Finance report for the month to 30 November 2011 – FOR APPROVAL

1. Trust Board 11th January 2012 Position overview 2 Monitor risk rating 3 Statement of Comprehensive Income 4 Statement of Financial Position 5 Capital Expenditure 6 Debtors and payments 7 Risks 8 App 1: Cash flow forecast 9 App 2: Rolling 12 month income 10 Finance report for the month to 30 November 2011 – FOR APPROVAL • This Report enables the Trust Board to be assured that the Trust is meeting its objective of: • Providing a financial base that is robust for the future development of the Trust and to provide economic and efficient services

2. Position Overview • Cash • Overall, the Trust had cash and short term investments of £44.2m at the end of Nov’11 which is 5.4m ahead of plan (£38m). The Trust continues to score a 4 for liquidity per Monitor’s financial risk rating. • Monitor rating • The Trust’s financial risk rating for the year is scored at 4, which is in line with the target set out in the annual plan. • CIP and contract reductions delivery • The Trust has a savings target of £19.7m for 11/12, which includes savings required due to reduction in contract values, as well as internally generated efficiency requirements. • CIPs to the value of £17.3m have been identified, but £1.1m of these are rated as high risk. Therefore the potential gap at present is £3.5m, prior to additional new schemes being achieved • Within the CIP schemes identified £2.7m are non recurrent. Having made a solid start to the financial year, at month 8 the Trust is still on track to deliver the financial plan. EBITDA The Trust’s EBITDA for the month ending 30 November 2011 was £14.35m (5.84%). This is ahead of the Monitor plan (£14.13m/ 5.74%) Surplus The Trust has delivered a surplus of £10.85m, which is ahead of plan (£10.82m).

3. The Trust’s overall risk rating is scored at a 4 for the year to date, which is in line with the plan submitted to Monitor. • It should be noted that profit on the sale of assets, restructuring costs, and asset impairments are excluded from the risk ratings as they are not indicative of underlying financial performance. Monitor Risk rating Additional risk indicators • In 10/11 Monitor introduced ten additional risk indicators that give an indication of whether there are financial risks within a Trust. They do not have a bearing on the formal risk rating. These are reported in the table below on an exception basis. • As at November ‘11, the Trust was compliant in 8 of the 10 additional risk indicators. It is expected that full compliance will be achieved in Q4. • The Trust continues to miss the creditors target (less than 5% of total creditor balances). In Nov’11 the Trust reached 10% as compared to 12.6% last month which is an improvement. The main reason that the target has not been achieved is due to an ongoing dispute with NHS Enfield as well as disputes with NHS Hillingdon and Chelsea & Westminster, relating to contracts. • The Trust still continues to miss the >90 days debtor target. In Nov’11 the Trust reached 24% as compared to 17% last month. This is largely due to debt relating to NCL now becoming >90 days old.

4. Comparisons to plan • Comparisons have been made against plan as it is against the plan, rather than operational budgets, that the Trust is assessed by Monitor. • EBITDA • The Trust has recorded actual Earnings before Interest Tax Depreciation and Amortisation (EBITDA) of £14.35m for the period to 30 November‘11, which is slightly ahead of plan (£14.13) • The Trust’s EBITDA return of 5.84% is ahead of plan (5.74%) • Surplus • The Trust is reporting a surplus of £10.85m for the year to date, which is ahead of plan (£10.82m). Statement of comprehensive income –Eight months to 30 November ‘11 Income Income (£245.66m) is slightly behind plan (£246.18m). This is due in part to deferral of sexual health and HIV income (£1.2m), in line with activity, in particular drug spend and a provision against CQUIN performance (£0.4m) and a net favourable movement of under and over performance against contract of £0.5m. Foreign national income is ahead of plan (£0.8M) • Expenditure • Pay expenditure is £0.59m lower than plan, due to vacancies being held non recurrently to manage the CIP gap and lower than planned agency usage; • In month 1 the cost of agency was £1.18m and fell to £1.15m in month 2 and from month three onwards remained at £1.3m. Having risen at month 7 to £1.2m it has now fallen to £1.06m; • Bank costs rose from £0.7m to £1m at month 4 and have remained at this level since then; • Non pay expenditure is slightly lower than plan as the CIPs start to take effect.

5. Statement of financial position • Summary • Non current assets as at the end of Nov ‘11 stand at £160.5m which is in line with plan. • Trade & other receivables are 6.4m higher than plan but in line with the month on month trend. This is largely due to Accrued income being £6m higher than plan which is also in line with the month on month trend. • Creditors < 1 year are £10.7m higher than plan. This is attributed to Deferred Income running at £2.6m higher than plan but in line with month on month trend. • Cash • As at 30 Nov’11 the Trust had £44.2m of cash, £5.4m higher than planned balance of £38m. This is largely due to payments on account of £4.5m received from NCL. • Although the Trust continues to score a 4 for liquidity per Monitor’s financial risk rating, for block contracts, there is an year to date 3% shortfall on payments received compared to billed invoices. As at Nov’11 cumulative receipts was £186m as compared to cumulative billed of £192m.

6. Capital Expenditure 6 Summary Cumulative spend to date on capital projects to October stood at £8.59m (PPE £6.7m and Intangibles £1.9m) against a plan for the year of £15.2m. Expenditure on Intangibles assets includes expenditure on JADE/QIS of £1,533k. Cumulative depreciation/amortisation charged up to Nov’11 was £2.31m which is a 1.3% increase when compared to the same period last year. The sale of Hopkinson House, which took place in September, has reduced the monthly depreciation figure (from £292k per month, to £289k per month). We now expect a constant month-on-month depreciation charge for the rest of the financial year as additions are not depreciated in the year of acquisition. The Head of Financial Accounts is currently meeting with all project managers in order to prepare a detailed capital forecast for 11-12, which will be included in next month’s report. In addition we are required to submit a 3-year capital plan for 12-13 to 14-15 to Monitor in mid January. • Detail: • At project level, the key trends in the Trust’s YTD capital expenditure are set out below: • Ellington Ward Refurbishment £1.68m (19.55%) of the total spend • HQ Move has accounted for £1.44m (16.74%) which includes mainly IT expenditure • JADE - £1.05m on items such as application licenses, and Jade support staff and training. (12.22% of Expenditure) • Northwick Park spend totals £435k (5.1%) • SK&C VSC Relocation totals £404k (4.7%) • Riverside Hillingdon - acute ward reception expenditure totals £355k (4.1%) of total capital expenditure. • A detailed capital expenditure report is attached in the Appendix to this report.

7. Debt summary • Total debt is 20.6m as at the end of Nov’11. Total NCL debt as at the date of this report stands at £12.7m of which £4.5m has been received on account. (Appendix 4); • The Monitor target is a >90 days debtor that is <5% of total net debtors which equates to a debtor target of £679k for November. The Trust had £3,263k of debtors >90 days which equates to 24%; • The trust has bad debt provision of £2.9m to reflect its aging bad debt. • Aged debt • The graphs opposite show the debt ageing profile and the type of debt. • The key debts that are >90 days overdue are as follows: • -Hillingdon PCT - £1.1m (continuing care invoices under negotiation). A meeting to finalise the agreement on these figures is taking place 20th Dec.; • -Local Authorities £786k; • -£544k Barnet Overperformance (Under dispute); • -£300k NCL Cluster (chasing for urgent payment); • -£63k Harrow PCT (Under dispute) Debtors & Payments • Payments • The Monitor target is a >90 days creditor that is less than 5% of total creditors. As at the end of Nov this translated to a >90 creditor target of £705k. The Trust achieved a >90 day creditor of £1,429k, which equates to 10% of total creditors (which is an improvement from 12.6% last month) • The key credit balances under dispute are: • -Enfield PCT £394k (Seacole dispute) • -Chelsea & Westminster £352k (CNWL formally advised C&W these invoices will not be paid still awaiting response) • -Hillingdon PCT £300k (Invoices under dispute awaiting Hillingdon response)

8. Risks

9. Appendix 1 – Cash flow forecast 9

10. Appendix 2 – Rolling 12 month statement of comprehensive income forecast 10