annual report 2004-2005 finance

8/9/2019 Annual Report 2004-2005 Finance

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St Georges + Quality healthcareAnnual accounts for the year ended 31 March 2005

STG 2505 final AM 2/9/05 3:24 pm Page 1


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Contents

2 Directors statements

5 Auditors report to the

members of the board

5 Foreword

6 Income and expenditure

account

7 Balance sheet

8 Statement of recognised

gains and losses

9 Cash flow statement

10 Notes to the accounts

Directors statements

Statement of the Chief Executives responsibilities as the

Accountable Officer of the TrustThe 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 and regularity of the public finances for which they are

answerable, and for the keeping of proper records, are set out 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 of appointment as an accountable officer.

Peter HomaChief Executive Date: 14th July 2005

Statement of directors responsibilities in respect of the

accounts

The directors are required under the National Health Services Act 1977 to prepare

accounts for each financial year. The Secretary of State, with the approval of the

Treasury, directs that these accounts give a true and fair view 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:

apply on a consistent basis accounting policies laid down by the Secretary of State

with the approval of the Treasury

make judgements and estimates which are reasonable and prudent

state whether applicable accounting standards have been followed, subject to anymaterial departures disclosed and explained in the accounts.

The directors are responsible for keeping proper accounting records which disclose with

reasonable accuracy at any time the financial position of the trust and to enable them to

ensure that the accounts comply with requirements outlined in the above mentioned

direction of the Secretary of State. They are also responsible for safeguarding the assets

of the trust and hence for taking reasonable steps for the prevention and detection of

fraud 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

Peter Homa Colin Gentile

Chief Executive Date: 14th July 2005 Director of Finance Date:14th July 2005

St. George's Healthcare NHS Trust - Annual Accounts 2004/05



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3

STATEMENT ON INTERNAL CONTROL 2004/05

1 Scope of responsibility

The Trust Board is accountable for the organisations internal

control systems. As Accountable Officer and Chief Executive ofthis Board, I have responsibility for maintaining a sound system of

internal control that supports the achievement of the organi-

sations policies, aims and objectives. I am also personally

responsible for safeguarding the public funds and the organi-

sations assets, as set out in the Accountable Officer

Memorandum.

Accountability for Risk Management is set out in the Trusts Risk

Management Strategy, where Executive responsibilities for specific

areas of risk are identified.

Improving patient care is an endeavour that the Trust achieves by

working closely with partner organisations and the South-West

London Health Authority. A number of mechanisms are used for

partnership work including the Wandsworth Overview & ScrutinyCommittee, Patient and Public Involvement activities, the

Bolingbroke Steering Group, Workforce Confederation, Service

Level Agreement negotiations with local Primary Care Trusts (PCTs)

and the Financial Recovery Board.

2 The purpose of the system of internal control

The system of internal control is designed to manage or mitigate

risk and improve patient care and safety. The system of internal

control is based on an ongoing process designed to:

identify and prioritise the risks to the achievement of theorganisations policies, aims and objectives; and

evaluate the probability and potential impact of those risks

being realised, and to manage them efficiently, effectively andeconomically.

The system of internal control has been in place in St Georges

Healthcare NHS Trust for the year ended 31 March 2005 and

embedded up to the date of approval of the annual report and

accounts.

3 Capacity to handle risk

The Trust is committed to providing high quality services in a safe

and secure environment. As Chief Executive I have overall respon-

sibility for all risk management and ensuring that the organisa-

tional structure and resource is in place to ensure this occurs.

Senior leadership in this process is delegated through the

Directors and operationalised through the Directorates, Service

Delivery Units (SDUs) and committee structures.

This system provides a central steer whilst supporting local

ownership in managing and controlling risks to which the Trust

may be exposed.

Through the Directorates and SDUs the Trust has systems in place

to identify risks, assess their impact and devise strategies to

manage and evaluate them. Risk management training and

education are available for all Trust staff, relevant to their grade

and situation. Expert guidance and facilitation support this

function.

Actions taken to reduce risks are regularly monitored, reported

and trends analysed, at SDU, Directorate, Corporate Committee

and Trust Board level. Evaluation of their effectiveness and theimplementation of recommendations from external assurance

assessments promote both organisational and individual learning

and the dissemination of good practice within the Trust.


4 The risk and control framework

The key elements of the Trusts Risk Management Strategy are to

manage and control identified risks, whether clinical, non-clinical

or financial, appropriately. This is achieved through a sound

organisational framework, which promotes early identification ofrisk, the co-ordination of risk management activity, the provision

of a safe environment for staff and patients, and the effective use

of financial resources. It ensures staff are aware of their roles and

responsibilities and outlines the structures and processes through

which risk is assessed, controlled and managed.

Risks are identified through feedback from many sources, such as,

formal risk assessments, incident reporting, audit data, complaints,

legal claims, patient and public feedback, stakeholder/partnership

feedback and internal/external assessments.

Risks are evaluated using a recognised risk assessment tool, which

assesses the impact and likelihood of the risk occurring using a

scoring system. This score feeds into the decision-making process

about whether a risk is considered acceptable or unacceptable.When a risk is accepted control measures are put into place.

Unaccepted risks are tolerated and monitored, not disregarded.

The level of control required is informed by the risk score, the risk

is then prioritised and a designated person is responsible for

reviewing, reporting, reassessing and monitoring the effectiveness

of the controls.

Risk management is embedded within the organisation through

the Corporate, Directorate and SDU structures and the reporting

and feedback mechanisms in place. Systems are in place to ensure

that the necessary risk assessments are carried out, risk registers

are maintained, risk plans approved, control measures

implemented and monitored, and action plans are reported,

reviewed and monitored. The Corporate Governance directorate,which includes Risk Management, support staff and disseminate

good practice across the organisation. Involvement in risk

management activities is also included within the Trusts objective

setting and individual performance review of staff and the organi-

sations business planning process.

The Trusts Assurance Framework, based on the Trusts objectives

and ratified by the Trust Board, is a high-level document based on

structured and on-going assessment of the key risks to the Trust

achieving its objectives and the controls and assurances

mechanisms in place to manage them. The objectives are robust

and cover all the organisations functions. Material risks, which

form part of the Principal Risk Register, have also been linked to

the Assurance Framework, as have details of sources of availableassurances. Action Plans, which are regularly reviewed by the Risk

Management Committee, are in place and regular reports are

made to the Trust Board and the Audit Committee.

Key stakeholders are involved in the management of risks via

patient and public involvement activities, patient surveys, public

Board meetings, the Patient Forum and the local Overview and

Scrutiny Committee.

Assessment of the Assurance Framework has identified some

weaknesses and gaps in control and assurances in relation to

some of the potential risks identified. These are being addressed

through the Trusts Assurance Framework Action Plan, covering

patient related issues of focus, safety, clinical effectiveness, service

access and the environment as well as the organisational issues of

human resources, governance, performance and finance.

Additional actions include:



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Directors statements (continued)

Clinical issues

A working group will develop internal measures to assess

progress in relation to dignity, privacy, consent and confidentiality.

Communication and provision of information to patients willbe improved through the provision of a dedicated patient

information centre and ensuring links to staff objectives and

appraisals.

Child protection arrangements will be strengthened byimplementation and monitoring of part 8 inquiry recommen-

dations.

Patient outcomes will be further improved through clinicalaudit and clinical outcome measurement linked to the leadership

programmes for medical staff and the appraisal processes.

Care management across organisational boundaries will beimproved through an audit programme (agreed jointly by SouthWest London Chief Executives and Audit Committees), of long

term medical conditions, audits of discharge documentation and

care pathways and establishment of a lead Consultant in this

area.

Cross-organisational projects will have risk registers monitoredand managed by the Trust Executive Group.

Waiting times for Consultant-to-Consultant referrals will beimproved through a Consultant review panel and joint referral

protocols with PCTs.

Estates

A prioritised action plan to be developed and progress reportspresented regularly to the Trust Board. Immediate Fire Safetyissues at Bolingbroke Hospital addressed but outstanding issues to

be taken forward.

Cleanliness issues are being implemented through theMatrons Charter, involvement of the patients and public in

monitoring standards and regular reports to the Trust Board.

Public Health

Public support for strategic change will be managed through across-organisational Programme Board, a lead Director and a

comprehensive communication and involvement strategy.

Human Resources

The Agenda For Change and Improving Working LivesProject Boards are monitoring and overseeing the Electronic StaffRecord system project.

Governance

Outstanding governance issues will be addressed by thedevelopment of an Integrated Governance Plan and other

initiatives outlined above.

Finance

With the support of the Department of Health and StrategicHealth Authority, the Trust has engaged external consultants to

assist in the development of a financial turnaround plan to set out

how the Trust will achieve financial balance.


Information

Providing high quality accessible information to our patientsand public in general is important to the Trust. Recent

developments include the publication of descriptive mortality on

our intranet pages, and the availability of approved patientinformation leaflets in over three hundred different areas of

healthcare.

An Information Governance action plan is also beingdeveloped. Information Governance Self Assessment will be

completed and a remedial action plan will be implemented.

5 Review of effectiveness

As Accountable Officer, I have responsibility for reviewing the

effectiveness of the system of internal control. My review is

informed in a number of ways. The Head of Internal Audit

provides me with an opinion on the overall arrangements for

gaining assurance through the Assurance Framework and on the

controls reviewed as part of the internal audit work. Directors andmanagers within the organisation who have responsibility for the

development and maintenance of the system of internal control

provide me with assurance. The Assurance Framework itself

provides evidence of the effectiveness of the controls used to

manage the risks to the organisation achieving its principal

objectives and these are regularly reviewed.

My review is also informed by external and internal audit reports,

clinical audit reports, reports from external assessments such as

Clinical Negligence Scheme for Trusts (CNST) level 2 accreditation,

Patient Environmental Action Team (PEAT), patient surveys, Royal

College reports, staff surveys, Quality Assurance Agency Report,

Improving Working Lives reports and Price Waterhouse Cooper

reviews.I have been advised on the implications of the result of my review

of the effectiveness of the system of internal control by: the Risk

Management Department, Directors Team, Trust Executive Group,

Risk Management Committee, Audit Committee, Clinical

Governance Committee and the Trust Board.

Action to ensure the continuous improvement of the internal

control system is in place. The Board has been engaged in the

development and continuous review of the Assurance Framework.

It has been scrutinised by the Audit Committee and I have taken

into account the Head of Internal Audit Opinion on the system of

internal control.

Significant Control IssuesThe Trust incurred a significant deficit on income and expenditure

in 2004/05. With the support of the Department of Health and

the Strategic Health Authority, the Trust has engaged external

consultants to assist in the development of a financial turnaround

plan to set out how the Trust will achieve financial balance.

Progress will be carefully monitored to ensure achievement of

agreed targets.

Peter Homa

Chief Executive Date: 14th July 2005

(on behalf of the Board)



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Auditors report Foreword to the accounts

These accounts for the year ended 31

March 2005 have been prepared by the

St George's Healthcare NHS Trust under

section 98(2) of the National Health

Service Act 1977 (as amended by

section 24(2), schedule 2 of the National

Health Service and Community Care Act

1990) in the form which the Secretary

of State has, with the approval of the

Treasury, directed.


Independent Auditors Report to Directors of

the Board of St Georges Healthcare NHS TrustI have audited the financial statements on pages 2 to 31 which have

been prepared in accordance with the accounting policies relevant to

the National Health Service as set out on pages 10 to 13.

This report is made solely to the Board of St George's Healthcare

NHS Trust in accordance with Part II of the Audit Commission Act

1998 and for no other purpose, as set out in paragraph 54 of the

Statement of Responsibilities of Auditors and of Audited Bodies,

prepared by the Audit Commission.

Respective Responsibilities of Directorsand Auditors

As described on page 2 the Directors are responsible for the

preparation of the financial statements in accordance with

directions issued by the Secretary of State. My responsibilities, as

independent auditor, are established by statute, the Code of Audit

Practice issued by the Audit Commission and my professions

ethical guidance.

I report to you my opinion as to whether the financial statements

give a true and fair view of the state of affairs of the Trust and its

income and expenditure for the year, in accordance with the

accounting policies directed by the Secretary of State as being

relevant to the National Health Service in England.

I review whether the directors statement on internal control

reflects compliance with the Department of Healths guidance

The Statement on Internal Control 2003/2004 issued on 15

September 2003 and further guidance issued on 5 April 2005.I report if it does not meet the requirements specified by the

Department of Health or if the statement is misleading or

inconsistent with other information I am aware of from my audit

of the financial statements. I am not required to consider, nor

have I considered, whether the directors statement on internal

control covers all risks and controls. I am also not required to

form an opinion on the effectiveness of the Trusts corporate

governance procedures or its risk and control procedures. My

review was not performed for any purpose connected with any

specific transaction and should not be relied upon for any such

purpose.

Basis of audit opinion

I conducted my audit in accordance with the Audit Commission

Act 1998 and the Code of Audit Practice issued by the Audit

Commission, which requires compliance with relevant auditing

standards 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. It also includes an assessment of the significant

estimates and judgements made by the Directors in the

preparation of the financial statements, and of whether the

accounting policies are appropriate to the Trust's circumstances,

consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the

information and explanations which I considered necessary in

order to provide me with sufficient evidence to give reasonable

assurance that the financial statements are free from material

misstatement, whether caused by fraud or other irregularity or

error. In forming my opinion I also evaluated the overall adequacy

of the presentation of information in the financial statements.

Opinion

In my opinion the financial statements give a true and fair view of

the state of affairs of St George's Healthcare NHS Trust as at 31

March 2005 and of its income and expenditure for the year then

ended in accordance with the accounting policies directed by theSecretary of State as being relevant to the National Health Service

in England.

Certificate

I certify that I have completed the audit of the accounts in

accordance with the requirements of the Audit Commission Act

1998 and the Code of Audit Practice issued by the Audit

Commission.

Susan Exton (District Auditor)

Audit Commission, First Floor, Millbank Tower, Millbank, London,

SW1P 4HQ

Date: 14th July 2005



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for the year ended 31 March 2005 2004/05 2003/04

NOTE 000 000

Income from activities 3 260,935 244,682

Other operating income 4 72,597 72,359

Operating expenses 5-7 (349,182) (312,181)

__________ __________

OPERATING SURPLUS/(DEFICIT) (15,650) 4,860

Cost of fundamental reorganisation/restructuring 0 0

Profit (loss) on disposal of fixed assets 8 (460) (123)

__________ __________SURPLUS/(DEFICIT) BEFORE INTEREST (16,110) 4,737

Interest receivable 422 456

Interest payable 9 (2) 0

Other finance costs - unwinding of discount (58) (58)

Other finance costs - change in discount rate on provisions 0 0

__________ __________

SURPLUS/(DEFICIT) FOR THE FINANCIAL YEAR (15,748) 5,135

Public Dividend Capital dividends payable (5,908) (5,785)

__________ __________RETAINED SURPLUS/(DEFICIT) FOR THE YEAR (21,656) (650)

__________ __________

The notes on pages 10 to 31 form part of these accounts.

All income and expenditure is derived from continuing operations.

000

RETAINED SURPLUS/(DEFICIT) FOR THE YEAR - (21,656)Financial support included in retained surplus/ (deficit) for the year -

NHS Bank 0

Financial support included in returned surplus/(deficit) for the year -

Internally generated 0__________

RETAINED SURPLUS/(DEFICIT) FOR THE YEAR

EXCLUDING FINANCIAL SUPPORT (21,656)

__________

Income and expenditure account




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as at 31 March 2005 31 March 2005 31 March 2004

NOTE 000 000

FIXED ASSETS

Intangible assets 10 627 814

Tangible assets 11 250,225 192,560

Investments 14.1 0 0

__________ __________250,852 193,374

CURRENT ASSETS

Stocks and work in progress 12 4,331 4,273

Debtors 13 37,226 32,566

Investments 14.2 0 0

Cash at bank and in hand 18.3 68 68

__________ _________41,625 36,907

CREDITORS: Amounts falling due within one year 15 (61,558) (45,369)

__________ _________NET CURRENT ASSETS/(LIABILITIES) (19,933) (8,462)

__________ _________

TOTAL ASSETS LESS CURRENT LIABILITIES 230,919 184,912

CREDITORS: Amounts falling due after more thanone year 15 0 0

PROVISIONS FOR LIABILITIES AND CHARGES 16 (5,338) (3,908)

__________ _________TOTAL ASSETS EMPLOYED 225,581 181,004

__________ _________FINANCED BY:

TAXPAYERS EQUITY

Public dividend capital 22 116,688 104,771

Revaluation reserve 17 103,729 50,123

Donated asset reserve 17 15,789 14,368

Government grant reserve 17 854 816Other reserves 17 1,150 1,150

Income and expenditure reserve 17 (12,629) 9,776

__________ __________TOTAL TAXPAYERS EQUITY 225,581 181,004

__________ __________

Peter Homa

Chief Executive Date: 14th July 2005

Balance sheet




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000 000

Surplus/(deficit) for the financial year before dividend payments (15,748) 5,135

Fixed asset impairment losses 0 0

Unrealised surplus/(deficit) on fixed asset revaluations/indexation 54,758 13,578

Increases in the donated asset and government grant reserve due to 1,188 1,956receipt of donated and government grant financed assets

Reductions in the donated asset and government grant reserve due to

the depreciation, impairment and disposal of donated and (1,630) (1,301)government grant financed assets

Additions/(reductions) in "other reserves" 0 0

__________ __________

Total recognised gains and losses for the financial year 38,568 19,368

Prior period adjustment 0 0

__________ __________

Total gains and losses recognised in the financial year 38,568 19,368__________ __________

Statement of total recognised gains and losses




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NOTE 000 000

OPERATING ACTIVITIES

Net cash inflow(outflow) from operating activities 18.1 4,126 18,679

RETURNS ON INVESTMENTS AND

SERVICING OF FINANCE:

Interest received 371 426

Interest paid (2) 0

Interest element of finance leases 0 0

__________ __________

Net cash inflow/(outflow) from returns oninvestments and servicing of finance 369 426

CAPITAL EXPENDITURE

(Payments) to acquire tangible fixed assets (10,265) (14,409)

Receipts from sale of tangible fixed assets 0 3,663

(Payments) to aquire intangible assets (239) (206)

Receipts from sale of intangible assets 0 0

(Payments to acquire)/receipts from sale of fixed asset investments 0 0

__________ __________Net cash inflow (outflow) from capital expenditure (10,504) (10,952)

DIVIDENDS PAID (5,908) (5,785)

Net cash inflow/(outflow) before management of (11,917) 2,368

liquid resources and financing __________ __________

MANAGEMENT OF LIQUID RESOURCES

Purchase of current asset investments 0 0

Sale of current asset investments 0 0

Net cash inflow (outflow) from management of liquid resources 0 0

__________ __________Net cash inflow (outflow) before financing (11,917) 2,368

__________ __________FINANCING

Public dividend capital received 22,917 0Public dividend capital repaid (not previously accrued) (11,000) (2,363)

Public dividend capital repaid (accrued in prior period) 0 0

Loans received 0 0

Loans repaid 0 0

Other capital receipts 0 0

Capital element of finance lease rental payments 0 0

Cash transferred (to)/from other NHS bodies 0 0

__________ __________Net cash inflow (outflow) from financing 11,917 (2,363)

__________ __________Increase (decrease) in cash 0 5

__________ __________

Cash flow statement




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1. Accounting PoliciesThe Secretary of State for Health has directed that the financial

statements of NHS trusts shall meet the accounting requirements

of the NHS trusts Manual for Accounts which shall be agreed

with HM Treasury. Consequently, the following financial

statements have been prepared in accordance with the 2004/05

NHS Trusts Manual for Accounts issued by the Department of

Health. The accounting policies contained in that manual follow

UK generally accepted accounting practice for companies (UK

GAAP) and HM Treasury's Resource Accounting Manual to the

extent that they are meaningful and appropriate to the NHS, as

determined 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

These accounts have been prepared under the historical cost

convention modified to account for the revaluation of fixed

assets at their value to the business by reference to their current

costs. NHS Trusts are not required to provide a reconciliation

between current cost and historical cost surpluses and deficits.

1.2 Acquisitions and discontinued operations

Activities are considered to be 'acquired' only if they are acquired

from outside the public sector. Activities are considered to be

'discontinued' only if they cease entirely. They are not considered

to be 'discontinued' if they transfer from one public sector body

to another.

1.3 Income Recognition

Income is accounted for applying the accruals convention. The

main source of income for the Trust is from commissioners in

respect of healthcare services provided under local agreements.

Income is recognised in the period in which services are provided.

Where income is received for a specific activity which is to be

delivered in the following financial year, that income is deferred.

1.4 Intangible fixed assets

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 a cost 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 reviewed for

impairment at the end of the first full year following acquisition

and in other periods if events or changes in circumstances

indicate the carrying value may not be recoverable.

Purchased computer software licences are capitalised asintangible fixed assets where expenditure of at least 5,000 is

incurred. They are amortised over the shorter of the term of the

licence and their useful economic lives.

1.5 Tangible fixed assets

Capitalisation

Tangible assets are capitalised if they are capable of being

used for a period which exceeds one year:

- individually have a cost of at least 5,000; or

- 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 had broadly simultaneous purchase dates,

are anticipated to have simultaneous disposal dates and are

under single managerial control; or

- 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 expenditue,

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.

Valuation

Tangible fixed assets are stated at the lower of replacement cost

and recoverable amount. On initial recognition they are

measured at cost (for leased assets, fair value) including any

costs such as installation directly attributable to bringing them

into working condition. They are restated to current value each

year. The carrying values of tangible fixed assets are reviewed for

impairment in periods if events or changes in circumstances

indicate the carrying value may not be recoverable.

All land and buildings are restated to current value using profes-

sional valuations in accordance with FRS15 every five years and

in the intervening years by the use of indices. The buildings

index is based on the All in Tender Price Index published by the

Building Cost Information Service (BCIS). The land index is based

on the residential building land values reported in the Property

Market Report published by the Valuation Office.

Professional valuations are carried out by the District Valuers of

the Inland Revenue Government Department. The valuations

are carried out in accordance with the Royal Institute of

Chartered Surveyors (RICS) Appraisal and Valuation Manual

insofar as these terms are consistent with the agreed

requirements of the Department of Health and HM Treasury. In

accordance with the requirements of the Department of Health,

the last asset valuations were undertaken in 2004 as at the

prospective valuation date of 1 April 2005 and were applied on

the 31 March 2005.

The valuations are carried out primarily on the basis of

Depreciated Replacement Cost for specialised operational property

and Existing Use Value for non-specialised operational property.The value of land for existing use purposes is assessed at Existing

Use Value. For non-operational properties including surplus land,

Notes to the Accounts




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the valuations are carried out at Open Market Value.

Additional alternative Open Market Value figures have only been

supplied for operational assets once they have been taken out of

operational use and subsequently disposed of.

All adjustments arising from indexation and five-yearly revalu-

ations are taken to the Revaluation Reserve. All impairments

resulting from price changes are charged to the Statement of

Total Recognised Gains and Losses. Falls in value when newly

constructed assets are brought into use are also charged there.

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 indices as for land and buildings, as above. These

assets include any existing land or buildings under the control of

a contractor.

Residual interests in off-balance sheet Private Finance Initiative

properties are included in tangible fixed assets as 'assets underconstruction and payments on account' where the PFI contract

specifies the amount, or nil value at which the assets will be

transferred to the Trust at the end of the contract. The residual

interest is built up, on an actuarial basis, during the life of the

contract by capitalising part of the unitary charge so that at the

end of the contract the balance sheet value of the residual value

plus the specified amount equal the expected fair value of the

residual asset at the end of the contract. The estimated fair

value of the asset on reversion is determined by the District

Valuer based on Department of Health guidance. The District

Valuer should provide an estimate of the anticipated fair value of

the assets on the same basis as the District Valuer values the NHS

Trust's estate.

Operational equipment other than IT equipment, which is

considered to have nil inflation, is valued at net current

replacement cost through annual uplift by the change in the

value of the GDP deflator. Equipment surplus to requirements is

valued at net recoverable amount.

Depreciation, amortisation and impairments

Tangible fixed assets are depreciated at rates calculated to write

them down to estimated residual value on a straight-line basis

over their estimated useful lives. No depreciation is provided on

freehold land and assets surplus to requirements.

Assets in the course of construction and residual interests in off-

balance sheet PFI contract assets are not depreciated until theasset is brought into use or reverts 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.

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 revaluation reserve. 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.

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 assetimpairment is charged to the Income and Expenditure Account,

offsetting income may be paid by the Trust's main commissioner

using funding provided by the NHS Bank.

1.6 Donated fixed assets

Donated fixed assets are capitalised at their current value on

receipt and this value is credited to the Donated Asset Reserve.

Donated fixed assets are valued and depreciated as described

above for purchased assets. Gains and losses on revaluations are

also taken to the Donated Asset Reserve and, each 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 tothe 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.

1.7 Government Grants

Government grants are grants from government bodies other

than funds from NHS bodies or funds awarded by Parliamentary

Vote. The government grants reserve is maintained at a level

equal to the net book value of the assets which it has financed.

1.8 Private Finance Initiative (PFI) transactions

The NHS follows HM Treasury's Technical Note 1 (Revised) "How

to Account for PFI transactions" which provides definitive

guidance for the application of the FRS 5 Amendment and the

guidance 'Land and Buildings in PFI schemes Version 2.

PFI schemes under which the PFI operator receives an

annual payment from the Trust for the services provided

by the PFI operator.

Where the balance of the risks and rewards of ownership of the

PFI property are borne by the PFI operator, the PFI obligations are

recorded as an operating expense. Where the trust has

contributed assets, a prepayment for their fair value is recognised

and amortised over the life of the PFI contract by charge to the

Income and Expenditure Account. Where, at the end of the PFIcontract, a property reverts to the Trust, the difference between

the expected fair value of the residual on reversion and any

agreed payment on reversion is built up over the life of the

contract by capitalising part of the unitary charge each year, as a

tangible fixed asset.

Where the balance of risks and rewards of ownership of the PFI

property are borne by the trust, it is recognised as a fixed asset

along with the liability to pay for it which is accounted for as a

finance lease. Contract payments are apportioned between an

imputed finance lease charge and a service charge.

1.9 Stocks and work-in-progress

Stocks and work-in-progress are valued at the lower of cost and

net realisable value. This is considered to be a reasonable




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12

approximation to current cost due to the high turnover of stocks.

Work-in-progress comprises goods in intermediate stages of

production. Partially completed contracts for patient services

are not accounted for as work-in-progress.

1.10 Research and development

Expenditure on research is not capitalised. Expenditure on

development is capitalised if it meets the following criteria:

- there is a clearly defined project;

- the related expenditure is separately identifiable;

- the outcome of the project has been assessed with

reasonable certainty as to:

- its technical feasibility;

- its resulting in a product or service which will eventually be

brought into use;

- adequate resources exist, or are reasonably expected to be

available to enable the project to be completed and to

provide any consequential increases in working capital.

Expenditure so deferred is limited to the value of future benefits

expected and is amortised through the income and expenditure

account on a systematic basis over the period expected to

benefit from the project. It is revalued on the basis of current

cost. The amortisation charge is calculated on the same basis as

used for depreciation i.e. on a quarterly basis. Expenditure

which does not meet the criteria for capitalisation is treated as

an operating cost in the year in which it is incurred. NHS Trusts

are unable to disclose the total amount of research and

development expenditure charged in the income and

expenditure account because some research and development

activity cannot be separated from patient care activity.

Fixed assets acquired for use in research and development are

amortised over the life of the associated project.

1.11 Provisions

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 estimate of the expenditure required to settle

the obligation. Where the effect of the time value of money is

material, the estimated risk-adjusted cash flows are discounted

using the Treasury's discount rate of 3.5% in real terms.

Clinical negligence costs

The NHS Litigation Authority (NHSLA) operates a risk pooling

scheme under which the NHS Trust pays an annual contribution

to the NHSLA which in return settles all clinical negligence

claims. Although the NHSLA is administratively responsible for

all clinical negligence cases the legal liability remains with the

Trust. The total value of clinical negligence provisions carried by

the NHSLA on behalf of the Trust is disclosed at note 16.

Since financial responsibility for clinical negligence cases

transferred to the NHSLA at 1 April 2002, the only charge to

operating expenditure in relation to clinical negligence in

2004/05 relates to the Trust's contribution to the Clinical

Negligence Scheme for Trusts.

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 thecosts of claims arising. The annual membership contributions,

and any excesses payable in respect of particular claims are

charged to operating expenses as and when they become due.

1.12 Pension costs

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 the Secretary of

State, in England and Wales. As a consequence it is not possible

for the Strategic Health Authority to identify its share of the

underlying scheme assets and liabilities. Therefore the scheme is

accounted for as a defined contribution scheme and the cost ofthe scheme is equal to the contributions payable to the scheme

for the accounting period. The total employer contribution

payable in 2004-05 was 18,179,075 (2003-04 8,251,473).

The Scheme is subject to a full valuation by the Government

Actuary every four years which is followed by a review of the

employer contribution rates. The last valuation took place as at

31 March 2003 and has yet to be finalised. The last published

valuation covered the period 1 April 1994 to 31 March 1999.

Between valuations the Government Actuary provides an update

of the scheme liabilities on an annual basis. The latest

assessment of the liabilities of the Scheme is contained in the

Scheme Actuary report, which forms part of the NHS Pension

Scheme (England and Wales) Resource Account, publishedannually. These accounts can be viewed on the NHS Pensions

Agency website at www.nhspa.gov.uk. Copies can also be

obtained from The Stationery Office.

The conclusion of the 1999 valuation was that 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

employers' contributions remain at 7% of pensionable pay until

31 March 2003 and then be increased to 14% of pensionable

pay with effect 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.

NHS bodies are directed by the Secretary of State to charge

employers pension costs contributions to operating expenses as

and when they become due. Until 2002-03 HM Treasury paid

the Retail Price Indexation costs of the NHS Pension scheme

direct but as part of the Spending Review Settlement, these costs

have been devolved in full. For 2003-04 the additional funding

was retained as a Central Budget by the Department of Health

and was paid direct to the NHS Pensions Agency and the

employers' contribution remained at 7%. From 2004-05 this

funding was devolved in full to NHS Pension Scheme employers

and the employers' contribution rate rose to 14%.




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13

The scheme is a "final salary" scheme. Annual pensions are

normally based on 1/80th of the best of the last 3 years

pensionable pay for each year of service. A lump sum normally

equivalent to 3 years pension is payable on retirement. Annual

increases are applied to pension payments at rates defined by

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.

Early payment of a pension, with enhancement, is available to

members of the Scheme who are permanently incapable of

fulfilling their duties effectively through illness or infirmity.

Additional pension liabilities arising from early retirement are not

funded by the scheme except where the retirement is due to ill-

health. For early retirements not funded by the scheme, the full

amount of the liability for the additional costs is charged to the

Operating Cost Statement account at the time the Authority

commits itself to the retirement, regardless of the method of

payment.

A death gratuity of twice final years pensionable pay for death in

service, and up to five times their annual pension for death after

retirement, less pensions already paid, subject to a maximum

amount equal to twice the member's final years pensionable pay

less their retirement lump sum for those who die after retirement

is payable.

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's pension benefits.

The benefits payable relate directly to the value of theinvestments made.

1.13 Liquid resources

Deposits and other investments that are readily convertible into

known amounts of cash at or close to their carrying amounts are

treated as liquid resources in the cashflow statement. The Trust

does not hold any investments with maturity dates exceeding

one year from the date of purchase.

1.14 Value Added Tax

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.

1.15 Foreign Exchange

Transactions that are denominated in a foreign currency are

translated into sterling at the exchange rate ruling on the dates

of the transactions. Resulting exchange gains and losses are

taken to the Income and Expenditure account.

1.16 Third Party Assets

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 in them. Details of third party assets

are given in Note 28 to the accounts.

1.17 Leases

Where substantially all risks and rewards of ownership of a

leased asset are borne by the NHS Trust, the asset is recorded as

a tangible fixed asset and a debt is recorded to the lessor of the

minimum lease payments discounted by the interest rate implicit

in the lease. The interest element of the finance lease payment is

charged to the Income and Expenditure Account over the period

of the lease at a constant rate in relation to the balance

outstanding. Other leases are regarded as operating leases and

the rentals are charged to the Income and Expenditure Account

on a straight-line basis over the term of the lease.

1.18 Public Dividend Capital (PDC)

and PDC Dividend

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.

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 at the 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 cash with the Office of

the Paymaster General. The average carrying amount of assets is

calculated as a simple average of opening and closing relevantnet assets. For 2004-05 the average carrying amount of assets is

calculated before the national revaluation figures are applied on

31 March 2005. A note to the accounts discloses the rate that

the dividend represents as a percentage of the actual average

carrying amount of assets less liabilities in the year.

1.19 Losses and Special Payments

Losses and Special Payments are charged to the relevant

functional headings on a cash basis, including losses which

would have been made good through insurance cover had NHS

Trusts not been bearing their own risks (with insurance premiums

then being included as normal revenue expenditure).




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14

2. Segmental analysisThis note is not applicable for St George's Healthcare NHS Trust as the organisation does not have more than one business segment.

3. Income from activities2004/05 2003/04

000 000

Strategic Health Authorities 625 1

NHS Trusts 9 880

Primary Care Trusts* 256,032 240,153

Foundation Trusts 196 0

Local Authorities 28 0

Department of Health 745 0

NHS Other 167 0

Non NHS:

- Private Patients 2,027 1,516- Overseas patients (non-reciprocal) 382 0

- Road Traffic Act 679 1,614

- Other 45 518

__________ __________260,935 244,682

__________ __________

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

4. Other operating income2004/05 2003/04

000 000

Patient transport services 0 0

Education, training and research 49,602 44,295

Charitable and other contributions to expenditure 525 463

Transfers from donated asset reserve 1,581 1,255

Transfers from government grant reserve 49 46

Non-patient care services to other bodies 3,079 2,529

Other income 17,761 23,771

__________ __________72,597 72,359

__________ __________

Included in 'Other Income' is 4,451,872 relating to the Central Office for Research Ethics Committee (2003/04: 3,208,000).




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5. Operating expenses

5.1 Operating expenses comprise: 2004/05 2003/04

000 000

Services from other NHS Trusts 2,591 2,292

Services from other NHS bodies 8,898 8,768

Services from Foundation Trusts 329 0

Purchase of healthcare from non NHS bodies 330 0

Directors' costs 1,212 883

Staff costs 224,049 194,030

Supplies and services

- clinical 57,808 53,408

- general 8,964 7,870

Establishment 3,929 3,969

Transport 2,772 2,635

Premises 20,452 16,694

Bad debts 160 620

Depreciation and amortisation 11,375 11,584Fixed asset impairments and reversals 0 259

Audit fees 118 55

Other auditor's remuneration 114 101

Clinical negligence 5,000 2,479

Other 1,081 6,534

__________ __________349,182 312,181

__________ __________

5.2 Operating leases

5.2/1 Operating expenses include: 2004/05 2003/04

000 000

Hire of plant and machinery 1,962 1,901

Other operating lease rentals 17 20

__________ __________1,979 1,921

__________ __________

5.2/2 Annual commitments under non - cancellable operating leases are:

Land and buildings Other leases

2004/05 2003/04 2004/05 2003/04

000 000 000 000

Operating leases which expire:

Within 1 year 0 0 240 238

Between 1 and 5 years 0 0 981 1,121

After 5 years 0 0 900 2,825

________ ________ ________ ________0 0 2,121 4,184

________ ________ ________ ________

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5.3 Salary and Pension Entitlements of Senior Managers

A) Remuneration 2004/05 2003/04

Name and Title Salary Other Benefits Salary Other Benefits

(bands ofRemuneration in Kind

(bands ofRemuneration in kind

5000) (bands of (Rounded to the 5000) (bands of (Rounded to the

5000) nearest 100) 5000) nearest 100)

000 000 100 000 000 100

Mr Peter Homa, Chief Executive Director 155-160 0-5 0 50-55 0-5 0

Mr Colin Gentile, Director of Finance (from June 2004) 95-100 0-5 0

Mr Kevin Harbottle, Acting Director of Finance (to May 2004) 70-75 0-5 0 75-80 0-5 0

Mrs Marie Grant, Deputy Chief Executive 110-115 0-5 0 90-95 0-5 0

Dr Geraldine Walters, Director of Nursing (from May 2004) 85-90 0-5 0

Ms Sue Cooper, Director of Nursing (to May 2004) 60-65 0-5 0

Mr Christopher Streather, Medical Director 140-145 0-5 0

Mr Mike Bailey, Medical Director 100-105 0-5 0

Miss Patricia Hamilton, Medical Director 205-210 0-5 0

Mr Colin Watts, Director of Human Resources 85-90 0-5 0 75-80 0-5 0

Mrs Janet Hunter, Director of Modernisation (to August 2004) 25-30 0-5 0 75-80 0-5 0

Mrs Karen Castille-Wardle, Director of Service Improvement 20-25 0-5 0

(from January 2005)Mr Neal Deans, Director of Facilities (from January 2005) 15-20 0-5 0

NON EXECUTIVE DIRECTORS

Mrs Naz Coker,Chairman 20-25 0-5 0 5-10 0-5 0

Professor Sean Hilton, Non-Executive Director 5-10 0-5 0 5-10 0-5 0

Ms Diane Mark, Non-Executive Director 5-10 0-5 0 5-10 0-5 0

Ms Valerie Moore, Non Executive Director (from August 2004) 0-5 0-5 0

Ms Valerie Vaughan - Dick, Non Executive Director 5-10 0-5 0 5-10 0-5 0

Mr David Knowles, Non Executive Director (to July 2004) 0-5 0-5 0 5-10 0-5 0

Mr Michael Rappolt, Non Executive Director (from August 2004) 0-5 0-5 0

B) Pension Benefits

Name and Title Real increase Total accrued Cash Equivalent Cash Equivalent Real Increase Employersin pension and pension and Transfer Value Transfer Value in Cash Equivalent Contribution to

related lump sum related lump sum at 31 March 2005 at 31 March 2004 Transfer Value Stakeholder

at age 60 at age 60 Pension(bands of 2500) (bands of 5000) (To nearest 100)

000 000 000 000 000 100

Mr Peter Homa, Chief Executive Director (from December 2003) 125-127.5 185-190 646 200 441 0

Mr Colin Gentile, Director of Finance (from June 2004) 17.5-20 115-120 395 304 82 0

Mr Kevin Harbottle, Acting Director of Finance (to May 2004) 0-2.5 75-80 241 239 5 0

Mrs Marie Grant, Deputy Chief Executive 30-32.5 175-180 722 57 135 0

Dr Geraldine Walters, Director of Nursing (from May 2004) 10-12.5 90-95 333 292 34 0

Ms Sue Cooper, Director of Nursing (to May 2004) 0-2.5 60-65 262 266 0 0

Mr Christopher Streather, Medical Director 17.5-20 80-85 258 193 60 0

Miss Patricia Hamilton, Clinical Director 12.5-15 185-190 780 690 70 0

Mr Colin Watts, Director of Human Resources 10.0-12.5 135-140 623 539 69 0

Mrs Janet Hunter, Director of Modernisation (to August 2004) 5-7.5 50-55 192 164 23 0

Mrs Karen Castille-Wardle, Director of Service Improvement 12.5-15 105-110 369 314 47 0

(from January 2005)

As Non-Executive members do not receive pensionable remuneration, there will be no entries in respect of pensions for Non-Executive members.

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular

point in time. The benefits valued are the member's accrued benefits and any contingent spouse's pension payable from the scheme. A CETV is a

payment made by a pension scheme, or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves

a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has

accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which the disclosure applies.

The CETV figures, and from 2004-05 the other pension details, include the value of any pension benefits in another scheme or arrangement which the

individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as a result of their

purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed

by the Institute and Faculty of Actuaries.

Real Increase in CETV - This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to

inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses

common market valuation factors for the start and end of the period.

16




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6. Staff costs and numbers

6.1 Staff costs 2004/05 Permanently 2003/04Total Employed Other Total

000 000 000 000

Salaries and wages 192,334 171,401 20,933 173,450

Social Security Costs 14,590 14,590 0 12,986

Employer contributions to NHSPA 18,179 18,179 0 8,293

Other pension costs 134 134 0 162

__________ __________ __________ __________225,237 204,304 20,933 194,891

__________ __________ __________ __________

The cost of staff capitalised during the year 2004/05 was 188,851 (303,649 in 2003/04)

6.2 Average number of persons employed

2004/05 Permanently

Total Employed Other 2003/04

Number Number Number Number

Medical and dental 718 663 55 691

Ambulance staff 0 0 0 0

Administration and estates 1,433 1,183 250 1,421

Healthcare assistants & other support staff 192 192 0 204

Nursing, midwifery & health visiting staff 2,243 1,828 415 2,092

Nursing, midwifery & health visiting learners 8 8 0 9

Scientific, therapeutic and technical staff 1,203 1,103 100 1,143

Social care staff 0 0 0 0

Other 0 0 0 0

_____ _____ _____ _____

Total 5,797 4,977 820 5,560

_______ _______ _______ _______

6.3 Employee benefits 2004/05 2003/04

000 000

__________ _________

0 0

__________ __________

6.4 Management costs 2004/05 2003/04

000 000

Management costs 13,846 10,528

Income 333,532 316,716

6.5 Retirements due to ill-health

During 2004/05 (prior year 2003/04) there were 12 (4) early retirements from the trust agreed on the grounds of ill-health. The

estimated additional pension liabilities of these ill-health retirements will be 549,244 (169,064). These retirements represented 1.95

per 1,000 active scheme members. The cost of these ill-health retirements will be borne by the NHS Pensions Agency.

17




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7. Better Payment Practice Code

7.1 Better Payment Practice Code - measure of compliance

Number 000

Total bills paid in the year 102,583 138,542

Total bills paid within target 81,680 114,772

Percentage of bills paid within target 80% 83%

The Better Payment Practice Code requires the Trust to aim to pay all valid non-NHS invoices by the due date or within 30 days of

receipt of goods or a valid invoice, whichever is later.

7.2 The Late Payment of Commercial Debts (Interest) Act 1998

2004/05 2003/04

000 000

Amounts included within Interest Payable (Note 9) arising from claims

made under this legislation 2 0

Compensation paid to cover debt recovery costs under this legislation 0 0

8. Profit (Loss) on Disposal of Fixed AssetsProfit/loss on the disposal of fixed assets is made up as follows:

2004/05 2003/04

000 000

Profit on disposal of fixed assets investments 0 0

Loss on disposal of fixed assets investments 0 0

Profit on disposal of intangible fixed assets 0 0

Loss on disposal of intangible fixed assets (17) 0

Profits on disposal of land and buildings 0 0

Loss on disposal of land and buildings (311) 0

Profits on disposal of plant and equipment 0 0

Loss on disposal of plant and equipment (132) (123)

__________ __________(460) (123)

__________ __________

9. Interest Payable2004/05 2003/04

000 000

Finance leases 0 0

Other 2 0

__________ __________2 0

__________ __________

18




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10. Intangible Fixed Assets

Software Licenses & Patents Development Total

Licences trademarks Expenditure

000 000 000 000 000

Gross cost at 1 April 2004 1,036 0 0 2,518 3,554

Indexation 0 0 0 39 39

Impairments 0 0 0 0 0

Reclassifications 0 0 0 0 0

Other revaluation 0 0 0 0 0

Additions - purchased 227 0 0 0 227

Additions - donated 12 0 0 0 12

Additions - government granted 0 0 0 0 0

Disposals (17) 0 0 0 (17)

________________________________________________

Gross cost at 31 March 2005 1,258 0 0 2,557 3,815

________________________________________________

Accumulated amortisation at 1 April 2004 476 0 0 2,264 2,740

Indexation 0 0 0 34 34

Impairments 0 0 0 0 0

Reversal of impairments 0 0 0 0 0

Reclassifications 0 0 0 0 0

Other revaluation 0 0 0 0 0

Provided during the year 155 0 0 259 414

Disposals 0 0 0 0 0

________________________________________________

Accumulated amortisation at 31 March 2005 631 0 0 2,557 3,188

________________________________________________

Net book value

- Purchased at 1 April 2004 552 0 0 254 806

- Donated at 1 April 2004 8 0 0 0 8

- Government granted at 1 April 2004 0 0 0 0 0

________________________________________________

- Total at 1 April 2004 560 0 0 254 814

- Purchased at 31 March 2005 611 0 0 0 611

- Donated at 31 March 2005 16 0 0 0 16

- Government granted at 31 March 2005 0 0 0 0 0

________________________________________________

- Total at 31 March 2005 627 0 0 0 627

________________________________________________

19




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11. Tangible Fixed Assets

11.1 Tangible fixed assets at the balance sheet date comprise the following elements:

Land Buildings Dwellings Assets under Plant & Transport Information Furniture Total

excluding construction Machinery Equipment Technology & fittingsdwellings and payments

on account*

000 000 000 000 000 000 000 000 000

Cost or valuation at 1 April 2004 52,911 101,957 5,900 7,314 49,771 141 6,286 4,977 229,257

Additions - purchased 0 6,350 0 3,630 2,322 0 384 455 13,141

Additions - donated 0 844 0 158 129 0 20 18 1,169

Additions government granted 0 0 0 8 0 0 0 0 8

Impairments 0 0 0 0 0 0 0 0 0

Reclassifications 0 5,917 0 (6,038) 60 1 0 60 0

Indexation 3,933 8,074 467 551 1,190 3 0 107 14,325

Other in year revaluation 0 0 0 0 0 0 0 0 0

Disposals 0 (1,115) 0 (131) (9) (23) (41) 0 (1,319)

National Revaluation Exercise 38,824 (3,207) 5,626 0 0 0 0 0 41,243

______________________________________________________________ At 31 March 2005 95,668 118,820 11,993 5,492 53,463 122 6,649 5,617 297,824

______________________________________________________________

Depreciation at 1 April 2004 0 0 0 0 30,685 131 4,197 1,684 36,697

Provided during the year 0 6,807 236 0 3,065 3 525 325 10,961

Impairments 0 0 0 0 0 0 0 0 0

Reversal of Impairments 0 0 0 0 0 0 0 0 0

Reclassifications 0 0 0 0 0 0 0 0 0

Indexation 0 0 0 0 777 3 0 36 816

Other in year revaluation 0 0 0 0 0 0 0 0 0

Disposals 0 (804) 0 0 (8) (22) (41) 0 (875)______________________________________________________________

Depreciation 0 6,003 236 0 34,519 115 4,681 2,045 47,599

at 31 March 2005 ______________________________________________________________

Net book value

- Purchased at 1 April 2004 52,911 93,016 5,900 7,107 13,347 10 2,069 3,027 177,387

- Donated at 1 April 2004 0 8,151 0 207 5,739 0 20 240 14,357

- Government Granted at 1 April 2004 0 790 0 0 0 0 0 26 816______________________________________________________________

Total at 31 March 2004 52,911 101,957 5,900 7,314 19,086 10 2,089 3,293 192,560______________________________________________________________

Net book value

- Purchased at 31 March 2005 95,668 101,673 11,757 5,326 13,928 7 1,930 3,311 233,600

- Donated at 31 March 2005 0 10,324 0 158 5,016 0 38 236 15,772

- Government Granted at 31 March 2005 0 820 0 8 0 0 0 25 853______________________________________________________________

Total at 31 March 2005 95,668 112,817 11,757 5,492 18,944 7 1,968 3,572 250,225______________________________________________________________*Residual interests of off balance sheet PFI schemes should be recorded here. If the amount is material a disclosure should be made stating what the figure represents.

Of the totals at 31 March 2005, nil related to land valued at open market value and nil related to buildings valued at open market value

and nil related to dwellings valued at open market value.

The net book value of assets held under finance leases and hire purchase contracts at the balance sheet date are as follows:

Land Buildings Dwellings Assets under Plant & Transport Information Furniture Totalexcluding construction Machinery Equipment Technology & fittingsdwellings and payments

on account

000 000 000 000 000 000 000 000 000

At 31 March 2005 0 0 0 0 0 0 0 0 0

At 31 March 2004 0 0 0 0 0 0 0 0 0

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The total amount of depreciation charged to the income and expenditure in respect of assets held under finance leases and

hire purchase contracts:Land Buildings Dwellings Assets under Plant & Transport Information Furniture Total

excluding construction Machinery Equipment Technology & fittings

dwellings and payments

on account

000 000 000 000 000 000 000 000 000

Depreciation 31 March 2005 0 0 0 0 0 0 0 0 0

Depreciation 31 March 2004 0 0 0 0 0 0 0 0 0

11.2 The net book value of land, buildings and dwellings at 31 March 2005 comprises:

31 March 2005 31 March 2004

000 000

Freehold 220,242 160,768

Long leasehold 0 0

Short leasehold 0 0

__________ __________

Total 220,242 160,768

__________ __________

12. Stocks and Work in Progress31 March 2005 31 March 2004

000 000

Raw materials and consumables 0 0

Work-in-progress 0 0

Finished goods 4,331 4,273

__________ __________

4,331 4,273

__________ __________

13. Debtors31 March 2005 31 March 2004

000 000

Amounts falling due within one year:

NHS debtors 18,326 17,244

Provision for irrecoverable debts (3,178) (3,370)

Other prepayments and accrued income 1,775 2,160

Other debtors 20,186 12,935

__________ __________

Sub total 37,109 28,969

Amounts falling due after more than one year:

NHS debtors 117 154

Provision for irrecoverable debts 0 0

Other prepayments and accrued income 0 0

Other debtors 0 3,443

__________ __________

Sub total 117 3597

__________ __________

Total 37,226 32,566

__________ __________

NHS Debtors include 116,398 prepaid pension contributions at 31 March 2005 (154,078 at 31 March 2004)

21




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14. Investments14.1 Fixed asset investments

Description Description Other Total

000 000 000 000

Balance at 1 April 2004 0 0 0 0

Additions 0 0 0 0

Disposals 0 0 0 0

Revaluations 0 0 0 0

__________ __________ __________ __________

Balance at 31 March 2005 0 0 0 0

__________ __________ __________ __________

14.2 Current asset investmentsDescription Description Other Total

000 000 000 000

Balance at 1 April 2004 0 0 0 0

Additions 0 0 0 0Disposals 0 0 0 0

Revaluations 0 0 0 0

__________ __________ __________ __________

Balance at 31 March 2005 0 0 0 0

__________ __________ __________ __________

15. Creditors

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

31 March 2005 31 March 2004

000 000

Amounts falling due within one year:

Bank overdrafts 0 0

Current instalments due on loans 0 0

Interest payable 0 0

Payments received on account 821 446

NHS creditors 17,759 10751

Non - NHS trade creditors - revenue - other 8,865 11,165

Non - NHS trade creditors - capital 3,965 5,258

Tax and social security costs 7,478 4,464

Obligations under finance leases and hire purchase contracts 0 0

Other creditors 12,932 6,525

Accruals and deferred income 9,738 6,760

__________ __________

Sub total 61,558 45,369

__________ __________

Amounts falling due after more than one year:

Long - term loans 0 0

Obligations under finance leases and hire purchase contracts 0 0

NHS creditors 0 0

Other 0 0

Sub total 0 0

__________ __________

Total 61,558 45,369

__________ __________

Other creditors include;

6,824,475 outstanding pensions contributions at 31 March 2005 (31 March 2004 1,359,075).

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15.2 Loans (and other long-term financial liabilities) Total31 March 2005 31 March 2004

Amounts falling due: 000 000

In one year or less 0 0

Between one and two years 0 0

Between two and five years 0 0

Over five years 0 0__________ __________

Total 0 0__________ __________

Total31 March 2005 31 March 2004

000 000Wholly repayable within five years 0 0

Wholly repayable after five years, not by instalments 0 0

Wholly or partially repayable after five years, by instalments 0 0__________ __________

Total 0 0__________ __________

Loans [and long-term financial liabilities] Value 31 March 2004wholly or partially repayable after five years: Interest rate outstanding 000

% 000Terms of payment

15.3 Finance lease obligations 31 March 2005 31 March 2004Payable: 000 000

Within one year 0 0

Between one and five years 0 0

After five years 0 0__________ __________

0 0

Less finance charges allocated to future periods 0 0__________ __________

0 0

__________ __________

15.4 Finance Lease CommitmentsSt George's Healthcare NHS Trust has not entered into any finance leases.

16. Provisions for liabilities and chargesPensions Pensions Legal Restruct- Other Total

relating to relating to claims uringsformer directors other staff

000 000 000 000 000 000

At 1 April 2004 0 1,651 288 0 1,969 3,908

Arising during the year 0 0 130 0 3,589 3,719

Utilised during the year 0 (121) (111) 0 (1,893) (2,125)

Reversed unused 0 (16) (130) 0 (76) (222)

Unwinding of discount 0 58 0 0 0 58________ ________ ________ ________ ________ ________

At 31 March 2005 0 1,572 177 0 3,589 5,338________ ________ ________ ________ ________ ________

Expected timing of cashflows:

Within 1 year 0 121 177 0 3,589 3,887

Between one and five years 0 418 0 0 0 418

After five years 0 1,033 0 0 0 1,033

Provision for Pension costs is calculating using information provided by the NHS Pensions Agency.Provision for Legal Claims has been

calculated using figures and estimated probability supplied by both the NHS Litigation Authority and the Trust's solicitor.

'Other' includes; (a) provision for probable additional non-medical pay expenditure to 31 March 2005 as a result of Agenda for Change

NHS pay reform (3,206,000) and; (b) provision for additional medical pay expenditure to 31 March 2005 in respect of new consultant

contracts (383,000)

8,354,581 is included in the provisions of the NHS Litigation Authority at 31/3/2005 in respect of clinical negligence liabilities of the

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17. Movements on ReservesMovements on reserves in the year comprised the following:

Revaluation Donated Government Other Income and Total

reserve Asset Grant reserves Expenditurereserve reserve reserve

000 000 000 000 000 000

At 1 April 2004 as previously stated 50,123 14,368 816 1,150 9,776 76,233

Prior Period Adjustments 0 0 0 0 0 0

At 1 April 2004 as restated 50,123 14,368 816 1,150 9,776 76,233

Transfer from the income and expenditure account (21,656) (21,656)

Fixed asset impairments 0 0 0 0

Surplus on other revaluations

/indexation of fixed assets 52,857 1,822 79 54,758

Transfer of realised profits (losses)

to the Income and Expenditure reserve 749 0 0 (749) 0

Receipt of donated/government granted assets 1,180 8 1,188

Transfers to the Income and Expenditure Account

for depreciation, impairment, and disposal of

donated/government granted assets (1,581) (49) (1,630)

Other transfers between reserves 0 0 0 0 0 0

Reserves eliminated on dissolution 0 0 0 0 0 0

________ ________ ________ ________ ________ ________

At 31 March 2005 103,729 15,789 854 1,150 (12,629) 108,893

________ ________ ________ ________ ________ ________

18. Notes to the Cash Flow Statement

18.1 Reconciliation of operating surplus to net cash flow from operating activities:

2004/05 2003/04

000 000

Total operating surplus (deficit) (15,650) 4,860

Depreciation and amortisation charge 11,375 11,584

Fixed asset impairments and reversals 0 259

Transfer from donated asset reserve (1,581) (1,255)Transfer from the government grant reserve (49) (46)

(Increase)/decrease in stocks (58) (836)

(Increase)/decrease in debtors (8,753) (5,210)

Increase/(decrease) in creditors 17,470 7,414

Increase/(decrease) in provisions 1,372 1,909

__________ __________

Net cash inflow/(outflow) from operating activities before restructuring costs 4,126 18,679

Payments in respect of fundamental reorganisation/restructuring 0 0

__________ __________

Net cash inflow from operating activities 4,126 18,679

__________ __________

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18.2 Reconciliation of net cash flow to movement in net debt

2004/05 2003/04

000 000

Increase/(decrease) in cash in the period 0 5

Cash inflow from new debt 0 0

Cash outflow from debt repaid and finance lease capital payments 0 0

Cash (inflow)/outflow from (decrease)/increase in liquid resources 0 0

__________ __________

Change in net debt resulting from cashflows 0 5

Non - cash changes in debt 0 0

Net debt at 1 April 2004 68 63

__________ __________

Net debt at 31 March 2005 68 68

__________ __________

18.3 Analysis of changes in net debt At 1 Cash Transferred Cash Non - cash At 31April (to)/from other changes in changes in March

2004 NHS bodies year year 2005

000 000 000 000 000

OPG cash at bank 0 0 0 0

Commercial cash at bank and in hand 68 0 0 68

Bank overdrafts 0 0 0 0

Debt due within one year 0 0 0 0

Debt due after one year 0 0 0 0 0

Finance leases 0 0 0 0 0

Current asset investments 0 0 0 0 0

__________ __________ __________ __________ __________

68 0 0 0 68

__________ __________ __________ __________ __________

19. Capital Commitments

Commitments under capital expenditure contracts at the balance sheet date were 6,172,512 (31 March 2004 9,058,173)

20. Post Balance Sheet Events

From 1 April 2005 HM Treasury changed the discount rate used in calculating provisions from 3.5% to 2.2%. This change will result

in an increase in our provisions of 20,436 which will be charged to the Income and Expenditure account in 2005-06. National

funding of NHS commissioners will be increased by the total estimated effect to offset this charge.

21. Contingencies 2004/05 2003/04000 000

Gross Value (85) 48

Amounts recoverable (if any) 0 0

__________ __________

Net contingent liability (85) 48

__________ __________

The above reflects the member contingent liability as notified by the NHS Litigation Authority relating to claims receivedand logged at the NHSLA as at 31 March 2005.

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22. Movements in Public Dividend Capital 2004/05 2003/04000 000

Public Dividend Capital as at 1 April 2004 104,771 107,134

New Public Dividend Capital received (including transfers from dissolved NHS Trusts) 11,917 0

Public Dividend Capital repaid in year 0 (2,363)Public Dividend Capital repayable (creditor) 0 0

Public Dividend Capital written off 0 0

Public Dividend Capital transferred to Foundation Trust 0

Other movements in Public Dividend Capital in year 0 0

__________ __________

Public Dividend Capital as at 31 March 2005 116,688 104,771

__________ __________

23. Financial Performance Targets

23.1 Breakeven performance

The Trust's breakeven performance for 2004/2005 is as follows:

1997/98 1998/99 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05

000 000 000 000 000 000 000 000

Turnover 174,908 186,975 205,968 223,195 251,017 286,483 317,041 333,532

Retained surplus/(deficit) for the year 550 (418) (5,753) 0 613 4,280 (650) (21,656)

Adjustment for: 0

Timing/non-cash impacting distortions

- Use of pre - 1.4.97 surpluses

[FDL(97)24 Agreements] 0 0 0 0 0 0 0 0

- 1999/2000 Prior Period Adjustment

(relating to 1997/98, 1998/99) 0 0

- 2000/01 Prior Period Adjustment(relating to 1997/98, 1998/99 and 1999/2000) (40) 7 (529)


(relating to 1997/98, 1998/99, 1999/2000 and 2000/01) 0 0 0 0


(relating to 1997/98, 1998/99, 1999/2000, 2000/01

and 2001/02) 0 0 0 0 0


(relating to 1997/98, 1998/99, 1999/2000, 2000/01,

2001/02 and 2002/03) 0 0 0 0 0 0


(relating to 1997/98, 1998/99, 1999/2000, 2000/01,

2001/02, 2002/03 and 2003/04) 0 0 0 0 0 0 0

Break-even in-year position 510 (411) (6,282) 0 613 4,280 (650) (21,656)

Break-even cumulative position 510 99 (6,183) (6,183) (5,570) (1,290) (1,940) (23,596)

Materiality test: -

- Break-even in-year position 0.3% -0.2% -3.0% 0.0% 0.2% 1.5% -0.2% -6.5%

- Break-even cumulative position 0.3% 0.1% -3.0% -2.8% -2.2% -0.5% -0.6% -7.1%

The Trust is developing, with the assistance of the Strategic Health Authority, a financial strategy to achieve recurring balance

on Income and Expenditure.

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24. Related Party Transactions

St. George's Healthcare NHS Trust is a body corporate established by order of the Secretary of State for Health.

The Department of Health is regarded as the ultimate controlling party. During the year St. George's Healthcare NHS Trust received monies

amounting to 10,438,454 from the Department of Health. This relates to grants for training, teaching and research. As at 31 March

2005 the Trust accounts included a debtor balance of 1,390,502 and a 314,842 creditor balance with the Department of Health.

The Trust also received 104,352,000 from its main commissioners Wandsworth Primary Care Trust; 54,598,000 from Sutton & Merton

PCT and 18,917,867 from Croydon PCT. This related to contract income for patient services. As at 31 March 2005 the Trust accounts

included debtor balances with Wandsworth Primary Care Trust 7,946,022; Sutton & Merton Primary Care Trust 1,119,470 and

Croydon Primary Care Trust 1,234,927. The Trust accounts included creditor balances with Wandsworth Primary Care Trust 6,956,923;

Sutton & Merton Primary Care Trust 1,042,439 and Croydon Primary Care Trust 11,807.

In addition, the Trust received 38,424,568 from the South West London Workforce Development Confederation. As at 31 March

2005 the Trust accounts included a debtor balance of 177,861 and a creditor balance of 500.

A non-executive director of the Trust Board, Diane Mark is a trustee of the Charitable Foundation. During 2004/05 the Charitable

Foundation raised charges to the Trust totalling 540,908, and the Trust incurred capital and revenue expenditure to be funded by the

Charitable Foundation amounting to 3,692,246. As at 31 March 2005 the Trust accounts included a debtor balance of 3,650,434

and a creditor balance of 20,469 with the Charitable Foundation.

23.2 Capital cost absorption rate

The Trust is required to absorb the cost of capital at a rate of 3.5% of average relevant net assets. The rate is calculated as the

percentage that dividends paid on public dividend capital, totalling 5,908,000, bears to the average relevant net assets of

183,193,000, that is 3.2%.

23.3 External financing

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

2004/05 2003/04

000 000 000

External financing limit 11,917 (2,363)

Cash flow financing 11,917 (2,368)

Finance leases taken out in the year 0 0Other capital receipts 0 0

________External financing requirement 11,917 (2,368)

________ ________

Undershoot (overshoot)* 0 5________ ________

23.4 Capital Resource Limit

The Trust is given a Capital Resource Limit which it is not permitted to overspend

2004/05 2003/04

000 000

annual report 2004-2005 finance

Documents