TIDM50PS
RNS Number : 8750N
Peterborough (Progress Health) plc
25 February 2009
Peterborough (Progress Health) plc
Report and financial statements for the period ended
31 March 2008
Registered number: 06054624
Contents
+----------------------------------------------------------------------+---------+
| Company information | 2 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Directors' report | 3-6 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Statement of directors' responsibilities in respect of the | 7 |
| directors' report and the financial statements | |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Independent auditors' report | 8 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Profit and loss account | 9 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Statement of total recognised gains and losses | 10 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Balance sheet | 11 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Cash flow statement | 12 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
| Notes to the financial statements | 13-26 |
+----------------------------------------------------------------------+---------+
| | |
+----------------------------------------------------------------------+---------+
Company information
Directors
+----------------+---------------+---------------+
| P Cooper | (Chairman) | |
+----------------+---------------+---------------+
| M Wayment | | |
+----------------+---------------+---------------+
| G Quaife | | |
+----------------+---------------+---------------+
| D Collins | | |
+----------------+---------------+---------------+
| L Esau | | |
+----------------+---------------+---------------+
| M Dooley | | |
+----------------+---------------+---------------+
| M Bradshaw | | |
+----------------+---------------+---------------+
Company Secretary
T Rowbury
Registered Office
3 White Oak Square
London Road
Swanley
Kent
BR8 7AG
Auditors
Ernst & Young LLP
1 More London Place
London
SE1 2AF
Directors' report
The directors present their report and the audited financial statements for the
period ended 31 March 2008.
Results and dividends
The loss for the period, after taxation, amounted to GBP5,155,000. The directors
are unable to recommend the payment of a dividend.
Comparative information
The Company was incorporated on 16 January 2007. This is the Company's first
accounting period and therefore the financial statements contain no comparative
information.
Principal activities and review of the business
The principal activities of Peterborough (Progress Health) plc (the
"Company") are the financing, design, construction and maintenance of a new
acute hospital ("ECH"), a new mental health unit ("MHU") and a new integrated
care centre ("ICC") at two sites in Peterborough together with the operation of
certain non-clinical services within the existing and new hospital facilities,
as part of the strategic redevelopment scheme for the Peterborough and Stamford
Hospitals NHS Foundation Trust, the Cambridgeshire and Peterborough Mental
Health Partnership NHS Trust and the Peterborough Primary Care Trust
respectively (the "Trusts") under the Government's Private Finance Initiative
("PFI"). The directors are not aware, at the date of this report, of any likely
major changes in the Company's activities in the next year.
On 4 July 2007, the Company entered into a Project Agreement with the Trusts,
together with an associated construction contract, funding agreements, hard and
soft facilities management services contracts, a medical equipment supplies
contract and other ancillary project related agreements.The Project Agreement
requires the Company to provide and maintain three new hospital facilities for
the Trusts, and to deliver certain non-clinical services over the 35 year
concession term. The project is currently in the construction phase and the
Company is providing interim services to the existing hospital facilities.
On 4 July 2007, the Company authorised the creation of GBP446,115,000 of 5.581%
guaranteed secured bonds due 2042 of which GBP396,115,000 were issued.
Key performance indicators
1. Completion of construction sections in line with the construction contract
The achievement of sectional completions in accordance with the contractual
timetable is a key indicator of satisfactory performance under the design and
build contract as the unitary charge income from the Trust increases with each
completed section. The completion dates for the new hospitals are in April 2009
for the ICC and the MHU and December 2010 for the ECH. The current construction
programme indicates that these completion dates will be achieved on schedule.
2. Performance deductions under the service contracts
Financial penalties are levied by the Trusts in the event that performance
standards set out in the Project Agreement are not achieved. All deductions are
passed on to the contracted service providers under the terms of their
sub-contract, however the quantum of the penalties is an indication of the level
of performance. During the period to 31 March 2008, no penalties have been
levied.
3. Financial performance
The Company has modelled the financial outcome of the project over the 35 year
concession term and this has shown the project to be profitable. The Company
monitors actual financial performance against this anticipated performance
including monitoring the cash flows and profit or loss after tax on a regular
basis. As at 31 March 2008, the Company is in the first year of a construction
phase of a 35 year hospital PFI concession and as such the Company is currently
in a loss making position. This is consistent with the modelled position, with
the first period the group is forecast to make a profit being 2012.
Principal risks and uncertainties
The PFI hospital concession assets produce revenues which are index-linked to
movements in the UK Retail Prices Index ("RPI"). Variations in revenue as a
result of changes in RPI are mitigated as: (i) a proportion of the Company's
costs, including facilities management services, also vary in accordance with
changes in RPI; and (ii) the Company has entered into an RPI swap whereby it
pays out an element of its RPI-linked income to receive fixed rate income to
cover its fixed rate finance costs. The hospital concession asset revenues
generate the cash flows with which the Company funds its operating costs,
finance costs and repayments due on its financial liabilities. These revenues
are secured under contract from the Trusts, whose liabilities are effectively
underwritten by the Secretary of State for Health. The Company passes on design,
construction, availability and performance risks to its various sub-contractors
via sub-contracts.
The obligations of these sub-contractors are underwritten either by performance
guarantees issued by banks or by parent company guarantees. The Company is
responsible for the funding of lifecycle expenditure throughout the concession
term. The timing and quantum of the finances available to settle this
expenditure has been reviewed and compared to the forecast lifecycle
expenditure. The directors consider the amounts available to settle this
expenditure appropriate for the remainder of the project concession term.
Financial risk management policies and objectives
The Company's financial instruments comprise trade and other receivables,
a finance debtor, short term bank deposits, fixed rate guaranteed investment
contracts ("GICs"), trade creditors, retentions, bank loans, fixed rate bonds
and loan notes and an RPI swap. The financial structure has been established to
ensure that the cash flows from the PFI hospital concession assets are
sufficient to meet all interest and principal payments and other liabilities as
they fall due.
The Company does not undertake financial instrument transactions which are
speculative or unrelated to the Company's trading activities. Board approval is
required for the use of any new financial instrument, and the Company's ability
to enter into any new transactions is constrained by covenants in its existing
funding agreements. Exposure to price risk, cash flow risk, credit risk,
liquidity risk and interest rate risk arises in the normal course of the
Company's business.
The Company's exposure to, and management of, price risk, cash flow risk, credit
risk, liquidity risk and interest rate risk is described below:
Price Risk
The Company's price risk is principally managed through a 35 year Project
Agreement with the Trusts providing for payments that are fixed subject to
performance and RPI indexation and through sub-contracts with suppliers that
largely mirror the provisions of the Project Agreement.
Cash Flow Risk
Cash flows are generated from the availability of the hospital facilities and
from the provision of facilities management services. The risk of exposure to
variability in cash flows is mitigated as performance risk deductions are passed
on to the relevant service providers. A portion of the Company's costs, relating
to facilities management services provided by its suppliers, varies in
accordance with RPI. The impact of this is mitigated by equivalent contractual
entitlements relating to RPI in the Company's Project Agreement with the Trusts.
The portion of the Company's revenues which does not relate to provision of
facilities management services also varies in accordance with changes in RPI.
The Company has entered into an RPI swap with a leading European bank whereby it
pays over a portion of its RPI-linked income to receive fixed rate income to
cover its fixed rate finance costs.
Credit risk
The Company's credit risk is concentrated as its only clients are the respective
Trusts. The directors consider that this risk is mitigated as the project cash
flows are secured under the Project Agreement which is a long term contract with
the Trusts, whose liabilities are effectively underwritten by the Secretary of
State for Health.
Liquidity Risk
The Company's liquidity risk is principally managed through financing the
Company by means of long term borrowings which are tailored to match the
expected cash flows arising from the Company's PFI hospital concession assets
and its RPI swap arrangements, described above.
Interest Rate Risk
The Company's policy is to manage the cost of its borrowing through the use of
fixed rate debt. Whilst fixed rate interest bearing debt is not exposed to cash
flow interest rate risk, there is no opportunity for the Company to enjoy a
reduction in borrowing costs in markets where rates are falling. In addition,
the fair value risk inherent in fixed rate borrowing means that the company is
exposed to unplanned costs should debt be restructured or repaid early as part
of the liquidity management process.
Capital Management
The Company's capital and debt structure is set out in the project financial
model at the commencement of the project. The equity and debt has been
subscribed for in accordance with this model to date.
Directors
The directors who held office during the period ended 31 March 2008 and up to
the date of this report are shown below:
+---------------------------+-------------------+-----------------+-----------------+
| | Appointed | Resigned | Appointed |
+---------------------------+-------------------+-----------------+-----------------+
| Loviting Limited | 16 January 2007 | 12 March 2007 | |
+---------------------------+-------------------+-----------------+-----------------+
| Serjeants' Inn Nominees | 16 January 2007 | 12 March 2007 | |
| Limited | | | |
+---------------------------+-------------------+-----------------+-----------------+
| M Bradshaw | 12 March 2007 | 30 August 2007 | 20 November |
| | | | 2007 |
+---------------------------+-------------------+-----------------+-----------------+
| A Hunter | 12 March 2007 | 30 August 2007 | |
+---------------------------+-------------------+-----------------+-----------------+
| M Dooley | 21 March 2007 | | |
+---------------------------+-------------------+-----------------+-----------------+
| L Esau | 18 June 2007 | | |
+---------------------------+-------------------+-----------------+-----------------+
| D Collins | 18 June 2007 | | |
+---------------------------+-------------------+-----------------+-----------------+
| P Cooper | 18 September 2007 | | |
+---------------------------+-------------------+-----------------+-----------------+
| J Entract | 18 September 2007 | 8 July 2008 | |
+---------------------------+-------------------+-----------------+-----------------+
| M Wayment | 8 July 2008 | | |
+---------------------------+-------------------+-----------------+-----------------+
| G Quaife | 18 September 2007 | | |
+---------------------------+-------------------+-----------------+-----------------+
Policy on payment of creditors
It is the Company's policy to comply with the payment terms agreed with
suppliers. Where payment terms are not negotiated the Company endeavours to
adhere with suppliers' standard terms. The Company had GBP971,000 of trade
creditors at 31 March 2008 and an average payment period of 25 days.
Disclosure of information to the auditors
So far as each person who was a director at the date of approving this report is
aware, there is no relevant audit information, being information needed by the
auditor in connection with preparing its report, of which the auditor is
unaware. Having made enquiries of fellow directors and the Company's auditor,
each director has taken all the steps that he / she is obliged to take as a
director in order to make himself / herself aware of any relevant audit
information and to establish that the auditor is aware of that information.
Auditor
Ernst & Young LLP were appointed as auditor on 18 September 2007. In accordance
with Section 385 of the Companies Act 1985, a resolution to reappoint Ernst &
Young LLP as auditor is to be proposed at the next General Meeting.
By order of the board
T Rowbury
Secretary
Statement of directors' responsibilities in respect of the directors' report and
the financial statements
The directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
The financial statements are required by law to give a true and fair view of the
state of affairs of the Company and of the profit or loss of the Company for
that period.
In preparing those financial statements, the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* state whether applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the financial statements; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Independent auditors' report to the members of Peterborough (Progress Health)
plc
We have audited the Company's financial statements for the period ended 31 March
2008 which comprise the profit and loss account, statement of total recognised
gains and losses, balance sheet, cash flow statement and related notes 1 to 26.
These financial statements have been prepared under the accounting policies set
out therein.
This report is made solely to the Company's members, as a body, in accordance
with section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the Company's members those matters we are required to
state to them in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the annual report and the
financial statements in accordance with applicable United Kingdom law and
Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are
set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you whether in our opinion the information given in the
directors' report is consistent with the financial statements.
In addition we also report to you if, in our opinion, the Company has not kept
proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law
regarding directors' remuneration and other transactions is not disclosed.
We read the directors' report and consider the implications for our report if we
become aware of any apparent misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. 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 Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us 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 our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
· the financial statements give a true and fair view, in accordance with United
Kingdom Generally Accepted Accounting Practice, of the state of the Company's
affairs as at 31 March 2008 and of its loss for the period then ended;
· the financial statements have been properly prepared in accordance with the
Companies Act 1985; and
· the information given in the directors' report is consistent with the
financial statements.
Ernst & Young LLP
Registered auditor
London
Profit and loss account
for the period ended 31 March 2008
+----------------------------------------------------------+--------+--------------+
| | Notes | Period from |
| | | 16 January |
| | | 2007 to 31 |
| | | March 2008 |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| | | GBP'000 |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Turnover | 4 | 121,426 |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Cost of sales | 5 | (123,609) |
+----------------------------------------------------------+--------+--------------+
| | | _______ |
+----------------------------------------------------------+--------+--------------+
| Gross loss | | (2,183) |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Operating costs | 6 | (17) |
+----------------------------------------------------------+--------+--------------+
| | | _______ |
+----------------------------------------------------------+--------+--------------+
| Operating loss | | (2,200) |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Interest receivable and similar income | 9 | 14,700 |
+----------------------------------------------------------+--------+--------------+
| Interest payable and similar charges | 10 | (17,655) |
+----------------------------------------------------------+--------+--------------+
| | | _______ |
+----------------------------------------------------------+--------+--------------+
| Loss on ordinary activities before taxation | | (5,155) |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Tax on loss on ordinary activities | 11 | - |
+----------------------------------------------------------+--------+--------------+
| | | _______ |
+----------------------------------------------------------+--------+--------------+
| Loss on ordinary activities after taxation | | (5,155) |
+----------------------------------------------------------+--------+--------------+
| | | _______ |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
There is no difference between the historical cost loss and the loss stated
above.
All of the results relate to continuing activities.
Movements in reserves are shown in note 19.
Statement of total recognised gains and losses
for the period ended 31 March 2008
+----------------------------------------------------------+--------+--------------+
| | | Period from |
| | | 16 January |
| | | 2007 to 31 |
| | | March 2008 |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| | | GBP'000 |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Loss for the period | | (5,155) |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Loss on cash flow hedge taken to reserves | | (22,074) |
+----------------------------------------------------------+--------+--------------+
| | | |
+----------------------------------------------------------+--------+--------------+
| Deferred tax relating to cash flow hedge | | 6,181 |
+----------------------------------------------------------+--------+--------------+
| | | _______ |
+----------------------------------------------------------+--------+--------------+
| Total losses relating to the period | | (21,048) |
+----------------------------------------------------------+--------+--------------+
| | | _______ |
+----------------------------------------------------------+--------+--------------+
Balance sheet
at 31 March 2008
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | |Notes | 2008 |
+---------------------------------------+---+----+---------------+-------+-----------+
| Current assets | | | | | GBP'000 |
+---------------------------------------+---+----+---------------+-------+-----------+
| Debtors: | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| Amounts falling due within one year | | | | 12 | 8,787 |
+---------------------------------------+---+----+---------------+-------+-----------+
| Amounts falling due after more than | | | | 13 | 122,670 |
| one year | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | _______ |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | 131,457 |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| Short term investments | | | | 14 | 260,909 |
+---------------------------------------+---+----+---------------+-------+-----------+
| Cash at bank and in hand | | | | | 36,604 |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | _______ |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | 428,970 |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| Creditors: Amounts falling due within | | | | 15 | (29,878) |
| one year | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | _______ |
+---------------------------------------+---+----+---------------+-------+-----------+
| Net current assets | | | | | 399,092 |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| Creditors: Amounts falling due after | | | | 16 | (420,090) |
| more than one year | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | _______ |
+---------------------------------------+---+----+---------------+-------+-----------+
| Net liabilities | | | | | (20,998) |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | _______ |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| Capital and reserves | | | | | |
+---------------------------------------+---+----+---------------+-------+-----------+
| Called up share capital | | | | 18 | 50 |
+---------------------------------------+---+----+---------------+-------+-----------+
| Profit and loss account | | | | 19 | (5,155) |
+---------------------------------------+---+----+---------------+-------+-----------+
| Unrealised gains and losses reserve | | | | 19 | (15,893) |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | _______ |
+---------------------------------------+---+----+---------------+-------+-----------+
| Equity shareholders' deficit | | | | 20 | (20,998) |
+---------------------------------------+---+----+---------------+-------+-----------+
| | | | | | _______ |
+---------------------------------------+---+----+---------------+-------+-----------+
These financial statements were approved by the board of directors on 23rd
February 2009
and were signed on its behalf by:
M Dooley
Cash flow statement
for the period ended 31 March 2008
+------------------------------------------------------+------------+------------+
| | Notes | Period |
| | | from 16 |
| | | January |
| | | 2007 to 31 |
| | | March 2008 |
+------------------------------------------------------+------------+------------+
| | | GBP'000 |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| Net cash outflow from operating activities | 21 | (113,245) |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| Returns on investment and servicing of finance | 22 | 8,682 |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| Taxation | 22 | - |
+------------------------------------------------------+------------+------------+
| | | ________ |
+------------------------------------------------------+------------+------------+
| Net cash outflow before management of liquid | | (104,563) |
| resources and financing | | |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| Management of liquid resources | | |
+------------------------------------------------------+------------+------------+
| Cash placed on guaranteed investment contracts | | (260,909) |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| Financing | 22 | 402,076 |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| | | _______ |
+------------------------------------------------------+------------+------------+
| Increase in cash | 23 | 36,604 |
+------------------------------------------------------+------------+------------+
| | | _______ |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| Reconciliation of net cash flow to movement in net | | |
| debt | | |
+------------------------------------------------------+------------+------------+
| Increase in cash in the period | | 36,604 |
+------------------------------------------------------+------------+------------+
| Cash outflow to guaranteed investment contracts | | 260,909 |
+------------------------------------------------------+------------+------------+
| Proceeds from issue of subordinated debt | | (1,768) |
+------------------------------------------------------+------------+------------+
| Net proceeds from issue of bonds and bank loan | | (400,258) |
+------------------------------------------------------+------------+------------+
| | | ________ |
+------------------------------------------------------+------------+------------+
| Change in net debt resulting from cash flows | | (104,513) |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| | | |
+------------------------------------------------------+------------+------------+
| Net debt at 16 January 2007 | | - |
+------------------------------------------------------+------------+------------+
| | | ________ |
+------------------------------------------------------+------------+------------+
| Net debt at 31 March 2008 | 23 | (104,513) |
+------------------------------------------------------+------------+------------+
| | | ________ |
+------------------------------------------------------+------------+------------+
Notes to the financial statements
At 31 March 2008
1 Basis of preparation
The financial statements have been prepared under the historical cost convention
and in accordance with applicable UK accounting standards and the Companies Act
1985. The Company has adopted FRS 29, "Financial instruments: Disclosures"
during the period. This standard requires disclosures that enable users of the
financial statements to evaluate the significance of the Company's financial
instruments and the nature and extent of risks arising from those financial
instruments. These disclosures are included throughout the financial statements.
The profit and loss account for the period ending 31 March 2008 shows a loss of
GBP5,155,000. The directors have reviewed the Company's projected profits and
cash flows by reference to a financial model covering accounting periods up to
31 March 2043. They have also examined the current status of the Company's
principal contracts and likely developments in the foreseeable future. Having
reviewed the financial facilities available to the Company, the directors
consider that the Company will be able to settle its liabilities as they fall
due and accordingly the financial statements have been prepared on a going
concern basis.
2 Accounting policies
(i) Finance debtor
The Company has adopted the provisions of FRS 5 (Application Note F) in
determining the appropriate treatment of the three hospital assets of the
Company. After due consideration the Company has accounted for attributable
expenditure during the period as a finance debtor. In accounting for costs as a
finance debtor, all attributable expenditure during the construction phase of
the project, excluding interest and financing costs, is included in the cost of
the finance debtor. On completion of the construction phase of each hospital the
amortisation of the relevant finance debtor will be calculated to write off the
cost over their respective Project Agreement operational phases.
(ii) Interest and other financing costs
Interest and other financing costs are expensed to the profit and loss account
in the period to which they relate.
(iii) Revenue recognition
Revenue is recognised to the extent that the Company obtains the right to
consideration in exchange for its performance. Revenue is measured at the fair
value of the consideration received, excluding discounts, VAT and other sales
taxes or duty. The following criteria must also be met before revenue is
recognised:
Revenue from construction activity
Revenue from construction activity is recognised by reference to costs incurred
in the period that are expected to be recoverable and are directly attributable
to the construction of the asset.
Facilities management services - interim phase prior to completion
Revenue from the provision of the interim services to the existing hospital
estate is recognised as contract activity progresses at GBPNil mark up on
related costs as these items are direct pass-throughs from the Trust to the
contracted service providers.
Facilities management services - operational phase following completion
Revenue from the provision of the facilities management services to the new
hospital is recognised as contract activity progresses at a mark up on related
costs to reflect the value of work performed.
Interest receivable on finance debtor
Revenue in relation to the finance debtor is recognised as finance income at a
project specific rate commencing when each new hospital becomes operational.
Interest income
Revenue is recognised as interest accrues using the effective interest method.
(iv) Taxation
The charge for current taxation for the period is based on the result for the
period, adjusted for disallowable items.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or a right to pay less or to receive more, tax, with the following exception:
* Deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences can
be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.
(v) Financial instruments
Financial instruments are recognised when the Company becomes a party to the
contractual provisions of the instrument. Financial instruments are generally
derecognised when the contract giving rise to the instrument is settled, sold,
cancelled or expires.
Financial assets
The Company determines the classification of its financial assets at initial
recognition and re-evaluates this designation at each financial year end.
Financial assets are initially measured at fair value, plus, in the case of
financial assets not at 'fair value through profit or loss', directly
attributable transaction costs.
The Company has categorised its financial assets as either 'loans and
receivables' or as 'held-to-maturity investments'.
'Loans and receivables' are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market, do not qualify as
trading assets and have not been designated as either 'fair value through profit
or loss' or 'available for sale'. Such assets are carried at amortised cost
using the effective interest method. The effective interest method is a method
of calculating the amortised cost of a financial asset or a financial liability
and of allocating the interest income or expense over the relevant period. Gains
and losses are recognised in the profit and loss account when the 'loans and
receivables' are derecognised or impaired, as well as through the amortisation
process.
'Held-to-maturity investments' are non-derivative financial assets with fixed or
determinable payments and fixed maturity that an entity has the positive
intention and ability to hold to maturity other than:
(a) those that the Company upon initial recognition designates as at fair
value through profit or loss;
(b) those that the entity designates as available for sale; and
(c) those that meet the definition of loans and receivables.
'Held-to-maturity investments' are carried at amortised cost using the effective
interest method. Gains and losses are recognised in income when the investments
are derecognised or impaired, as well as through the amortisation process.
Impairment of financial assets
The company assesses at each balance sheet date whether a financial asset or
group of financial assets is impaired.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on assets carried at
amortised cost has been incurred, the amount of the loss is measured as the
difference between the asset's carrying amount and the present value of the
estimated future cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset's original effective interest rate
(i.e. the effective interest rate computed at initial recognition). The carrying
amount of the asset is reduced, through the use of an allowance account. The
amount of the loss shall be recognised in administration costs.
If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment
was recognised, the previously recognised impairment loss is reversed. Any
subsequent reversal of an impairment loss is recognised in the profit and loss
account, to the extent that the carrying value of the asset does not exceed its
amortised cost at the reversal date.
In relation to trade receivables, a provision for impairment is made when there
is objective evidence (such as the probability of insolvency or significant
financial difficulties of the debtor) that the Company will not be able to
collect all of the amounts due under the original terms of the invoice. The
carrying amount of the receivable is reduced through use of an allowance
account. Impaired debts are derecognised when they are assessed as
irrecoverable.
Financial liabilities
Loans and borrowings are initially measured at fair value less directly
attributable transaction costs. After initial recognition, financial liabilities
are measured at amortised cost using the effective interest method. Finance
charges and directly attributable transaction costs are accounted for in the
profit and loss account using the effective interest method, and added to the
carrying amount of the instrument to the extent that they are not settled in the
period in which they arise.
Derivative financial instruments and hedging
The Company uses a derivative financial instrument, an RPI swap, to hedge its
risks associated with RPI income fluctuations. Derivatives are initially
recorded at fair value on the date the derivative contract is entered into and
are subsequently remeasured at fair value at each reporting date. The fair value
of the RPI swap contract is determined by reference to market values for similar
instruments.
The Company has designated its RPI swap as an effective cash flow hedging
instrument. The hedging relationship has been formally designated and documented
at its inception. This documentation identifies the risk management objective
and strategy for undertaking the hedge, the hedging instrument, the hedged
transaction, the nature of the risk being hedged and how effectiveness will be
measured throughout its duration. The hedge is expected at inception to be
highly effective in offsetting changes in cash flows and is assessed on an
ongoing basis to determine that it is highly effective throughout the reporting
period for which it was designated.
For cash flow hedges, the effective portion of the gain or loss on the hedging
instrument is recognised directly in reserves via the statement of total
recognised gains and losses, while the ineffective portion is recognised
directly in the profit and loss account. Amounts taken to reserves are recycled
to the profit and loss account in the periods when the hedged item is recognised
in the profit and loss account.
3 Segment analysis
The Company has one continuing activity being the financing, design,
construction and maintenance of a new acute hospital, a new mental health unit
and a new integrated care centre together with the operations of certain non
-clinical services and this is undertaken entirely in the United Kingdom.
4 Turnover
Turnover which is stated net of value added tax, represents income for services
provided in the period. Turnover is attributable to one geographical market, the
United Kingdom, and can be analysed as follows:
+--------------------------------------------------+-------------+---------------+
| | | Period from |
| | | 16 January |
| | | 2007 to |
| | | 31 March 2008 |
+--------------------------------------------------+-------------+---------------+
| | | GBP'000 |
+--------------------------------------------------+-------------+---------------+
| | | |
+--------------------------------------------------+-------------+---------------+
| Construction income | | 116,495 |
+--------------------------------------------------+-------------+---------------+
| Interim services income | | 4,931 |
+--------------------------------------------------+-------------+---------------+
| | | ______ |
+--------------------------------------------------+-------------+---------------+
| | | 121,426 |
+--------------------------------------------------+-------------+---------------+
| | | ______ |
+--------------------------------------------------+-------------+---------------+
5 Cost of sales
+--------------------------------------------------------------------+----------+
| | |
| | GBP'000 |
+--------------------------------------------------------------------+----------+
| Construction costs | 116,495 |
+--------------------------------------------------------------------+----------+
| Interim services | 4,931 |
+--------------------------------------------------------------------+----------+
| Bid costs | 214 |
+--------------------------------------------------------------------+----------+
| Mobilisation and upfront fees | 1,969 |
+--------------------------------------------------------------------+----------+
| | _______ |
+--------------------------------------------------------------------+----------+
| | 123,609 |
+--------------------------------------------------------------------+----------+
| | _______ |
+--------------------------------------------------------------------+----------+
6 Operating costs
+--------------------------------------------------+----------+------+--------------+
| | | |
+--------------------------------------------------+----------+---------------------+
| | | |
+--------------------------------------------------+-----------------+--------------+
| | | GBP'000 |
+--------------------------------------------------+----------+---------------------+
| | | |
+--------------------------------------------------+----------+---------------------+
| Project management services and associated | | 17 |
| overheads | | |
+--------------------------------------------------+----------+---------------------+
| | | _____ |
+--------------------------------------------------+----------+------+--------------+
7 Auditors' remuneration
The remuneration of the auditors is analysed as follows:
+--------------------------------------------------------------------+------------+
| | Period |
| | from 16 |
| | January |
| | 2007 to 31 |
| | March 2008 |
| | GBP'000 |
+--------------------------------------------------------------------+------------+
| Audit of the financial statements - the Company | 12 |
+--------------------------------------------------------------------+------------+
| | |
+--------------------------------------------------------------------+------------+
| Other fees to auditors - taxation services | 5 |
+--------------------------------------------------------------------+------------+
| | ____ |
+--------------------------------------------------------------------+------------+
| | 17 |
+--------------------------------------------------------------------+------------+
| | ____ |
+--------------------------------------------------------------------+------------+
8 Directors' emoluments and staff costs
None of the directors received any emoluments in respect of services provided to
the Company in the period. The directors receive their emoluments directly from
shareholder companies and do not receive any emoluments from the Company. The
Company incurred fees from related parties for directors' services totalling
GBP40,000.
The Company operates through subcontracting services and does not directly
employ any staff.
9 Interest receivable and similar income
+-------------------------------------------------------+----+--------------------+
| | | |
+-------------------------------------------------------+----+--------------------+
| | | GBP'000 |
+-------------------------------------------------------+----+--------------------+
| | | |
+-------------------------------------------------------+----+--------------------+
| Interest receivable on GICs | | 14,343 |
+-------------------------------------------------------+----+--------------------+
| Interest receivable on bank deposits | | 357 |
+-------------------------------------------------------+----+--------------------+
| | | _______ |
+-------------------------------------------------------+----+--------------------+
| | | 14,700 |
+-------------------------------------------------------+----+--------------------+
| | | ______ |
+-------------------------------------------------------+----+--------------------+
10 Interest payable and similar charges
+-----------------------------------------------------------------+--------------+
| | GBP'000 |
+-----------------------------------------------------------------+--------------+
| | |
+-----------------------------------------------------------------+--------------+
| Interest payable on bonds | 16,490 |
+-----------------------------------------------------------------+--------------+
| Interest payable on loan notes | 99 |
+-----------------------------------------------------------------+--------------+
| Interest payable on bank loans | 216 |
+-----------------------------------------------------------------+--------------+
| Amortisation of debt transaction costs | 88 |
+-----------------------------------------------------------------+--------------+
| Financing costs | 762 |
+-----------------------------------------------------------------+--------------+
| | _______ |
+-----------------------------------------------------------------+--------------+
| | 17,655 |
+-----------------------------------------------------------------+--------------+
| | ______ |
+-----------------------------------------------------------------+--------------+
11 Taxation
+--------------------------------------------------------+--------+---------------+
| | | Period from |
| | | 16 January |
| | | 2007 to 31 |
| | | March 2008 |
+--------------------------------------------------------+--------+---------------+
| (a) Tax on loss on ordinary activities | | GBP'000 |
+--------------------------------------------------------+--------+---------------+
| | | |
+--------------------------------------------------------+--------+---------------+
| Analysis of charge in period: | | |
+--------------------------------------------------------+--------+---------------+
| Current tax: | | |
+--------------------------------------------------------+--------+---------------+
| UK corporation tax on loss for the period (Note 11 | | - |
| (b)) | | |
+--------------------------------------------------------+--------+---------------+
| | | |
+--------------------------------------------------------+--------+---------------+
| Deferred tax: | | |
+--------------------------------------------------------+--------+---------------+
| Origination and reversal of timing differences | | - |
+--------------------------------------------------------+--------+---------------+
| | | ______ |
+--------------------------------------------------------+--------+---------------+
| Tax on loss on ordinary activities | | - |
+--------------------------------------------------------+--------+---------------+
| | | ______ |
+--------------------------------------------------------+--------+---------------+
(b)Analysis of credit in the period in statement of total recognised gains and
losses
+--------------------------------------------------------+--------+---------------+
| | | GBP'000 |
+--------------------------------------------------------+--------+---------------+
| | | |
+--------------------------------------------------------+--------+---------------+
| Deferred tax | | (6,181) |
+--------------------------------------------------------+--------+---------------+
| | | ______ |
+--------------------------------------------------------+--------+---------------+
(c) Factors affecting the current tax charge
The tax assessed on the loss on ordinary activities for the period is higher
than the standard rate of corporation tax in the United Kingdom of 30%. The
differences are reconciled below:
+--------------------------------------------------+-------------+---------------+
| | | GBP'000 |
+--------------------------------------------------+-------------+---------------+
| | | |
+--------------------------------------------------+-------------+---------------+
| Loss on ordinary activities before tax | | (5,155) |
+--------------------------------------------------+-------------+---------------+
| | | ______ |
+--------------------------------------------------+-------------+---------------+
| Loss on ordinary activities before tax | | (1,547) |
| multiplied by standard rate of corporation tax | | |
| in the UK of 30% | | |
+--------------------------------------------------+-------------+---------------+
| Expenses not deductible for tax purposes | | 15 |
+--------------------------------------------------+-------------+---------------+
| Unrelieved tax losses carried forward | | 1,532 |
+--------------------------------------------------+-------------+---------------+
| | | _____ |
+--------------------------------------------------+-------------+---------------+
| Total current tax (Note 11 (a)) | | - |
+--------------------------------------------------+-------------+---------------+
| | | ______ |
+--------------------------------------------------+-------------+---------------+
(d) Deferred tax
+--------------------------------------------------------+--------+---------------+
| | | 2008 |
+--------------------------------------------------------+--------+---------------+
| | | GBP'000 |
+--------------------------------------------------------+--------+---------------+
| The deferred tax included in the balance sheet is as | | |
| follows: | | |
+--------------------------------------------------------+--------+---------------+
| Deferred tax asset arising on loss on cash flow hedge | | 6,181 |
+--------------------------------------------------------+--------+---------------+
| | | ______ |
+--------------------------------------------------------+--------+---------------+
(e) Factors affecting future tax charge
The UK corporation tax rate changed from 30% to 28% from 1 April 2008. This rate
change will affect the amount of future cash payments to be made by the Company.
As at 31 March 2008, any deferred tax balances have been calculated at a rate of
28%.
A deferred tax asset of GBP1,430,000 in respect of trading losses available to
be carried forward and offset against profits arising from the same trade has
not been recognised at 31 March 2008. This is due to there being no persuasive
and reliable evidence available at this time of suitable profits in the future
to offset these losses.
12 Debtors: Amounts falling due within one year
+--------------------------------------------------+-------------+---------------+
| | | 2008 |
+--------------------------------------------------+-------------+---------------+
| | | GBP'000 |
+--------------------------------------------------+-------------+---------------+
| | | |
+--------------------------------------------------+-------------+---------------+
| Trade receivables | | 793 |
+--------------------------------------------------+-------------+---------------+
| VAT receivable | | 2,570 |
+--------------------------------------------------+-------------+---------------+
| Prepayments and accrued income | | 5,418 |
+--------------------------------------------------+-------------+---------------+
| Finance debtor - under construction | | 6 |
+--------------------------------------------------+-------------+---------------+
| | | ______ |
+--------------------------------------------------+-------------+---------------+
| | | 8,787 |
+--------------------------------------------------+-------------+---------------+
| | | ______ |
+--------------------------------------------------+-------------+---------------+
13 Debtors: Amounts falling due after more than one year
+--------------------------------------------------+-------------+---------------+
| | | 2008 |
+--------------------------------------------------+-------------+---------------+
| | | GBP'000 |
+--------------------------------------------------+-------------+---------------+
| | | |
+--------------------------------------------------+-------------+---------------+
| Finance debtor - under construction | | 116,489 |
+--------------------------------------------------+-------------+---------------+
| Deferred tax | | 6,181 |
+--------------------------------------------------+-------------+---------------+
| | | _______ |
+--------------------------------------------------+-------------+---------------+
| | | 122,670 |
+--------------------------------------------------+-------------+---------------+
| | | _______ |
+--------------------------------------------------+-------------+---------------+
14 Short term investments
+--------------------------------------------------+-------------+---------------+
| | | 2008 |
+--------------------------------------------------+-------------+---------------+
| | | GBP'000 |
+--------------------------------------------------+-------------+---------------+
| | | |
+--------------------------------------------------+-------------+---------------+
| Fixed rate GIC | | 260,909 |
+--------------------------------------------------+-------------+---------------+
| | | ________ |
+--------------------------------------------------+-------------+---------------+
The short term investments are convertible into cash within five business days
net of any professional fees.
15 Creditors: Amounts falling due within one year
+--------------------------------------------------+------------------+----------+
| | | 2008 |
+--------------------------------------------------+------------------+----------+
| | | |
+--------------------------------------------------+------------------+----------+
| | | GBP'000 |
+--------------------------------------------------+------------------+----------+
| | | |
+--------------------------------------------------+------------------+----------+
| Trade creditors | | 971 |
+--------------------------------------------------+------------------+----------+
| Bank loan | | 6,500 |
+--------------------------------------------------+------------------+----------+
| Accruals | | 22,407 |
+--------------------------------------------------+------------------+----------+
| | | _______ |
+--------------------------------------------------+------------------+----------+
| | | 29,878 |
+--------------------------------------------------+------------------+----------+
| | | _______ |
+--------------------------------------------------+------------------+----------+
The bank loan was drawn down in two tranches in September and October 2007 under
the terms of a GBP14,500,000 Liquidity Facility Agreement dated 4 July 2007 and
bore interest at rates of 6.32% per annum and 6.74% per annum respectively. The
loan was repaid in full on 2 April 2008.
16 Creditors: Amounts falling due after more than one year
+-----------------------------------------------------------+---------+----------+
| | | |
+-----------------------------------------------------------+---------+----------+
| | | 2008 |
+-----------------------------------------------------------+---------+----------+
| | | |
+-----------------------------------------------------------+---------+----------+
| Bonds: | | GBP'000 |
+-----------------------------------------------------------+---------+----------+
| At 16 January 2007 | | - |
+-----------------------------------------------------------+---------+----------+
| Bonds issued during the period | | 396,115 |
+-----------------------------------------------------------+---------+----------+
| | | ________ |
+-----------------------------------------------------------+---------+----------+
| | | 396,115 |
+-----------------------------------------------------------+---------+----------+
| | | |
+-----------------------------------------------------------+---------+----------+
| Less: Unamortised transaction costs | | (2,357) |
+-----------------------------------------------------------+---------+----------+
| | | ________ |
+-----------------------------------------------------------+---------+----------+
| | | 393,758 |
+-----------------------------------------------------------+---------+----------+
| Loan Notes: | | |
+-----------------------------------------------------------+---------+----------+
| At 16 January 2007 | | - |
+-----------------------------------------------------------+---------+----------+
| Loan notes drawn down during the period | | 1,768 |
+-----------------------------------------------------------+---------+----------+
| | | ________ |
+-----------------------------------------------------------+---------+----------+
| | | 1,768 |
+-----------------------------------------------------------+---------+----------+
| | | |
+-----------------------------------------------------------+---------+----------+
| Retentions payable | | 2,490 |
+-----------------------------------------------------------+---------+----------+
| | | |
+-----------------------------------------------------------+---------+----------+
| RPI swap | | 22,074 |
+-----------------------------------------------------------+---------+----------+
| | | ________ |
+-----------------------------------------------------------+---------+----------+
| | | 420,090 |
+-----------------------------------------------------------+---------+----------+
| | | ________ |
+-----------------------------------------------------------+---------+----------+
Maturity analysis
+------------------+------+---+------------------+----------+-------------+------------+
| | | | 2-5 years | Over 5 | Unamortised | Total |
| | | | | years | issue costs | |
+------------------+------+---+------------------+----------+-------------+------------+
| | | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+------+---+------------------+----------+-------------+------------+
| Bonds | | | 6,508 | 389,607 | (2,357) | 393,758 |
+------------------+------+---+------------------+----------+-------------+------------+
| Loan notes | | | 171 | 1,597 | - | 1,768 |
+------------------+------+---+------------------+----------+-------------+------------+
| | | | _____ | ________ | ________ | ________ |
+------------------+------+---+------------------+----------+-------------+------------+
| Total | | | 6,679 | 391,204 | (2,357) | 395,526 |
+------------------+------+---+------------------+----------+-------------+------------+
| | | | ______ | ________ | ________ | ________ |
+------------------+------+---+------------------+----------+-------------+------------+
Guaranteed Secured Bonds due 2042
The Company has created GBP446,115,000 of 5.581% Guaranteed Secured Bonds due
2042 pursuant to a Bond Trust Deed and a Collateral Deed dated 4 July 2007, of
which GBP396,115,000 were issued for cash on 4 July 2007 at an issue price of
100.009% of par. The interest is payable semi-annually in arrears on 2 April and
2 October each year. The bonds are repayable in instalments which commence on 2
April 2012 and end in October 2042.
The bonds created by the Company have the benefit of an unconditional and
irrevocable financial guarantee issued by FGIC (UK) Limited in favour of
LaSalle Trustees Limited (formerly ABN AMRO Trustees Limited) as security
trustee over all of the undertakings and assets of the Company.
Unsecured Loan Notes due 2026
The Company has created GBP1,768,000 of unsecured loan notes due 2026 pursuant
to a deed poll dated 4 July 2007 and were issued for cash on that date. The
loan notes bear interest at a rate of 7.47% per annum, from the date of issue
until the actual final completion date of the hospital facilities and at a rate
of 9.97% per annum thereafter. The interest is payable semi-annually in arrears
on 2 April and 2 October each year. The loan notes are repayable in instalments
which commence on 2 October 2011 and end in October 2026.
17 Financial instruments
Financial risk management policies and objectives
An explanation of the Company's financial instrument risk management objectives,
policies and strategies can be found in the directors' report.
Interest rate maturity profile of financial assets and financial liabilities
The table below sets out the carrying amount, by maturity, of the Company's
financial instruments that are exposed to interest rate risk.
+----------------+----------------+----------------+----------------+----------------+
| Fixed rate: | Finance Debtor | GIC | Loan Notes | Bonds |
+----------------+----------------+----------------+----------------+----------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+----------------+----------------+----------------+----------------+
| Within 1 year | 6 | 173,450 | - | - |
+----------------+----------------+----------------+----------------+----------------+
| 1-2 years | 637 | 80,564 | - | - |
+----------------+----------------+----------------+----------------+----------------+
| 2-3 years | 2,147 | 6,895 | - | - |
+----------------+----------------+----------------+----------------+----------------+
| 3-4 years | 4,442 | - | (57) | - |
+----------------+----------------+----------------+----------------+----------------+
| 4-5 years | 4,772 | - | (114) | (6,508) |
+----------------+----------------+----------------+----------------+----------------+
| Over 5 years | 104,491 | - | (1,597) | (389,607) |
+----------------+----------------+----------------+----------------+----------------+
| | _______ | ________ | _______ | _______ |
+----------------+----------------+----------------+----------------+----------------+
| Total | 116,495 | 260,909 | (1,768) | (396,115) |
+----------------+----------------+----------------+----------------+----------------+
| | ======= | ======== | ======= | ======= |
+----------------+----------------+----------------+----------------+----------------+
| | | | | |
+----------------+----------------+----------------+----------------+----------------+
| Floating rate: | | | Cash Deposits | Bank Loan |
+----------------+----------------+----------------+----------------+----------------+
| | | | GBP'000 | GBP'000 |
+----------------+----------------+----------------+----------------+----------------+
| Within 1 year | | | 36,604 | (6,500) |
+----------------+----------------+----------------+----------------+----------------+
| | | | _______ | _______ |
+----------------+----------------+----------------+----------------+----------------+
| Total | | | 36,604 | (6,500) |
+----------------+----------------+----------------+----------------+----------------+
| | | | ======= | ======= |
+----------------+----------------+----------------+----------------+----------------+
Interest on financial instruments classified as fixed rate is fixed until the
maturity of the instrument. Interest on financial instruments classified as
floating rate is repriced at intervals of less than one year. The other
financial instruments of the Company that are not included in the above table
are non-interest bearing and are not subject to interest rate risk.
Sensitivity analysis for variable rated financial instruments - market related
interest rate risk
The Company's only floating rate borrowing, comprising a GBP6,500,000 bank loan,
was repaid in full on 2 April 2008 and accordingly the Company is not sensitive
to changes in interest rates going forward.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss to the other party by failing to discharge an obligation under
the contract giving rise to the financial instrument.
The Company's short term exposure to credit risk, which exists predominantly
until the end of the construction period, is principally dependent on the
creditworthiness of two major European investment banks which hold the company's
cash balances and GICs. The contractual arrangements under the GICs require the
counterparty banks to inform the Company immediately should their credit ratings
fall below certain levels and thereafter to either return the cash balances
within the GICs to the Company, or procure that an appropriately rated
replacement bank be the new custodian of the GICs.
The Company's long term exposure to credit risk is principally dependent on the
creditworthiness of the Trusts as the Company's sole clients. The risk
associated with this is mitigated as the cash flows are secured under the
Project Agreement, which is a long term contract with the Trusts, whose
obligations and liabilities are effectively underwritten by the Secretary of
State for Health.
Maximum exposure to credit risk
The carrying amount of the Company's financial assets represents the maximum
credit exposure. Trade and other receivables have all been collected in full
after 31 March 2008. There are no debtors that are past due on the reporting
date.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulties in meeting
obligations associated with its financial liabilities. The Company's liquidity
risk is principally managed through financing the Company by means of long term
borrowings which are tailored to match the expected cash flows arising from the
Company's PFI hospital concession assets and its RPI swap arrangements which are
described in the directors' report. The maturity profile of the anticipated
future undiscounted cash flows, including interest where appropriate, and based
on the earliest date upon which the Company can be required to pay its financial
liabilities, is as follows:
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| | Bonds | Loan | Bank | Trade | Retentions | RPI | Total |
| | | Notes | Loan | creditors | | Swap | |
| | | | | | | | |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| Less | 11,056 | 66 | 6,705 | 971 | - | - | 18,798 |
| than 3 | | | | | | | |
| months | | | | | | | |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| 3 to | 11,056 | 66 | - | - | - | - | 11,122 |
| 12 | | | | | | | |
| months | | | | | | | |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| 1- 5 | 94,881 | 728 | - | - | 2,490 | 44,657 | 142,756 |
| years | | | | | | | |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| Over 5 | 804,890 | 2,751 | - | - | - | 983,259 | 1,790,900 |
| years | | | | | | | |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| | _______ | _______ | _______ | _______ | _______ | _________ | _________ |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| Total | 921,883 | 3,611 | 6,705 | 971 | 2,490 | 1,027,916 | 1,963,576 |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
| | _______ | _______ | _______ | _______ | _______ | _________ | _________ |
+--------+---------+---------+---------+-----------+------------+------------+-----------+
Fair values of financial assets and liabilities
Set out below is a comparison by category of carrying amounts and fair values of
all the Company's financial assets and liabilities:
+------------------------------------------+----------------+-------------------+
| | 2008 | 2008 |
+------------------------------------------+----------------+-------------------+
| | Book value | Fair value |
+------------------------------------------+----------------+-------------------+
| Financial assets: | GBP'000 | GBP'000 |
+------------------------------------------+----------------+-------------------+
| Fixed rate GIC | 260,909 | 261,223 |
+------------------------------------------+----------------+-------------------+
| Cash at bank | 36,604 | 36,604 |
+------------------------------------------+----------------+-------------------+
| Finance debtor under construction | 116,495 | 116,495 |
+------------------------------------------+----------------+-------------------+
| | | |
+------------------------------------------+----------------+-------------------+
| Financial liabilities: | | |
+------------------------------------------+----------------+-------------------+
| Loan notes (including accrued interest) | (1,843) | (1,843) |
+------------------------------------------+----------------+-------------------+
| Bank loan (including accrued interest) | (6,705) | (6,705) |
+------------------------------------------+----------------+-------------------+
| Bonds (including accrued interest) | (404,813) | (322,818) |
+------------------------------------------+----------------+-------------------+
| RPI swap | (22,074) | (22,074) |
+------------------------------------------+----------------+-------------------+
| | _________ | _________ |
+------------------------------------------+----------------+-------------------+
The other financial instruments of the Company that are not included in the
above tables are short term debtors and creditors where carrying amounts are a
reasonable approximation of fair value. The fair value of the finance debtor is
calculated by discounting future cash flows relating to the asset. The fair
values of the fixed rate GIC and bonds reflect market values. The fair value of
the RPI swap has been determined by reference to the market value for a similar
instrument. The fair value of the loan notes has been calculated by discounting
the expected future cash flows at prevailing interest rates. The bank loan was
repaid in full on 2 April 2008. The RPI swap has been assessed as a highly
effective hedging instrument and at 31 March 2008, a net unrealized loss of
GBP22,074,000 was included in equity. The Company has estimated that a 1%
increase or decrease in RPI, together with a corresponding change in the
discount rate would affect the net unrealised loss in respect of the RPI swap as
set out below:
+--------------------------+--------------------------+--------------------------+
| | Estimated swap fair | Effect on unrealised |
| | value | loss within equity |
| | GBP'000 | GBP'000 |
+--------------------------+--------------------------+--------------------------+
| 1% increase in RPI | (97,990) | (75,916) |
+--------------------------+--------------------------+--------------------------+
| 1% decrease in RPI | 39,703 | 61,777 |
+--------------------------+--------------------------+--------------------------+
.
18 Called up share capital
+-------------------------------------------------------------------+----------------+----------------------+
| | | 2008 |
+-------------------------------------------------------------------+----------------+----------------------+
| Equity | | GBP'000 |
+-------------------------------------------------------------------+----------------+----------------------+
| Authorised | | |
+-------------------------------------------------------------------+----------------+----------------------+
| 50,000 ordinary shares of GBP1 each | | 50 |
+-------------------------------------------------------------------+----------------+----------------------+
| | | |
+-------------------------------------------------------------------+----------------+----------------------+
| Allotted, called up and fully paid | | |
+-------------------------------------------------------------------+----------------+----------------------+
| 50,000 ordinary shares of GBP1 each | | 50 |
+-------------------------------------------------------------------+----------------+----------------------+
| | | |
+-------------------------------------------------------------------+----------------+----------------------+
19 Reserves
+----------+--------+------------+---------+----------+
| | | 2008 | 2008 | 2008 |
+----------+--------+------------+---------+----------+
| | | Unrealised | Profit | Total |
| | | gains and | and | |
| | | (losses) | loss | |
| | | reserve | account | |
+----------+--------+------------+---------+----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+----------+--------+------------+---------+----------+
| At 16 | | - | - | - |
| January | | | | |
| 2007 | | | | |
+----------+--------+------------+---------+----------+
| | | | | |
+----------+--------+------------+---------+----------+
| Retained | | - | (5,155) | (5,155) |
| loss for | | | | |
| the | | | | |
| period | | | | |
+----------+--------+------------+---------+----------+
| Loss | | (22,074) | - | (22,074) |
| on | | | | |
| cash | | | | |
| flow | | | | |
| hedge | | | | |
+----------+--------+------------+---------+----------+
| Deferred | | 6,181 | - | 6,181 |
| tax on | | | | |
| cash | | | | |
| flow | | | | |
| hedge | | | | |
+----------+--------+------------+---------+----------+
| | | _______ | _______ | _______ |
+----------+--------+------------+---------+----------+
| At 31 | | (15,893) | (5,155) | (21,048) |
| March | | | | |
| 2008 | | | | |
+----------+--------+------------+---------+----------+
| | | ___ | ___ | ___ |
| | | | | |
+----------+--------+------------+---------+----------+
20Movements in equity shareholders' deficit
+-----------------------------+-----------+-----------+------------+----------------+
| | | | | Period from 16 |
| | | | | January 2007 |
| | | | | to 31 March |
| | | | | 2008 |
+-----------------------------+-----------+-----------+------------+----------------+
| | | | | GBP'000 |
+-----------------------------+-----------+-----------+------------+----------------+
| | | | | |
+-----------------------------+-----------+-----------+------------+----------------+
| Equity shareholders' deficit at 16 | | | - |
| January 2007 | | | |
+-----------------------------------------+-----------+------------+----------------+
| | | | | |
+-----------------------------+-----------+-----------+------------+----------------+
| Issue of share capital | | | | 50 |
+-----------------------------+-----------+-----------+------------+----------------+
| Retained loss for the | | | | (5,155) |
| period | | | | |
+-----------------------------+-----------+-----------+------------+----------------+
| Unrealised loss on cash | | | | (15,893) |
| flow hedge | | | | |
+-----------------------------+-----------+-----------+------------+----------------+
| | | | | ______ |
+-----------------------------+-----------+-----------+------------+----------------+
| Equity shareholders' deficit at 31 | | | (20,998) |
| March 2008 | | | |
+-----------------------------------------+-----------+------------+----------------+
| | | | | ______ |
+-----------------------------+-----------+-----------+------------+----------------+
21Reconciliation of operating loss to cash outflow from operating activities
+-----------------------------------------------------------------+--------------+
| | |
+-----------------------------------------------------------------+--------------+
| | |
+-----------------------------------------------------------------+--------------+
| | GBP'000 |
+-----------------------------------------------------------------+--------------+
| Operating loss | (2,200) |
+-----------------------------------------------------------------+--------------+
| Increase in debtors | (125,194) |
+-----------------------------------------------------------------+--------------+
| Increase in creditors | 14,149 |
+-----------------------------------------------------------------+--------------+
| | ________ |
+-----------------------------------------------------------------+--------------+
| Cash outflow from operating activities | (113,245) |
+-----------------------------------------------------------------+--------------+
| | ____ |
+-----------------------------------------------------------------+--------------+
22Analysis of cash flow movements
+-----------------------------------------------------------------+--------------+
| | |
+-----------------------------------------------------------------+--------------+
| | |
+-----------------------------------------------------------------+--------------+
| Returns on investment and servicing of finance | GBP'000 |
+-----------------------------------------------------------------+--------------+
| Interest received | 14,618 |
+-----------------------------------------------------------------+--------------+
| Interest paid | (5,555) |
+-----------------------------------------------------------------+--------------+
| Financing costs | (381) |
+-----------------------------------------------------------------+--------------+
| | _______ |
+-----------------------------------------------------------------+--------------+
| Net cash inflow from returns on investment and servicing of | 8,682 |
| finance | |
+-----------------------------------------------------------------+--------------+
| | ____ |
+-----------------------------------------------------------------+--------------+
| Taxation | |
+-----------------------------------------------------------------+--------------+
| Corporation tax paid | - |
+-----------------------------------------------------------------+--------------+
| | ____ |
+-----------------------------------------------------------------+--------------+
| Financing | |
+-----------------------------------------------------------------+--------------+
| Issue of ordinary shares | 50 |
+-----------------------------------------------------------------+--------------+
| Bonds issued during the period | 393,758 |
+-----------------------------------------------------------------+--------------+
| Loan notes issued during the period | 1,768 |
+-----------------------------------------------------------------+--------------+
| Bank loan issued during the period | 6,500 |
+-----------------------------------------------------------------+--------------+
| | ________ |
+-----------------------------------------------------------------+--------------+
| Net cash inflow from financing | 402,076 |
+-----------------------------------------------------------------+--------------+
| | ____ |
+-----------------------------------------------------------------+--------------+
23Analysis of net debt
+------------------------+-----------------+--------------------+--------------------+
| | At | Cash | At |
| | 16 January | movements | 31 March |
| | 2007 | during the period | 2008 |
| | | | |
+------------------------+-----------------+--------------------+--------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------+-----------------+--------------------+--------------------+
| | | | |
+------------------------+-----------------+--------------------+--------------------+
| Cash at bank and in | - | 36,604 | 36,604 |
| hand | | | |
+------------------------+-----------------+--------------------+--------------------+
| Guaranteed investment | - | 260,909 | 260,909 |
| contracts | | | |
+------------------------+-----------------+--------------------+--------------------+
| Bonds | - | (393,758) | (393,758) |
+------------------------+-----------------+--------------------+--------------------+
| Loan notes | - | (1,768) | (1,768) |
+------------------------+-----------------+--------------------+--------------------+
| Bank loan | - | (6,500) | (6,500) |
+------------------------+-----------------+--------------------+--------------------+
| | ____ | _________ | _________ |
+------------------------+-----------------+--------------------+--------------------+
| Total | - | (104,513) | (104,513) |
+------------------------+-----------------+--------------------+--------------------+
| | ___ | ____ | __ |
+------------------------+-----------------+--------------------+--------------------+
24Capital commitments
+--------------------------------------------------+-----------+------------------+
| | | 2008 |
+--------------------------------------------------+-----------+------------------+
| | | GBP'000 |
+--------------------------------------------------+-----------+------------------+
| Amounts contracted for but not provided for in | | 256,315 |
| the financial statements | | |
+--------------------------------------------------+-----------+------------------+
| | | ____ |
+--------------------------------------------------+-----------+------------------+
25Related party transactions
The Company's immediate parent entity is Peterborough (Progress Health) Holdings
Limited which is owned by Peterborough Hospitals Investments Limited (49%),
Brookfield Infrastructure (UK) Limited (30%) and Macquarie Peterborough Hospital
Investments Limited (21%). The Brookfield group of companies has interests in
contracts placed by the Company to develop, design and construct, maintain and
deliver certain non-clinical services within the existing and the new hospitals
and facilities as part of the Project Agreement entered into with the Trusts.
On 4 July 2007, the Company entered into contracts with Brookfield Construction
(UK) Limited (formerly Multiplex Constructions (UK) Limited) and Brookfield
Services (UK) Limited (formerly Multiplex Facilities Management (UK) Limited)
for the construction of the hospital facilities and for the provision of certain
services in connection with the development of the hospital facilities. The
value of work completed up to 31 March 2008 under the contracts with the
Brookfield Group was GBP83,105,000. As at 31 March 2008, GBP10,825,000 remained
outstanding and is included in creditors.
At the date of financial close of the Project Agreement, 4 July 2007, certain
amounts were paid to the shareholder companies in respect of work performed by
them and their affiliated companies in the period leading up to financial close.
The amount paid to companies related to the Brookfield Group was GBP13,030,000
and the amount paid to companies related to Macquarie Peterborough Hospital
Investments Limited was GBP11,485,000.
During the period ended 31 March 2008, the Company incurred costs of GBP13,333
in respect of directors' services from each of its three shareholder companies.
26Parent undertaking and controlling party
The Company's immediate parent undertaking is Peterborough (Progress Health)
Holdings Limited which is owned and jointly controlled by Peterborough
Hospitals Investments Limited, Brookfield Infrastructure (UK) Limited (formerly
Multiplex Infrastructure (UK) Limited) and Macquarie Peterborough Hospital
Investments Limited. All of these entities are registered in England and
Wales. In the directors' opinion, there is no ultimate controlling party. The
largest and smallest group in which the results of the Company are consolidated
is that headed by Peterborough (Progress Health) Holdings Limited, a company
registered and incorporated in England and Wales. The consolidated financial
statements of the group are available to the public and may be obtained from 3
White Oak Square, London Road, Swanley, Kent, BR8 7AG, United Kingdom.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BSGDDSDDGGCU
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