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

Annual Report & Accounts 2009-2010
79
39.2 Capital cost absorption rate
The trust was required to absorb the cost of capital at
a rate of 3.5% of forecast average relevant net assets.
The rate is calculated as the percentage that dividends
paid on public dividend capital, totalling for 2009/10
£4549k, bearing to the actual average relevant net
assets of £129,978k, that is 3.5% (2008/09 3.1%)
From 2009/10 the dividend payable on public dividend
capital is based on the actual (rather than forecast)
average relevant net assets and therefore the actual
capital cost absorption rate is automatically 3.5%.
39.3 External financing
The Trust is given an external financing limit which it is permitted to undershoot
2009/10 2008/09
£000 £000
External financing limit (22,374) (20,388)
Cash flow financing (14,098) 13,441
Finance leases taken out in the year 2,026 0
Other capital receipts 0 0
External financing requirement (12,072) 13,441
Undershoot/(overshoot) (10,302) (33,829)
The EFL is set by the Department of Health and
determines how much (or less) cash than that
generated by its activites the Trust can spend in a year.
It is initially set at planning stage early in the year. The
Trust's EFL was based on its original planned deficit of
£24.7m, which would have led to a cash requirement
of £11.7m, allowing for non-cash items such as
impairments and depreciation plus capital expenditure.
The out-turn was a deficit of £56.2m, which with
non-cash items gives a cash requirement of £25.6m,
some £13.9m more than planned. Within the year, the
Trust received Public Dividend Captial of £5.0m, which
was covered by an EFL adjustment, leaving £8.9m
uncovered. In year, London SHA did recognise the
causes of the Trust's financial pressures and increased
the Trust's planned deficit from £24.7m to £54.1m.
£18m of this increase was due to non-cash items such
as unforeseen fixed asset impairments, the remaining
£11.4m requiring cash. Although the increased deficit
was supported by the SHA, the DH did not adjust the
Trust's EFL. Overshooting the EFL means that the Trust
has used more cash in year than the DH intended; it
does not give rise to a present or future liability to the
DH.
Annual Accounts