />
Financial assets carried at fair value<br />
through profit <strong>and</strong> loss 0 0 0 0<br />
Held to maturity investments at<br />
amortised cost 0 0 0 0<br />
Available for sale financial assets<br />
carried at fair value 0 0 0 0<br />
Loans carried at amortised cost 0 0 0 0<br />
Total 0 0 0 0<br />
24. Other current assets<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
EU Emissions trading scheme allowances 0 0<br />
Other assets [specify] 0 0<br />
Total 0 0<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
69<br />
25. Cash <strong>and</strong> cash equivalents<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
Balance at 1 April 1,370 1,771<br />
Net change in year 728 (401)<br />
Balance at 31 March 2,098 1,370<br />
Made up of<br />
Cash with Office of HM Paymaster General 1,990 1,158<br />
Commercial banks <strong>and</strong> cash in h<strong>and</strong> 108 212<br />
Current investments 0 0<br />
Cash <strong>and</strong> cash equivalents as in statement of financial position 2,098 1,370<br />
Bank overdraft - Office of HM Paymaster General 0 0<br />
Bank overdraft - Commercial banks 0 0<br />
Cash <strong>and</strong> cash equivalents as in statement of cash flows 2,098 1,370<br />
26. Non-current assets held for sale<br />
L<strong>and</strong> Buildings Dwellings Other Intagible Total<br />
exc dwellings property assets<br />
plant <strong>and</strong><br />
equipment<br />
£000 £000 £000 £000 £000 £000<br />
Balance brought forward 0 0 0 0 0 0<br />
Plus assets classified as held for<br />
sale in the year 0 0 0 0 0 0<br />
Less assets sold in the year 0 0 0 0 0 0<br />
Less Impairments of assets held for sale 0 0 0 0 0 0<br />
Plus reversal of impairment of assets<br />
held for sale 0 0 0 0 0 0<br />
Less assets no longer classified as held for<br />
sale, for reasons other than disposal by sale 0 0 0 0 0 0<br />
Balance carried forward 0 0 0 0 0 0<br />
Annual Accounts
70<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
27. Trade <strong>and</strong> other payables<br />
Current<br />
Non-current<br />
31 March 2010 31 March <strong>2009</strong> 31 March 2010 31 March <strong>2009</strong><br />
£000 £000 £000 £000<br />
Interest payable 0 0 0 0<br />
NHS payables-revenue 10,272 5,987 0 0<br />
NHS payables-capital 655 0 0 0<br />
Non NHS trade payables - revenue 16,904 14,698 0 0<br />
Non NHS trade payables - capital 0 39 0 0<br />
Accruals <strong>and</strong> deferred income 14,526 11,514 5,342 0<br />
Social security costs 5,305 7,738 0 0<br />
VAT 0 0 0 0<br />
Tax 0 0<br />
Other 660 667 0 6,025<br />
Total 48,322 40,643 5,342 6,025<br />
28. Borrowings<br />
Current<br />
Non-current<br />
31 March 2010 31 March <strong>2009</strong> 31 March 2010 31 March <strong>2009</strong><br />
£000 £000 £000 £000<br />
Bank overdraft -<br />
Office of HM Paymaster General 0 0 0 0<br />
Bank overdraft - Commercial banks 0 0 0 0<br />
Loans from:<br />
Department of Health 0 0 0 0<br />
Other entities 235 0 235 0<br />
PFI liabilities 4,786 5,235 263,784 265,950<br />
LIFT 0 0 0 0<br />
Finance lease liabilities 0 0 0 0<br />
Other 0 0 0 0<br />
Total 5,021 5,235 264,019 265,950<br />
29. Other liabilities<br />
Current<br />
Non-current<br />
31 March 2010 31 March <strong>2009</strong> 31 March 2010 31 March <strong>2009</strong><br />
£000 £000 £000 £000<br />
PFI asset – deferred credit 0 0 0 0<br />
Lease incentives 0 0 0 0<br />
Other 0 0 0 0<br />
Total 0 0 0 0<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
71<br />
30. Finance lease obligations<br />
The Trust has no finance lease obligations other than PFI (note 33).<br />
31. Finance lease receivables (i.e. as lessor)<br />
The Trust has no finance lease receivables.<br />
32. Finance lease commitments<br />
The Trust has no finance lease commitments other than PFI (note 33).<br />
33. Private finance initiative contracts<br />
33.1 PFI schemes off-Statement of Financial Position<br />
There are no "off statement of Financial Position" PFI schemes.<br />
33.2 PFI schemes on-Statement of Financial Position<br />
The PFI project relates to Queen's Hospital in Romford,<br />
which was built by Catalyst Healthcare (Romford) Ltd,<br />
(CHRL), completed in October 2006 <strong>and</strong> fully<br />
operational by December 2006. CHRL is a consortium<br />
comprising Bovis Lend Lease Limited (the constructor<br />
<strong>and</strong> infrastructural lifecyle provider), Sodexo,<br />
(providing a broad range of facilities management<br />
services including "living-space" lifecycle) <strong>and</strong> Uberior<br />
Investments, formerly part of HBOS, now part of the<br />
Lloyds Banking Group. Bovis, Sodexo <strong>and</strong> Uberior<br />
were original equity holders in CHRL. Bovis have in<br />
<strong>2009</strong>/10 sold their CHRL equity interest to<br />
Infrastructure Investments Ltd, a division of, HSBC.<br />
The PFI Project Agreement, with Catalyst comprises a<br />
design <strong>and</strong> build contract which provides Queen's<br />
Hospital, a 930 bedded multi-specialty acute hospital<br />
in Romford, supported by 16 operating theatres, an<br />
Accident <strong>and</strong> Emergency department, ITU/ HDU<br />
facilities, a renal dialysis unit with accompanying<br />
diagnostic services such as pathology <strong>and</strong> radiology.<br />
Siemens Healthcare Services Ltd provides a managed<br />
equipment service to the Trust as part of the unitary<br />
payment, but is not part of the CHRL consortium;<br />
however Siemens is a sub-contractor to CHRL.<br />
Although financed <strong>and</strong> managed by CHRL, the<br />
hospital's main purpose is the treatment of NHS<br />
patients <strong>and</strong> clinical services will continue to be run by<br />
NHS staff. At the end of the Project Term, January<br />
2040, CHML's interest in the facility ceases <strong>and</strong> no<br />
further payments are due to them. CHRL are obliged<br />
to maintain the hospital to a required st<strong>and</strong>ard<br />
throughout the project timescale, <strong>and</strong> there is an<br />
agreed h<strong>and</strong>over commitment requiring this st<strong>and</strong>ard<br />
to be maintained or made good at the end of the<br />
contract.<br />
Annual Accounts
72<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Within the contract, there is provision for the Trust to<br />
elect to either benchmark or market-test certain<br />
facities management services, which may affect the<br />
price of services provided by the consortium.<br />
From 1 April <strong>2009</strong>, <strong>and</strong> the adoption of International<br />
Financial Reporting St<strong>and</strong>ards, the PFI hospital now<br />
comes onto the Statement of Financial position.<br />
Assets have been recognised for the building <strong>and</strong><br />
equipment under the scope of the Managed<br />
Equipment Service, which are depreciated in<br />
accordance with the Trust's accounting policies. The<br />
substance of the contract is that the Trust has a<br />
financial liability which is similar to a finance lease<br />
over the Project term. Payments comprise two<br />
elements - imputed finance lease charges <strong>and</strong> service<br />
charges. The financial liability covers the financing cost<br />
of the building <strong>and</strong> equipment, (as distinct from<br />
service costs); the timing of the obligations are<br />
disclosed below:-<br />
Total obligations due for on-statement of financial position PFI contracts:<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
Not later than one year 24,513 23,453<br />
Later than one year, not later than five years 96,193 99,788<br />
Later than five years 525,800 546,739<br />
Sub total 646,506 669,980<br />
Less: interest element (377,936) (398,795)<br />
Total 268,570 271,185<br />
33.3 Charges to expenditure<br />
The total charged in the year to expenditure in respect of the service element of the on-statement PFI contract was<br />
£20.291m (prior year £19.176m).<br />
The trust is committed to the following <strong>annual</strong> charges:<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
[1]<br />
PFI scheme expiry date:<br />
Not later than one year 0 0<br />
Later than one year, not later than five years 0 0<br />
Later than five years 21,103 20,291<br />
Total 21,103 20,291<br />
The <strong>annual</strong> payment is subject to an RPI-based<br />
indexation in common with most other PFI schemes.<br />
Apart from inflationary increases, any increases or<br />
decreases in payments are determined by upward or<br />
downward service variations, determined by the Trust.<br />
[1] Note: there should only be an entry against one of<br />
these lines for each PFI contract, for instance, a PFI<br />
contract with 20 years to expiry at an <strong>annual</strong> service<br />
charge of £100,000 would require a single entry of<br />
100 against the later than five years line.<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
73<br />
34. Other financial liabilities<br />
Current<br />
Non-current<br />
31 March 2010 31 March <strong>2009</strong> 31 March 2010 31 March <strong>2009</strong><br />
£000 £000 £000 £000<br />
Financial liabilities carried at fair<br />
value through profit <strong>and</strong> loss:<br />
Embedded derivatives 0 0 0 0<br />
Other financial liabilities 0 0 0 0<br />
Authorised cost 0 0 0 0<br />
Total 0 0 0 0<br />
35. Provisions<br />
Current<br />
Non-current<br />
31 March 2010 31 March <strong>2009</strong> 31 March 2010 31 March <strong>2009</strong><br />
£000 £000 £000 £000<br />
Pensions relating to former directors 0 0 0 0<br />
Pensions relating to other staff 777 715 5,312 5,040<br />
Legal claims 875 520 0 789<br />
Restructurings 0 0 0 0<br />
Continuing care 0 0 0 0<br />
Equal pay 0 0 0 0<br />
Agenda for change 488 351 0 0<br />
Other 0 267 0 310<br />
Total 2,140 1,853 5,312 6,139<br />
Annual Accounts
74<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Pensions Pensions Legal Restruc- Continuing Equal Agenda Other Total<br />
relating to relating to claims turings care pay for change<br />
former other<br />
directors staff<br />
£000 £000 £000 £000 £000 £000 £000 £000 £000<br />
At 1 April 2008 0 6281 867 0 0 0 0 1315 8,463<br />
Arising during the year 0 213 629 0 0 0 0 151 993<br />
Used during the year 0 (794) (165) 0 0 0 0 (158) (1,117)<br />
Reversed unused 0 (69) (40) 0 0 0 0 (380) (489)<br />
Unwinding of discount 0 124 18 0 0 0 0 0 142<br />
Transfers in year 0 0 0 0 0 0 0 0 0<br />
At 1 April <strong>2009</strong> 0 5,755 1,309 0 0 0 351 577 7,992<br />
Arising during the year 0 132 74 0 0 0 137 0 343<br />
Used during the year 0 (778) (238) 0 0 0 0 0 (1,016)<br />
Reversed unused 0 0 0 0 0 0 0 0 0<br />
Unwinding of discount 0 133 0 0 0 0 0 0 133<br />
Transfers in year 0 847 (270) 0 0 0 0 (577) 0<br />
At 31 March 2010 0 6,089 875 0 0 0 488 0 7,452<br />
Expected timing of cash flows:<br />
In the remainder of the spending review<br />
period to 31 March 2011 0 156 874 0 0 0 487 0 1,517<br />
Between 1 April 2011 <strong>and</strong> 31 March 2016 0 3,453 0 0 0 0 0 0 3,453<br />
Between 1 April 2016 <strong>and</strong> 31 March 2021 0 2,708 0 0 0 0 0 0 2,708<br />
Thereafter 0 (228) 1 0 0 0 1 0 (226)<br />
Annual Accounts
Annual Report & Accounts <strong>2009</strong>-2010<br />
75<br />
Legal claims include provisions for employer's liability,<br />
public liability, injury benefits <strong>and</strong> employment tribunal<br />
cases.<br />
Employer's liabilty <strong>and</strong> public liabilty provisions are the<br />
product of the best estimates of the NHS Litigation<br />
Authority's claim managers. It is assumed that the<br />
cases will complete in the timescale <strong>and</strong> costs forecast.<br />
However, cases do change in value <strong>and</strong> timing<br />
depending on the litigation process <strong>and</strong> the<br />
complexity of the case.<br />
Other Provisions include provisions for Agenda for<br />
Change. The agenda for change provision is for salary<br />
arrears due to ex-employees, whose posts had been<br />
assimilated to Agenda For Change subsequent to their<br />
leaving. These provisions have been determined after<br />
making an assessment of the likely eventual outcome.<br />
The expected reimbursement from commissioners<br />
(Primary Care Trusts) for provisions covered by back-toback<br />
arrangements is £1,707,214 (<strong>2009</strong>:<br />
£1,868,000). This amount is included within NHS<br />
debtors<br />
Note. £77,425,087 is included in the provisions of the<br />
NHS Litigation Authority at 31 March 2010 in respect<br />
of clinical negligence liabilities of the NHS Trust (<strong>2009</strong>:<br />
£74,453,000).<br />
36. Contingent liabilities<br />
36.1 Contingent liabilities<br />
<strong>2009</strong>/100 2008/09<br />
£000 £000<br />
Equal pay cases 0 0<br />
Other (specify) (28) (211)<br />
Amounts recoverable against contingent liabilities 0 36<br />
Total (28) (175)<br />
The other amount referred to above relates to Legal<br />
cases pending where probability of Trust losing is<br />
graded as Medium.<br />
Legal cases where the risk is considered high have<br />
been accounted for under provisions.<br />
The timing of this liability should it materialise will be<br />
2010/2011.<br />
Annual Accounts
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<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
37. Financial Instruments<br />
37.1 Financial assets<br />
At fair value Loans <strong>and</strong> Available Total<br />
through profit receivables for sale<br />
<strong>and</strong> loss<br />
£000 £000 £000 £000<br />
Embedded derivatives 0 0 0 0<br />
Receivables 0 76,028 0 76,028<br />
Cash at bank <strong>and</strong> in h<strong>and</strong> 0 1,370 0 1,370<br />
Other financial assets 0 0 0 0<br />
Total at 31 March <strong>2009</strong> 0 77,398 0 77,398<br />
Embedded derivatives 0 0 0 0<br />
Receivables 0 56,377 0 56,377<br />
Cash at bank <strong>and</strong> in h<strong>and</strong> 0 2,098 0 2,098<br />
Other financial assets 0 0 0 0<br />
Total at 31 March 2010 0 58,475 0 58,475<br />
37.2 Financial liabilities<br />
At fair value Other Total<br />
through profit<br />
<strong>and</strong> loss<br />
£000 £000 £000<br />
Embedded derivatives 0 0 0<br />
Payables 0 27,216 27,216<br />
PFI <strong>and</strong> finance lease obligations 0 0 0<br />
Other borrowings 0 271,185 271,185<br />
Other financial liabilities 0 0 0<br />
Total at 31 March <strong>2009</strong> 0 298,401 298,401<br />
Embedded derivatives 0 0 0<br />
Payables 0 50,977 50,977<br />
PFI <strong>and</strong> finance lease obligations 0 268,570 268,570<br />
Other borrowings 0 470 470<br />
Other financial liabilities 0 0 0<br />
Total at 31 March 2010 0 320,017 320,017<br />
Annual Accounts
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37.3 Financial risk management<br />
Financial <strong>report</strong>ing st<strong>and</strong>ard IFRS 7 requires disclosure<br />
of the role that financial instruments have had during<br />
the period in creating or changing the risks a body<br />
faces in undertaking its activities. Because of the<br />
continuing service provider relationship that the NHS<br />
trust has with primary care trusts <strong>and</strong> the way those<br />
primary care trusts are financed, the NHS trust is not<br />
exposed to the degree of financial risk faced by<br />
business entities. Also financial instruments play a<br />
much more limited role in creating or changing risk<br />
than would be typical of listed companies, to which<br />
the financial <strong>report</strong>ing st<strong>and</strong>ards mainly apply. The<br />
NHS trust has limited powers to borrow or invest<br />
surplus funds <strong>and</strong> financial assets <strong>and</strong> liabilities are<br />
generated by day-to-day operational activities rather<br />
than being held to change the risks facing the NHS<br />
trust in undertaking its activities.<br />
The trust’s treasury management operations are<br />
carried out by the finance department, within<br />
parameters defined formally within the trust’s st<strong>and</strong>ing<br />
financial instructions <strong>and</strong> policies agreed by the board<br />
of directors. Trust treasury activity is subject to review<br />
by the trust’s internal auditors.<br />
Currency risk<br />
The trust is principally a domestic organisation with<br />
the great majority of transactions, assets <strong>and</strong> liabilities<br />
being in the UK <strong>and</strong> sterling based. The trust has no<br />
overseas operations. The trust therefore has low<br />
exposure to currency rate fluctuations.<br />
Interest rate risk<br />
The trust borrows from government for capital<br />
expenditure, subject to affordability as confirmed by<br />
the strategic health authority. The borrowings are for<br />
1 – 25 years, in line with the life of the associated<br />
assets, <strong>and</strong> interest is charged at the National Loans<br />
Fund rate, fixed for the life of the loan. The trust<br />
therefore has low exposure to interest rate<br />
fluctuations<br />
Credit risk<br />
Because the majority of the trust’s income comes from<br />
contracts with other public sector bodies, the trust has<br />
low exposure to credit risk. The maximum exposures<br />
as at 31 March 2010 are in receivables from<br />
customers, as disclosed in the Trade <strong>and</strong> other<br />
receivables note.<br />
Liquidity risk<br />
The trust’s operating costs are incurred under<br />
contracts with primary care trusts, which are financed<br />
from resources voted <strong>annual</strong>ly by Parliament . The<br />
trust funds its capital expenditure from funds obtained<br />
within its prudential borrowing limit. The trust is not,<br />
therefore, exposed to significant liquidity risks.<br />
37.4 Maturity of financial liabilities (need not be included if liquidity risk is not material)<br />
31 March 2010 31 March <strong>2009</strong><br />
£000 £000<br />
In one year or less 0 0<br />
In more than one year but not more than two years 0 0<br />
In more than two years but not more than five years 0 0<br />
In more than five years 0 0<br />
Total 0 0<br />
Annual Accounts
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<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
38. Events after the <strong>report</strong>ing period<br />
There are no events after the <strong>report</strong>ing period.<br />
39. Financial performance targets<br />
The figures given for periods prior to <strong>2009</strong>/10 are on a UK GAAP basis as that is the basis on which the targets<br />
were set for those years.<br />
39.1 Breakeven performance<br />
2005/06 2006/07 2007/08 2008/09 <strong>2009</strong>/10<br />
£000 £000 £000 £000 £000<br />
Turnover 334,815 351,780 345,451 378,400 397,456<br />
Retained surplus/(deficit) for the year (16,009) (16,844) (35,621) (35,674) (56,243)<br />
Adjustment for:<br />
Timing/non-cash impacting distortions:<br />
Use of pre - 1.4.97 surpluses (FDL(97)24 Agreements) 0 0 0 0 0<br />
2006/07 PPA (relating to 1997/98 to 2005/06) 0 0 0 0 0<br />
2007/08 PPA (relating to 1997/98 to 2006/07) 0 0 0 0 0<br />
2008/09 PPA (relating to 1997/98 to 2007/08) 0 0 0 0 0<br />
<strong>2009</strong>/10 PPA (relating to 1997/98 to 2008/09) 0 0 0 0 0<br />
Adjustments for Impairments 0 0 0 9,460 31,862<br />
Consolidated Budgetary Guidance -<br />
Adjustment for Dual Accounting under IFRIC12* 0 0 0 0 2,100<br />
PPAs from IFRS Transition not Included above<br />
(for 09/10 Accounts) 0 0 0 0 0<br />
Other agreed adjustments 0 0 0 0 0<br />
Break-even in-year position (16,009) (16,844) (35,621) (26,214) (22,281)<br />
Break-even cumulative position (15,989) (32,833) (68,454) (94,668) (116,949)<br />
Due to the introduction of International Financial<br />
Reporting St<strong>and</strong>ards (IFRS) accounting in <strong>2009</strong>/10,<br />
NHS Trust’s financial performance measurement needs<br />
to be aligned with the guidance issued by HM<br />
Treasury measuring Departmental expenditure.<br />
Therefore, the incremental revenue expenditure<br />
resulting from the application of IFRS to IFRIC 12<br />
schemes (which would include PFI schemes), which<br />
has no cash impact <strong>and</strong> is not chargeable for overall<br />
budgeting purposes, is excluded when measuring<br />
Breakeven performance.<br />
The Trust's recovery plan, approved by the SHA aims<br />
to achieve break-even in 2011/12<br />
If anticipated financial year of recovery is more than<br />
two years state the period agreed with SHA<br />
2005/06 2006/07 2007/08 2008/09 <strong>2009</strong>/10<br />
% % % % %<br />
Materiality test (I.e. is it equal to or less than 0.5%):<br />
Break-even in-year position as a percentage of turnover -5% -5% -10% -7% -6%<br />
Break-even cumulative position as a percentage of turnover -5% -9% -20% -25% -29%<br />
The amounts in the above tables in respect of financial years 2005/06 to 2008/09 inclusive have not been restated<br />
to IFRS <strong>and</strong> remain on a UK GAAP basis<br />
Annual Accounts
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79<br />
39.2 Capital cost absorption rate<br />
The trust was required to absorb the cost of capital at<br />
a rate of 3.5% of forecast average relevant net assets.<br />
The rate is calculated as the percentage that dividends<br />
paid on public dividend capital, totalling for <strong>2009</strong>/10<br />
£4549k, bearing to the actual average relevant net<br />
assets of £129,978k, that is 3.5% (2008/09 3.1%)<br />
From <strong>2009</strong>/10 the dividend payable on public dividend<br />
capital is based on the actual (rather than forecast)<br />
average relevant net assets <strong>and</strong> therefore the actual<br />
capital cost absorption rate is automatically 3.5%.<br />
39.3 External financing<br />
The Trust is given an external financing limit which it is permitted to undershoot<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
External financing limit (22,374) (20,388)<br />
Cash flow financing (14,098) 13,441<br />
Finance leases taken out in the year 2,026 0<br />
Other capital receipts 0 0<br />
External financing requirement (12,072) 13,441<br />
Undershoot/(overshoot) (10,302) (33,829)<br />
The EFL is set by the Department of Health <strong>and</strong><br />
determines how much (or less) cash than that<br />
generated by its activites the Trust can spend in a year.<br />
It is initially set at planning stage early in the year. The<br />
Trust's EFL was based on its original planned deficit of<br />
£24.7m, which would have led to a cash requirement<br />
of £11.7m, allowing for non-cash items such as<br />
impairments <strong>and</strong> depreciation plus capital expenditure.<br />
The out-turn was a deficit of £56.2m, which with<br />
non-cash items gives a cash requirement of £25.6m,<br />
some £13.9m more than planned. Within the year, the<br />
Trust received Public Dividend Captial of £5.0m, which<br />
was covered by an EFL adjustment, leaving £8.9m<br />
uncovered. In year, London SHA did recognise the<br />
causes of the Trust's financial pressures <strong>and</strong> increased<br />
the Trust's planned deficit from £24.7m to £54.1m.<br />
£18m of this increase was due to non-cash items such<br />
as unforeseen fixed asset impairments, the remaining<br />
£11.4m requiring cash. Although the increased deficit<br />
was supported by the SHA, the DH did not adjust the<br />
Trust's EFL. Overshooting the EFL means that the Trust<br />
has used more cash in year than the DH intended; it<br />
does not give rise to a present or future liability to the<br />
DH.<br />
Annual Accounts
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<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
39.4 Capital Resource Limit<br />
The Trust is given a capital resource limit which it is not permitted to exceed.<br />
<strong>2009</strong>/10 2008/09<br />
£000 £000<br />
Gross capital expenditure 15,424 6,094<br />
Less: book value of assets disposed of (14,247) (16,300)<br />
Plus: loss on disposal of donated assets 0 32<br />
Less: capital grants 0 0<br />
Less: donations towards the acquisition of non-current assets 0 (48)<br />
Charge against the capital resource limit 1,177 (10,222)<br />
Capital resource limit 1,799 (6,399)<br />
(Over)/Underspend against the capital resource limit 622 3,823<br />
40. Related party transactions<br />
<strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong> Hospitals NHS Trust<br />
is a body corporate established by order of the<br />
Secretary of State for Health.<br />
During the year none of the Board Members or<br />
members of the key management staff or parties<br />
related to them has undertaken any material<br />
transactions with the Trust.<br />
The Department of Health is regarded as a related<br />
party. During the year the Trust has had a significant<br />
number of material transactions with the Department,<br />
<strong>and</strong> with other entities for which the Department is<br />
regarded as the parent Department. These entities are<br />
listed below:<br />
NHS London<br />
<strong>Barking</strong> <strong>and</strong> Dagenham Primary Care Trust<br />
<strong>Havering</strong> Primary Care Trust<br />
<strong>Redbridge</strong> Primary Care Trust<br />
South West Essex Primary Care Trust<br />
West Essex Primary Care Trust<br />
North East London Mental Health NHS Trust<br />
NHS Professionals<br />
NHS Litigation Authority<br />
NHS Blood <strong>and</strong> Transplant<br />
Other Primary Care, NHS <strong>and</strong> Foundation Trusts<br />
London Strategic Health Authority<br />
Newham PCT<br />
Mid Essex PCT<br />
South East Essex PCT<br />
Tower Hamlets PCT<br />
Waltham Forest PCT<br />
NHS Purchasing <strong>and</strong> Supply Agency<br />
In addition, the Trust has had a number of material<br />
transactions with other Government Departments <strong>and</strong><br />
other central <strong>and</strong> local Government bodies. Such<br />
transactions were performed in furtherance of the<br />
Trust's normal activities.<br />
The Trust has also received revenue <strong>and</strong> capital<br />
payments from <strong>Barking</strong>, <strong>Havering</strong> <strong>and</strong> <strong>Redbridge</strong><br />
Hospitals NHS Trust Charity Fund, certain of the<br />
Trustees for which are also members of the NHS Trust<br />
Board.<br />
Annual Accounts
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81<br />
41. Third Party Assets<br />
The Trust held £1743 cash <strong>and</strong> cash equivalents at 31<br />
March 2010 (£1645 - at 31 March <strong>2009</strong>) which relates<br />
to monies held by the NHS Trust on behalf of patients.<br />
This has been excluded from the cash <strong>and</strong> cash<br />
equivalents figure <strong>report</strong>ed in the accounts.<br />
42. Intra-Government <strong>and</strong> Other Balances<br />
Current Non-current Current Non-current<br />
receivables receivables payables payables<br />
£000 £000 £000 £000<br />
Balances with other Central Government Bodies 229 0 5,305 0<br />
Balances with Local Authorities 0 0 0 0<br />
Balances with NHS Trusts <strong>and</strong> Foundation Trusts 23,612 0 10,927 0<br />
Balances with Public Corporations <strong>and</strong> Trading Funds 0 0 0 0<br />
Intra Government balances 23,841 0 16,232 0<br />
Balances with bodies external to Government 9,443 26,337 32,090 5,342<br />
At 31 March 2010 33,284 26,337 48,322 5,342<br />
Balances with other Central Government Bodies 625 0 3,053 0<br />
Balances with Local Authorities 0 0 0 0<br />
Balances with NHS Trusts <strong>and</strong> Foundation Trusts 9,646 1,658 2,934 0<br />
Balances with Public Corporations <strong>and</strong> Trading Funds 0 0 0 0<br />
Intra Government balances 10,271 1,658 5,987 0<br />
Balances with bodies external to Government 39,751 27,373 34,656 6,025<br />
At 31 March <strong>2009</strong> 50,022 29,031 40,643 6,025<br />
43. Losses <strong>and</strong> Special Payments<br />
There were 177 cases of losses <strong>and</strong> special payments (2008/09: 354 cases) totalling £179,738 (2008/09:<br />
£365,360) accrued during <strong>2009</strong>/10.<br />
Annual Accounts
82<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
44. Transition to IFRS<br />
The table below reconciles the movement in<br />
taxpayers' equity as a result of the transition to<br />
International Financial Reporting St<strong>and</strong>ards with effect<br />
from 1 April <strong>2009</strong>.<br />
IFRS has affected the Trust in two material ways, by<br />
taking both the PFI <strong>and</strong> accrued employee benefits,<br />
(<strong>annual</strong> leave) into the Statement of Financial Position,<br />
not required by previous <strong>report</strong>ing requirements.<br />
The PFI hospital was opened in 2006, <strong>and</strong> appear in<br />
the re-stated comparatives for 2008/<strong>2009</strong> under IFRS.<br />
An impairment was recognised in these figures for a<br />
downward valuation of the l<strong>and</strong> <strong>and</strong> buildings as at 1<br />
April 2008.<br />
Because the accrued employee benefits were<br />
recognised for the first time in the 2008/09<br />
restatement, there would have been a retrospective<br />
adjustment to the Income Statement for this.<br />
Retained Revaluation Donated Government<br />
earnings reserve asset grant<br />
reserve reserve<br />
£000 £000 £000 £000<br />
Taxpayers’ equity at 31 March <strong>2009</strong> under UK GAAP: -75,322 16,148 1,100 0<br />
Adjustments for IFRS changes:<br />
Private finance initiative -58,308 1,061 0 0<br />
Leases 0 0 0 0<br />
Others : Accrued Employee Benefits -1,049 0 0 0<br />
Adjustments for:<br />
Impairments recognised on transition 0 0 0 0<br />
UK GAAP errors 0 0 0 0<br />
Taxpayers’ equity at 1 April <strong>2009</strong> under IFRS: -134,679 17,209 1,100 0<br />
£000<br />
Surplus/(deficit) for 2008/09 under UK GAAP -35,674<br />
Adjustments for:<br />
Private finance initiative -19,054<br />
Leases 0<br />
Others : Reduction in <strong>annual</strong> leave accrual 721<br />
Surplus/(deficit) for 2008/09 under IFRS -54,007<br />
The transition to IFRS has had no impact on payments, receipts or cash-flows.<br />
Annual Accounts
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83<br />
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Produced by the communications department - June 2010<br />
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