RNS Number:1114N
Derby Healthcare PLC
3 June 2005
Derby Healthcare Plc
Directors' report and financial statements
For the year ended 31 December 2004
Registered number 04668140
Company Information
Directors
G.N.V. Green
T.R. Pearson
A.R. Gillman
J.E. Gemmell
Secretary
R.S. West
Registered office
3 White Oak Square
London Road
Swanley
Kent
BRB 7AG
Auditors
KPMG Audit Plc
8 Salisbury Square
London EC4Y 8BB
United Kingdom
1
Directors' report
The directors present their annual report and the audited financial statements
for the year ended 31 December 2004.
Principal Activities
The principal activity of the Company is the finance, design and construction
and partial operation of the new Derby City General Hospital under the
Government's Private Finance Initiative. The company also provides non-clinical
services at the current Derby City General Hospital and the Derby Royal
Infirmary.
Business Review
The Company has entered into a Project Agreement with the Southern Derbyshire
Acute Hospitals NHS Trust, together with an associated construction contract,
funding agreements, hard and soft services contracts and ancillary project
agreements.
The Company's Project Agreement requires it to finance, design, develop,
construct, maintain and deliver certain non-clinical services within the new
Derby City General Hospital for a primary term of forty years from the date of
signing the Project Agreement,
The Company is also providing non-clinical services at the current Derby City
General Hospital and the Derby Royal Infirmary under the terms of a Mobilisation
Services Agreement.
The construction works are progressing satisfactorily. The new hospital is due
to be fully commissioned in December 2008.
Comparative Information
The company was incorporated on 17 February 2003. As such the comparative
information covered by the financial statements covers the financial period
17 February 2003 to 31 December 2003.
Dividends
The directors do not recommend the payment of a dividend.
Directors
The following persons were directors of the company during the year: -
G.N.V. Green
T.R. Pearson
A.R. Gillman
J.E. Gemmell
None of the directors who held office at the end of the financial year had any
disclosable interest in the shares of the group companies.
Since the year end the following changes have occurred: G.N.V. Green resigned on
10 May 2005, and N.J.E. Crowther was appointed on 10 May 2005.
2
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 #13,111,838 (2003:
#11,426,270) of trade creditors at 31 December 2004 and an average payment
period of 27 days (2003: 39 days).
Auditors
KPMG Audit Plc are auditors of the Company. In accordance with Section 385 of
the Companies Act 1985, a resolution to reappoint KPMG Audit Plc as auditors is
to be proposed at the next Annual General Meeting.
By order of the board
R S West
Company Secretary
3 White Oak Square
London Road
Swanley
Kent BR8 7AG
10 May 2005
3
Statement of directors' responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and group and of the profit or loss 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 accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume the the company will continue in business.
The Directors are responsible for keeping proper accounting records which
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 have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the group and to
prevent and detect fraud and other irregularities.
4
KPMG Audit Plc
PO Box 695
8 Salisbury Square
London EC4Y 8BB
United Kingdom
Independent auditors report to the members of Derby Healthcare Plc
We have audited the financial statements on pages 6 to 15.
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 auditor's 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 are responsible for preparing the directors' report and, as
described on page 4, the financial statements in accordance with applicable
United Kingdom law and accounting standards. Our responsibilities, as independent
auditors, are established in the United Kingdom by statute, the Auditing
Practices Board and by our profession's ethical guidance.
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 if, in our opinion, the directors' report is not
consistent with the financial statements, if the company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, of if information specified by law regarding
directors' remuneration and transactions with the group is not disclosed.
Basis of audit opinion
We have conducted our audit in accordance with 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 directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the group'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 of the state
of affairs of the company as at 31 December 2004 for and of the loss of the
company for the year then ended and have been properly prepared in accordance
with the Companies Act 1985.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
10 May 2005
5
Profit and loss account
for the period ended 31 December 2004
17 Feb to Dec
Note 2004 2003
# #
Turnover 100,509,446 80,602,267
Net operating costs 3 (100,509,446) (80,602,267)
Operating profit - -
Interest payable and similar charges 5 (23,833,401) (7,293,639)
Other interest receivable and
similar income 6 12,704,691 4,471,413
Loss on ordinary activities before
taxation (11,128,710) (2,822,226)
Taxation on loss on ordinary
activities 7 4,168,310 -
Loss for financial year (6,960,400) (2,822,226)
Retained loss brought forward (2,822,226) -
Retained loss at end of year (9,782,626) (2,822,226)
There were no other recognised gains and losses for the period other than the
loss stated above.
There is no difference between the historical cost loss and the loss stated
above. All of the results relate to continuing activities.
Movements on reserves are shown in note 14.
The notes on pages 8 to 15 form part of these financial statements.
6
Balance sheet at 31 December 2004
2004 2003
Note # #
Current assets
Debtors: amounts falling due within
one year 8 9,754,979 8,612,157
Debtors: amounts falling due in
more than one year 9 156,209,033 74,637,793
165,964,012 83,249,950
Cash at bank and in hand 10 226,950,774 313,960,909
392,914,786 397,210,859
Creditors: amounts falling due
within one year 11 (14,877,171) (13,051,376)
Net current assets 378,037,615 384,159,483
Total assets less current liabilities 378,037,615 384,159,483
Creditors: amounts falling due after
more than one year 12 (378,770,241) (386,931,709)
Net liabilities (9,732,626) (2,772,226)
Capital and reserves
Called up share capital 13 50,000 50,000
Profit and loss account 14 (9,782,626) (2,822,226)
Deficit on equity shareholders'
funds 15 (9,732,626) (2,772,226)
The notes on pages 8 to 15 form part of these financial statements
These financial statements were approved by the board of directors on
10 May 2005 and signed on its behalf by:
Director
7
1. Basis of preparation of the accounts
The financial statements have been prepared in accordance with applicable
accounting standard and under historical accounting rules.
The shareholders' funds for the period ending 31 December 2004 show a deficit of
#9,732,626. This is a result of the timing of cashflows and is not considered
permanent. This has not resulted in breach of the covenant terms relating to
the bond.
The directors have reviewed the forecast cashflows and believe that the net
assets deficit will reverse in the future and therefore consider that, given the
continuing access to funds, it is appropriate to prepare these financial
statements on the going concern basis.
The company was incorporated on 17 February 2003. As such the comparative
information covered by the financial statements covers the financial period
17 February 2003 to 31 December 2003.
2. Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Company's financial
statements.
(i) Turnover
Turnover represents value of work done entirely in the UK and excludes
value added tax.
(ii Contract receivable
Increases in the contract receivable represent the costs arising on the
construction of the new Derby City General Hospital. Cost is stated at
prime cost plus contracting overheads.
(iii) Finance debtor
In accordance with Financial Reporting Standard (FRS) 5 Application Note
F the costs incurred in building the new Derby City General Hospital have
been treated as a contract receivable. On completion of each phase of the
contract the contract receivable is converted to a finance debtor, receipt
of which is dependent upon satisfactory performance by the Company of its
obligational under its Concession Agreement, and is accounted for in
accordance with FRSS.
(iv) Debt Issue costs
Costs arising in connection with the arrangement of the bond finance have
been offset against the carrying value of the bond and will be amortised
through the profit and loss account on a systematic basis over the life of
the bond.
Costs arising in connection with the arrangement of the loan note finance
have been shown as prepayments and will be offset against the carrying
value of the loan notes on issue. These costs will then be amortised
through the profit and loss account on a systematic basis over the life of
the loan notes.
(v) Taxation
The charge to taxation takes into account taxation deferred because of
timing differences in the treatment of certain items for taxation and
accounting purposes. Deferred taxation is not recognised unless there is
reasonable evidence that it will reverse in the foreseeable future.
(vi) Cashflow statement
A cashflow statement is not presented since Derby Healthcare (Holdings)
Limited, the ultimate parent company has prepared a consolidated cash flow
statement, including the cash flows of this company for the year ended
31 December 2004 in accordance with Financial Reporting Standard No.l
(revised 1996).
8
3 Net operating costs 17 Feb to 31 Dec
2004 2003
# #
Materials, site and production costs 83,126,383 68,653,900
Services costs 17,339,371 11,911,421
Auditor's remuneration - audit fees 15,000 15,000
- other 8,300 6,700
Directors' Fees 20,392 15,246
100,509,446 80,602,267
4 Directors and staff costs
There were no employees during the period. Directors' emoluments were paid to
the shareholders of the parent undertaking.
5 Interest payable and similar charges
17 Feb to 31 Dec
2004 2003
# #
Amounts payable on bonds (22,994,869) (7,034,039)
Amortisation of finance arrangement coats (838,532) (259,600)
(23,833,401) (7,293,639)
6 Other Interest receivable and similar Income
17 Feb to 31 Dec
2004 2003
# #
Interest receivable on bank deposits 12,704,691 4,471,413
9
7 Taxation
(a) Analysis of the charge in the year
17 Feb to 31 Dec
2004 2003
# #
Current Tax:
UK Corporation tax on income for the
period -
Total current tax -
Deferred Tax:
Tax on loss on ordinary activities 3,338,613
Recognition of prior period tax losses
not previously brought to account 829,697
Total deferred tax (note 18) 4,168,310
Tax on loss on ordinary activities 4,168,310
Tax losses have been recognised for the first time as the directors consider the
balance to be recoverable over the life of the PFI contract with Derby Hospitals
NHS Foundation Trust.
(b) Factors affecting the tax charge for the current period
The constituent elements of the tax charge for the period are set out below:-
17 Feb to 31 Dec
2004 2003
# #
Current tax reconciliation
Loss on ordinary activities before tax (11,128,710) (2,822,266)
Current tax at 30% (2003:30%) (3,338,613) (846,668)
Effects of:
Disallowed expenditure - 16,971
Tax losses carried forward 3,338,613 829,697
- -
10
8 Debtors: amounts falling due within one year
2004 2003
# #
Trade debtors 238,080 2,783,857
Prepayments and accrued income 3,269,042 3,078,436
Deferred tax asset (note 18) 4,168,310 -
Other debtors 2,079,547 2,749,864
9,754,979 8,612,157
9 Debtors: amounts falling due after more than one year
2004 2003
# #
Contract receivable 151,860,921 68,690,846
Prepayments and accrued income 4,348,112 5,946,947
156,209,033 74,637,793
10 Cash at bank and in hand
2004 2003
# #
Fixed rate Guaranteed Investment
Contract 219,668,203 307,951,598
RPI Linked Guaranteed Investment
Contract 1,779,854 3,375,608
Other bank balances 5,502,717 2,633,703
226,950,774 313,960,909
#221,448,057 of the above is cash is blocked and comprises balances held in a
fixed interest guaranteed income contract and an index lined guaranteed income
contract. Cash will be released from these contracts over the period of
construction of the hospital so as to match the forecast profile of construction
and debt service costs.
11 Creditors: amounts falling due within one year
2004 2003
# #
Trade creditors 13,111,838 11,426,270
Accruals 1,765,333 1,625,106
14,877,171 13,051,376
11
12 Creditors: amounts falling due after more than on year
2004 2003
# #
Guaranteed Secured 5.564% Bonds 2041: 411,588,000 411,588,000
Unsecured Unsubordinated 13.465% Loan
Notes 2041: 2,014 2,014
Total borrowings 411,590,014 411,590,014
Finance arrangement costs capitalised (24,917,905) (24,917,905)
Less: amortisation of finance arrangement
costs capitalised 1,098,132 259,600
387,770,241 386,931,709
Borrowings are repayable as follows:
Instalments due within 1 year - -
1-2 years - -
2-5 years 290,282 -
Over 5 years 411,299,732 411,590,014
411,590,014 411,590,014
Guaranteed Secured Bonds 2041
The Company has created #446.588m 5.564% Guaranteed Secured Bonds 2041 pursuant
to a Trust Deed and Collateral Deed dated 9 September 2003 of which #411.588m
were issued for cash on 9 September 2003 at an issue price of 99.993%.
The bonds bear interest at 5.564% which is payable semi-annually in arrears on
30 June and 31 December each year. The bonds are repayable in instalments which
commence in June 2009 and end in June 2041.
The Company retained #35m of bonds (the "variation bonds") which it may sell,
subject to certain restrictions in the Collateral Deed, to fund variations to
the project.
The bonds, excluding the variation bonds, have the benefit of an unconditional
and irrevocable financial guarantee issued by MBIA Assurance S.A. in favour of
BNP Paribas Trust Corporation UK Limited as security trustee over all of the
undertaking and assets of the company.
12
Unsecured Subordinated 13.465% Loan Notes 2041
The Company is a wholly owned subsidiary of Derby Healthcare (Holdings) Limited.
Together Skanska BOT Investment UK Limited is legal and beneficial owner, and
Innisfree Nominees Limited acting on behalf of Innisfree PFI Fund II and III is
legal owner, of the entire issued share capital of Derby Healthcare (Holdings)
Limited.
Under the terms of Deed Polls made on 9 September 2003 both Derby Healthcare
(Holdings) Limited and Derby Healthcare Plc authorised and approved the issue of
up to #39.07m Unsecured Subordinated Loan Notes 2041 on like terms. Under the
terms of an Equity Subscription Agreement dated 9 September 2003 Skanska BOT
Investment UK Limited and Innisfree Nominees Limited each agreed to subscribe in
instalments between December 2003 and December 2008 for #39.07m of the Loan
Notes in Derby Healthcare (Holdings) Limited, which in turn agreed to subscribe
for the #39.07m Loan Notes in its subsidiary Derby Healthcare Plc.
On 31 December 2003 Derby Healthcare (Holdings) Limited and Derby Healthcare Plc
each issued #2,014 of Loan Notes at par for cash. The loan notes do not bear
interest until December 2008, from December 2008 the Loan Notes bear interest at
13.465% which is payable semi-annually on 30 June and 31 December each year. The
Loan Notes are repayable in instalments on 30 June and 31 December 2041, save
that they may be redeemed early with the consent of MBIA Assurance S.A.
13 Called up share capital
2004 2003
# #
Equity
Authorised
50,000 ordinary shares of #1 50,000 50,000
Called up and fully paid
50,000 ordinary shares of #1 50,000 50,000
14 Reserves
17 Feb to 31 Dec
2004 2003
# #
At the beginning of the year (2,822,226) -
Share capital subscribed - 50,000
Retained loss for the year (6,960,400) (2,822,226)
At the end of the year (9,782,626) (2,722,226)
13
15 Reconciliation of movements in equity shareholders' funds
17 Feb to 31 Dec
2004 2003
# #
Opening equity shareholders' funds (2,772,226) -
Issue of share capital - 50,000
Loss for the year (6,960,400) (2,822,226)
Closing equity shareholders' funds (9,732,626) (2,772,226)
16 Contingent liabilities
There are no contingent liabilities.
17 Capital commitments
2004 2003
# #
Amounts contracted for but not provided in
the financial statements 195,424,115 279,659,211
18 Deferred Tax Asset
A deferred tax asset has been recognised in the current year as it is felt that
this amount will be recoverable from future profits.
The elements of deferred taxation are as follows:
2004 2003
# #
Tax losses for the current year 3,338,613 -
Tax losses for the previous period 829,697 -
Total deferred tax 4,168,310 -
14
19 Related party transactions
The Company's parent company is Derby Healthcare (Holdings) Limited which is
jointly owned by Skanska BOT Investment UK Limited and Innisfree Nominees
Limited acting in its capacity as manager of the Innisfree PFI Funds I and III.
The Skanska and Innisfree group of companies have interests in contracts placed
by the Company for the financing, construction and management of the project.
On 9 September 2003 the Company entered into a #334,686,667 fixed price design
and build contract with Skanska Construction Limited and Skanska Rashleigh
Weatherfoil Limited (the Skanska Derby Joint Venture) for the construction of
the Derby City General Hospital. The value of work completed under this contract
during the year was #80,235,096 (2003: #59,027,456). As at 31 December 2004
trade creditors and accruals includes #8,015,930 (2003: #5,341,207) due to the
Skanska Derby Joint Venture.
On 28 March 2003 the Company entered into a mobilisation services contract with
Skanska Rashleigh Weatherfoil Limited for the provision of Estates and Waste
services for the Derby City General Hospital and the Derby Royal Infirmary. The
value of work completed under the contract during the period was #4,457,089
(2003: #2,924,433). As at 31 December 2004 trade creditors and accruals include
#682,127 (2003: #615,072) due to Skanska Rashleigh Weatherfoil Limited.
Under the terms of Shareholder, Technical Services and Management Agreements the
Skanska and Innisfree groups provide the Company with its directors, staff and
technical support services. The value of work undertaken in the year was
#712,199 (2003: #7,482,443). As at 31 December 2004 trade creditors and accruals
includes #40,747 (2003: #11,435) due to the Skanska and Innisfree groups under
these agreements.
Skanska and Innisfree are parties to an Equity Subscription Agreement details of
which are given in note 12 to the accounts.
20 Parent Undertaking
The Company's immediate parent undertaking is Derby Healthcare (Holdings)
Limited, a company registered and incorporated in England and Wales. The results
of the company are consolidated into the accounts of Derby Healthcare (Holdings)
Limited which are available to the public.
15
This information is provided by RNS
The company news service from the London Stock Exchange
END
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