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Trust Board Meeting (Public) 29th October 2015

Agenda Item: 10 Enclosure: H

Title: M6 Finance Report

Purpose: Approval Assurance Discussion Briefing X

Summary:

In response to a request from the Trust Development Authority, the Trust has set anamended operating plan for 2015/16 that includes delivery of a £2,971k surplus.

At the end of September the Trust is reporting a surplus, net of technicaladjustments, of £109k, £54k below the planned position for the year to date. Cashbalances were £1,985k at the end of September, lower than planned and remaininga key area of focus.

This report also includes information on the Trust’s management of its nurse agencytarget and delivery of the 2015/16 efficiency programme.

Recommendation:The Board are asked to note progress on actions to secure delivery of the Trustfinancial plan.

CQC Domains (Safe; Caring; Responsive; Effective; Well Led) Delivery of the financial plan for the year is a key component of the well-led domain.

Relevance to Strategic Goals: Delivery of the financial plan in year for the Trust supports the ‘sustainable organisation’

Strategic Goal.

Equality and Diversity: Assessment completed: Report has been reviewed Impact: No direct impact has been identified.

Prepared by:Jonathan Reid, Director of Finance andEstates

Presented by:Jonathan Reid, Director of Finance andEstates

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Finance Report : Month 6 -September 2015

Presented by:Jonathan Reid, Director of Finance, Estates & Facilities29th October 2015

Excellent care at the heart of the community

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Executive Summary

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Key Issues for the Committee:

Performance against Plan• In response to a request from the Trust Development Authority, the Trust has set an amended operating plan for 2015/16

that includes delivery of a £2,971k surplus, an increase of £2,020k from the 2014/15 outturn position and an increase of£1m on the 2015/16 plan. The current plan assumes delivery of a £6,993k efficiency programme, but in order to covercurrent risks to delivery as well as the increased surplus requirement, the Trust is working up additional plans worth£3,700k in total, described in more detail in this report .

• At the end of Month 6, September 2015, the Trust had delivered a surplus of £109k against a planned surplus of £163k,an adverse variance of £54k. The underlying position for the year to date is a £193k deficit, reflecting the fact that non-recurrent benefits, in particular from asset sales have contributed to the delivery of the in year position.

• Income receipts are £38k (0%) above the revised financial plan, with pay budgets £764k (1%) higher than plan and non-pay operating costs £408k (1%) underspent.

• The Trust has been asked to deliver, alongside its increased surplus target a reduction in nurse agency costs equivalentto £280k over 6 months, with an expectation that agency nurse costs will need to be no higher than 5% of all nursingcosts. Agency nursing costs currently account for 6% of nurse staff costs for the year to date compared to 4% in 2014/15and remained at 6% of nurse spend in September. This report includes details of the plans in place to manage thenational agency requirements.

Income: £38k (0%) above plan• The Trust’s revised plans take into account income growth, through the new East Sussex (HWLH) community services

contract and other services, from the original plan assumptions. This growth is reflected in Adults services in Crawley,Horsham and mid Sussex and Coastal where funding for resilience schemes accounts for £508k of overperformance, inChildren and Specialist services for drugs recharges (£280k) and Estates and Facilities, including income to coverNewhaven Rehabilitation set up costs (£367k).

• Income relating to the new HWLH community services will impact from November 2015.

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Executive Summary

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Key Issues for the Committee:

Pay Costs: £764k (1%) above plan• Pay costs of £71,042k have been incurred for the first half of the year. £726k of the spend is specifically offset by

additional income for resilience and salary recharges above initial plan assumptions.• The Trust continues to be impacted by high agency costs, relating primarily to Coastal and North West Sussex Adults

budgets, where recruitment difficulties continue to lead to significantly higher than planned agency and locum costs, butalso on resilience schemes where the non-recurrent nature of the funding has led to increased use of flexible staffing.Inpatient beds remain the most challenging areas for agency use, with five wards reporting nursing agency use of morethan 30% of total spend.

• Total agency costs were £4,200k at the end of September, accounting for 6% of pay spend. Agency nursing costs were£1,707k (also 6%), with the Trust’s target being to reduce to 5% in the period October 2015 to March 2016 . The Trusthas robust plans in place to address both the growth in agency expenditure, and the imposition of the national strategies,described later in this report.

Non Pay Costs: £408k (1%) below plan• The Trust’s operating non pay run rate remains constant at £4,787k in September. The revision to the Trust’s plans

included an increase in outturn spend of £2.8m reflecting the growth in services and the HWLH contract.• Increased spend in drugs, equipment and works based upon increased volumes are driving non recurrent pressures of

£330k, but this is offset by the underspends against additional contingency set aside to cover these increases.

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Executive Summary

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Key Issues for the Committee:

Continuity of Services; Capital and Cash• Cash remains challenging for the Trust at the end of September, with the month end balance of £1,985k against a plan of

£4,912k. The Trust is impacted by the wider NHS financial pressures, and in the ability of other NHS debtors to maketimely payments. Cash will remain challenging over the coming months, but actions are being taken to engage our CCGsin helping to improve liquidity in the system and is looking to restructure SLA payments where it can by moving invoicingdates forward.

• To ensure that capital spend does not add to cash pressures the Trust is ensuring that its capital investment loanapplication is submitted to the TDA by the end of October.

• The Trust has maintained its Continuity of Services rating of ‘4’ in September and is expecting to continue to maintain thisfor the remainder of the financial year.

• Capital spend of £2,691k at the end of September was £136k lower than planned. Accelerated spend on SystmOneimplementation meant that the spend on IMT programmes was £624k higher than planned for the year to date, withEstates schemes behind plan due to slippage and rescheduling of works.

Efficiency• The Trust has delivered £2,678k of efficiency savings at the end of September, £221k ahead of the planned position of

£2,457k. Although there are risks to the delivery of some initial schemes, additional programmes are being implementedto cover the risks and to generate sufficient headroom to cover any underlying financial risks and enable the Trust to meetits revised stretch surplus target of £2,971k.

Forecast Position• A further review of risks and opportunities to the financial position will be considered in part 2 of the committee. However,

at Month 6, the Trust continues to forecast full delivery of the financial plan for the year.

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2. Key Performance Indicators

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Key Issues:The Trust is reporting a surplus, net of technical adjustments, of £109k, £54k below the planned position at the end ofSeptember. However the year to date position includes some non-recurrent benefits and the underlying YTD position wouldbe a deficit of £193k. Cash balances were £1,985k at the end of September, £2,927k lower than planned. This is as a result ofdelays in receipts of NHS debtors. Work is ongoing with our NHS partners to ensure income is recovered as efficiently aspossible.

Key Financial Indicators at Month 6

Plan/Target(£000)

Actual(£000)

Variance(£000) Status

1. In Month Surplus/Deficit (-) 7 (43) (50)

2. YTD Surplus/Deficit (-) 163 109 (54)

3. Forecast Outturn Surplus 2,971 2,971 0

4. YTD Cash Balance 4,912 1,985 (2,927)

5. Forecast Outturn Cash Balance 5,369 5,369 0

6. YTD Capital Expenditure 2,827 2,691 (136)

7. Forecast Outturn Capital Expenditure 8,652 8,652 0

10. YTD Financial Sustainability Risk Rating 3.0 3.0 0.0

11. Forecast Financial Sustainability Risk Rating 4.0 4.0 0.0

FinancialPerformance

Cash Flow

Capital Spend

Monitor FSRR

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3. Income and Expenditure

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Key Issues:

A revised plan of £2,971k has been requested by the TDA. Although the Trust has plans to deliver against its original plan of £1,984k, furtherefficiency plans are being developed to deliver an additional £1m. Key to the delivery of the position will be to address the current high agencycosts that are driving the £764k overspend on pay.

The recurrent performance would be a £200k deficit, £193k adverse to plan, reflecting the fact that underlying cost increases, particularly in paycosts have been mitigated for the year to date by non recurrent benefits.

Plan Actual Var Plan Actual Var Plan ForecastActual Var Plan Actual Var

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Income 18,602 17,163 (1,439) 100,712 100,750 38 206,805 206,805 0 100,712 99,391 (1,321)Pay 12,432 12,035 397 70,278 71,042 (764) 144,148 144,148 0 70,278 70,315 (37)Non Pay excl dep'n, PDC & interest 5,746 4,787 959 27,917 27,509 408 54,629 54,629 0 27,917 26,860 1,057EBITDA 424 341 (83) 2,517 2,199 (318) 8,028 8,028 0 2,517 2,216 (301)EBITDA Margin [EBITDA/ Income] 2.3% 2.0% 2.5% 2.2% 3.9% 3.9% 2.5% 2.2%EBITDA % [EBITDA Actual/ EBITDA Plan] 87% 87% 89%

Investment Revenue (2) (2) 0 (12) (11) (1) (24) (24) 0 (12) (11) (1)Other Gains and Losses 0 (5) 5 (156) (319) 163 (356) (356) 0 0 0 0Finance Costs 9 6 3 59 67 (8) 118 118 0 59 67 (8)Depreciation and Amortisation 324 299 25 1,944 1,836 108 4,193 4,193 0 1,944 1,836 108PDC Dividend 100 101 (1) 603 603 0 1,206 1,206 0 603 603 0TOTAL Non-Operating Expenses 431 399 32 2,438 2,176 262 5,137 5,137 0 2,594 2,495 99

Accounting surplus (deficit) (7) (58) (51) 79 23 (56) 2,891 2,891 0 (77) (279) (202)Net Margin [surplus(deficit) / Income] 0.0% -0.3% 0.1% 0.0% 1.4% 1.4% -0.1% -0.3%

AdjustmentsImpairments 0 0 0 0 0 0 0 0 0 0 0 0Donated/Government grant assets adj 14 14 0 84 86 2 80 80 0 84 86 2NHS Financial Performance 7 (43) (50) 163 109 (54) 2,971 2,971 0 7 (193) (200)Adjusted Margin [surplus(deficit) / Income] 0.0% -0.3% 0.2% 0.1% 1.4% 1.4% 0.0% -0.2%

September YTD YTD Recurrent PerformanceFull Year

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4. Income and Expenditure Run Rate

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Key Issues:Agency costs have grown slightly from previous months and remain significantly higher than 2014/15, with substantive pay costs increasing asa result of service developments including for the Newhaven bedded unit. A 20% reduction in agency costs is targeted by the Trust in thesecond half of the year to deliver against its agency cap and the financial target.

775 778 8201040

976 1011 1056 1105 1109 1150 1261 1214

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Expenditure by Month £000

TemporaryStaffing

SubstantivePay

Non Pay

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Income by Month £000

Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Income 16,686 16,301 16,264 17,205 16,384 17,362 16,516 16,550 16,589 16,854 17,078 17,163

ExpenditureSubstantive Pay 10,436 10,392 10,469 10,639 10,402 10,028 10,687 10,679 10,637 10,710 10,612 10,821Bank 368 537 378 361 392 551 458 475 374 386 501 419Agency 407 241 441 679 584 460 598 630 735 764 760 795Total Pay 11,211 11,170 11,289 11,679 11,378 11,039 11,744 11,784 11,746 11,860 11,873 12,035Non Pay 5,465 5,059 4,945 5,526 4,980 5,606 4,753 4,751 4,829 4,907 5,187 5,172Total Expenditure 16,676 16,229 16,234 17,205 16,358 16,645 16,497 16,534 16,575 16,767 17,061 17,207

Surplus 10 72 30 0 26 716 19 15 14 87 18 -43

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5. Underlying Run Rate

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Key Issues:The Trust’s underlying position in September was a small deficit of £63k, with a year to date underlying deficit of £193k at the end of the month.Although significant additional costs for drugs and non pay costs were offset by additional income, underlying pay costs, particularly agencycosts remain significantly higher than planned and would be sufficient to push the Trust into deficit without the receipt of non recurrent income.

Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Income 16,686 16,301 16,264 17,205 16,384 17,362 16,416 16,458 16,477 16,375 16,697 16,969

ExpenditureSubstantive Pay 10,436 10,392 10,469 10,639 10,402 10,028 10,687 10,679 10,637 10,710 10,612 10,821Bank 368 537 378 361 392 551 458 475 374 386 501 419Agency 407 241 441 679 584 460 498 538 623 644 572 680Total Pay 11,211 11,170 11,289 11,679 11,378 11,039 11,643 11,692 11,633 11,741 11,686 11,920Non Pay 5,465 5,059 4,945 5,526 4,980 5,606 4,753 4,751 4,829 4,819 5,019 5,113Total Expenditure 16,676 16,229 16,234 17,205 16,358 16,645 16,397 16,443 16,463 16,560 16,704 17,032

Surplus 10 72 30 0 26 716 19 15 14 -186 -7 -63

775 778 8201040

976 1011 956 1014 997 1031 1073 1099

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Expenditure by Month £000

TemporaryStaffing

SubstantivePay

Non Pay

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Income by Month £000

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6. Balance Sheet

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Key Issues:

Capital investment in estatesremains behind plan as schemesare being worked up for delivery,resulting in the variance onProperty Plan and Equipment.The variance on non-currentreceivables relates to a change intreatment of RTA debtors.

Current asset receivables(debtors and accrued income)remain higher than plan at Month6 and work is ongoing with otherNHS bodies to improve thedebtors position through earlierinvoicing and focus on debtcollection, particularly though ourCCGs.

Trade creditors also remainhigher than plan due to slowerthan anticipated billing.

Statement of Financial Position 2015-16 OpeningBalance Plan Actual Variance to Plan

Sep-15 Sep-15£000s £000s £000s £000s

NON-CURRENT ASSETSProperty Plant Equipment 47,725 48,715 48,653 -62Intangible Assets 666 552 570 18Trade and Other Receivables NC 295 0 230 230TOTAL NON-CURRENT ASSETS 48,685 49,267 49,453 186CURRENT ASSETS:Inventories 1,250 1,250 1,250 0Trade and Other Receivables 12,458 9,167 18,937 9,770Other Current Assets 0 0 0 0Cash and Cash Equivalents 4,896 4,912 1,985 -2,927SUB TOTAL CURRENT ASSETS 18,604 15,329 22,171 6,842Non-Current Assets Held for Sale 773 646 646 -0TOTAL CURRENT ASSETS 19,377 15,975 22,817 6,842TOTAL ASSETS 68,062 65,242 72,270 7,028CURRENT LIABILITIESTrade and Other Payables -15,645 -13,034 -20,069 -7,035Other Liabilities 0 0 0 0Provisions for Liabilities and Charges -90 -89 -90 -1Borrowings -2 -3 -3 0DH Working Capital Loan 0 0 0 0DH Capital Loan -576 -576 -576 0TOTAL CURRENT LIABILITIES -16,314 -13,702 -20,737 -7,035NET CURRENT ASSETS/(LIABILITIES) 3,063 2,273 2,080 -193TOTAL ASSETS LESS CURRENT LIABILITIES 51,748 51,540 51,533 -7NON-CURRENT LIABILITIESProvisions for Liabilities and Charges NC -886 -888 -936 -48Borrowings NC -494 -492 -492 -0DH Capital Loan NC -4,484 -4,196 -4,196 0TOTAL NON-CURRENT LIABILITIES -5,864 -5,576 -5,625 -49TOTAL ASSETS EMPLOYED 45,885 45,964 45,909 -55FINANCED BY TAXPAYERS EQUITYPublic Dividend Capital 2,184 2,184 2,184 0Retained Earnings 37,550 37,628 37,573 -55Revaluation Reserve 17,755 17,755 17,755 -0Other Reserves -11,603 -11,603 -11,603 0TOTAL TAXPAYERS EQUITY 45,885 45,964 45,909 -55

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7. Cashflow Forecast

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Actual YTDStatement of Cash Flows (CF) Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16

£000s £000s £000s £000s £000s £000s £000s £000s £000s £000s £000sCash Flows from Operating ActivitiesOperating Surplus/(Deficit) 363 56 182 280 499 538 720 1,720 56 56 182Depreciation and Amortisation 1,836 374 374 374 374 374 379 379 374 374 374Impairments and Reversals 0 0 0 0 0 0 0 0 0 0 0Donated Assets received credited to revenue but non-cash (7) (7) (7) (7) (7) (5) (5) (7) (7) (7)Interest Paid (54) (6) 0 0 (6) (34) (5) (5) (6) (6) 0Dividend (Paid)/Refunded (637) 0 0 0 0 0 (603) (637) 0 0 0(Increase)/Decrease in Inventories 0 0 0 0 0 0 0 0 0 0 0(Increase)/Decrease in Trade and Other Receivables (6,413) 311 262 165 (54) 541 1,656 (786) 311 311 262(Increase)/Decrease in Other Current Assets 0 0 0 0 0 0 0 0 0 0 0Increase/(Decrease) in Trade and Other Payables 4,774 (46) (96) (97) (171) (98) (1,294) 106 (46) (46) (96)Increase/(Decrease) in Other Current Liabilities 0 0 0 0 0 0 0 0 0 0 0Provisions Utilised (32) (28) 0 (15) 0 0 (17) (17) (28) (28) 0Increase/(Decrease) in Movement in non Cash Provisions 70 0 0 0 0 0 0 0 0 0 0Net Cash Inflow/(Outflow) from Operating Activities (93) 654 715 700 635 1,314 831 755 654 654 715CASH FLOWS FROM INVESTING ACTIVITIESInterest Received 11 2 2 2 2 2 2 2 2 2 2(Payments) for Property, Plant and Equipment (3,009) (488) (909) (909) (909) (906) (907) (1,245) (488) (488) (909)(Payments) for Intangible Assets 0 0 0 0 0 0 0 0 0 0Proceeds of disposal of assets held for sale (PPE) 469 533 0 0 0 267 0 0 533 533 0Proceeds of disposal of assets held for sale (Intangible) 0 0 0 0 0 0 0 0 0 0Rental Revenue 0 0 0 0 0 0 0 0 0 0Net Cash Inflow/(Outflow) from Investing Activities (2,529) 47 (907) (907) (907) (637) (905) (1,243) 47 47 (907)NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING (2,622) 701 (192) (207) (272) 677 (74) (488) 701 701 (192)CASH FLOWS FROM FINANCING ACTIVITIES 0 0 0 0 0 0 0 0 0 0Loans received from DH - New Capital Investment Loans 0 0 0 3,000 0 0 0 0 0 0Loans received from DH - FT Liquidity Loans 0 0 0 0 0 0 0 0 0 0Capital Investment Loans Repayment of Principal (Existing) (288) 0 0 0 0 (210) (78) (78) 0 0 0Capital Element of Payments in Respect of Finance Leases and On-SoFPPFI and LIFT (1) 0 0 0 0 0 0 0 0 0 0Capital grants and other capital receipts 7 7 7 7 7 5 5 7 7 7Net Cash Inflow/(Outflow) from Financing Activities (289) 7 7 7 3,006 (203) (73) (73) 7 7 7NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (2,911) 708 (185) (200) 2,734 474 (147) (561) 708 708 (185)Cash and Cash Equivalents at Beginning of the Period 4,896 1,985 2,693 2,508 2,308 5,042 5,516 5,369 4,808 5,516 6,224Cash and Cash Equivalents at the end of the period 1,985 2,693 2,508 2,308 5,042 5,516 5,369 4,808 5,516 6,224 6,039

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8. Capital Programme

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Key Issues:

The full year forecast spend currently includes £5.57m of capital schemes including essential backlog maintenance and SystmOneimplementation approved by the Finance and Investment Committee. There were additional schemes that the Trust would aim to takeforward but only through the approval of business cases to support the additional investment. In order to maintain the possibility of acapital investment loan being available through the TDA, our TDA submitted plan included the potential additional spend of £3m.

At the end of September the programme remains £136k behind plan. Estates schemes to develop the Sexual Health facility in Brightonand some backlog maintenance schemes have slipped but are still in progress for completion this year. The IM&T overspend of £624kto date reflects the decision to push forward the investment in infrastructure for SystmOne to aid delivery.

Budget Actual Variance Budget FcastSpend Variance

£000 £000 £000 £000 £000 £000

Capital Projects

Total Capital Projects - Estates 1,549 825 (724) 2,628 2,546 (82)

Total IT Projects 1,200 1,824 624 5,786 5,986 200

Services Equipment & Transport 78 42 (36) 238 423 185

Total Gross Capital Expenditure 2,827 2,691 (136) 8,652 8,955 303

Less: Funding from Charitable Sources 0 0 0 (80) (385) (305)

Net CRL Expenditures 2,827 2,691 (136) 8,572 8,570 (2)

Year to Date Expenditure Full Year

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9. Efficiency Programme

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Key Issues:

Performance in Month 6 was on plan, with a year to date favourable variance of £221k. There is a negative year to date variance for Adults Services of£534k. However, a number of new opportunities for service developments are emerging in year within the Adults Directorate which are likely to mitigatethese losses. Until these are finalised, the overall forecast remains red rated to support increased focus on the key issues impacting on delivery.

These service lines are being offset by over performance other areas, in particular in Corporate Teams, Estates and Facilities and Children’s andSpecialists who have a combined year to date position of £755k over performance against plan, aided by a significant non-recurrent benefit from anasset sale.

The Trust is working to ensure that the non-recurrent elements of the efficiency programme are addressed by the development of recurrent elementsbefore the end of the financial year – this will ensure that the normalised position of the Trust is maintained, and will not increase the level of challengefor 2016/17. The Trust continues to focus on efficiency delivery (and Service Developments) through the weekly Delivery Group meeting.

Full YearForecast(£000)

Full YearForecast

(£000)Plan Actual Variance RAG Plan Actual Variance RAG Actual Plan Variance RAG

Adult Services Brighton & Hove (68) (22) (46) 68% (378) (191) (187) 49% (683) (760) (77) 11%Adult Services Coastal West Sussex (91) (64) (27) 30% (579) (384) (195) 34% (921) (1,132) (211) 23%Adult Services North West Sussex (32) (3) (29) 91% (180) (28) (152) 85% (224) (636) (412) 184%Central Schemes 0 0 0 0% 0 0 0 0% (418) (1,080) (662) 158%Corporate Teams (50) (80) 30 -60% (300) (487) 187 -62% (876) (615) 261 -30%Estates and Facilities (33) (56) 23 -70% (198) (539) 341 -172% (1,134) (945) 189 -17%Children's and Specialist (137) (260) 123 -90% (822) (1,049) 227 -28% (2,024) (1,825) 199 -10%Pipeline - See Overlead 0 0 0 0% 0 0 0 0% (713) 0 713Total (411) (485) 74 0% (2,457) (2,678) 221 0% (6,993) (6,993) 0 0%

Current Month (£000) Year to Date (£000)

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10. Income and Expenditure by Division

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Key Issues:Adults services are impacted by high agency use, particularly for inpatient units, which is driving pay overspends. This is partially offset byincreased income for service developments. Children and Specialist services have lower agency use and pay underspends are a result ofvacancies.

Budget Actual Variance % WTE

Adults PAY 30,906 32,499 -1,593 (5%) 1,749

Adults NON-PAY 5,436 5,749 -313 (6%)

Adults INCOME 46,381 47,222 841 2%

Adults Total 10,040 8,974 -1,065 (11%) 1,749

Children's and Specialist PAY 29,721 29,264 457 2% 1,508

Children's and Specialist NON-PAY 9,298 10,040 -742 (8%)

Children's and Specialist INCOME 44,288 44,428 140 0%

Children's and Specialist Total 5,269 5,124 -145 (3%) 1,508

Corporate PAY 9,651 9,280 372 4% 565

Corporate NON-PAY 15,632 13,907 1,725 11%

Corporate INCOME 10,054 9,111 -943 (9%)

Corporate Total -15,229 -14,075 1,154 (8%) 565

Total PAY 70,278 71,042 -764 (1%) 3,821

Total NON-PAY 30,366 29,695 671 2%

Total INCOME 100,723 100,761 38 0%

Total Surplus (Deficit) 79 23 -56 (70%) 3,821

Post Technical Adjustments 163 109 -54 (33%)

YTD (£000)

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11. Financial Sustainability Risk Rating #1

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Key Issues:In August 2015, Monitor refreshed their Risk Assessment Framework to reflect an increased focus on financial sustainability. Accordingly,financial risk rating for Foundation Trusts is now undertaken on the basis of the Financial Sustainability Risk Rating rather than theContinuity of Services Risk Rating – the new components are shown above.

The Trust has historically delivered a CoSRR of 4, both in-year and at year-end. The Trust’s plan was set before the new FinancialSustainability Risk Rating was finalised and would deliver a FSRR of 4. The updated Monitor Guide for Applicants requires that the Trusthas a minimum FSRR of 3 on authorisation and on a quarterly basis in the first year of operation.

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12. Financial Sustainability Risk Rating #2

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Key Issues:

In month, the Trust is ‘on plan’ for FSRR – noting that the plan isdeveloped by passing the Trust plan with stretch target through thescoring system. However, the impact of both the non-recurrentsavings delivered earlier in year than planned, and the lower levelof EBITDA delivered in year is flagged up in the variances on thecapital servicing capacity metric and the I&E margin from planrating. The key messages remain the same – the Trust mustrecover it’s delivery trajectory, and ensure that recurrent savingsare delivered in year. Note that if the Trust cannot – despite bestefforts - deliver the stretch target, the FSRR would, all elseremaining equal, be 3. At Month 6, the Trust remains absolutelycommitted to delivering this target.

Current Month Metrics Forecast Outturn Metrics

Financial Metric PlanActual /Forecast Variance Plan

Actual /Forecast Variance

£000s £000s £000s £000s £000s £000sNormalised Surplus/(Deficit)Retained Surplus (Deficit) 79 23 (56) 2,891 3,829 938Gain/(loss) on asset (& other) disposals (156) (319) (163) (356) (356) 0Normalised Surplus/(Deficit) (77) (296) (219) 2,535 2,819 284Total Income 100,712 100,750 38 206,721 206,704 (17)I&E Margin (0.1) (0.3) (0.2) 1.2 1.4 0.1I&E Margin rating 2 2 0 4 4 0I&E Margin Variance (1.2) (0.2) 1 (1.2) 0.1 1I&E Margin Variance From Plan rating 2 3 1 2 4 2

Current Month Metrics Forecast Outturn Metrics

Financial Metric PlanActual /Forecast Variance Plan

Actual /Forecast Variance

Liquidity Ratio Metric 4 4 0 4 4 0

Capital Servicing Capacity metric 4 3 (1) 4 4 0

I&E Margin rating 2 2 0 4 4 0

I&E Margin Variance From Plan rating 2 3 1 2 4 2

Financial Sustainability Risk Rating 3 3 0 4 4 0

Key Issues:

The Trust financial plan was set using theCOSRR methodology rather than the FSRRmethodology. The difference between the twois that the FSRR makes more explicit theimpact of non-recurrent savings (such asasset disposals) and plan profiling (with alower I&E margin) – meaning that the Trustplan is a 3 in the YTD and a 4 in the full yearforecast. In planning for 2016/17, the plan willbe developed on a full year FSRR basis. Thedetailed calculations for the new elements areshown below:

16

13. National Agency Spending Rules

Excellent care at the heart of the Community

Key Issues:

The Trust is addressing the impact of agency spend through the following measures:• Rolling out the Medacs lead provider contract in a rolling programme with full management support to ensure compliance with

framework rates, offering 15% savings on current average rates incurred.• Establishing additional medical posts in Crawley to ensure that any additional hours can be covered through substantive staff and not

agency• Working with our strategic partner to explore a range of measures to improve design of rotas• Schemes to allow substantive staff to work more flexibly

Key Issues:

Nationally, the Trust has been set anagency ratio trajectory of 5% on nursingexpenditure in Q3 & Q4– the currentlevel of expenditure in nursing (andacross the Board) is 6%. As the Trustdelivers it’s stretch target plans, this willbring the organisation into line with thenational mandates.

The Trust is developing local plans toaddress the requirement to move allagency staff to a framework agencybasis, described below.