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Finance Report Month 12 2009/10 Paper 15(i). Executive Summary. Income & expenditure reported a £0.7m surplus in month The reported in month surplus is in line with plan. The planned result was a £0.7m surplus. Clinical income is £2.0m below plan. Other operating income is in line with plan.
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Executive Summary • Income & expenditure reported a £0.7m surplus in month • The reported in month surplus is in line with plan. The planned result was a £0.7m surplus. • Clinical income is £2.0m below plan. Other operating income is in line with plan. • Pay was favourable versus plan by £1.2m. The key driver remains vacancies. • Non-Pay was £0.3m favourable versus plan in the month. Additional consultancy and external hotel services contract account for the variance in month. • The net savings generated by the Cost Improvement Programme have not always been realised against original categories of spend. This has therefore resulted in increased savings in pay and lower savings within non-pay. • Cost Improvement Programme • £1.2m of total net savings have been phased into M12 contributing to the surplus this month. Savings of £1.2m have been reported and are above plan in month. • Total 2009/10 CIP’s are broadly delivering in line with expectations. This is above originally planned levels. • Actual out-turn • The reported operational deficit for 2009/10 is £9.9m which is in line with plan and forecast. • Financial Risk Rating • The Monitor Financial Risk Rating is 1. This is in line with expectations. • Cash • The cash position remains tight. The Trust is moving from stress to distress. • The Trust Board continues to monitor its going concern status on a fortnightly basis.
Key assumptions • The month 12 financial results are reported against the revised Trust budget of a £9.9m deficit for 2009/10. • £9.2m of CIPs have now been allocated to cost centre level or Directorate (previously £9.2m). • Where this has still not been possible, £1.1m of CIPs remain within individual Executive Leads (previously £1.1m). These are profiled in line with original delivery expectations. • Planned savings of £1.2m have been assumed in the month 12 budgeted position. • Actual savings are reported as £1.3m in month which is in line with plan. • Income has been reported using month 11 YTD actual data and an estimate for month 12. • The CIP embedded in the budget is consistent with the numbers contained in the Turnaround report. Progress on CIP delivery is explored in greater detail in the turnaround report, with overall financial performance of which CIP is only one element being explored in this report. • Following the agreement of the SLA with East Berkshire PCT the M12 income assumption is based on the signed contract plan value of £149.0m • The SLA position for Bucks PCT is agreed. The M12 position is in line with this agreement.
Monitor risk rating score Scoring Note: Results reported one month in arrears Commentary The Trust remains as a FRR of 1. This is driven by all 5 metrics. The main determinants of that are; - Planned deficit £9.9m - Weak EBITDA - Weak working capital position Performance is not expected to change in year
Income and Expenditure summary Commentary The Trust is reporting a £0.7m surplus for M12, which is £0.1m adverse versus plan. Income Total Trust Income is £1.5m below plan in month. A provision has been made in month to reflect the uncertainty surrounding non-payment of invoices from Berkshire East. A penalty notice for 18 week performance was received from Berkshire East PCT for £0.2m. Expenditure Pay is £1.1m favourable to plan in month. The key driver remains vacancies and the reporting of Project Management Office support costs within non pay. Non pay is £0.3m favourable to plan in the month. Additional consultancy and external catering and linen costs are offset by a review of accruals and a higher level of CIP’s delivered through non-pay than originally planned. Financing Reduced interest receivable and higher depreciation charges account for the variance.
Other expenditure issues Agency expenditure • Agency costs have increased by £0.4m versus last month with spend of £1.1m compared to £0.7m in February. • Agency nursing costs have increased versus last month with spend of £0.4m compared to £0.3m in January. • Admin and clerical agency costs are £0.3m in month which is in line with last months expenditure. • Medical agency costs have increased to £0.2m during March as anticipated due to additional locum appointments within A&E and Surgery. Consultancy / Turnaround support • £0.8m was spent in the month. YTD spend of £5.5m is £0.5m above plan and £0.1m above forecast. This was driven by the recruitment of Programme and Project Managers to support the implementation phase of the Turnaround Plan.
Short term cash flow forecast for the period ended 2 July 2010 This is an update to the March base case short term cash flow issued previously. The cash flow for 2010/11 is consistent with the underlying assumptions in the Turnaround Plan. Section 1.5 highlights the main risks and issues. The main assumptions are: 2010/11 Income in line with base case in the Turnaround Plan – awaiting conformation of actual SLA position. Expenditure continues at current run rate (adjusted for inflation). PCT advance of £9 million received week ending 2 April 2010 and two further payments of £1.5 million each in July and October 2010. BEPCT is seeking to make these payments conditional. This is not consistent with the Trust’s understanding of the agreement. Turnaround costs are £750k per month. No transitional funding (as not yet agreed). No redundancy payments. A number of creditors will need to be normalised in April and May, the largest being NHS Supply Chain. The forecast shows that with PCT support of £9 million the Trust will have adequate funds throughout the short term planning period. The forecast does not includes any PDC dividend payments. On page 6 a summary of the cash position excluding the £9 million PCT cash advance has been shown which demonstrates the underlying cash deficit. The Trust does not currently have access to its working capital facility. Work continues to secure funding for the Turnaround implementation and this forecast currently assumes that no funding is available. Work continues on agreeing a settlement of drugs and devices invoices. This forecast does not include the impact of any savings programmes not already in the run rate, and operates on the assumption that further cash savings are not released in the 13 week period, the cash generation programme is also excluded. Additional 18 week costs are also excluded. Variance analysis against March base case: The Trust is £4.4 million ahead of the March base case forecast. Cash Analysis 7
