Name of Trust: South Warwickshire NHS Foundation Trust
Amount Proposed: 1) £21,860,000
2) £8,300,000 £30,160,000 Date of application: 7th March 2014 Former Strategic Health Authority: West Midlands
Main Commissioners: (2013) Warwickshire PCT £171,840 79.76%
(£'000) West Midlands Strategic Health Authority £7,082 3.29%
Coventry Teaching PCT £5,326 2.47%
Solihull NHS Care Trust PCT £2,935 1.36% Birmingham East And North PCT £2,031 0.94%
Others £26,231 12.18%
Total Income £215,445 100.00%
Limit Drawn Maturity Rate
Existing Loans (Finance Leases) £375,000 £375,000
Total Existing: £375,000 £375,000
Amounts Proposed: £30,160,000
Total: £30,535,000 55.24% Tier 1
Purpose of new loan(s): 1)
2)
Term of new loan(s): 25 years
Repayment programme: Equal instalments of principal
Interest rate: National Loan Fund Rate currently 3.09%
Fees: Nil
Security/Covenants Negative pledge Estimated Debt Capacity:
Long Term (2x debt service cover) Tier 1 £55,274,454 Beds: 417 Working Capital (30 days OpEx) £17,378,800
Date of Authorisation: 01/03/10 Trust Type: Acute and specialist trust
Monitor Published Rating: Finance 3
Governance Green
Care Quality Commission Rating
Reference Cost Index (2010/11) 92 (MFF adjusted) 89 (Non-adjusted)
Ratios: Required (Tier 1) Projected (max)
Minimum dividend cover >1x 4.03
Minimum interest cover >3x 8.18
Minimum debt service cover >2x 3.62
Maximum debt service / net revenue <2.5% 1.02%
Debt / net assets 41%
INDEPENDENT TRUST FINANCING FACILITY REVISED APPLICATION
Meets all standards
Two new clinical units for ophthalmology and cancer care with supporting service buildings, shell space for MRI diagnostics expansion, energy centre and a multi-storey car park at the Stratford Hospital site.
Construction of a new three-storey ward block together with a basement at the Warwick Hospital site.
South Warwickshire NHS Foundation Trust Summary
South Warwickshire NHSFT has asked to increase the value of its existing loan approvals totalling £23.1 million to £30.16 million following final agreement of an updated full business case relating to the development of its Stratford Hospital site by the Trust's Board in January 2014.
Previously the ITFF has approved loans totalling £23.1 million over 25 years, made up of two projects, both of which address key strategic issues for the Trust:
1) £14.8m for new clinical and supporting service buildings, together with a multi-storey car park, on the Stratford Hospital site, to meet growing local demand for
ophthalmology and cancer care; and,
2) £8.3m towards the costs of constructing a new three-storey ward block together with a basement on the Warwick Hospital site to provide purpose-built facilities for orthopaedics, improving patient experience and patient flow, as well as providing flexible space that, depending on demand, can be optimised to:
a. Manage demand for emergency healthcare by providing additional inpatient wards; and/or;
b. Expand and enhance maternity services including the closure of an old ward. Development of the full business case for the Stratford site has resulted in the value of the Stratford development increasing from £14.8m to £21.86m. This is largely as a result of shortcomings in the original OBC, namely:
A need to increase in clinical space for the Opthalmic unit to allow for a full range of optometry and orthoptic testing;
Recognition of the need for an adjacent ophthalmic theatre to avoid unnecessary travel to Warwick for treatment;
An improved energy solution by re-provision of the existing energy centre to cover the whole site, rather than adding to existing capacity;
Future proofing further developments by adding an extra storey to provide shell space on the ground floor to accommodate future expansion of MRI diagnostic capacity.
The revised plan further develops services at Stratford Hospital and delivers the greatest financial benefits. Although the capital costs are higher the option provides significantly more space, a better design and less cost for the development of future phases.
The Energy Centre will incur additional cost at this stage of the development but will provide benefits such as releasing space on site, reducing running costs of the site and future development costs. The Trust strategy to develop this site fully would support the inclusion of a new Energy Centre in this phase.
There are a number of options regarding car parking that have been proposed. The financial analysis supports the provision of a multi-storey car park up to a cost of £2.6m, on site providing at least 250 spaces and the proposition becomes increasingly attractive if more spaces that can be achieved within this cost.
The Trust believes the capital costs and revenue assumptions are prudent but even in a worst case scenario, the proposal delivers a positive NPV, a surplus by year 3 and an
Recommendation
In summary the Trust would like to increase the level of total loan from £23.1million to £30.16 million over the same 25 year term.
The Trust is on track to deliver its annual planned level of surplus in 2013/14 of £2.1m and at Q3 was rated Green for governance with a CoSRR score of 3. The Q3 Monitor
submission is attached for background information together with a copy of Monitor’s letter confirming closure of its investigation into missed A&E targets
The increased loan remains affordable for the Trust and enhances the delivery of the proposed scheme. It also future proofs additional capital commitments the Trust will need to make in due course. The amendment to the propose loan amount is recommended for approval.
NR/05.03.2014
(This is supplemental to the previous application which has also been circulated.)
Financial Commentary
Quarterly Return for Q3 (October 2013 to December 2013)
Executive SummaryThe financial position for the nine months ending 31st December 2013 is an operating surplus of £1.480m; this is a £0.049m adverse variance from the planned operating surplus of £1.529m.
The Trust has achieved a COSRR rating for the period of 3, in line with our plan. A further review of forecast outturn has been undertaken in Month 9. This has encompassed a review of income, expenditure and CIP delivery. The forecast range has improved since month 6, following close management of emerging cost pressures and clarification on a number of factors previously uncertain in the Trust’s forecast, and is now expected to be between a £1.6m and £2.6m surplus. The Trust is confident that the risks can be managed sufficiently to deliver the £2.1m planned surplus.
There are still some risks that are being actively managed, these are:
Under delivery of CIPs – The Trust has now identified the full £7.5m CIP target on a recurrent basis, which represents a significant achievement. The Trust remains behind plan YTD at month 9 and currently has a non recurrent gap of £0.246m. Slippage year to date is £0.685m; this is lower than the £0.993m slippage shown in the Q3 SoCI following changes to the original annual plan profile as more schemes have been identified. The Trust is confident that it can manage any slippage in CIP non-recurrently and deliver the overall financial plan.
Additional expenditure anticipated in the final quarter to address our 18 week RTT
issues and deliver the RTT admitted target sustainably.
The impact of cost increases during the winter months relative to any winter funding
received.
Investment in A&E to assure delivery of A&E performance target.
Arden Court is now planned to remain open for the remainder of the financial year -
at budget setting it was assumed that this would be closed.
Additional future costs to support the development of the Lorenzo Business Case
over and above those initially estimated.
Confirmation of winter funding allocation – South Warwickshire CCG have been
allocated £904k of which we expect to receive a large proportion, as provider of
2 acute and community services, this is to be confirmed by the Emergency Care Board. In addition we are also in discussions with other commissioners where we provide community services, regarding winter funding support.
Income
NHS Clinical Income is £0.828m higher than planned at the end of the third quarter. The main increases in the quarter relate to day case, outpatient and non elective income all of which are higher in quarter 3 than in either of the previous two quarters.
There is no under or over performance on non electives for our main commissioners as this element is contracted as a block at 2012/13 activity outturn.
In NHS community Income, the Trust has seen a reduction in the level of over performance, down to £0.124m in Q3 from £0.300m at Q2, against our community contract at the Central England Rehabilitation Hospital (formerly known as Royal Leamington Spa Rehabilitation Hospital). Outpatient activity, whilst being higher than planned, particularly in follow ups, is not fully reflected in the overall favorable variance of £0.196m due to follow up outpatients being capped in our contract and other adverse price variances; this means that the additional costs incurred are not fully covered by income.
Other operating income is £2.515m favorable compared to plan; this is due to various non recurrent income streams being confirmed during the financial year, primarily relating to SIFT £0.558m and placement funding of £0.693m, both of which have corresponding cost increases. The Trust’s planning approach to education and other non recurrent income sources was to assume no income or expenditure budgets and to establish these once funding is confirmed in year and this has a net breakeven impact.
Revenue
Overall operating expenses are £2.199m higher than planned at the end of the third quarter; this has improved compared to the first two quarters, largely as divisional expenditure forecasts have reduced following management of emerging risks and cost pressures.
Employee expenses make up £1.413m of the adverse variance, with the Trust seeing a slightly reduced level of agency costs, compared to Q2, to cover vacancies and service additional activity, predominantly for medical staff. This has led to an adverse variance of £4.251m offset by vacancies in permanent staff of £2.838m.
The main areas of agency spend to deliver additional activity totaling £0.372m have been in Orthopaedics and Ophthalmology. The main areas of agency costs to cover vacancies in Q3 are in A&E (£0.160m) and Paediatrics (£0.143m) as well as a number of medical specialties. The quarter 3 figures include agency expenditure being incurred for the development of the business case and investment case to support the replacement patient administration system, this totals £0.086m in Q3 and will continue into Q4 and beyond. The case has now been approved by the Board of Directors at the January 2014 meeting. The Trust continues to actively address the level of agency usage via the locum project group, set up as part of
4 Appendix 1
the PMO work linked to our Cost Improvement Programme, focusing particularly on the process for requesting agency cover.
The main area of CIP slippage is against pay expenses, mainly due to not closing additional capacity required for emergency flow and this slippage is being largely offset by other favorable non recurrent variances within pay, reducing the overall pay variance and meaning that our EBITDA value has not fallen commensurately with the CIP slippage. Significant work has been ongoing during the third quarter to continue to identify and deliver CIPs as our ability to deliver CIPs, both in year and recurrently, poses a risk. At the end of the third quarter £7.254m of the £7.5m CIP has been identified leaving a gap of £0.246m (3%) to be found non-recurrently but all £7.5m has now been identified recurrently, reducing the risk to the Trust’s financial position.
Drugs costs are over plan by £1.977m at the end of quarter 3. This reflects the slippage in CIP and timing relating to the level of pass through drugs expenditure compared to the original plan. In addition during Q3 the Trust has incurred expenditure relating to community prescribing.
Clinical Supplies have a slight adverse variance compared to the plan year to date of £0.230m. This has reduced from a favourable variance of £0.275m in quarter 1 largely following the increased elective activity undertaken in quarters 2 & 3 and associated high cost consumables. There continues to be an adverse variance on our Integrated Community Equipment store expenditure, although following discussions with the relevant external partners, this has not deteriorated in the third quarter and is forecast to improve further in Q4.
Education expenditure shows an adverse variance against plan of £0.289m; this is related to the Trust’s treatment of non recurrent income and expenditure items such as ‘Learning beyond Registration’ which were not assumed in the annual plan so appear as variances in both income and expenditure when they are confirmed. This approach was taken as it is more prudent.
There was another small reduction in the level of impairment of receivables in the third quarter, following resolution of various issues, which creates a favorable variance of £0.436m in the year to date.
Working Capital
Overall net current assets/Liabilities are worse than plan by £1.753m.
Current assets are £2.16m lower than planned at the end of quarter 3. The level of NHS trade receivables has increased as a result of invoices now being raised for income over performance in quarters 1 and 2. The national issue around payment for NCA activity is also contributing; whilst this has now been resolved by the trust, there is still £0.5m of debtors over 90 days in this area. The level of inventories held is higher than planned by £1.393m relating to pharmacy stock and the bulk purchase of high cost devices as part of a overall cost saving. The cash balance is also lower than planned; the detail of this is covered under the cash flow section below.
4 Current liabilities are £0.409m lower than planned at the end of quarter 3. Deferred income is £2.599m favorable compared to plan following receipt of income streams which are being deferred as they relate to cost pressures in the final quarter of the year. The level of trade and other payables is below plan by £1.563m and this is partly being offset by an increase level of accruals compared to plan for invoices not yet received of £0.971m.
Capital creditors are now £2.43m lower than planned at the end of the third quarter following the delay in externally funded capital schemes. The annual plan assumed that loan finance of £4.17m, from the FTFF, would be drawn down in quarter three, to finance the capital projects at both Stratford and Warwick hospitals. These schemes have suffered delays through a change in provision of architect services and delays incurred by having to amend plans, at the insistence of planners, in order to receive planning permissions. It is now anticipated that the Trust will not be drawing down loan finance until 2014/15 for these schemes.
Cash Flows
The cash balance at the end of the third quarter is £6.579m lower than planned at £7.7m. The major part of this variance relates to the Trust not drawing down the £4.17m of loan financing during Q3 as mentioned above. The remaining difference is a result of the higher than planned level of debtors at the end of December 2013.
Since the 31st December it should be noted that the Trust has received a large proportion of
the NHS debtors balance, £3.65m, following active dialogue with other organisations and is forecasting a cash position at the end of January 2014 of £10.4m in line with the planned level before external borrowing.
Balance Sheet
Outside of working capital movements, there are two main points to note on the balance sheet:-
1. Non-interest bearing borrowing, non-current.
The plan assumed we would draw down Salix loans in the first two quarters in respect of energy saving schemes being implemented as part of the Trust capital investments, these schemes have now been completed and in quarter 3 the drawdown of interest free loans is reflected.
2. Gain on relevant transfers (1st April)
This is in respect of the overall transfer of a number of assets totaling £19.250m from the previous PCT which include 2 major freehold properties, Central England Rehabilitation Centre, formally known as the Royal Leamington Spa Rehabilitation Hospital and the Ellen Badger Hospital in Shipston on Stour. For the quarter 3 return this is reflected as an adjustment to the revaluation reserve, following guidance published in the FT ARM.
6 Appendix 1
South Warwickshire NHS FT
High level summary of financial plan of SWARKS
Previous YE FY
Actual Plan Actual Variance Plan Actual Variance Plan
Operating Revenue for EBITDA 215.4 53.9 56.0 2.1 161.6 165.0 3.4 215.5
Employee Expenses (141.4) (36.3) (36.8) (0.6) (108.8) (110.2) (1.4) (145.1)
Drugs (15.9) (4.0) (5.3) (1.2) (12.1) (14.1) (2.0) (16.1)
PFI operating expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other costs (50.1) (11.5) (11.9) (0.4) (34.4) (34.9) (0.5) (45.8)
Clinical supplies (17.8) (4.5) (4.7) (0.2) (13.4) (13.7) (0.2) (17.9)
Decrease (increase) in inventories of finished goods & WIP (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Vehicle Fuel costs (ambulance trusts) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Non-clinical supplies (6.8) (1.8) (1.8) (0.1) (5.3) (5.4) (0.2) (7.0)
Cost of Secondary Commissioning of mandatory services 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Research & Development expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Education and training expense 0.0 (0.1) (0.2) (0.1) (0.3) (0.6) (0.3) (0.5)
Misc. other Operating expenses (24.0) (5.1) (5.3) (0.2) (15.4) (15.7) (0.3) (20.4)
EBITDA 8.0 2.1 2.0 (0.1) 6.3 5.8 (0.5) 8.5
Donations of PPE & intangible assets 0.1 0.0 0.0 (0.0) 0.1 0.0 (0.1) 0.1
Depreciation and amortisation (3.7) (1.0) (0.7) 0.3 (3.1) (2.9) 0.2 (4.1)
Impairment Losses (Reversals) net (on non-PFI assets) (0.2) (1.5) 0.0 1.5 (1.5) 0.0 1.5 (1.5)
Impairment Losses (Reversals) net on PFI assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Restructuring Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating Surplus 4.1 (0.3) 1.3 1.7 1.8 2.9 1.1 3.1
Net interest 0.1 0.0 0.0 (0.0) 0.1 0.0 (0.1) 0.1
Interest Income 0.1 0.0 0.0 (0.0) 0.1 0.0 (0.1) 0.1
Interest Expense on Overdrafts and Working Capital Facilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Interest Expense on Bridging loans 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Interest Expense on Non-commercial borrowings (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Interest Expense on Commercial borrowings 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Interest Expense on Finance leases (non-PFI) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) Interest Expense on PFI leases & liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Non-Operating items (1.9) (0.6) (0.5) 0.1 (1.8) (1.5) 0.3 (2.5)
Gain (Loss) on Financial Instruments Designated as Cash Flow Hedges 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gain (Loss) on Derecognition of Available-for-Sale Financial Assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gain (Loss) on Derecognition of Non-Current Assets Not Held for Sale, Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gain (Loss) from investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Dividend Income 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Share of profit (loss) from equity accounted Associates, Joint Ventures, Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other Non-Operating income, Total (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other Finance Costs (0.1) (0.0) (0.0) (0.0) (0.0) (0.1) (0.0) (0.1) PDC dividend expense (1.7) (0.6) (0.4) 0.1 (1.8) (1.4) 0.3 (2.3) PFI Contingent Rent 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other Non-Operating expenses (incl. Misc) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.1) Income Tax (expense)/ income 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Surplus / (Deficit) 2.3 (0.9) 0.9 1.8 0.1 1.5 1.4 0.7
EBITDA % Income 3.7% 4.0% 3.7% -0.3% 3.9% 3.5% -0.4% 3.9%
CIP% of Op.Exp. less PFI Exp. 2.1% 3.2% 4.7% 1.5% 3.0% 2.6% -0.4% 3.1%
Pay CIPs as % Pay Costs -1.6% -3.3% -2.1% 1.2% -3.1% -1.4% 1.7% -3.1%
Net Surplus / (Deficit) 2.3 (0.9) 0.9 1.8 0.1 1.5 1.4 0.7
Change in working capital 0.4 0.6 (3.1) (3.7) (9.6) (11.8) (2.2) (10.0)
(Increase)/decrease in inventories (0.4) 0.0 (0.7) (0.7) 0.4 (1.0) (1.4) 0.4 (Increase)/decrease in tax receivable 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (Increase)/decrease in NHS Trade Receivables (0.0) 0.0 (3.6) (3.6) (1.9) (4.3) (2.4) (1.9) (Increase)/decrease in Non NHS Trade Receivables (0.6) 0.0 (0.0) (0.0) 0.3 0.2 (0.1) 0.3 (Increase)/decrease in other related party receivables (0.1) (0.2) (0.2) (0.0) (0.2) 0.0 0.2 (0.2) (Increase)/decrease in other receivables 0.6 0.0 (0.1) (0.1) (0.1) (0.1) 0.1 (0.1) (Increase)/decrease in accrued income 0.1 0.0 (0.2) (0.2) (0.1) (0.5) (0.5) (0.1) (Increase)/decrease in other financial assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (Increase)/decrease in prepayments (0.2) 0.1 0.3 0.2 (0.9) (0.7) 0.1 0.0 (Increase)/decrease in Other assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase/(decrease) in Deferred Income (excl. Donated Assets) 0.0 0.0 0.2 0.2 (0.7) 1.9 2.6 (1.9) Increase/(decrease) in Deferred Income (Donated Assets) 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase/(decrease) in Current provisions 0.0 0.0 0.0 0.0 0.0 (0.2) (0.2) 0.0 Increase/(decrease) in post-employment benefit obligations (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase/(decrease) in tax payable 0.0 0.0 (0.1) (0.1) (0.1) (0.1) 0.0 (0.1) Increase/(decrease) in Trade Creditors 0.2 (1.0) 0.2 1.2 (7.1) (8.8) (1.7) (6.1) Increase/(decrease) in Other Creditors (0.4) 0.0 (0.1) (0.1) 0.0 0.1 0.1 0.0 Increase/(decrease) in accruals 0.3 1.7 1.0 (0.7) 0.6 1.6 1.0 (0.4) Increase/(decrease) in other Financial liabilities (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase/(decrease) in Other liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase/(decrease) in Non Current provisions 0.0 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) (0.2)
Non cash I&E items 6.4 3.2 1.4 (1.7) 6.2 4.0 (2.2) 7.8
Tax expense/(refund) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Finance (income)/charges 0.0 0.0 0.0 (0.0) 0.0 0.0 (0.0) 0.1 Share of (profit)/loss from equity accounted investments net of cash distributions received 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Donations & Grants received of PPE & intangible assets (non cash) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 Other operating non-cash (revenues)/expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Depreciation and amortisation, total 3.7 1.0 0.7 (0.3) 3.1 2.9 (0.2) 4.1 Impairment losses/(reversals) 0.2 1.5 0.0 (1.5) 1.5 0.0 (1.5) 1.5 Unrealised (gains)/losses on foreign currency exchange 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (Gain)/loss on disposal of property plant and equipment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (Gain)/loss on disposal of intangible assets 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Share of (profit)/loss loss from investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 PDC dividend expense 1.7 0.6 0.4 (0.1) 1.8 1.4 (0.3) 2.3 Other increases/(decreases) to reconcile to profit/(loss) from operations 0.6 0.0 0.3 0.2 (0.2) (0.4) (0.2) (0.3)
Cashflow from operations 9.1 2.8 (0.8) (3.6) (3.3) (6.4) (3.1) (1.7)
Cashflow from investing activities (3.3) (3.7) (2.6) 1.2 (7.7) (7.2) 0.5 (11.2)
Property, plant and equipment - maintenance expenditure (0.5) (0.8) (0.3) 0.4 (1.1) (0.4) 0.6 (1.3) Property, plant and equipment - non-maintenance expenditure (0.3) (3.7) (2.2) 1.5 (7.1) (5.4) 1.7 (10.2) Plant and equipment - Information Technology (0.1) 0.0 0.0 0.0 (0.3) 0.0 0.3 (0.4) Plant and equipment - Other (1.1) (0.1) (0.1) 0.0 (0.7) (1.1) (0.5) (0.8) Property, plant and equipment - other expenditure 0.0 (0.3) 0.0 0.3 (0.7) 0.0 0.7 (0.7) Proceeds on disposal of property, plant and equipment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Purchase of investment property 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Proceeds on disposal of investment property 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Purchase of intangible assets (1.8) (0.3) (0.1) 0.2 (1.0) (0.9) 0.1 (1.0) Proceeds on disposal of intangible assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Expenditure on capitalised development 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase/(decrease) in Capital Creditors 0.5 1.4 0.1 (1.3) 3.0 0.6 (2.4) 3.1 Payments for other capitalised costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Purchase of subsidiaries net of cash acquired 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net bank balance acquired with subsidiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Proceeds from disposal of subsidiaries net of cash disposed 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net bank balance disposed with subsidiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Purchase of associates net of cash acquired 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net bank balance acquired with associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Proceeds from disposal of associates net of cash disposed 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net bank balance disposed with associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Purchase of joint ventures net of cash acquired 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net bank balance acquired with associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Proceeds from disposal of joint ventures net of cash disposed 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net bank balance disposed with joint venture 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Government grants received 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Deposits and investments made (3.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Deposits and investments liquidated 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other cash flows from investing activities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cashflow before financing 5.8 (0.9) (3.4) (2.5) (11.1) (13.6) (2.6) (12.9)
Cashflow from financing activities (3.3) 4.2 (0.0) (4.2) 3.4 (0.6) (4.0) 4.1
Public Dividend Capital received 0.0 0.0 0.0 0.0 0.2 0.2 0.0 0.2 Public Dividend Capital repaid 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 PDC Dividends paid (1.7) 0.0 0.0 0.0 (1.0) (0.8) 0.2 (2.1) Interest (paid) on bridging loans 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Interest (paid) on commercial loans 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Interest (paid) on non-commercial loans (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 (0.1) Interest (paid) on overdraft and working capital facility 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Interest element of finance lease rental payments - other (0.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Interest element of finance lease rental payments - On-balance sheet PFI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Capital element of finance lease rental payments - other (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Capital element of finance lease rental payments - On-balance sheet PFI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Interest received on cash and cash equivalents 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net increase/(decrease) in cash 2.5 3.3 (3.4) (6.7) (7.7) (14.2) (6.6) (8.7)
Cash at period end 22.0 14.3 7.7 (6.6) 14.3 7.7 (6.6) 13.2
Cash and Cash equivalents at period end 22.0 14.3 7.7 (6.6) 14.3 7.7 (6.6) 13.2
Financial Summary £m
Current Quarter YTD
South Warwickshire NHS FT
High level summary of financial plan of SWARKS
Previous YE FY
Actual Plan Actual Variance Plan Actual Variance Plan
Community
Co Cost & volume contract revenue 5.3 2.1 2.0 (0.2) 6.4 6.5 0.1 8.5
Co Block contract revenue 53.7 13.2 13.2 0.0 39.5 39.5 (0.0) 52.7
Ambulance
Am Cost & volume contract revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Am Block contract revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Am Other clinical MS revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Mental Health
Mh Cost & volume contract revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Mh Block contract revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Mh Clinical partnership (s31) revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Mh Secondary commissioning revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Mh Other clinical MS revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Acute Ac Elective revenue 30.7 8.1 8.0 (0.1) 24.4 24.4 0.1 32.5 Ac Non-Elective revenue 41.8 10.6 10.8 0.2 31.9 32.0 0.1 42.6 Ac Outpatient revenue 24.9 6.4 6.6 0.2 19.1 19.3 0.2 25.5 Ac A&E revenue 5.7 1.5 1.5 0.1 4.4 4.7 0.3 5.9 Ac other revenue 33.5 8.4 8.7 0.3 25.1 25.2 0.0 33.5
Private patient revenue 0.2 0.0 0.1 0.1 0.0 0.1 0.1 0.6
Grants and donations in cash 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other operating revenues 19.6 3.6 5.2 1.6 10.7 13.2 2.5 13.7
Total operating revenue for EBITDA 215.4 53.9 56.0 2.1 161.6 165.0 3.4 215.5
Grants and donations of PPE and intangible assets 0.1 0.0 0.0 (0.0) 0.1 0.0 (0.1) 0.1
Total operating revenue 215.4 53.9 56.0 2.1 161.7 165.0 3.3 215.6
Employee Expenses (141.4) (36.3) (36.8) (0.6) (108.8) (110.2) (1.4) (145.1)
Drugs expense (15.9) (4.0) (5.3) (1.2) (12.1) (14.1) (2.0) (16.1)
Supplies (clinical & non-clinical) (24.7) (6.2) (6.5) (0.3) (18.7) (19.1) (0.4) (24.9)
PFI expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other expenses (25.5) (5.2) (5.4) (0.1) (15.7) (15.8) (0.1) (20.9)
Total operating expenses within EBITDA (207.4) (51.7) (54.0) (2.2) (155.3) (159.2) (3.9) (207.0)
EBITDA 8.0 2.1 2.0 (0.1) 6.3 5.8 (0.5) 8.5
Depreciation and amortisation (3.7) (1.0) (0.7) 0.3 (3.1) (2.9) 0.2 (4.1)
Impairments & Restructuring (0.2) (1.5) 0.0 1.5 (1.5) 0.0 1.5 (1.5)
Total operating expenses (211.3) (54.3) (54.7) (0.4) (159.9) (162.1) (2.2) (212.6)
Operating Surplus (Deficit) 4.1 (0.3) 1.3 1.7 1.8 2.9 1.1 3.1
Profit (loss) on asset disposal (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net interest 0.1 0.0 0.0 (0.0) 0.1 0.0 (0.1) 0.1
Taxation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PDC dividend (1.7) (0.6) (0.4) 0.1 (1.8) (1.4) 0.3 (2.3)
Other non-operating items 0.0 0.0 (0.0) (0.0) 0.1 (0.1) (0.1) (0.0)
Net Surplus / (Deficit) 2.3 (0.9) 0.9 1.8 0.1 1.5 1.4 0.7
EBITDA % of Op. revenue 3.7% 4.0% 3.7% -0.3% 3.9% 3.5% -0.4% 3.9%
EBITDA 8.0 2.1 2.0 (0.1) 6.3 5.8 (0.5) 8.5
Change in Current Receivables (0.1) (0.2) (3.9) (3.7) (1.9) (4.1) (2.2) (1.9)
Change in Current Payables (0.2) (1.0) 0.1 1.1 (7.2) (8.8) (1.5) (6.2)
Other changes in WC 0.7 1.8 0.7 (1.1) (0.5) 1.1 1.6 (1.9)
Change in Non Current Provisions 0.0 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) (0.2)
Other non-cash items 0.8 0.1 0.3 0.2 0.0 (0.3) (0.4) (0.0)
Cashflow from operating activities 9.1 2.8 (0.8) (3.6) (3.3) (6.4) (3.1) (1.7)
Capital expenditure (accurals basis) 0.0 (5.1) (2.7) 2.5 (10.8) (7.8) 2.9 (14.3)
Asset sale proceeds 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
other Investing cash flows (3.3) 1.4 0.1 (1.3) 3.0 0.6 (2.4) 3.1
Cashflow before financing 5.8 (0.9) (3.4) (2.5) (11.1) (13.6) (2.6) (12.9)
Net interest (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 (0.1)
PDC dividends (paid) (1.7) 0.0 0.0 0.0 (1.0) (0.8) 0.2 (2.1)
Movement in loans (1.2) 4.2 0.0 (4.2) 4.1 (0.1) (4.2) 6.1
PDC received/(repaid) 0.0 0.0 0.0 0.0 0.2 0.2 0.0 0.2
Donations received in cash 0.0 0.0 0.0 (0.0) 0.0 0.0 (0.0) 0.1
other financing cashflows (0.3) 0.0 (0.0) (0.0) 0.0 0.0 0.0 0.0
Net cash inflow (outflow) 2.5 3.3 (3.4) (6.7) (7.7) (14.2) (6.6) (8.7)
Cash at period end 22.0 14.3 7.7 (6.6) 14.3 7.7 (6.6) 13.2
Cash and Cash equivalents at period end 22.0 14.3 7.7 (6.6) 14.3 7.7 (6.6) 13.2
Non Safe Harbour Investments at period end 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Detailed Financial Summary
£m
Current Quarter YTD
8 Appendix 1
Mr Graham Murrell Chair
South Warwickshire NHS Foundation Trust Warwick Hospital Lakin Road Warwick Warwickshire CV34 5BW By email 13 December 2013 Dear Graham,
South Warwickshire NHS Foundation Trust (the “Trust”)
Provider Regulation Directorate decision regarding closure of investigation into A&E 4-hour waiting time target breaches and Referral Time to Treatment (“RTT”) admitted target performance.
Following a meeting of Monitor’s Provider Regulation Directorate (PRD) on 9 December 2013, I am writing to inform you that PRD determined that the formal investigation into A&E 4-hour waiting time target breaches and RTT admitted target performance at your Trust be closed without the need for any enforcement action.
1. Reasons for closure of investigation into A&E 4-hour waiting time target breaches and RTT admitted target performance
1.1 On 7 June 2013 Monitor opened a formal investigation into the Trust to
determine if the Trust was in breach of its licence and whether any regulatory action should be undertaken. The investigation was launched due to governance concerns arising as a result of the Trust’s breach of the A&E 4-hour waiting time target five times within a 24-month period and the Trust’s inability to provide assurance that it would be able to comply with the RTT admitted target in Q1 2013/14.
1.2 The Trust has undertaken a number of actions to address its A&E and
RTT performance issues:
1.2.1 To address A&E performance these actions have included:
i. committing to invest in A&E staffing and additional equipment in 2013/14 and subsequent years; ii. introducing the “Discharge to Assess” scheme and
increasing the number of nurses and consultants to meet the demand for this service;
iii. focusing on improvements to the frail and elderly pathway; iv. participating in the local health economy Urgent Care Board;
Wellington House 133-155 Waterloo Road London SE1 8UG T: 020 3747 0000 W: www.monitor.gov.uk
Page 2 of 3
v. implementing recommendations from the Emergency Care Intensive Support Team’s review of the acute emergency care pathway in May 2013; and
vi. introducing the “Assess before Admitting” scheme focused on increasing the use of the ambulatory care pathway.
1.2.2 To address RTT performance, these actions have included:
i. improving data quality through the implementation of a new
reporting tool and the review of backlog validation processes;
ii. reviewing the Patient Access Policy to clarify guidelines,
rules and responsibilities for RTT;
iii. implementing changes to processes for pathway
management;
iv. focusing on backlog reduction at challenged sub-specialty
level;
v. implementing changes to capacity planning; and
vi. reviewing the management structure within the elective
division through clarifying roles, responsibilities and the escalation process.
1.3 As a result of the measures taken the Trust has:
1.3.1 delivered compliance with the A&E 4-hour waiting time target in Q2 2013/14, and remains complaint with the target Q3 2013/14 to date; and
1.3.2 delivered compliance against the RTT admitted target in October 2013, remains complaint with this target Q3 2013/14 to date and forecasts to achieve the RTT admitted target in Q3 and Q4 2013/14.
1.4 Since the investigation was opened in June 2013, your Trust has
demonstrated considerable progress towards addressing Monitor’s
concerns and shown that it has plans in place to continue to do so. While a degree of residual risk remains with regards to sustainability of
performance, particularly given the pressures of the forthcoming winter period, it is the view of PRD that there is sufficient evidence that the Trust has addressed Monitor’s concerns as previously communicated to you.
2. Governance Risk Rating
2.1 As a result of PRD’s decision, the Trust’s governance risk rating published
on Monitor’s website has been updated to Green.
3. Regulatory approach going forwards
3.1 It is our expectation that, taking full account of all available and relevant
evidence, including the Trust’s expectations and supporting submissions, the Trust will take all action within its control to ensure that it continues to meet the A&E 4-hour waiting time target and RTT admitted target. Should the Trust fail to achieve any of these targets for Q3 or Q4 12/13 Monitor may consider this to be indicative of a failure in governance and/or other aspects of its provider licence. Accordingly, in addition to providing
10 Appendix 2
information on A&E and RTT performance and other matters under our standard quarterly reporting processes, the Trust is expected to update Monitor should it consider that it is at risk of failing to achieve the A&E 4-hour waiting time target or RTT admitted target in the future.
If you have any queries relating to the matters set out in this letter, please contact me, or Laura Mills who I job share with, by telephone on 020 7340 2473 or by email
on [email protected] or [email protected].
Yours sincerely
Alex Coull
Senior Regional Manager
Cc.: Glen Burley, Chief Executive
Name of Trust South Warwickshire NHS Foundation Trust Based on year ending 31/03/2013 Assumptions
Total Revenues £215,445,000
Surplus/(Deficit) before Interest £4,002,935 Complies with Prudential Borrowing Code
Depreciation £3,913,065
Revenues available for Debt Service £7,916,000 Current Required Covenant Ratio
Dividends Paid (£1,726,000) Fails Prudential Borrowing Code
Total Assets Employed £74,025,935
Estimated Prudential Borrowing Limit - Tier 1 £55,274,454 0
Estimated Prudential Borrowing Cap - Tier 2 £73,675,581 £0
Proposed Debt £30,535,000
Interest Rate 3.17%
Debt sustainable under individual covenant tests
Term of Borrowing 25.0
Current Risk Rating 3 Estimated PBL Proposed Debt TIER 1 TIER 2
Tier 1
Debt to Capital Ratio #REF! 75% 41% 75% 102% 112% 264% 100% 169% 264% 404%
Prudential Borrowing Limit £55,274,454 £30,535,000 £55,274,454 £75,815,238 £83,152,831 £195,294,222 £73,675,581 £125,026,470 £195,434,463 £299,317,769 Annual Interest payable (year 1) £1,752,200 £967,960 £1,752,200 £2,403,343 £2,635,945 £6,190,827 £2,335,516 £3,963,339 £6,195,272 £9,488,373
Annual Principal repayments £2,210,978 £1,221,400 £2,210,978 £3,032,610 £3,326,113 £7,811,769 £2,947,023 £5,001,059 £7,817,379 £11,972,711
Max Annual Debt Service £3,963,178 £2,189,360 £3,963,178 £5,435,953 £5,962,058 £14,002,596 £5,282,539 £8,964,398 £14,012,651 £21,461,084
Tier 1
Minimum Dividend Cover (min) 1 3.57 4.03 3.57 3.19 3.06 1.00 3.23 2.29 1.00 -0.91
Minimum Interest Cover (min) 3 4.52 8.18 4.52 3.29 3.00 1.28 3.39 2.00 1.28 0.83
Minimum Debt Service Cover (min) 2 2.00 3.62 2.00 1.46 1.33 0.57 1.50 0.88 0.56 0.37
Maximum Debt Service to Revenue (max) 2.5% 1.84% 1.02% 1.80% 2.50% 2.80% 6.50% 2.50% 4.20% 6.50% 10.00%
12 Appendix 3
