Wrightington,Wigan & Leigh NHS Trust · Wrightington, Wigan & Leigh NHS Trust Accounts for the Year ended 31 March 2007 INDEX Page no. Directors' statements Statement of the Chief

Wrightington,Wigan & LeighNHS Trust

Annual Accounts

2006/07

Wrightington, Wigan & Leigh NHS TrustAccounts for the Year ended 31 March 2007

INDEX

Pageno.

Directors' statements

Statement of the Chief Executive's responsibilities as the Accountable Officer of the Trust 1

Statement of the Directors' responsibilities in respect of the Accounts 1

Statement of the directors' responsibility in respect of internal control 2

Independent Auditors' Report to Directors of the Board 9

Foreword to the accounts 11

Income and expenditure account 12

Balance sheet 13

Statement of total recognised gains and losses 14

Cashflow statement 15

Notes to the accounts

Note 1 Accounting policies 16

Note 2 Income from activities 20

Note 3 Other operating income 20

Note 4 Operating expenses 21

Note 5 Staff costs and numbers 23

Note 6 Better Payments Practices Code 24

Note 7 Profit/Loss on disposal of Fixed Assets 24

Note 8 Intangible Fixed Assets 25

Note 9 Tangible fixed assets 26

Note 10 Stocks and work-in-progress 27

Note 11 Debtors 27

Note 12 Creditors 28

Note 13 Provisions for liabilities and charges 29

Note 14 Movement on reserves 30

Note 15 Notes to the cashflow statement 31

Note 16 Capital commitments 32

Note 17 Post balance sheet events 32

Note 18 Contingencies 33

Note 19 Movements in public dividend capital 33

Note 20 Financial Performance Targets 34

Note 21 Related Party Transactions 36

Note 22 Private Finance Initiative 36

Note 23 Financial Instruments 37

Note 24 Third Party Assets 41

Note 25 Intra-Government Balances 42

Note 26 Losses and Special Payments 43


STATEMENT OF THE CHIEF EXECUTIVE'S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OF THE TRUST

The Secretary of State has directed that the Chief Executive should be the Accountable Officer to the Trust.The relevant responsibilities of Accountable Officers, including their responsibility for the propriety andregularity of the public finances for which they are answerable, and for the keeping of proper records, are setout in the Accountable Officers' Memorandum issued by the Department of Health.

To the best of my knowledge and belief, I have properly discharged the responsibilities set out in my letter ofappointment as an accountable officer.

Date Signed

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS

The directors are required under the National Health Service Act 2006 to prepare accounts for each financialyear. The Secretary of State, with the approval of the Treasury, directs that these accounts give a true and fairview of the state of affairs of the trust and of the income and expenditure of the trust for that period. In preparing those accounts, the directors are required to:

Treasury

- make judgements and estimates which are reasonable and prudent

- state whether applicable accounting standards have been followed, subject to any material departures disclosedand explained in the accounts.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy atany time the financial position of the trust and to enable them to ensure that the accounts comply withrequirements outlined in the above mentioned direction of the Secretary of State. They are also responsible forsafeguarding the assets of the trust and hence for taking reasonable steps for the prevention and detection offraud and other irregularities.

The directors confirm to the best of their knowledge and belief they have complied with the above requirements in preparing the accounts.

By order of the Board

Date 13 June 2007 Signed Chief Executie

Date 13 June 2007 Signed Director of Finance &

STATEMENT ON INTERNAL CONTROL FOR THE YEAR ENDED 31 MARCH 2007

1. Scope of responsibility

The Board is accountable for internal control. As Accountable Officer, and Chief Executive of this Board, I have responsibility formaintaining a sound system of internal control that supports the achievement of the organisation s policies, aims and objectives. Ialso have responsibility for safeguarding the public funds and the organisation s assets for which I am personally responsible as setout in the Accountable Officer Memorandum.

Updates are provided to the Board on a regular basis, on arrangements for ensuring effective control through :-

· Risk Management Quarterly and Annual Reports· Risk Register reviews· Assurance Framework action plans progress reports· Clinical Governance updates · Provision of minutes from Risk and Environmental Committee, Clinical Governance and Standards Board and Audit Committee

As accountable Officer, I have overall accountability for Internal Control. To support this role, there are clear systems ofaccountability within the organisation with each Executive Director having an area of responsibility. These are listed on page 3.Delivery of our objectives, which are framed around requirement of Standards for Better Health, is reported to the Board on amonthly basis. The Trust below Board level is operated from five Divisions with each Division having a Divisional Chairman andGeneral Manager and Estates and Facilities Division having a General Manager, again for clear accountability for delivering theGovernance agenda.

Arrangements are in place for the reporting of Serious Untoward Incidents to the Strategic Health Authority and others asappropriate through the Trust s Incident Reporting policy. The Trust links to the National Reporting and Learning System (NRLS)of the NPSA.

1.1 Processes in place by which we work with SHA and partner organisations

Relationships and working arrangements with the SHA are conducted principally through

· SHA performance management and reporting arrangements· SHA-led, Greater Manchester joint planning networks eg. for Cancer; Children; Cardiac; Critical Care; Orthopeadic; Older People; Sexual Health· Routine contact between senior officers and their counterparts

The Trust s principal partner organisation is Ashton, Leigh and Wigan PCT and a series of arrangements is in place relating both totheir role as commissioner and co-provider of services:

· Joint planning intentions are embodied in the Local Delivery Plan and joint aspects of Performance Improvement Plans· Contractual commitments between provider and commissioner are regulated via an annual service level agreement· Joint performance review mechanisms are in place; focusing key LDP deliverables and NHS Plan target delivery· A complex array of planning forums exists to focus professional advice and managerial action across a range of priority

agendas, including services for Older People; Cancer services; Children s service; CHD; Emergency services; Access and Booking.

These are supported, as appropriate, by specific project arrangements.

Overarching partnership structures, embracing Local Authority, NHS and non-statutory sector organisations provide theframework for borough-wide strategic development broadly grouped around Older People, Adults and Children.

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2. The purpose of the system of internal control

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achievepolicies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system ofinternal control is based on an ongoing process designed to:

· identify and prioritise the risks to the achievement of the organisation s policies, aims and objectives, · evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.

The system of internal control has been in place in Wrightington Wigan and Leigh NHS Trust for the year ended 31 March 2007 and up to the date of the approval of the Annual Report and accounts.

3 Capacity to handle risk

3.1 Leadership

Responsibility of the Chairman

The Chairman is a member of the Risk and Environmental Management Committee and the Clinical Governance and Standards Board.

Responsibility of The Chief Executive

The Chief Executive has overall accountability and responsibility for Risk Management within the Wrightington Wigan and Leigh NHS Trust. The Chief Executive holds each line manager accountable for setting objectives, relevant to Board objectives, for their own staff. The Chief Executive is also personally involved in management of complaints and claims against the Wrightington Wigan and Leigh NHS Trust and is a member of the Risk and Environmental Management Committee.

Responsibility of The Director of Nursing, Operations and Patient Services

The Director of Nursing is joint lead for Clinical Governance and has responsibility for ensuring the implementation of a system ofrisk management in the Trust. The Director of Nursing has responsibility for Clinical Risk, and is the lead on Clinical Risk.

The Director of Nursing is a member of the Risk and Environmental Management Committee and Clinical Governance andStandards Board. She is also a member of the Audit Committee and the Health and Safety Committee.

Responsibility of The Medical Director

The Medical Director is the Executive Director with joint responsibility for Clinical Governance. The Medical Director is amember of the Clinical Governance and Standards Board.

Responsibility Of The Finance Director

The Director of Finance is the Executive Director designated as the accountable and responsible officer for managing financial riskin the Trust. The Director of Finance is a member of the Finance sub committee and attends the Audit committee.

Responsibility Of The Head of Governance

The Head of Governance is responsible for advising on and co-ordinating Governance and Risk Management. The Patient andStaff Safety Manager and Health and Safety Manager support the Head of Governance.

The Head of Governance is a member of the Clinical Governance and Standards Board and Risk and Environment ManagementCommittee.

All these responsibilities will be reviewed for 2007-08 to reflect the appointment of a new Director of Corporate and CommercialDevelopment and the splitting of the post of Director of Nursing and Operations.

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3.2 Training

To ensure the successful implementation and maintenance of the risk management policy, Board Members and staff areappropriately trained and skilled in carrying out risk assessment and reporting incidents. Risk Management, Incident Reportingand Risk Assessment Training form part of corporate and local induction programmes and mandatory training. In addition there isan ongoing programme of training in Risk Management, Incident Reporting and Risk Assessments.

The Risk Management Strategy defines risk, states the policy and defines accountability, responsibilities and reporting structuresfor all levels of staff and this is clearly imparted in the training sessions.

General awareness raising for staff of risk management issues and good practice is also undertaken through staff briefings, teambrief, staff newsletter, induction programmes and inclusion of relevant documents on the Trust Intranet. During training sessionsreal examples of incidents are used from the Trust with examples of the good practice that has resulted from investigations.

The Trust has a Medicines Safety Pharmacist, Medicines Safety Nurse and a Medical Devices Nurse who all train staff using goodpractice examples. There is also a comprehensive Medicines Safety Training programme and manual. Clinical Governance Leadsfrom each Division meet regularly to solve problems and share good practice. Divisional Service Improvement Teams have leadsfor each of the components of Clinical Governance who are responsible for ensuring good practice is implemented.

4 The Risk and Control Framework

A Board endorsed Risk Management Strategy is in place, available to all staff, which describes the following

a) Statement of Intent and Objectivesb) Scopec) Definitionsd) Governancee) Fair Blame Culturef) Accountabilities and Responsibilitiesg) Systems for Managing Riskh) Whistle-blowingi) Risk Quantification and Acceptabilityj) Organisational Risk Registerk) Risk Treatmentl) Key Performance Indicators 2006-2007m) Implementation, Training and Supportn) Other Relevant Policieso) Trust Stakeholdersp) Communication with Stakeholdersq) Risk Management Training and Supportr) Monitoring, Reviewing and Auditings) Resourcing Risk Managementt) Approval, Review and Assurance Mechanisms

All Board members and other senior Trust staff attended a workshop held in July 2006, where they assessed the risks to achieving the corporate objectives. These identified risks now form the Board Assurance Framework.

During the year, the electronic risk register has been maintained and improved. This contains risks from Divisions and AssuranceFramework. General Managers in all Divisions have to sign a statement to say they have had a sound system of managing risk inplace from April 2006 to March 2007.

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The Trust works in ways which will allow known and potential risks and hazards to be dealt with on an ongoing basis, using thekey stages and approaches identified within the adapted Australian Risk Management Process. These processes will be used toenable the Trust to identify and profile identified and potential risks, develop prioritised action plans for the management of risksand evaluate the effectiveness/impact and end result of the implemented action plans.

Risk prioritisation and action planning takes account of local incident reports, litigation and claims information, audit information,complaints and issues raised by individual directorates/departments, as well as national requirements and guidance.

In addition to utilisation of the information sources referred to above, in depth clinical and non-clinical risk assessments will beundertaken across the Trust using the Risk Assessment Procedure available in the Document library on the intranet.

The Clinical Governance Development Plan for 2006-2007 is written under the Seven Domains of the Standards for BetterHealth . The Trust corporate objectives for 2006-2007 are written under the domains of Standards for Better Health

The Audit committee has a key role in assuring the Board on the effectiveness of the System of internal Control. The committee smembership has been reviewed and members roles clarified.

As an employer with staff entitled to membership of the NHS Pension Scheme, control measures are in place to ensure allemployer obligations contained within the Scheme Regulations are complied with. This includes that deductions from salary,employers contributions and payments in to the Scheme are in accordance with the Scheme rules, and that member pension schemerecords are accurately updated in accordance with the time scales detailed in the Regulations.

4.1 Risk Management is embedded in the Trust

Clinical Governance principles, processes and systems are embedded through the Trust Board and within the organisation by various means. The Medical Director and the Director of Nursing are joint leads for Clinical Governance, supported by the Head of Governance. The system for Governance was reviewed during the year and some changes will be made in 2007-08 as a result of the appointment of new Executive Directors and the run up to Foundation Trust application.

The following sub committees of the Trust Board have responsibility for policy setting and monitoring, and co-ordination of risk management issues:

· Clinical Governance and Standards Board clinical risk· Human Resources Strategy Group staffing issues · Risk and Environmental Management Committee non-clinical risk

The Clinical Governance and Standards Board ensures the implementation of national quality imperatives e.g. National Institutefor Clinical Excellence (NICE) Guidance and National Service Framework (NSF) Standards. It also reviews the results of theNational Confidential Enquiries and is aware of the particular issues affecting this Trust.

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Responsibility for facilitation and monitoring of the implementation of policy lies with Divisional Chairs and the Patient and StaffSafety Team. The Audit Committee provides a scrutinising and review role and the Internal Audit Department and External Auditprovide independent assurance. Policy implementation is the responsibility of the various risk groups reporting to the ClinicalGovernance and Standards Board and the Risk and Environmental Committee. The most important groups at this level are ServiceImprovement Teams that implement Clinical Governance within the Divisions and Directorates. In each of the Divisions, there is aClinical Governance Lead. The Leads meet to share good practice and solve problems.

A Governance team which comprises the Deputy Director of Nursing and Governance, the Head of Governance, Patient and PublicInvolvement Manager, Complaints Service Manager, Patient Safety Manager and the Health and Safety Manager, meets monthly.Divisional and departmental risk registers that feed into the corporate risk register are being further developed and refined. RiskManagement Training is included in Induction and Mandatory Training for all staff, and all staff have access to the RiskManagement Strategy via the intranet.

There are written agreements with other hospitals used by the Trust on the clinical governance arrangements that they have in place.

4.2 The Assurance Framework

A Board approved Assurance Framework is in place and was fully embedded during 2006-2007 to provide the necessary evidenceof an effective system of internal control. A structured risk identification has taken place at Board level linked to strategicobjectives and also an assessment of significant risk taking into account existing controls and other management assurances.

The Assurance Framework

· Covers all of the Trust s main activities· Identifies the objectives the Trust is trying to achieve· Identifies and examines the system of internal control in place to manage the risks

· Identifies and examines the review and assurance mechanisms which relate to the effectiveness of the system of internal control· Records the actions taken by the Board to address control and assurance gaps

4.3 Public Involvement

Public Board Meetings are held at which the Assurance Framework, Risk Management Strategy and the Corporate Risk Registerare discussed.

There is a system for patients to report incidents and to complain. In this way any risks identified can be appropriately assessedand the necessary remedial action taken. Complainants are always informed of the action taken. There is also a Patient Safetyleaflet for patients, advising them how they can contribute to their own safety whilst on Trust premises.

Public and Patients are represented on various Trust Committees including the Trust Board and Clinical Governance and StandardsBoard. There is an active Patients Forum.

5 Review of Effectiveness

As Accountable Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review isinformed in a number of ways. The Head of Internal Audit provides me with an opinion on the overall arrangements for gainingassurance through the Assurance Framework and on the controls reviewed as part of the internal audit work. Executive managerswithin the organisation who have responsibility for the development and maintenance of the system of internal control provide mewith assurance. The Assurance Framework itself provides me with evidence that the effectiveness of controls that manage the risksto the organisation achieving its principal objectives have been reviewed.

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The Executive Directors have undertaken a detailed analysis of the Trust s position against the guidance issued at Annex A of SirNigel Crisp s letter of 15 September 2003. The Trust s Risk Management Policy and Strategy covers all the points.

The Trust retained CNST level 2 in October 2004 and achieved CNST level 1 Maternity Services in December 2004. The Trustachieved Risk Pooling Scheme for Trusts (RPST) level 1 in June 2002. The RPST was withdrawn by the NHSLA at the end of the2004-05 financial year.

The Board, Audit Committee, Clinical Governance and Standards Board, Risk and Environmental Committee have advised me onthe implications of the result of my review of the effectiveness of the system of internal control. A plan to address weaknesses andensure continuous improvement of the system is in place.

The Clinical Governance and Standards Board ensures the implementation of national quality imperatives e.g. National Institutefor Clinical Excellence (NICE) Guidance and National Service Framework (NSF) Standards. It also reviews the results of theNational Confidential Enquiries and is aware of the particular issues affecting this Trust.

Responsibility for facilitation and monitoring of the implementation of policy lies with Divisional Chairs and the Patient and StaffSafety Team. The Audit Committee provides scrutiny and review and the Internal Audit Department and External Audit provideindependent assurance.

The Trust has achieved its key objectives. An assurance statement from the internal auditors confirms that there is a generallysound system of internal control designed to meet the organisation s objectives. The Trust will review indicators of performanceand be able to demonstrate that they have acted on these where there is evidence of significant risk.

The Trust retained CNST level 2 in October 2004 and retained CNST level 1 Maternity Services in March 2007. The Trust achieved Risk Pooling Scheme for Trusts (RPST) level 1 in June 2002. The RPST was withdrawn by the NHSLA at the end of the 2004-05 financial year. The Trust has undertaken self-assessments against the Healthcare Commission's "Standards for Better Health" and has declared itself fully compliant with the core standards from April 2006 to March 2007. Progress with the Development standards D1 and D2a has been self assessed as "Good."

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Date : 13 June 2007 Signed (on behalf of the board)

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Management

Board

Trust Board

Audit

CommitteeRisk and EnvironmentalManagement

Committee

Clinical Governance and Standards Board

HR Strategy

Group

IM & TSteering

Group

Finance Sub Committee

Information Governance Board

PPI Forum

Divisional Management BoardsService Improvement Teams

Health and SafetyEstates CompliancePEATFire SafetySecurityEnvironmental

Liaison Forum

Resuscitation Drugs & TherapeuticsInfection Control CommitteeClinical Audit/Effectiveness NICE NSFsComplaints Claims ManagementAdverse Events Medicines ManagementCNST Nutrition R&DBlood TransfusionPPI Steering GroupInformation systemsTraining and Education CPDStandards for Better Health

Agenda for ChangeTEDALLEquality and DiversityTMECIWL

Health Records

Board


Independent Auditors' Report to the Directors of the Board of Wrightington, Wigan & Leigh NHS Trust

We have audited the financial statements of Wrightington, Wigan and Leigh NHS Trust for the year ended 31 March 2007 underthe Audit Commission Act 1998. These comprise the Income and Expenditure Account, the Balance Sheet, the Cash FlowStatement, the Statement of Total Recognised Gains and Losses and the related notes. These financial statements have beenprepared under the accounting policies relevant to the National Health Service set out within them.

This report is made solely to the Board of Wrightington, Wigan and Leigh NHS Trust in accordance with Section 2 of the AuditCommission Act 1998. Our audit work has been undertaken so that we might state to the Board of Wrightington, Wigan and LeighNHS Trust those matters which we are required to state to them in an auditor's report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyone other than Wrightington, Wigan and Leigh NHSTrust and the Board of Wrightington, Wigan and Leigh NHS Trust, as a body, for our audit work, for this report, or for theopinions we have formed.

Respective Responsibilities of Directors and Auditors

The directors' responsibilities for preparing the financial statements in accordance with directions made by the Secretary of Stateare set out in the Statement of Directors' Responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the part of theRemuneration Report to be audited (details of senior managers' remuneration and pensions) has been properly prepared inaccordance with the accounting policies directed by the Secretary of State as being relevant to the National Health Service inEngland.

We review whether the directors' statement on internal control reflects compliance with the Department of Health's requiremets'The Statement on Internal Control 2003/2004" issued on 15 September 2003 and further guidance issued on 5 April 2005, 7 April2006, and 2 April 2007. We report if it does not meet the requirements specified by the Department of Health or if the statement ismisleading or inconsistent with other information we are aware of from my/our audit of the financial statements. I/We are notrequired to consider, nor have I/we considered whether the directors' statement on internal control covers all risks and controls. Weare also not required to form an opinion on the effectiveness of the Trust's corporate governance procedures or its risk and controlprocedures.

We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises only [the Foreword, the unaudited part of the Remuneration Report, the Chairman's Statement and the Operating and Financial Review]. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

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Basis of audit opinion

We conducted our audit in accordance with the Audit Commission Act 1998, the Code of Audit Practice issued by the AuditCommission and International Standards on Auditing (UK and Ireland), issued by the Auditing Practices Board.

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements andthe part of the Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgements madeby the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Trust'scircumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in orderto provide us with sufficient evidence to give reasonable assurance that the financial statements and the part ofthe RemunerationReport to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming ouropinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of theRemuneration Report to be audited.

Opinion

In our opinion:

the financial statements give a true and fair view in accordance with the accounting policies directed by the Secretary of State asbeing relevant to the National Health Service in England, of the state of the Trust's affairs as at 31 March 2007 and of its incomeand expenditure for the year then ended; and

the part of the Remuneration Report to be audited has been properly prepared in accordance with the accounting policies directedby the Secretary of State as being relevant to the National Health Service in England.

Signature: Date: 13 June 2007

Name: KPMG LLP Address: St James Square Manchester M2 6DS

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FOREWORD TO THE ACCOUNTS

Page 11 of 43

These accounts for the year ended 31 March 2007 have been prepared by the Wrightington, Wigan & Leigh Health Services NHSTrust under section 98(2) of the National Health Service Act 1977 (as amended by section 24(2), schedule 2 of the NationalHealth Service and Community Care Act 1990) in the form which the Secretary of State has, with the approval of the Treasury,directed.

Income and Expenditure Account for the year ended 31 March 2007

2006/07 2005/06Note £'000 £'000

Income from activities: 2 187,186 168,017

Other operating Income 3 11,895 12,318

Operating Expenses: 4-5 (193,711) (173,253)

OPERATING SURPLUS: 5,370 7,082Profit (loss) on disposal of fixed assets 7 2,027 (32)

SURPLUS BEFORE INTEREST 7,397 7,050

Interest receivable 625 357

Other finance costs - unwinding of discount 13 (33) (32)

Other finance costs - change in discount rate on provisions 0 (162)

SURPLUS FOR THE FINANCIAL YEAR 7,989 7,213

Public Dividend Capital dividends payable (5,356) (5,516)

The notes on pages 16 to 43 form part of these accounts.

All income and expenditure is derived from continuing operations.

Note to the Income and Expenditure Account For the year ended 31 March 2007

2006/07 2005/06

£000 £000

Retained surplus/(deficit) for the year 2,633 1,697

Financial support included in retained deficit for the year - Internally Generated 0 670

Retained surplus (deficit) for the year excluding financial support 2,633 1,027

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RETAINED SURPLUS/ (DEFICIT) FOR THE FINANCIAL YEAR

2,633 1,697

Balance Sheetas at 31 March 2007

2006/07 2005/06Note £'000 £'000

FIXED ASSETSIntangible assets 8 428 488Tangible assets 9 164,439 177,234TOTAL FIXED ASSETS 164,867 177,722

CURRENT ASSETSStocks and work-in-progress 10 2,644 2,873Debtors 11 28,647 6,450Cash at bank and in hand 15.3 591 531TOTAL CURRENT ASSETS 31,882 9,854

CREDITORS: amounts falling due within one year 12 (14,258) (12,528)

NET CURRENT LIABILITIES 17,624 (2,674)

TOTAL ASSETS LESS CURRENT LIABILITIES 182,491 175,048

PROVISIONS FOR LIABILITIES AND 13 (2,031) (2,372)CHARGES

TOTAL ASSETS EMPLOYED 180,460 172,676

FINANCED BY:

TAXPAYERS EQUITYPublic dividend capital 19 93,835 99,779Revaluation reserve 14 54,411 63,482Donated asset reserve 14 2,384 2,372Income & expenditure reserve 14 29,830 7,043

TOTAL TAXPAYERS EQUITY 180,460 172,676

The financial statements on pages (12 to 15) were approved by the board on 13 June 2007 and signedon its behalf by:

Signed: Chief Execuitve

Date: 13 June

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The Trust expects to repay £4,971k of PDC in 2007-2008 in respect of fundingfor impairments for which cash has not yet been received.

2006/07 2005/06£'000 £'000

Surplus/(deficit) for the financial year before dividend payments 7,989 7,213

Unrealised surplus/(deficit) on fixed asset revaluations / indexation 11,216 9,118

Increases in the donated asset and government grant reserve due to receipt of donated and government grant financed assets 112 582

TOTAL RECOGNISED GAINS FORTHE FINANCIAL YEAR

Surplus for the financial year before dividend payments 7,989 7,213Movement in the revaluation reserve (9,071) 8,494

245 625

20,154 581

19,317 16,913

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Movement in the donated asset reserve (excluding depreciation & impairments)Movement in the I&E reserve (exc. I&E generated deficit/surplus)

The Statement of Total Recognised Gains and Losses shows the net increase in the valuation of the Trust year on year before dividend payments. It represents the surplus on the I&E account (before dividends), plus the movement on reserves within the balance sheet (excluding Public Dividend Capital). A reconciliation of the movements is shown below:

Statement of Total Recognised Gains and Lossesfor the year ended 31 March 2007

19,317 16,913

Cashflow Statementfor the year ended 31 March 2007

2006/07 2005/06Note £'000 £'000 £'000

OPERATING ACTIVITIESNet cash inflow from operating activities 15.1 12,082 9,936

RETURNS ON INVESTMENTS ANDSERVICING OF FINANCE

Interest received 346 361

Net cash inflow/(outflow) from returns on investmentsand servicing of finance 346 361

CAPITAL EXPENDITUREPayments to acquire tangible fixed assets (5,394) (3,770)Receipts from sale of tangible fixed assets 4,355 6Payments to acquire intangible fixed assets (29) (105)

Net cash inflow/(outflow) from capital expenditure (1,068) (3,869)

DIVIDENDS PAID (5,356) (5,516)

Net cash inflow before management of liquid 6,004 912resources and financing

Net cash inflow before financing 6,004 912

FINANCINGPublic dividend capital received 0 0Public dividend capital repaid (not previously accrued) (5,944) (900)Public dividend capital repaid (accrued in prior period) 0 0

Net cash (outflow) from financing (5,944) (900)

Increase in cash 60 12

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Notes to the Accountsfor the year ended 31 March 2007

1 ACCOUNTING POLICIES AND OTHER INFORMATION

The Secretary of State for Health has directed that the financial statements of NHS Trusts shall meet the accounting requirementsof the NHS Trusts Manual for Accounts, which shall be agreed with HM Treasury. Consequently, the following financialstatements have been prepared in accordance with the 2006/07 NHS Trusts Manual for Accounts issued by the Department ofHealth. The accounting policies contained in that manual follow UK generally accepted accounting practice for companies (UKGAAP) and HM Treasury s Financial Reporting Manual to the extent they are meaningful and appropriate to the NHS, asdetermined by HM Treasury, which is advised by the Financial Reporting Advisory Board. The accounting policies have beenapplied consistently in dealing with items considered material in relation to the accounts.

1.1 Accounting convention

1.2 Acquisitions and discontinued operations

1.3 Income Recognition

1.4 Intangible fixed assets

1.5 Tangible fixed assets

Capitalisation

(i) individually have a cost of at least £5,000; or

Valuation

Intangible assets are capitalised when they are capable of being used in a Trust's activities for more than one year; they can be valued; and they have acost of at least £5,000.

Intangible fixed assets held for operational use are valued at historical cost and are depreciated over the estimated life of the asset on a straight line basis,except capitalised Research and Development which is revalued using an appropriate index figure. The carrying value of intangible assets is reviewedfor impairment at the end of the first full year following acquisition and in other periods if events or changes in circumstances indicate the carrying valuemay not be recoverable.

Purchased computer software licences are capitalised as intangible fixed assets where expenditure of at least £5,000 is incurred. They are amortised overthe shorter of the term of the licence and their useful economic lives.

Tangible assets are capitalised if they are capable of being used for a period which exceeds one year and they:

(ii) collectively have a cost of at least £5,000 and individually have a cost of more than £250, where the assets are functionally interdependent, they hadbroadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control; or

(iii) form part of the initial equipping and setting-up cost of a new building, ward or unit irrespective of their individual or collective cost.

Expenditure on digital hearing aids in the year ended 31 March 2004 (but not in earlier years) was treated as capital expenditure. In accordance with the amendment to the Capital Accounting Manual issued in July 2003, giving rise to an increase in fixed assets regardless of the cost of the individual hearing aids. Subsequent purchases of digital hearing aids are capitalised only when the total value is greater than £5,000. Where small numbers of appliances are purchased the costs are expensed as incurred.

Activities are considered to be acquired only if they are acquired from outside the public sector. Activities are considered to be discontinued only ifthey cease entirely. They are not considered to be discontinued if they transfer from one NHS body to another.

Income is accounted for applying the accruals convention. The main source of income for the Trust is from commissioners in respect of healthcareservices provided under local agreements. Income is recognised in the period in which services are provided. Where income is received for a specificactivity which is to be delivered in the following financial year, that income is deferred.

These accounts have been prepared under the historical cost convention modified to account for the revaluation of fixed assets at their value to thebusiness by reference to their current costs. NHS Trusts are not required to provide a reconciliation between current cost and historical cost surplusesand deficits.

Tangible fixed assets are stated at the lower of replacement cost and recoverable amount. On initial recognition they are measured at cost (for leasedassets, fair value) including any costs such as installation directly attributable to bringing them into working condition. They are restated to currentvalue each year. The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate the

Depreciation, amortisation and impairments

1.6 Donated fixed assets

Assets in the course of construction and residual interests in off-balance sheet PFI contract assets are not depreciated until the asset is brought into use orreverts to the Trust, respectively.

Buildings, installations and fittings are depreciated on their current value over the estimated remaining life of the asset as advised by the District Valuer.Leaseholds are depreciated over the primary lease term. Equipment is depreciated on current cost evenly over the estimated life of the asset.

Donated fixed assets are capitalised at their current value on receipt and this value is credited to the Donated Asset Reserve. Donated fixed assets arevalued and depreciated as described above for purchased assets. Gains and losses on revaluations are also taken to the Donated Asset Reserve and, each

Where the useful economic life of an asset is reduced from that initially estimated due to the revaluation of an asset for sale, depreciation is charged to bring the value of the asset to its value at the point of sale.

Where, under Financial Reporting Standard 11, a fixed asset impairment is charged to the Income and Expenditure Account, offsetting income may bepaid by the Trust's main commissioner using funding provided by the NHS Bank.

Professional valuations are carried out by the District Valuers of the Revenue and Customs Government Department. The valuations are carried out inaccordance with the Royal Institute of Chartered Surveyors (RICS) Appraisal and Valuation Manual insofar as these terms are consistent with the agreedrequirements of the Department of Health and HM Treasury. In accordance with the requirements of the Department of Health, the last asset valuationswere undertaken in 2004 as at the prospective valuation date of 1 April 2005 and were applied on the 31 March 2005.

All adjustments arising from indexation and five-yearly revaluations are taken to the Revaluation Reserve. All impairments resulting from price changesare charged to the Statement of Total Recognised Gains and Losses. Falls in value when newly constructed assets are brought into use are also chargedthere. These falls in value result from the adoption of ideal conditions as the basis for depreciated replacement cost valuations.

Assets in the course of construction are valued at current cost using the indexes as for land and buildings, as above. These assets include any existingland or buildings under the control of a contractor.

Operational equipment other than IT equipment, which is considered to have nil inflation, is valued at net current replacement cost through annual upliftby the change in the value of the GDP deflator. Equipment surplus to requirements is valued at net recoverable amount.

value each year. The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate thecarrying value may not be recoverable.

All land and buildings are restated to current value using professional valuations in accordance with FRS15 every five years and in the intervening yearsby the use of indices. The buildings index is based on the All in Tender Price Index published by the Building Cost Information Service (BCIS). Theland index is based on the residential building land values reported in the Property Market Report published by the Valuation Office.

The value of land for existing use purposes is assessed at Existing Use Value. For non-operational properties including surplus land, the valuations arecarried out at Open Market Value.

Additional alternative Open Market Value figures have only been supplied for operational assets scheduled for imminent closure and subsequentdisposal.

The valuations are carried out primarily on the basis of Depreciated Replacement Cost for specialised operational property and Existing Use Value fornon-specialised operational property.

Tangible fixed assets are depreciated at rates calculated to write them down to estimated residual value on a straight-line basis over their estimated usefullives. No depreciation is provided on freehold land, and assets surplus to requirements.

Impairment losses resulting from short-term changes in price that are considered to be recoverable in the longer term are taken in full to the revaluationreserve. These include impairments resulting from the revaluation of fixed assets from their cost to their value in existing use when they becomeoperational. This may lead to a negative revaluation reserve in certain instances.

1.7 Stocks and work-in-progress

1.8 Provisions

1.9 Clinical negligence costs

1.10 Non-clinical risk pooling

1.11 Pension costs

The conclusion from the 1999 valuation was thet the scheme continues to operate on a sound financial basis and the notional surplus of the scheme is £1.1 billion. It was recommended that the employers' contributions are set at 14% of pensionable pay from 1 April 2003. On advice from the actuary the contribution may be varied from time to time to reflect changes in the scheme's liabilities. Employees pay contributions of 6% (manual staff 5%) of their pensionable pay.

Stocks and work-in-progress are valued at the lower of cost and net realisable value. This is considered to be a reasonable approximation to current costdue to the high turnover of stocks. Work-in-progress comprises goods in intermediate stages of production. Partially completed contracts for patientservices are not accounted for as work-in-progress.

The NHS Litigation Authority (NHSLA) operates a risk pooling scheme under which the NHS Trust pays an annual contribution to the NHSLA whichin return settles all clinical negligence claims. Although the NHSLA is administratively responsible for all clinical negligence cases the legal liabilityremains with the Trust. The total value of clinical negligence provisions carried by the NHSLA on behalf of the Trust is disclosed at note 13.

year, an amount equal to the depreciation charge on the asset is released from the Donated Asset Reserve to the Income and Expenditure account.Similarly, any impairment on donated assets charged to the Income and Expenditure Account is matched by a transfer from the Donated Asset Reserve.On sale of donated assets the value of the sale proceeds is transferred from the Donated Asset Reserve to the Income and Expenditure Reserve.

The Trust provides for legal or constructive obligations that are of uncertain timing or amount at the balance sheet date on the basis of the best estimateof the expenditure required to settle the obligation. Where the effect of the time value of money is material, the estimated risk-adjusted cash flows arediscounted using the Treasury's discount rate of 2.2% in real terms. This is a change from the rate of 3.5% applied in 2004-05 and earlier. The effect ofthe change is to increase the carrying value of the provision and this is shown in the Income and Expenditure Account and at Note 13.

Since financial responsibility for clinical negligence cases transferred to the NHSLA at 1 April 2002, the only charge to operating expenditure in relationto clinical negligence in 2006/07 relates to the Trust's contribution to the Clinical Negligence Scheme for Trusts.

The Trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are risk pooling schemes under which theTrust pays an annual contribution to the NHS Litigation Authority and, in return, receives assistance with the costs of claims arising. The annualmembership contributions, and any 'excesses' payable in respect of particular claims are charged to operating expenses as and when they become due.

The Scheme is subject to a full valuation for FRS 17 purposes every four years. The last valuation on this basis took place as at 31 March 2003. Thescheme is also subject to a full valuation by the Government Actuary to assess the scheme's assets and liabilities to allow a review of the employerscontribution rates, this valuation took place as at 31 March 2004 and has yet to be finalised. The last published valuation on which contributions arebased covered the period 1 April 1994 to 31 March 1999. Between valuations, the Government Actuary provides an update of the scheme liabilities.The latest assessment of the liabilities of the Scheme is contained in the Scheme Actuary report, which forms part of the annual NHS Pension Scheme(England and Wales) Resource Account, published annually. These accounts can be viewed on the Business Services Authority - Pensions Divisionwebsite at www.nhspa.gov.uk. Copies can also be obtained from The Stationery Office.

NHS bodies are directed by the Secretary of State to charge employer's pension cost contributions to operating expenses as and when they become due.

Past and present employees are covered by the provisions of the NHS Pension Scheme. The Scheme is an unfunded, defined benefit scheme that coversNHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. As a consequence it isnot possible for the Trust to identify its share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as a definedcontribution scheme and the cost of the scheme is equal to the contributions payable to the scheme for the accounting period.

The Scheme is a "final salary" scheme. Annual pensions are normally based on 1/80th of the best of the last three years pensionable pay for each year ofservice. A lump sum normally equivalent to 3 years pension is payable on retirement. Annual increases are applied to pension payments at rates definedby the Pensions (Increase) Act 1971, and are based on changes in retail prices in the twelve months ending 30 September in the previous calendar year.On death, a pension of 50% of the member's pension is normally payable to the surviving spouse.

http://www.nhspa.gov.uk

1.12 Liquid resources

1.13 Value Added Tax

1.14 Foreign Exchange

1.15 Third Party Assets

1.16 Public Dividend Capital (PDC) and (PDC) Dividend

1.17 Losses and Special Payments

Page 19 of 43

Most of the activities of the Trust are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

Transactions that are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the dates of the transactions. Resultingexchange gains and losses are taken to the Income and Expenditure account.

Deposits and other investments that are readily convertible into known amounts of cash at or close to their carrying amounts are treated as liquidresources in the cashflow statement. The Trust does not hold any investments with maturity dates exceeding one year from the date of purchase.

Additional pension liabilities arising from early retirements are not funded by the scheme except where the retirement is due to ill-health. For earlyretirements not funded by the scheme, the full amount of the liability for the additional costs is charged to the income and expenditure account at thetime the Trust commits itself to the retirement, regardless of the method of payment.

The Scheme provides the opportunity to members to increase their benefits through money purchase Additional Voluntary Contributions (AVCs)provided by an approved panel of life companies. Under the arrangement the employee/member can make contributions to enhance an employee'spension benefits. The benefits payable relate directly to the value of the investments made.

A charge, reflecting the forecast cost of capital utilised by the NHS Trust, is paid over as public dividend capital dividend. The charge is calculated atthe real rate set by HM Treasury (currently 3.5%) on the forecast average carrying amount of all assets less liabilities, except for donated assets and cashwith the Office of the Paymaster General. The average carrying amount of assets is calculated as a simple average of the opening and closing relevantnet assets. A note to the accounts discloses the rate that the dividend represents as a percentage of the actual average carrying amount of assets lessliabilities in the year.

Early payment of a pension, with enhancement, is available to members of the Scheme who are permanently incapable of fulfilling their dutieseffectively through illness or infirmity. A death gratuity of twice final year's pensionable pay for death in service, and five times their annual pension fordeath after retirement, less pension already paid, subject to a maximum amount equal to twice the member's final year's pensionable pay less theirretirement lump sum for those who die after retirement, is payable.

Assets belonging to third parties (such as money held on behalf of Patients) are not recognised in the accounts since the trust has no beneficial interest inthem. Details of third party assets are given in note 24 to the accounts.

Public Dividend Capital represents the outstanding public debt of an NHS Trust. At any time the Secretary of State can issue new PDC to, and require repayments of PDC from, the NHS Trust.

Losses and special payments are items that Parliament would not have contemplated when it agreed funds for the helth service or passed legislation. By their nature they are items that ideally should not arise. They are therefore subject to special control procedures compared with the generality of payments. They are divided into different catagories, which govern the way each individual case is handled.

Losses and special payments are charged to the relevant functional headings, including losses which would have been made good through insurancecover had NHS Trusts not been bearing their own risks (with insurance premiums then being included as normal revenue expenditure). However, note26 is compiled directly from the losses and compensations register which is prepared on a cash basis.


2 Income from Activities

2006/07 2005/06£'000 £'000

NHS Trusts 313 649Primary Care Trusts 171,589 165,565Foundation Trusts 0 8Local Authorities 0 0Department of Health 10,625 (2,963)NHS Other 88 0Non-NHS: Private Patients 3,051 3,533

Overseas Patients (non-reciprocal) 30 0 - road traffic actRoad traffic Act 1,014 1,011 - otherOther 476 214

187,186 168,017

Primary Care Trust income includes £4,971k to offset fixed asset impairments charged to operating expenses.

(Road Traffic Act income is subject to a provision for doubtful debts of 7.7% to reflect expected rates of collection.)

3 Other operating income

2006/07 2005/06£'000 £'000

Education, training and research 5,355 5,068

Charitable and other contributions to expenditure 63 61

Transfers from donated asset reserve 233 379

Non-patient care services to other bodies 3,058 3,164

Income generation 722 625

Other income 2,464 3,021

11,895 12,318

Page 20 of 43


4 Operating expenses

4.1 Operating expenses comprise:2006/07 2005/06

£'000 £'000

Services from other NHS Trusts 845 747Services from other NHS bodies 4,387 4,171Services from Foundation Trusts 183 6Purchase of healthcare from non NHS bodies 232 161Directors' costs 823 762Staff costs 126,866 118,701Supplies and services - clinical 27,991 24,862Supplies and services - general 3,023 2,748Establishment 3,308 2,767Transport 970 945Premises 8,535 6,236Bad debts 178 117Depreciation 6,865 6,427Fixed asset impairments and reversals 4,973 154Audit fees 159 146Clinical negligence 2,239 2,292Redundancy costs 17 0Other 2,117 2,011

193,711 173,253

Page 21 of 43

Of the fixed asset impairments £4,971k arises from site rationalisation for which fundinghas been approved and offsetting income accrued.


4.2 Operating Leases

4.2/1 Operating expenses include:

2006/07 2005/06£000 £000

Hire of plant and machinery 217 238Other operating lease rentals 318 260

535 498

4.2/2 Annual commitments under non-cancellable operating leases are:

Land and buildings Other leases

2006/07 2005/06 2006/07 2005/06£'000 £'000 £'000 £'000

Operating leases which expire:Within 1 year 16 16 44 55Between 1 and 5 years 62 0 204 230After 5 years 152 110 0 0

230 126 248 285

Page 22 of 43


5 Staff costs and numbers

5.1 Staff costs

Salaries and wagesSocial security costsEmployer contributions to NHSPAOther pension costs

5.2 Average number of persons employed

Medical and dentalAdministration and estatesHealthcare assistants and other support staffNursing, midwifery and health visiting staffScientific, therapeutic and technical staffOther

5.3 Management costs2006/07 2005/06£'000 £'000

Management costs 6,742 6,341Income 199,081 180,335

3.4% 3.5%

5.4 Retirements due to ill health

Page 23 of 43

386

3,841

785560

1,674

85

762

369389

781551

1,673

During 2006/07 (2005/06) there were 15 (15) early retirements from the Trust agreed on the grounds of ill-health. The estimated additional pension liabilities of these ill-health retirements will be £760k (£611k). The cost of these ill-health retirements will be borne by the NHS Business Services Authority-Pensions Division.

Management costs are defined as those on the management costs website at www.dh.gov.uk/PolicyAndGuidance/OrganisationPolicy/FinanceAndPlanning/NHSManagementCosts/fs/en.

73

463,775

0

3,821

85

2005/06

Prior Year

No.380

2006/07

Others

No.5

2006/07

Total

No.342

2006/07

Permanently Employed

No.337

1910

93

5411,664

2006/07 2006/07

£'000 £'000

8,296 8,296

0 0

2006/07 2005/06

TotalPermanently

EmployedOthers Prior Year

£'000 £'000107,676 105,641 2,035 100,169

0 8,04611,661 11,661 0 11,193

0 0127,633 125,598 2,035 119,408

http://www.dh.gov.uk/PolicyAndGuidance/OrganisationPolicy/FinanceAndPlanning/NHSManagementCosts/fs/en


6 Better Payments Practice code

6.1 Better Payment Practice code - measure of compliance

2006/07No. £'000

Total Non-NHS trade invoices paid in the year 63,826 79,424

Total Non-NHS trade invoices paid within target 57,849 74,689

Percentage of Non-NHS trade invoices paid within target 91% 94%

2006/07No. £'000

Total NHS trade invoices paid in the year 2,561 19,822

Total NHS trade invoices paid within target 2,403 19,665

Percentage of NHS trade invoices paid within target 94% 99%

The Better Payment Practice Code requires the Trust to aim to pay all undisputed invoicesby the due date or within 30 days of receipt of goods or a valid invoice, whichever is later.

7. Profit/(loss) on disposal of fixed assets

Profit/(loss) on the disposal of fixed assets is made up as follows:

2006/07 2005/06£'000 £'000

Profit/(loss) on disposal of plant and equipment 2,027 (32)

2,027 (32)

Page 24 of 43


8. Intangible Fixed Assets

Software Licences £000 Total £000

Gross cost at 1 April 2006 1,168 1,168

Indexation

Impairments 0 0

Reclassifications 98 98

Other revaluation 0 0

Additions - purchased 39 39

Additions - donated 0 0

Additions - government granted 0 0

Disposals 0 0

Gross cost at 31 March 2007 1,305 1,305

Amortisation at 1 April 2006 680 680

Indexation

Impairments 0 0

Reversal of Impairments 0 0

Reclassifications 0

Other revaluation 0 0

Charged during the year 197 197

Disposals 0 0

Amortisation at 31 March 2007 877 877

Net book value: Purchased at 1 April 2006 484 484

Donated at 1 April 2006 4 4

Total at 1 April 2006 488 488

Purchased at 31 March 2007 425 425

Donated at 31 March 2007 3 3

Total at 31 March 2006 428 428

Page 25 of 43


9 Tangible Fixed Assets

9.1 Tangible Fixed Assets

Total £000 Land £000

Building, excluding dwellings

£000Dwellings

£000

Assets under construction and

payments on account £000

Plant and Machinery

£000

Transport Equipment

£000Information

Technology £000Furniture & Fittings £000

Cost or Valuation: At 1 April 2006 197,739 55,635 105,678 1,331 2,379 27,419 157 4,936 204Additions - purchased 6,616 1,573 1,741 2,785 10 507Additions - donated 112 75 37Additions - government grantedImpairments 0Reclassifications -98 1,797 -2,521 436 190Indexation 12,002 2,093 8,897 111 146 755 0Other in year revaluation 0Disposals -33,390 -19,000 -12,869 -653 -6 -862At 31 March 2007 182,981 38,728 105,151 1,442 1,745 30,779 161 4,771 204Depreciation at 1 April 2006 20,505 0 0 0 16,561 141 3,603 200Charged during the year 6,668 4,113 34 2,126 5 388 2Impairments 4,973 497 4,433 43Reversal of ImpairmentsReclassificationsIndexation 786 326 3 457Other in year revaluationDisposals -14,390 -12,869 -653 -6 -862Depreciation at 31 March 2007 18,542 497 -3,997 37 0 18,534 140 3,129 202Net book value: Purchased at 1 April 2006 174,866 55,635 105,010 1,331 1,779 9,758 16 1,333 4 Donated at 1 April 2006 2,368 668 600 1,100 Total at 1 April 2006 177,234 55,635 105,678 1,331 2,379 10,858 16 1,333 4 Purchased at 31 March 2007 162,058 38,231 107,744 1,405 1,745 11,268 21 1,642 2 Donated at 31 March 2007 2,381 1,404 977 0 0 0 Total at 31 March 2007 164,439 38,231 109,148 1,405 1,745 12,245 21 1,642 2

Page 26 of 43


9.2 The net book value of land and buildings (including dwellings) at the balance sheet datecomprised:

2006/07 2005/06£000 £000

Freehold 148,784 162,644Total 148,784 162,644

10. Stocks and work-in-progress

2006/07 2005/06

£000 £000

Raw materials and consumables 2,644 2,873

2,644 2,873

11. Debtors2006/07 2005/06

£'000 £'000Amounts falling due within one year:

NHS debtors 7,473 2,379Provision for irrecoverable debts (224) (166)Prepayments and accrued income 905 627Other debtors 20,239 3,199

28,393 6,039

Amounts falling due after more than one year:

Other debtors 275 411Provision for irrecoverable debts (21) 0

254 411

28,647 6,450

Page 27 of 43

Of the totals at 31 March 2007, £4.1 million related to land valued at open market value.


12. Creditors

12.1 Creditors at the balance sheet date are made up of:

2006/07 2005/06Amounts falling due within one year: £'000 £'000

Payments received on account 712 704NHS creditors 907 2,069Non-NHS trade creditors - revenue 3,975 4,373Non-NHS trade creditors - capital 1,516 894Tax and social security costs 2,737 2,600Other creditors 18 28Accruals and deferred income 4,393 1,860

14,258 12,528

Page 28 of 43

for the year ended 31 March 2007

13 Provisions for liabilities and charges

Pensionsrelatingto other Legal Other

staff claims Total£'000 £'000 £'000 £'000

At 1 April 2006 707 1,078 587 2,372

change in discount rate 0

Arising during the year other 28 351 240 619

Utilised during the year (65) (228) (462) (755)

Reversed Unused 0 (197) (41) (238)

Unwinding of discount 16 17 33

At 31 March 2007 686 1,021 324 2,031

Expected timing ofcash flows:

Within one year 65 242 324 631Between one and five years 258 172 0 430After five years 363 607 0 970

Page 29 of 43

Other Legal provisions include £199k for employers and public liability claims for which there is also a corresponding contingent liability of £77k declared in note 18, and £822k for the capitalised cost of permanent injury retirees.

Notes to the Accounts

The amount provided for employers / public claims is based on actuarial assessments received from the National Health Service Litigation Authority (NHSLA) and the Trusts insurers as to their value and anticipated payment

£16,150,309 is included in the provisions of the NHS Litigation Authority at 31 March 2007 in respect of clinical negligence liabilities of the trust (31 March 2006 £15,180,704).

Other provisions are £261k for the estimated outstanding pay arrears for the implementation of the NHS consultantcontract based on latest estimates, for which actual costs to date are not yet known and £63k for the estimated costof remaining arrears backdated to October 2004 in respect of the implementation of Agenda for Change.


14 Movement on reserves

The movements on reserves in the year comprised the following:

Donated Income andRevaluation Asset Expenditure

Reserve Reserve Reserve Total£'000 £'000 £'000 £'000

At 1 April 2006 63,482 2,372 7,043 72,897

Transfer from income & 2,633 2,633expenditure account

Surplus on other 11,083 133 11,216revaluations/indexationof fixed assets

Transfer of realised (19,308) 19,308 0profits (losses) to the Income& Expenditure reserve

Receipt of donated 112 112assets

Depreciation, impairment (233) (233)and disposal of donatedassets

Other transfers between (846) 846 0reserves

At 31 March 2007 54,411 2,384 29,830 86,625

Page 30 of 43


15. Notes to the cashflow statement

15.1 Reconciliation of operating surplus to net cash inflow from operating activities:

2006/07 2005/06£'000 £'000

Total operating surplus 5,370 7,082

Depreciation charge 6,865 6,427

Fixed asset impairments 4,973 154

Transfer from donation reserve (233) (379)

(Increase) / Decrease in stocks 229 (1,262)

(Increase) / Decrease in debtors (5,246) 289

Increase/(decrease) in creditors 498 (334)

Increase/(decrease) in provisions (374) (2,041)

Net cash inflow from operating activities 12,082 9,936

Page 31 of 43

15.2 Reconciliation of net cash flow to movement in net debt

2006/07 2005/06£'000 £'000

Increase in cash in the period 60 12

Change in net debt resulting from cashflows 60 12

Net debt at 1 April 2006 531 519

Net debt at 31 March 2007 591 531

15.3 Analysis of changes in net debt

At 31st March2006 Cash flows 2007£'000 £'000 £'000

OPG cash at bank 438 75 513

Commercial cash at bank and in hand 93 (15) 78

531 60 591

16. Capital commitments

Commitments under capital expenditure contracts at the balance sheet date were £494k(2005/06: £698k).

17. Post balance sheet events

The Trust does not have any material post balance sheet events.

Page 32 of 43

At 1st April



18. Contingencies

2006/07 2005/06£'000 £'000

77 433

Net Value of contingent liabilities 77 433

19. Movements in Public Dividend Capital

2006/07 2005/06£'000 £'000

Public Dividend Capital as at 1 April 2006 99,779 100,679Public Dividend Capital repaid in year (5,944) (900)Public Dividend Capital as at 31 March 2007 93,835 99,779

Page 33 of 43

Contingent liabilities (gross value)*

* Contingent liabilities are 77k for employers and public liability claims.


20. Financial performance targets

20.1 The trust's breakeven performance for 2006/07 is as follows:

BREAK EVEN DUTY2001/02

£0002002/03

£0002003/04

£0002004/05

£0002005/06

£0002006/07

£000A. Turnover 173,819 150,964 170,486 174,525 180,335 199,081B. retained surplus/(deficit) for the year 2 2 254 -743 1697 2633C. Adjustments for: timing/non-cash impacting distortionsUse of pre-01.04.97 surpluses [FDL(97)24 Agreements] 0 0 0 0 0 01999/2000 Prior Period Adjustment (relating to 1997/1998 & 1998/99)2000/01 Prior Period Adjustment (relating to1997/98, 1998/99 & 1999/2000)2001/02 Prior Period Adjustment (relating to1997/98, 1998/99, 1999/2000 & 2000/01)2002/03 Prior Period Adjustment (relating to1997/98, 1998/99, 1999/2000, 2000/01 & 2001/02)2003/04 Prior Period Adjustment (relating to1997/98, 1998/99, 1999/2000, 2000/01, 2001/02 & 2002/03)2004/05 Prior Period Adjustment (relating to 1997/98, 1998/99, 1999/2000, 2000/01, 2001/02, 2002/03 & 2003/042005/06 Prior Period Adjustment (relating to 1997/98, 1998/99, 1999/2000, 2000/01, 2001/02, 2002/03, 2003/04 & 2004/052006/07 Prior Period Adjustment (relating to 1997/98, 1998/99, 1999/2000, 2000/01, 2001/02, 2002/03, 2003/04, 2004/05 & 2005/06D. Break-even in year position 2 2 254 -743 1697 2633E. Break-even Cumulative Position 2 4 258 -485 1212 3845*F. Anticipated financial year of recovery (if a break-even cumulative deficit only)SHAMateriality test (I.e. is it equal to or less than 0.5%) % % % % % %H. Break-even in year position (%) (I.e. row d/a x 100) 0.0 0.0 0.1 -0.4 0.9 1.3I Break-even Cumulative position (%) (I.e. row a/a x 100) 0.0 0.0 0.2 -0.3 0.7 1.9

Page 34 of 43


20.2 Capital cost absorption rate

The variance from 3.5% is within the Department of Health's materiality range of 3.0% to 4.0%.

20.3 External financing limit

The Trust is given an external financing limit which it is permitted to undershoot.

2006/07 2005/06£'000 £'000 £000

External financing limit (6,004) (912)

Cash flow financing (6,004) (912)

External financing requirement (6,004) (912)

Undershoot (overshoot) 0 0

20.4 Capital Resource Limit

The Trust is given a Capital Resource Limit (CRL) which it is not permitted to overspend.

2006/07 2005/06£'000 £'000

Gross capital expenditure 6,655 4,275Less: book value of assets disposed of (19,000) (38)Charge Against CRL (12,345) 4,237Capital Resource Limit (12,345) 4,237

(Over)/Underspend against the CRL 0 0

Page 35 of 43

Notes to the Accounts

The Trust is required to absorb the cost of capital at a rate of 3.5% of average relevant net assets. The rateis calculated as the percentage that dividends paid on public dividend capital, totalling £5,356k bears to theaverage relevant net assets of £173,715k, that is 3.08%.

for the 12 months ended 31/03/2007

21. Related party transactions

£'000

Ashton Leigh and Wigan Primary Care Trust 142,218

Central Lancashire Primary Care Trust 9,316

NHS Logistics 5,394

North West Strategic Health Authority 4,932

Halton and St Helens Primary Care Trust 4,768

Bolton Primary Care Trust 2,934

National Health Service Litigation Authority 2,446

Bury PCT 2,187

National Blood Authority 1,749

5 Boroughs Partnership Mental Health Trust 1,425

North Lancashire PCT 1,312

Sefton PCT 1,247

22. Private Finance Transactions

22.1

Page 36 of 43

The Trust has also received revenue and capital payments from a number of charitable funds, certain of the Trustees for which are also members of the NHS Trust Board. [The audited accounts/the Summary Financial Statements of the Funds held on Trust are included in this annual report and accounts.]

Wrightington Wigan and Leigh NHS Trust is a body corporate established by order of the Secretary of Statefor Health.

The Department of Health is regarded as a related party. During the year, Wrightington Wigan and LeighNHS Trust has had a significant number of material transactions with the Department and with other entitiesfor which the Department is regarded as the parent Department. These entities are listed below:

In addition, the Trust has a significant number of material transactions with other Government Departmentsand other central and local Government bodies.

During the year none of the Board Members or members of the key management staff or other related partieshas undertaken any material transactions with Wrightington Wigan and Leigh NHS Trust.

The Trust in 2006/07 does not have any PFI transactions off balance sheet.


23 Financial Instruments

Liquidity risk

Interest-rate risk

Page 37 of 43

FRS 13, Derivatives and Other Financial Instruments, requires disclosure of the role that financialinstruments have had during the period in creating or changing the risks an entity faces in undertaking itsactivities. Because of the continuing service provider relationship that the NHS trust has with localPrimary Care Trusts and the way those Primary Care Trusts are financed, the NHS trust is not exposed tothe degree of financial risk faced by business entities. Also financial instruments play a much morelimited role in creating or changing risk than would be typical of the listed companies to which FRS 13mainly applies. The NHS trust has limited powers to borrow or invest surplus funds and financial assetsand liabilities are generated by the day-to day operational activities rather than being held to change therisks facing the NHS Trust in undertaking its activities.

As allowed by FRS 13, debtors and creditors that are due to mature or become payable within 12 monthsfrom the balance sheet date have been omitted from all disclosures other than the currency profile.

The NHS Trust's net operating costs are incurred under annual service agreements with local PrimaryCare Trusts, which are financed from resources voted annually by Parliament. The Trust also largelyfinances its capital expenditure from funds made available from Government under an agreed borrowinglimit. Wrightington, Wigan and Leigh NHS Trust is not, therefore, exposed to significant liquidity risks.

Wrightington, Wigan and Leigh Trust is not exposed to significant interest rate risk. The following twotables show the interest rate profiles of the Trust's financial assets and liabilities:


23.1 Financial assets

Non-interest bearing

CurrencyTotal £000

Floating rate £000

Fixed rate £000


£000

Weighted average

interest rate %

Weighted average period for which fixed

YearsWeighted average term

YearsAt 31 March 2007Sterling 591 513 0 78

Gross financial assets 591 513 0 78 0 Note a

At 31 March 2006Sterling 531 438 0 93

Gross financial assets 531 438 0 93

Note:

a.

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Non interest bearing assets relate to cash held in a current bank account the amount of which changes on a daily basis.

Fixed Rate


23.2 Financial liabilities


Currency Total £000

Floating rate £000

Fixed rate £000

Non-interest bearing £000

Weighted average interest

rate %

Weighted average

period for which fixed

weighted average term until maturity

At 31 March 2007SterlingProvision for Early Retirement Pensions -622 -622 2.2% Note aProvision for Industrial Injury -779 -779 2.2%NHSLA EL/PL 0 0

Consultant contract 0 0PDC -93,835 -93,835 Note bGross Financial liabilities -95,236 -1,401 -93,835

At 31 March 2006SterlingProvision for Early Retirement Pensions -642 -642 2.2%Provision for Industrial Injury -718 -718 2.2%NHSLA EL/PL 0 0Consultant contract 0 0PDC -99,779 -99,779Gross financial liabilities -101,139 -1,360 -99,779

Note:

a

b The trust's non-interest bearing financial liabilities comprise of public dividend capital.

The public dividend capital is of unlimited term.

Foreign Currency Risk

The trust has negligible foreign currency income or expenditure.

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Fixed Rate

The fixed rate liabilities are in respect of provisions for early retirements, industrial injury and other liabilities. These will remain until theprovision is discharged. Provisions for Consultant contract and NHSLA liabilities are expected to be discharged within one year.


23.3 Fair values

Book value £000 Fair value £000 Basis of fair valuation

Financial AssetsCash 591 591Total 591 591

Financial liabilitiesProvisions under contract (1,401) (1,401) Note aPublic dividend capital * (93,835) (93,835) Note bTotal (95,236) (95,236)

Notes:

a.

b. The figure here should be the full value of PDC in the balance sheet and 'book value' should equal 'fair value'.

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Set out below is a comparison, by category, of book values and fair values of the NHS Trust's financial assets and liabilities as at 31 March 2007

Fair value is not significantly different from book value since, in the calculation of book value, the expected cashflows have been discounted by the Treasury discount rate of 2.2% in real terms.


24 Third party assets

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The trust held £7,069 (£3,131 for 2005/06) Cash at bank and in hand at 31/03/07 which relates tomonies held by the NHS trust on behalf of patients. This has been excluded from cash at bank andin hand figure reported in the accounts.


25 Intra-Government BalancesDebtors: amounts

falling due within one

year

Debtors: amounts due after

more than one year

Creditors: amounts

falling due within one

year

amounts falling due after more than one

year£000 £000 £000 £000

Balances with other central government bodies 7,305 0 4,582 0Balances with local authorities 154 0 14 0Balances with NHS Trusts and Foundation Trusts 333 0 488 0Balances with public corporations and trading funds 12 0 0 0Balances with bodies external to government 20,589 254 9,174 0At 31 March 2007 28,393 254 14,258 0

Balances with other central government bodies 2,433 0 5,476 0Balances with local authorities 186 0 0 0Balances with NHS Trusts and Foundation Trusts 295 0 520 0Balances with public corporations and trading funds 19 0 80 0Balances with bodies external to government 3,106 411 6,452 0At 31 March 2006 6,039 411 12,528 0

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26 Losses and Special Payments

There were 189 cases of losses and special payments (2005/06: 234 cases) totalling £176,405 (2005/06: £136,994) approved during 2006-2007.

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Documents

Wrightington,Wigan & Leigh NHS Trust · Wrightington, Wigan & Leigh NHS Trust Accounts for the Year ended 31 March 2007 INDEX Page no. Directors' statements Statement of the Chief