2012/13 Trust Accounts pro-forma. Introduction. Data entered below will be used throughout the workbook:

Transcription

1 2012/13 Trust Accounts pro-forma Introduction Data entered below will be used throughout the workbook: Trust name: Barnsley Hospital NHS Foundation Trust This year 2012/13 Last year 2011/12 This year ended 31 MARCH 2013 Last year ended 31 March 2012 This year beginning 1 April 2012 Intro

2 FOREWORD TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2013 BARNSLEY HOSPITAL NHS FOUNDATION TRUST Barnsley Hospital NHS Foundation Trust ("Trust") is required to keep accounts in such form as Monitor (The Independent Regulator for NHS Foundation Trusts) may with the approval of Treasury direct" (Paragraph 24 (1) Schedule 7 of the National Health Service Act 2006 ("the 2006 Act")). The Trust is required to prepare in respect of each financial year annual accounts in such form as Monitor may with the approval of the Treasury direct (Paragraph 25 (1) Schedule 7 to the 2006 Act). In preparing their annual accounts, the Trust must comply with any directions given by Monitor, with the approval of the Treasury, as to the methods and principles according to which the accounts are to be prepared and the information to be given in the accounts (Paragraph 25 (2) Schedule 7 to the 2006 Act). Signed: (Chief Executive) Name Paul O'Connor Date: 28th May 2013 Foreword

3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH / /12 NOTE Operating income , ,891 Operating expenses 5 (164,218) (158,688) OPERATING SURPLUS 3,380 2,203 FINANCE COSTS Finance income Finance expense 11 (231) (191) Public Dividend Capital dividends payable (1,966) (1,821) NET FINANCE COSTS (2,020) (1,825) Share of Profit of Joint Ventures Corporation tax credit SURPLUS FOR THE YEAR 1, Other comprehensive income Revaluation (losses)/profits and impairment losses property, plant and equipment 14 (2,548) 7,989 TOTAL COMPREHENSIVE (EXPENSE)/INCOME FOR THE YEAR (1,179) 8,457 Page 1

4 STATEMENT OF FINANCIAL POSITIONS AS AT 31 MARCH March March March 2012 Group Trust Trust NON CURRENT ASSETS NOTE Intangible assets 13 1, ,351 Property, plant and equipment 14 69,884 69,737 66,514 Investments in subsidiaries Trade and other receivables TOTAL NON CURRENT ASSETS 71,572 71,906 68,432 CURRENT ASSETS Inventories 16 1,788 1,629 1,667 Trade and other receivables 17 5,148 5,267 7,553 Cash and cash equivalents 18 16,971 16,735 18,314 Total current assets 23,907 23,631 27,534 CURRENT LIABILITIES Trade and other payables 19 (13,324) (13,275) (13,801) Borrowings 20 (158) (158) (129) Provisions 23 (1,545) (1,545) (1,789) Other liabilities 21 (5,176) (5,176) (4,338) Total current liabilities (20,203) (20,154) (20,057) TOTAL ASSETS LESS CURRENT LIABILITIES 75,276 75,383 75,909 NON CURRENT LIABILITIES Borrowings 20 (732) (732) (639) Provisions 23 (235) (235) (257) Other liabilities 21 (682) (682) (207) TOTAL NON CURRENT LIABILITIES (1,649) (1,649) (1,103) TOTAL ASSETS EMPLOYED 73,627 73,734 74,806 FINANCED BY: TAXPAYERS' EQUITY Public dividend capital 45,855 45,855 45,855 Revaluation reserve 24 15,830 15,830 18,427 Income and expenditure reserve 11,942 12,049 10,524 TOTAL TAXPAYERS' EQUITY 73,627 73,734 74,806 The financial statements on pages 1 to 37 were approved by the Board on 23 May 2013 and signed on its behalf by: Signed: (Chief Executive) Date: 28th May 2013 Page 2

5 CONSOLIDATED STATEMENT OF CHANGES IN TAXPAYERS' EQUITY Public Revaluation Income Total Dividend reserve and taxpayers' Capital (Note 24 expenditure equity and below) reserve 2012/ Taxpayers' Equity at 1 April ,855 18,427 10,524 74,806 Total Comprehensive Income for the year Surplus for the year 0 0 1,369 1,369 Revaluation loss and impairment loss property, plant and equipment 0 (2,548) 0 (2,548) Transfers to the income and expenditure reserve in respect of assets disposed of 0 (49) 49 0 Taxpayers' Equity at 31 March ,855 15,830 11,942 73,627 Prior year : 2011/12 Taxpayers' Equity at 1 April ,855 10,465 10,029 66,349 Total Comprehensive Expense for the year Surplus for the year Revaluation profit and impairment profit property, plant and equipment 0 7, ,989 Transfers to the income and expenditure reserve in respect of assets disposed of 0 (27) 27 0 Taxpayers' Equity at 31 March ,855 18,427 10,524 74,806 Nature and function of classes of Taxpayers' Equity - Public Dividend Capital - is a type of public sector equity finance, it represents the Government's net investment in the Trust, this is notionally repayable. - The Revaluation Reserve is used to record revaluation gains/losses and impairment reversals on property plant and equipment (PPE )and intangibles that are recognised in Other Comprehensive Income. When an asset is sold, or otherwise disposed of, any remaining revaluation reserve balance for the asset in the reserve is transferred to Retained Earnings. The balance is wholly in respect of PPE and intangibles. -The surplus or deficit for the year is recognised in income and expenditure, together with any other gain or loss for the financial year that is not recognised in any other reserve. Page 3

6 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH / /12 NOTE Cash flows from operating activities Operating surplus 3,380 2,203 Non-cash income and expenses Depreciation and amortisation 6,098 5,907 Impairments Reversal of impairments (197) 0 (Gain)/Loss on disposal 1 17 PDC Dividends accrued and not paid or received 88 (263) Amortisation of PFI credit (29) (29) Decrease/(Increase) in Trade and Other Receivables 2,294 (3,612) (Increase)/Decrease in Inventories (121) (62) (Decrease)/Increase in Trade and other Payables (477) 892 Increase in Other Liabilities 1, Decrease/(Increase) in Provisions (266) 1,174 Tax received - deferred tax NET CASH INFLOW FROM OPERATING ACTIVITIES 12,234 6,931 Cash flows from investing activities Interest received Purchase of intangible assets (273) (62) Purchase of Property, Plant and Equipment (11,347) (4,615) Net cash outflow from investing activities (11,443) (4,490) Cash flows from financing activities Capital element of Private Finance Initiative Obligations 151 (391) Interest element of Private Finance Initiative Obligations (231) (191) PDC Dividend paid (2,054) (1,558) Cash flows from other financing activities (Joint Venture) Net cash outflow from financing activities (2,134) (2,050) (Decrease)/Increase in cash and cash equivalents 18 (1,343) 391 Cash and Cash equivalents at 1 April 18 18,314 17,923 Cash and Cash equivalents at 31 March 18 16,971 18,314 Page 4

7 Barnsley Hospital NHS Foundation Trust - Notes to the Accounts General Information Barnsley Hospital NHS Foundation Trust ( the Trust ) is a public benefit corporation authorised, in England, by Monitor in accordance with the National Health Act The trust provides healthcare mainly to the region. The address of the Trust is Gawber Road, Barnsley, S75 2EP 1 Accounting policies and other information After making enquiries, the Directors have a reasonable expectation that Barnsley Hospital NHS Foundation Trust has adequate resources to continue in operational existence for the forseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts. Monitor has directed that the financial statements of NHS foundation trusts shall meet the accounting requirements of the NHS Foundation Trust Annual Reporting Manual which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the 2012/13 NHS Foundation Trust Annual Reporting Manual issued by Monitor. The accounting policies contained in that manual follow International Financial Reporting Standards (IFRS) and HM Treasury s Financial Reporting Manual ("HM Treasury's FReM") to the extent that they are meaningful and appropriate to NHS foundation trusts. The accounting policies have been applied consistently in dealing with items considered material in relation to the accounts. The financial statements have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets and certain financial assets and financial liabilities. The financial statements have been prepared in accordance with EU endorsed International Financial Reporting Standards and IFRICs. On 16 April 2012 the Trust established a wholly owned subsidiary company ' Barnsley Hospital Support Services Limited '. Consequently the results of the subsidiary have been consolidated into the results of the Trust. References to 'Group' within the financial statements refer to the results and balances of the Trust and the subsidiary, whilst references to 'Parent' refer only to those of the ' Trust'. The Parent has taken advantage of section 408 of the Companies Act 2006 and elected not to prepare a Parent Statement of Comprehensive Income. The surplus for the year included in the financial statements of the Parent is 1,476, Consolidation Subsidiaries Subsidiary entities are those over which the Trust has the power to exercise control or a dominant influence so as to gain economic benefits. The income, expenses, assets, liabilities, equity and reserves are consolidated in full into the appropriate financial statement lines. The amounts consolidated are drawn from the financial statements of the subsidiary for the year. The investment in Barnsley Hospital Support Services Limited is recognised at cost as this is a wholly owned subsidiary of the Trust. Where the accounting policies of the subsidiary are not aligned with those of the Trust (including where they report under UK GAAP) then the amounts are adjusted during consolidation where the differences are material. NHS Charities accounts are not consolidated due to the HM Treasury dispensation of the application of IAS 27 (Consolidated and Separate Financial Statements ) by NHS Foundation Trusts. This dispensation is available up until 31 March Joint operations Joint operations are activities which are carried on with one or more other parties but which are not performed through a separate entity. The Trust includes within its financial statements its share of the activities, assets and liabilities. The Trust has entered into a contractual Joint Venture agreement with Nestor Primecare Services Ltd to provide certain primary medical services to NHS Barnsley. The statement of cash flows includes the net cash flow of the joint operation in other financing activities. The Joint Venture ended on 31 March Income Income in respect of services provided is recognised when, and to the extent that, performance occurs, and is measured at the fair value of the consideration receivable. The main source of income for the Trust is from commissioners in respect of healthcare services. Income relating to patient care treatments (also known as spells) that are part-completed at the year end are apportioned across the financial years on the basis of length of stay at the end of the reporting period compared to expected total length of stay. Where income is received for a specific activity that is to be delivered in the following year, that income is deferred. Page 5

8 1 Accounting policies and other information ( continued ) 1.2 Income (continued) The Trust also received income under the NHS Injury Cost Recovery Scheme, designed to reclaim the cost of treating injured individuals to whom personal injury compensation has subsequently been paid by an insurer. The Trust recognises the income when it receives notification from the Department of Work and Pension's Compensation Recovery Unit that the individual has lodged a compensation claim. The income is measured at the agreed tariff for the treatments provided to the injured individual, less a provision for the unsuccessful compensation claims and doubtful debts. Income from the sale of non-current assets is recognised only when all material conditions of sale have been met. It is measured as the sums due under the sale contract. 1.3 Expenditure on Employee Benefits Short-term Employee Benefits Salaries, wages and employment-related payments are recognised in the period in which the service is received from employees. The cost of annual leave entitlement earned but not taken by employees at the end of the period is recognised in the financial statements to the extent that employees are permitted to carryforward leave into the following period. Pension costs NHS Pension Scheme past and present employees are covered by the provisions of the NHS Pensions Scheme. The scheme is an unfunded, defined benefit scheme that covers NHS employers, general practices and other bodies, allowed under the direction of Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as a defined contribution scheme. Employers pension cost contributions are charged to operating expenses as and when they become due. Additional pension liabilities arising from early retirements are not funded by the scheme except where the retirement is due to ill-health. The full amount of the liability for the additional costs is charged to the operating expenses at the time the trust commits itself to the retirement, regardless of the method of payment. 1.4 Expenditure on other goods and services Expenditure on goods and services is recognised when, and to the extent that they have been received, and is measured at the fair value of those goods and services. Expenditure is recognised in operating expenses except where it results in the creation of a non-current asset such as property, plant and equipment. 1.5 Property, Plant and Equipment Recognition Property, Plant and Equipment is capitalised where: it is held for use in delivering services or for administrative purposes; it is probable that future economic benefits will flow to, or service potential be provided to, the Trust; it is expected to be used for more than one financial year; the cost of the item can be measured reliably; and individual items: o have a cost of at least 5,000; or o form a group of assets which individually have a cost of more than 250, collectively have a cost of at least 5,000 where the assets are functionally interdependent, they had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control; or o form part of the initial setting-up cost of a new building or refurbishment of a ward or unit, irrespective of their individual or collective cost. Where a large asset, for example a building, includes a number of components with significantly different asset lives e.g. plant and equipment, then these components are treated as separate assets and depreciated over their own useful economic lives. Page 6

9 1 Accounting policies and other information ( continued ) Measurement Valuation All property, plant and equipment assets are measured initially at cost, representing the costs directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets are measured subsequently at fair value. Land and buildings used for the Trust's services or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and impairment losses. Revaluations are performed, by a professional valuer periodically but at least every three years. Valuations are performed more frequently where there is evidence that the carrying amounts for land and buildings may be materially different from fair value. Fair values are determined as follows: - Land, non-specialised buildings and non-operational buildings - in accordance with the FT ARM, this is determined to be market value for existing use. - Specialised buildings - depreciated replacement cost, based on providing a modern equivalent asset. Where it would meet the location requirements of the service being provided, an alternative site is valued. - Buildings in the course of construction are carried at cost, less any impairment loss. Cost includes professional fees but not borrowing costs, which are recognised as expenses immediately, as permitted by IAS 23 in respect of assets measured at fair value. Operational equipment is held at cost less depreciation as a proxy. Subsequent expenditure Subsequent expenditure relating to an item of property, plant and equipment is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred to replace a component of such item will flow to the enterprise and the cost of replacement is capitalised if it meets the criteria for asset recognition above. The carrying amount of the part replaced is de-recognised. Other expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is charged to operating expenses in the period in which it is incurred. Depreciation Items of Property, plant and equipment are depreciated on a straight line basis over their remaining useful economic lives in a manner consistent with the consumption of economic or service delivery benefits. Asset lives fall into the following ranges: Buildings excluding dwellings 15 to 90 years Dwellings 15 to 90 years Plant and machinery 1 to 15 years Transport Equipment 5 to 7 years Information Technology 2 to 5 years Furniture and Fittings 2 to 10 years Freehold land is considered to have an infinite life and is not depreciated. The District Valuer (an external body to the Trust) considers that the remaining lives of the Buildings and Dwellings is 33 years. Property, plant and equipment which has been reclassified as Held for Sale ceases to be depreciated upon the reclassification. Assets in the course of construction are not depreciated until the asset is brought into use or reverts to the Trust, respectively. Page 7

10 1 Accounting policies and other information ( continued ) The estimated useful life of an asset is the period over which the Trust expects to obtain economic benefits or service potential from it. This period is specific to the Trust and may be shorter that the physical life of the asset itself. Revaluation and impairment Increases in asset values arising from revaluations are taken to the revaluation reserve except where, and to the extent that, they reverse an impairment for the same asset previously recognised in operating expenses, in which case they are recognised in operating income. Impairments that arise from a clear consumption of economic benefit are charged to operating expenses in the period that they occur. At the period end, a transfer is made from the revaluation reserve to the income and expenditure reserve for the amount of the impairment (or the remaining balance in the revaluation reserve relating to the asset if this is a lower amount). Decreases in asset values and all other impairments are charged to the revaluation reserve to the extent that there is an available balance for the asset concerned, and thereafter, are charged to operating expenses. Gains and losses recognised in the revaluation reserve are reported in the Statement of Comprehensive Income as an item of other comprehensive income. At each reporting period end, the Trust checks whether there is any indication that any of its property, plant or equipment have suffered an impairment loss. If there is indication of an impairment loss, the recoverable amount of the asset is estimated to determine whether there has been a loss and, if so, its amount. Refer note 24 ( Page 31) for further details. De-recognition Assets intended for disposal are reclassified as Held for Sale once all of the following criteria are met: the asset is available for immediate sale in its present condition subject only to terms which are usual and customary for such sales; the sale must be highly probable i.e.: o management are committed to a plan to sell the asset; o an active programme has begun to find a buyer and complete the sale; o the asset is being actively marketed at a reasonable price; o the sale is expected to be completed within 12 months of the date of classification as Held for Sale ; and o the actions needed to complete the plan indicate it is unlikely that the plan will be dropped or significant changes made to it. Following reclassification, the assets are measured at the lower of their existing carrying amount and their fair value less costs to sell. Depreciation ceases to be charged and the assets are not revalued, except where the fair value less costs to sell falls below the carrying amount. Assets are de-recognised when all material sale contract conditions have been met. The profit or loss arising on disposal of an asset is the difference between the sale proceeds and the carrying amount and is recognised in operating income or operating expense respectively. On disposal, the balance for the asset in the revaluation reserve is transferred to income and expenditure. Property, plant and equipment which is to be scrapped or demolished does not qualify for recognition as Held for Sale and instead is retained as an operational asset and the asset s economic life is adjusted. The asset is de-recognised when scrapping or demolition occurs. Page 8

11 1 Accounting policies and other information ( continued ) Donated, government grant and other grant funded assets Donated and grant funded property, plant and equipment assets are capitalised at their fair value on receipt.the donation/ grant is credited to income at the same time, unless the donor has imposed a condition that the future economic benefits embodied in the grant are to be consumed in a manner specified by the donor, in which case, the donation/grant is deferred within liabilities and is carried forward to future financial years to the extent that the condition has not yet been met. The donation and grant funded assets are subsequently accounted for in the same manner as other items of property, plant and equipment. Service concessions - Private Finance Initiative (PFI) transactions The PFI is the catering department scheme for the provision of a kitchen and dining facility for the production of patient, staff and visitors meals. PFI transactions which meet the IFRIC 12 (Service Concession Arrangements) definition of a service concession, as interpreted by HM Treasury s FReM, are accounted for as on-statement of Financial Position (''on SoFP"). The Trust therefore recognises the underlying assets as property, plant and equipment at their fair value. An equivalent financial liability is recognised and measured in accordance with IAS 17 (Leases). The annual contract payments are apportioned between the repayment of the liability, a finance cost and the charges for services. The finance cost is calculated using the implicit interest rate for the scheme. The service charge is recognised in operating expenses and the finance cost is charged to Finance Costs in the Statement of Comprehensive Income. PFI assets are held at fair value under IAS 16 (Property Plant and Equipment). Contingent Rent An element of the annual unitary payment increase is due to cumulative indexation allocated to the finance lease. In accordance with IAS 17, this amount is not included in the minimum lease payments, but is instead treated as contingent rent and is expensed as incurred. In substance, this amount is a finance cost in respect of the liability and the expense is presented as part of the finance costs in the Statement of Comprehensive Income. Lifecycle Replacement Costs For each year of the contract, an element of the unitary payment is allocated to lifecycle replacement based on the capital costs that the operator expects to incur for that year. Subsequently in each year, the actual capital cost incurred by the operator is recognised as an asset and, to the extent that the capital is funded by the unitary payment, an equivalent amount of the unitary payment is treated as a cash payment by the Trust to pay for the asset. Depreciation PFI transactions are depreciated on a straight line basis over their remaining useful economic lives in a manner consistent with the consumption of economic or service delivery benefits. The asset lives of these assets held by the Trust is 33 years. 1.6 Intangible assets Recognition Intangible assets are non-monetary assets without physical substance which are capable of being sold separately from the rest of the Trust s business or which arise from contractual or other legal rights. They are recognised only where it is probable that future economic benefits will flow to, or service potential be provided to, the Trust and where the cost of the asset can be measured reliably. Where internally generated assets are held for service potential, this involves a direct contribution to the delivery of services to the public. Page 9

12 1 Accounting policies and other information ( continued ) Internally generated intangible assets Internally generated goodwill, brands, mastheads, publishing titles, customer lists and similar items are not capitalised as intangible assets. Expenditure on research is not capitalised. Expenditure on development is capitalised only where all of the following can be demonstrated: the project is technically feasible to the point of completion and will result in an intangible asset for sale or use; the Trust intends to complete the asset and sell or use it; the Trust has the ability to sell or use the asset; how the intangible asset will generate probable future economic or service delivery benefits e.g. the presence of a market for it or its output, or where it is to be used for internal use, the usefulness of the asset; adequate financial, technical and other resources are available to the Trust to complete the development and sell or use the asset; and the Trust can measure reliably the expenses attributable to the asset during development. Assets under construction intangible assets The Trust includes such expenditures as software packages and Medicine Management systems. Software Software which is integral to the operation of hardware e.g. an operating system, is capitalised as part of the relevant item of property, plant and equipment. Software which is not integral to the operation of hardware e.g. application software, is capitalised as an intangible asset. Measurement Intangible assets are recognised initially at cost, comprising all directly attributable costs needed to create, produce and prepare the asset to the point that it is capable of operating in the manner intended by management. Subsequently intangible assets are measured at fair value. Revaluations and impairments of intangible assets are recognised and accounted for in the same manner as that for property, plant and equipment. Intangible assets held for sale are measured at the lower of their carrying amount or fair value less costs to sell. Amortisation Intangible assets are amortised over their expected useful economic lives in a manner consistent with the consumption of economic or service delivery benefits. Software is amortized over a useful life of 1 to 5 years. 1.7 Revenue Government and other grants Government grants are grants from Government bodies other than income from Primary Care Trusts or NHS Trusts for the provision of services. Where a grant is used to fund revenue expenditure it is taken to the Statement of Comprehensive Income to match that expenditure. Page 10

13 1 Accounting policies and other information ( continued ) 1.8 Inventories Inventories are valued at the lower of cost and net realisable value using the first in first out cost formula. This is considered to be a reasonable approximation to fair value due to the high turnover of inventories. Provision is made where necessary for obsolete, slow moving inventory where it is deemed that the costs incurred may not be recoverable. 1.9 Financial instruments and financial liabilities Recognition Financial assets and financial liabilities which arise from contracts for the purchase or sale of non-financial items (such as goods or services), which are entered into in accordance with the Trust s normal purchase, sale or usage requirements, are recognised when, and to the extent which, performance occurs i.e. when receipt or delivery of the goods or services is made. Financial assets or financial liabilities in respect of assets acquired or disposed of through finance leases are recognised and measured in accordance with the accounting policy for leases described below. All other financial assets and financial liabilities are recognised when the Trust becomes a party to the contractual provisions of the instrument. De-recognition All financial assets are de-recognised when the rights to receive cash flows from the assets have expired, or the Trust has transferred substantially all of the risks and rewards of ownership. Financial liabilities are de-recognised when the obligation is discharged, cancelled or expires. Classification and Measurement Financial assets are categorised as 'Loans and receivables' or Available-for-sale' financial assets. Financial liabilities are classified as Other Financial liabilities. The classification depends on the nature and purpose of the financial assets and is determined at the time of the initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments with are not quoted in an active market. They are included in current assets. The Trust s loans and receivables comprise: current investments, cash and cash equivalents, NHS receivables, accrued income and other receivables. Loans and receivables are recognised initially at fair value, net of transactions costs, and are measured subsequently at amortised cost, using the effective interest method. The effective interest rate is the rate that discounts exactly estimated future cash receipts through the expected life of the financial asset or, when appropriate, a shorter period, to the net carrying amount of the financial asset. Interest on loans and receivables is calculated using the effective interest method and credited to the Statement of Comprehensive Income. Page 11

14 1 Accounting policies and other information ( continued ) Other financial liabilities The Trust's financial liabilities are categorised as 'other' financial liabilities. The classification depends on the nature and purpose of the financial liability and is determined at the time of initial recognition. All other financial liabilities are recognised initially at fair value, net of transaction costs incurred, and measured subsequently at amortised cost using the effective interest method. The effective interest rate is the rate that discounts exactly estimated future cash payments through the expected life of the financial liability or, when appropriate, a shorter period, to the net carrying amount of the financial liability. They are included in current liabilities except for amounts payable more than 12 months after the Statement of Financial Position, which are classified as long-term liabilities. Interest on financial liabilities carried at amortised cost is calculated using the effective interest method and charged to Finance Costs. Interest on financial liabilities taken out to finance property, plant and equipment or intangible assets is not capitalised as part of the cost of those assets. Impairment of financial assets At the Statement of Financial Position date, the Trust assesses whether any financial assets are impaired. Financial assets are impaired and impairment losses are recognised if, and only if, there is objective evidence of impairment as a result of one or more events which occurred after the initial recognition of the asset and which has an impact on the estimated future cash flows of the asset. For financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of the revised future cash flows discounted at the asset s original effective interest rate. The loss is recognised in the Statement of Comprehensive Income and the carrying amount of the asset is reduced directly. Where an available for sale financial asset has declined in value and there is objective evidence of impairment, the net cumulative loss for the asset that has been recognised in reserves is transferred out of reserves and recognised in Finance Costs within the Statement of Comprehensive Income. An equal and opposite reclassification adjustment is shown within Other Comprehensive Income Leases Finance leases Where substantially all risks and rewards of ownership of a leased asset are borne by the Trust, the asset is recorded as property, plant and equipment and a corresponding liability is recorded. The value at which both are recognised is the lower of the fair value of the asset or the present value of the minimum lease payments, discounted using the interest rate implicit in the lease. The implicit interest rate is that which produces a constant periodic rate of interest on the outstanding liability. The asset and liability are recognised at the inception of the lease, and are de-recognised when the liability is discharged, cancelled or expires. Thereafter the asset is accounted for as an item of property plant and equipment. The annual rental is split between the repayment of the liability and a finance cost. The annual finance cost is calculated by applying the implicit interest rate to the outstanding liability and is charged to Finance Costs in the Statement of Comprehensive Income. The annual rental is split over the repayment of the liability and a finance cost so as to produce a constant rate of finance over the life of the lease. The finance cost for each financial year is then calculated by applying this finance rate to the opening lease liability for the financial year. The finance cost is recognised in Finance Costs in the Statement of Comprehensive Income. Contingent rentals are recognised as an expense in the period in which they are incurred. The liability is derecognised when the liability is discharged, cancelled or expires. Page 12

15 1 Accounting policies and other information ( continued ) Operating leases Other leases are regarded as operating leases and the rentals are charged to operating expenses on a straight-line basis over the term of the lease. Operating lease incentives received are added to the lease rentals and charged to operating expenses over the life of the lease. Contingent rentals are recognised as an expense in the period in which they are incurred. Leases of land and buildings Where a lease is for land and buildings, the land component is separated from the building component and the classification for each is assessed separately. Leased land is treated as an operating lease Provisions The Trust recognises a provision where it has a present legal or constructive obligation of uncertain timing or amount; for which it is probable that there will be a future outflow of cash or other resources; and a reliable estimate can be made of that amount. The amount recognised in the Statement of Financial Position is the best estimate of the resources required to settle the obligation. Where the effect of the time value of money is significant, the estimated risk-adjusted cash flows are discounted using the discount rates published and mandated by HM Treasury. Clinical negligence costs The NHS Litigation Authority (NHSLA) operates a risk pooling scheme under which the Trust pays an annual contribution to the NHSLA which in return settles all clinical negligence claims. The contribution is charged to expenditure. Although the NHSLA is administratively responsible for all clinical negligence cases the legal liability remains with the Trust. However, the Trust only recognises a provision for the net amount that it will have to pay in respect of these claims. The total value of clinical negligence provisions carried by the NHSLA on behalf of the Trust is disclosed at note 23 (Page 31) but it is not recognised in the Trust's financial statements. Non-clinical risk pooling The Trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are risk pooling schemes under which the trust pays an annual contribution to the NHS Litigation Authority and in return receives assistance with the costs of claims arising. The annual membership contributions, and any excesses payable in respect of particular claims are charged to operating expenses when the liability arises Contingencies Contingent assets (that is, assets arising from past events whose existence will only be confirmed by one or more future events not wholly within the entity s control) are not recognised as assets, but are disclosed where an inflow of economic benefits is probable. Contingent liabilities are not recognised in the accounts, but are disclosed in note 27 (page 32), unless the probability of a transfer of economic benefits is remote. Contingent liabilities are defined as: o possible obligations arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity s control; or o present obligations arising from past events but for which it is not probable that a transfer of economic benefits will arise or for which the amount of the obligation cannot be measured with sufficient reliability. Page 13

16 1 Accounting policies and other information ( continued ) 1.13 Public dividend capital Public dividend capital (PDC) is a type of public sector equity finance it represents the Government's net investment in the Trust, this is notionally repayable. HM Treasury has determined that PDC is not a financial instrument within the meaning of IAS 32 (Financial Instruments: Presentation). A charge, reflecting the cost of capital utilised by the Trust, is payable as public dividend capital dividend. The charge is calculated at the rate set by HM Treasury (currently 3.5%) on the average relevant net assets of the Trust during the financial year. Relevant net assets are calculated as the value of all assets less the value of all liabilities, except for (i) donated assets ( including lottery funded assets ), (ii) net cash balances held with the Government Banking Services (GBS), excluding cash balances held in GBS accounts that relate to a short-term working capital facility, and (iii) any PDC dividend balance receivable or payable. In accordance with the requirements laid down by the Department of Health (as the issuer of PDC), the dividend for the year is calculated on the actual average relevant net assets as set out in the pre-audit version of the annual accounts. The dividend thus calculated is not revised should any adjustment to net assets occur as a result of the audit of the annual accounts Value Added Tax Most of the activities of the Trust are outside the scope of value added tax and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable value added tax is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input value added tax is recoverable, the amounts are stated net of value added tax. The Trust established a wholly owned subsidiary Barnsley Hospital Support Services Limited that provides outpatient pharmacy dispensing services. Any transactions between the Trust and Barnsley Hospital Support Services Limited include value added tax where applicable Corporation Tax The Finance Act 2004 amended S519A Income and Corporation Taxes Act 1998 to provide power to HM Treasury to make certain non-core activities of NHS Foundation Trusts potentially subject to corporation tax. NHS Foundation Trusts may also incur corporation tax through NHS charitable funds or subsidiary organisations which are consolidated into their financial statements. Corporation tax expense recognised in these financial statements represents the sum of the tax currently payable and deferred tax. Current tax is the expected tax payable on the taxable surpluses generated during the year, using rates enacted or substantively enacted at the statement of financial position date, and any adjustments to tax payable in respect of previous years. Deferred tax is provided, using the liability method, on all temporary differences at the statement of financial period date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are not discounted. Page 14

17 1 Accounting policies and other information ( continued ) 1.16 Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less Critical accounting judgements, estimates and assumptions The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's reasonable knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. The Trust does not consider that there are any critical accounting judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year Accounting standards that have been adopted early No new accounting standards or revisions to existing standards have been early -adopted in 2012/ Standards issued but not adopted - IASB standards and IFRIC interpretations The following accounting standards and interpretations have been issued but not yet adopted as outlined in the Foundation Trust Annual Reporting Manual for 2012/13 (FT ARM). The Trust cannot adopt new standards unless they have been adopted in the FT ARM issued by Monitor. The FT ARM generally does not adopt a new standard or interpretation until it is endorsed by the European Union. In some cases the accounting standards may be interpreted in the FT ARM and therefore may not be adopted in their original form. IAS 1, Financial statement presentation regarding other comprehensive income. The main change resulting from these amendments is a requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI. Effective date of 2013/14 but not yet adopted by the EU. IFRS 13 Fair value measurement This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. Effective date of 2013/14 but not yet adopted by the EU. IAS 19, Employee benefits, was amended in June These amendments eliminate the corridor approach and calculate finance costs on a net funding basis. Effective date of 2013/14. IFRS 9, Financial instruments IFRS 9 was issued in November 2009 and October It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Standard has not yet been adopted by the EU. Page 15

18 1 Accounting policies and other information ( continued ) 1.19 Standard issued but not adopted (continued) IFRS 11, Joint arrangements IFRS 11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the parties to the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and therefore accounts for its share of assets, liabilities, revenue, and expenses. Joint ventures arise where the joint venture has rights to the net assets of the arrangement and therefore equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. Effective date of 2013/14 but not yet adopted by the EU. IFRS 12, Disclosures of interests in other entities This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. Effective date of 2013/14 but not yet adopted by the EU. IAS 27 (revised 2011), Separate financial statements This standard includes the requirements relating to separate financial statements. Effective date of 2013/14 but not yet adopted by the EU. An explanation of the impact for 2013/14 of consolidating charitable funds is in including in Note 15 (page 28) by detailing unaudited reasonable estimates of transactions and balances. IAS 28 (revised 2011), Associates and joint ventures This standard includes the requirements for associates and joint ventures that have to be equity accounted following the issue of IFRS 11. Effective date of 2013/14 but not yet adopted by the EU. Amendment to IAS 32, Financial instruments: Presentation These amendments are to the application guidance in IAS 32 and clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. Amendment to IFRS 7, Financial instruments: Disclosures This amendment includes new disclosures to facilitate comparison between those entities that prepare IFRS financial statements to those that prepare financial statements in accordance with US GAAP. Effective date of 2013/14 but not yet adopted by the EU. IPSAS 32 - Service Concession Arrangement This standard is applicable for periods beginning on or after 1 January 2014 but as it is not an IFRS standard it will have to be endorsed by HM Treasury as part of the HM Treasury FReM before it is adopted. Page 16

19 2. Operating segments All of the Trust's activities are in the provision of healthcare, which is an aggregate of all the individual specialty components included therein, and the large majority of the healthcare services provided occur at the one geographical main site. Similarly, the large majority of the Trust's revenue originates with the UK Government. The majority of expenses incurred are payroll expenditure on staff involved in the production or support of healthcare activities generally across the Trust together with the related supplies and overheads needed to establish this production. The business activities which earn revenue and incur expenses are therefore of one broad combined nature. On this basis one segment of 'Healthcare' is deemed appropriate. The operating results of the Trust are reviewed monthly by the Trust's chief operating decision maker which is the overall Trust Board and which includes non - executive directors. For 2012/13, the Board of Directors reviewed the financial position of the Trust as a whole in their decision making process. Prior to 2012/13 the operating segments were reported in a manner consistent with the internal reporting provided to the chief operating decision maker which was by directorate. The single segment of 'Healthcare' has therefore been identified consistent with the core principle of IFRS 8 which is to enable users of financial statements to evaluate the nature and financial effects of business activities and economic environments. 3. Income from activities 2012/ / Income from activities comprises Primary Care Trusts 144, ,845 Local Authorities Non NHS: - Private Patients NHS Injury Scheme* 1,040 1,217 - Other ** , ,333 *NHS injury scheme income is subject to a provision for doubtful debts of 12.6% ( 2011/ % ) to reflect expected rates of collection. ** Analysis of Income from activities: Non-NHS Other Other government departments and agencies Other Analysis of income from activities 2012/ / Inpatient - elective 25,164 25,375 Inpatient - non elective 52,603 51,228 Outpatient income 26,856 27,454 Other activity income 32,967 29,382 A & E income 7,715 6,881 Private Patient Income 6 13 Income from activities 145, ,333 Included within total income is income for non-mandatory services totalling 1,110,579 ( 2011/12 1,320,000), comprising private patients income 6,000 ( 2011/12 13,000); Joint Venture Income Nil ( 2011/12 90,000 ) and NHS Injury Scheme for 1,040,000 ( 2011/12 1,217,000 ) and Staff Redeployed for 64,579 ( 2011/12 - Nil) The balance of the total income is for mandatory services. 3.3 Private patient income The statutory limitation on private patient income in section 44 of the 2006 Act was repealed with effect from 1 October 2012 by the Health and Social Care Act The financial statements disclosures that were provided previously are no longer required Page 17

20 4. Other Operating Income 2012/ / Research and Development 1, Education and Training 4,034 4,161 Received from NHS Charities- grant for capital acquisitions Charitable and other contributions to expenditure Amortisation of PFI Main scheme - deferred credit Non-patient care services to other bodies Reversal of impairments of property plant and equipment Rental revenue from operating leases 0 3 Other income* 14,117 13,423 Income in respect of staff costs 1,132 1,016 22,287 20,558 * Further details of 'other income' are as follows: Car parking Estates recharges IT recharges 1,205 1,182 Pharmacy sales 5 0 Staff accommodation rentals Clinical tests Property rentals Community Paediatrics Cytotoxic Drugs Recharge Musculo Skeletal Services Neurology Recharge Occupational Health Recharge Oncology Recharge Pharmacy Issues 0 82 Renal Satellite Unit Recharge Rotherham Ophthalmology 2,250 2,185 Voluntary Services Income Waiting List Initiatives Clinic Funding to Support the Wider Development of A & E 2,317 2,006 Transformation Miscellaneous items Note 1 3,910 3,334 14,117 13,423 Note 1 - Miscellaneous items consists of various items of ' Other Operating Income ' including Radiology Tests, Medical Physics, Chemistry Recharges and Complex Needs, together with other Miscellaneous items. Page 18