ANNUAL ACCOUNTS 2009/10 - Birmingham Children's Hospital

BIRMINGHAM CHILDREN’S HOSPITALANNUALACCOUNTS2009/10Let’s Make It BetterThe best health for your child

Birmingham Children's Hospital NHS Foundation TrustStatutory AccountsYear ended 31st March 2010

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Statement of the Chief Executive Officer's responsibilities as the Accounting Officer of Birmingham Children'sHospital NHS Foundation TrustThe National Health Service Act 2006 ("2006 Act") states that the Chief Executive Officer is the Accounting Officer of the NHSFoundation Trust. The relevant responsibilities of the Accounting Officer, including their responsibility for the propriety andregularity of public finances for which they are answerable, and for the keeping of proper accounts, are set out in the AccountingOfficers' Memorandum issued by the Independent Regulator of NHS Foundation Trusts ("Monitor").Under the 2006 Act, Monitor has directed Birmingham Children's Hospital NHS Foundation Trust to prepare for each financialyear a Statement of Accounts in the form and on the basis set out in the Accounts Direction. The Accounts are prepared on anaccruals basis and must give a true and fair view of the state of affairs of Birmingham Children's Hospital NHS Foundation Trustand of its revenue and costs, changes in taxpayers' equity and cashflows for the financial year.In preparing the Accounts, the Accounting Officer is required to comply with the requirements of the NHS Foundation TrustAnnual Reporting Manual and in particular to:- observe the Accounts Direction issued by Monitor, including the relevant accounting and disclosurerequirements, and apply suitable accounting policies on a consistent basis;- make judgements and estimates on a reasonable basis;- state whether applicable accounting standards as set out in the NHS Foundation Trust Annual ReportingManual have been followed, and disclose and explain any material departures in the financial statements; and- prepare the financial statements on a going concern basis.The Accounting Officer is responsible for keeping proper accounting records which disclose with reasonable accuracy at anytime the financial position of the NHS Foundation Trust and to enable them to ensure that the Accounts comply with requirementoutlined in the above mentioned Act. The Accounting Officer is also responsible for safeguarding the assets of the NHSFoundation Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.To the best of my knowledge and belief, I have properly discharged the responsibilities set out in Monitor's NHS FoundationTrust Accounting Officers' Memorandum.

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010FOREWORD TO THE ACCOUNTSBIRMINGHAM CHILDREN'S HOSPITAL NHS FOUNDATION TRUSTThese accounts for the year ended 31 March 2010 have been prepared by Birmingham Children's Hospital NHS FoundationTrust in accordance with paragraphs 24 and 25 of Schedule 7 to the National Health Service Act 2006 in the form whichMonitor has, with the approval of HM Treasury, directed.

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED31 March 201031 March 2010 31 March 2009NOTE £000 £000Operating Income 2 205,067 184,553Operating Expenses 3 (200,919) (173,579)OPERATING SURPLUS 4,148 10,974FINANCE COSTSFinance income 5 177 847Finance expense - financial liabilities 6 (487) (341)Public Dividend Capital payable (2,264) (2,562)NET FINANCE COSTS (2,574) (2,056)SURPLUS FOR THE YEAR * 1,574 8,918Other comprehensive incomeRevaluation (losses)/gains and impairment losses property, plant and equipment (14,949) 142Increase in the donated asset reserve due to receipt of donated assets 5,886 3,470Reduction in the donated asset reserve in respect of depreciation, impairment, and/ordisposal of on donated assets(451) (647)Additions in "Other reserves" - 409TOTAL COMPREHENSIVE (EXPENSE)/INCOME FOR THE YEAR (7,940) 12,292All income and expenditure is derived from continuing operations.Note: Allocation of Comprehensive (Expense)/Income for the period:There are no Minority Interests in the Trust, therefore the surplus for the year of £1,574k (2009 - £8,918k) and the Total Comprehensive Expense of£7,940k (2009 - Income of £12,292k) is wholly attributable to the Trust.* The surplus for the year in 2009/10 is impacted by an impairment charge of £7.6m, see further details in Note 8.4.Page 1

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010STATEMENT OF FINANCIAL POSITION AS AT31 March 201031 March 2010 31 March 2009 1 April 2008NOTE £000 £000 £000Non-current assetsIntangible assets 7 209 - -Property, plant and equipment 8 70,352 81,829 78,854Trade and other receivables 13 612 305 260Total non-current assets 71,173 82,134 79,114Current assetsInventories 12 3,493 2,990 2,795Trade and other receivables 13 13,009 10,385 9,526Cash and cash equivalents 24 28,623 26,097 16,276Total current assets 45,125 39,472 28,597Current liabilitiesTrade and other payables 15 (12,926) (12,967) (13,556)Provisions 21 (501) (783) (430)Tax payable 15 (2,685) (2,576) (2,417)Other liabilities 16 (6,398) (6,687) (6,800)Total current liabilities (22,510) (23,013) (23,203)Total assets less current liabilities 93,788 98,593 84,508Non-current liabilitiesTrade and other payables 15 - - (2,210)Provisions 21 (29) (47) (57)Other liabilities 16 (4,124) (4,635) (1,865)Total non-current liabilities (4,153) (4,682) (4,132)Total assets employed 89,635 93,911 80,376Financed by taxpayers' equityPublic Dividend Capital 86,222 82,414 81,030Revaluation reserve 23 13,387 22,737 22,757Donated Asset Reserve 5,378 5,686 2,842Income and expenditure reserve (15,352) (16,926) (26,253)Total taxpayers' equity 89,635 93,911 80,376The financial statements were approved by the Board of Directors and authorised for issue on their behalf by:Page 2

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Statement of Changes In Taxpayers' EquityPublicDividendCapitalDonatedAssetsReserveIncome andExpenditureReserveRevaluationTotalReserve£000 £000 £000 £000 £000Taxpayers' Equity at 1 April 2009 93,911 82,414 22,737 5,686 (16,926)Surplus for the Year 1,574 - - - 1,574Revaluation losses and impairment losses property, plant and equipment (14,949) - (14,949) - -Increase in the donated asset reserve due to receipt of donated assets 5,886 - 5,886 - -Reduction in the donated asset reserve in respect of depreciation, impairment, and/or disposal ofon donated assets(451) - - (451) -Transfers to the Statement of Comprehensive Income in respect of assets disposed of (144) - (287) 143 -Public Dividend Capital received 3,808 3,808 - - -Taxpayers' Equity at 31 March 2010 89,635 86,222 13,387 5,378 (15,352)PublicDividendCapitalDonatedAssetsReserveIncome andExpenditureReserveRevaluationTotalReserve£000 £000 £000 £000 £000Taxpayers' Equity at 1 April 2008 80,376 81,030 22,757 2,842 (26,253)Surplus for the Year 8,918 - - - 8,918Revaluation gains and impairment losses property, plant and equipment 142 - 142 - -Increase in the donated asset reserve due to receipt of donated assets 3,470 - - 3,470 -Reduction in the donated asset reserve in respect of depreciation, impairment, and/or disposal ofdonated assets(647) - - (647) -Transfers to the Statement of Comprehensive Income in respect of assets disposed of (141) - (162) 21 -Public Dividend Capital received 1,384 1,384 - - -Other transfers between reserves 409 - - - 409Taxpayers' Equity at 31 March 2009 93,911 82,414 22,737 5,686 (16,926)Page 3

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010STATEMENT OF CASH FLOWS FOR THE YEAR ENDED31 March 201031 March 2010 31 March 2009Cash flows from operating activitiesNOTE £000 £000Operating surplus from continuing operations 4,148 10,974Non-cash income and expense:Depreciation and amortisation 4,494 4,052Impairments 13,346 -Transfer from the donated asset reserve (6,199) (647)Increase in Trade and Other Receivables (2,821) (904)Increase in Inventories (503) (195)Decrease in Trade and Other Payables (41) (2,799)Decrease in Other Liabilities (691) -(Decrease)/Increase in Provisions (300) 343Other movements in operating cash flows (191) 981Net cash generated from operating activities 11,242 11,805Cash flows from investing activitiesInterest received 202 880Purchase of intangible assets (84) -Purchase of Property, Plant and Equipment (14,074) (7,822)Sales of Property, Plant and Equipment - 513Net cash used in investing activities (13,956) (6,429)Cash flows from financing activitiesPublic dividend capital received 3,808 1,384Interest element of Private Finance Initiative obligations (487) -Public Dividend Capital paid (2,374) (2,562)Cash flows from other financing activities 4,293 5,623Net cash generated from financing activities 5,240 4,445Increase in cash and cash equivalents 2,526 9,821Cash and Cash equivalents at 1 April 26,097 16,276Cash and Cash equivalents at 31 March 28,623 26,097Page 4

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note1 ACCOUNTING POLICIESNOTES TO THE ACCOUNTSMonitor has directed that the financial statements of NHS Foundation Trusts shall meet the accounting requirementsof the NHS Foundation Trust Annual Reporting Manual as agreed with HM Treasury. Consequently, the followingfinancial statements have been prepared in accordance with the 2009/10 NHS Foundation Trust Annual ReportingManual issued by Monitor. The accounting policies contained in that manual follow International Financial ReportingStandards and HM Treasury‟s Financial Reporting Manual to the extent that they are meaningful and appropriate toNHS Foundation Trusts. The accounting policies have been applied consistently in dealing with items consideredmaterial in relation to the accounts.1.01 Accounting conventionThese accounts have been prepared under the historical cost convention modified to account for the revaluation ofcertain tangible fixed assets at their value to the business by reference to their current costs. NHS Foundation Trusts,in compliance with HM Treasury‟s Financial Reporting Manual, are not required to comply with the FRS 3requirements to report 'earnings per share' or 'historical profits and losses'.These accounts have been prepared on a going concern basis as described in the Annual Report.1.02 IncomeIncome is accounted for by applying the accruals convention. The main source of income for Birmingham Children'sHospital NHS Foundation Trust ("the Trust") is under contracts from commissioners in respect of healthcare services.Income is recognised in the period in which services are provided. Where income is received for a specific activitywhich is to be delivered in the following financial year, that income is deferred.The Trust receives income under the NHS Injury Cost Recovery Scheme, designed to reclaim the cost of treating injuredindividuals to whom personal injury compensation has subsequently been paid e.g. by an insurer. The Trust recognises theincome when it receives notification from the Department of Work and Pension's Compensation Recovery Unit that theindividual has lodged a compensation claim. The income is measured at the agreed tariff for the treatments provided to theinjured individual, less a provision for unsuccessful compensation claims and doubtful debts.The Trust accounts for the income of partially completed spells based on an average spell cost for the anticipated specialtywhich is adjusted based on the length of stay to take into account any excess bed days.The Trust changed the form of its contracts with NHS Commissioners to follow the Department of Health‟s Payment byResults methodology in 2006/07. As the system of PbR develops, as does the nature of payments to the Trust. In 2008/09 theTrust received Market Forces Factor payments from the Department of Health. These were received from individualcommissioners in 2009/10. The Trust has received Specialist Top-Up funding from PCTs and Specialised Commissioners inboth years.1.03 Employee BenefitsShort-term employee benefitsSalaries, wages and employment-related payments are recognised in the period in which the service is received fromemployees. The cost of leave earned but not taken by employees at the end of the period is recognised in the financialstatements to the extent that employees are permitted to carry forward leave into the following period.Retirement benefit costsPast and present employees are covered by the provisions of the NHS Pensions Scheme. The scheme is an unfunded, definedbenefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretaryof State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify theirshare of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a definedcontribution scheme: the cost to the NHS body of participating in the scheme is taken as equal to the contributions payable tothe scheme for the accounting period.Page 5

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Retirement benefit costs (continued)For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The fullamount of the liability for the additional costs is charged to expenditure at the time the Trust commits itself to the retirement,regardless of the method of payment.1.04 ExpenditureOther operating expenses are recognised when, and to the extent that, the goods or services have been received. They aremeasured at the fair value of the consideration payable.1.05 Property, Plant and EquipmentCapitalisationNOTES TO THE ACCOUNTSProperty, plant and equipment are capitalised if the assets are capable of being used for a period which exceeds one year and:- they are held for use in delivering services or for administrative purposes;- it is probable that future economic benefits will flow to, or service potential will be supplied to, the Trust;- individually have a cost of at least £5,000; or- they form a group of assets which individually have a cost of more than £250, collectively have a cost of at least£5,000, where the assets are functionally interdependent, they had broadly simultaneous purchase dates, areanticipated to have simultaneous disposal dates and are under single managerial control; or- they form part of the initial setting-up cost of a new building or refurbishment of a ward or unit, irrespective oftheir individual or collective cost.Where a large asset, for example a building, includes a number of components with significantly different assetlives, the components are treated as separate assets and depreciated over their own useful economic lives.Where subsequent expenditure enhances an asset beyond its original specification, the directly attributable cost is added tothe asset‟s carrying value. Where a component of an asset is replaced, the cost of the replacement is capitalised if it meets thecriteria for recognition above. The carrying amount of the part replaced is de-recognised.ValuationAll property, plant and equipment are measured initially at cost, representing the cost directly attributable to acquiring orconstructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the mannerintended by management.All land and buildings are revalued using professional valuations in accordance with FRS 15 every five years. Athree yearly interim valuation is also carried out. Valuations are carried out by professionally qualified valuers inaccordance with the Royal Institute of Chartered Surveyors (RICS) Appraisal and Valuation Manual. A fullasset valuation has been undertaken based on the "Modern Equivalent Asset Valuation" method as at 31 March 2010.Until 31 March 2008, the depreciated replacement cost of specialised buildings has been estimated for an exact replacementof the asset in its present location. HM Treasury has adopted a standard approach to depreciated replacement cost valuationsbased on modern equivalent assets and, where it would meet the location requirements of the service being provided, analternative site can be valued. HM Treasury has agreed that NHS trusts must apply these new valuation requirements by 1April 2010 at the latest. The Trust has considered this option, but has decided not to proceeed with this option at this time.Page 6

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Valuation (continued)NOTES TO THE ACCOUNTSProperties in the course of construction for service or administration purposes are carried at cost, less any impairment loss. Costincludes professional fees but not borrowing costs, which are recognised as expenses immediately, as allowed by IAS 23 for assets heldat fair value. Assets are revalued and depreciation commences when they are brought into use.An increase arising on revaluation is taken to the revaluation reserve except when it reverses an impairment for the same assetpreviously recognised in expenditure, in which case it is credited to expenditure to the extent of the decrease previously charged there.A revaluation decrease is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on thereserve for the asset and, thereafter, to expenditure. Gains and losses recognised in the revaluation reserve are reported as othercomprehensive income in the Statement of Comprehensive Income.Assets in the course of construction are valued at cost and are valued by professional valuers as part of the three or fiveyearlyvaluation or when they are brought into use.Residual interests in off-balance sheet Private Finance Initiative (PFI) properties are included in assets under constructionwithin tangible fixed assets at the amount of unitary charge allocated for the acquisition of the residual with anadjustment. The adjustment is the net present value of the change in the fair value of the residual interest as estimated atthe start of the contract and at the balance sheet date.Operational equipment is valued at net current replacement cost.Depreciation, amortisation and impairmentsProperty, plant and equipment are depreciated at rates calculated to write them down to estimated residual value on a straight-line basisover their estimated useful lives. No depreciation is provided on freehold land and assets surplus to requirements.Assets in the course of construction and residual interests in off-balance sheet PFI contract assets are not depreciated until the asset isbrought into use or reverts to the Trust, respectively.Buildings, installations and fittings are depreciated on their current value over the estimated remaining life of the asset as assessed bythe Trust's professional valuers.Equipment is depreciated on current cost evenly over the estimated life of the asset using the following lives:YearsMedical equipment and engineering plant and equipment 5 to 15Furniture 10Mainframe information technology installations 5 to 8Soft furnishings 7Office and information technology equipment 3 to 5Set-up costs in new buildings 10Motor Vehicles 71.06 Intangible AssetsRecognitionIntangible assets are non-monetary assets without physical substance, which are capable of sale separately from the rest of the trust‟sbusiness or which arise from contractual or other legal rights. They are recognised only when it is probable that future economicbenefits will flow to, or service potential be provided to, the trust; where the cost of the asset can be measured reliably, and where thecost is at least £5,000.Intangible assets acquired separately are initially recognised at fair value. Software that is integral to the operating of hardware, forexample an operating system, is capitalised as part of the relevant item of property, plant and equipment. Software that is not integralto the operation of hardware, for example application software, is capitalised as an intangible asset. Expenditure on research is notcapitalised: it is recognised as an operating expense in the period in which it is incurred. Internally-generated assets are recognised if,and only if, all of the following have been demonstrated:● the technical feasibility of completing the intangible asset so that it will be available for use; and● the intention to complete the intangible asset and use it.Page 7

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010NOTES TO THE ACCOUNTS1.07 Donated Property, Plant and EquipmentDonated property, plant and equipment are capitalised at their fair value on receipt, with a matching credit to the donatedasset reserve. They are valued, depreciated and impaired as described above for purchased assets. Gains and losses onrevaluations and impairments are taken to the donated asset reserve and, each year, an amount equal to the depreciationcharge on the asset is released from the donated asset reserve to offset the expenditure. On sale of donated assets, the netbook value is transferred from the donated asset reserve to retained earnings.1.08 Non-current assets held for saleNon-current assets are classified as held for sale if their carrying amount will be recovered principally through a saletransaction rather than through continuing use. This condition is regarded as met when the sale is highly probable, theasset is available for immediate sale in its present condition and management is committed to the sale, which is expectedto qualify for recognition as a completed sale within one year from the date of classification. Non-current assets held forsale are measured at the lower of their previous carrying amount and fair value less costs to sell. Fair value is openmarket value including alternative uses.Deposits and other investments that are readily convertible into known amounts of cash at or close to theircarrying amounts are treated as liquid resources in the statement of cashflows.The profit or loss arising on disposal of an asset is the difference between the sale proceeds and the carrying amount andis recognised in the Statement of Comprehensive Income. On disposal, the balance for the asset on the revaluationreserve is transferred to retained earnings. For donated and government-granted assets, a transfer is made to or from therelevant reserve to the profit/loss on disposal account so that no profit or loss is recognised in income or expenses. Theremaining surplus or deficit in the donated asset or government grant reserve is then transferred to retained earnings.Property, plant and equipment that is to be scrapped or demolished does not qualify for recognition as held for sale.Instead, it is retained as an operational asset and its economic life is adjusted. The asset is de-recognised when it isscrapped or demolished.1.09 LeasesLeases are classified as finance leases when substantially all the risks and rewards of ownership are transferred to thelessee. All other leases are classified as operating leases.The Trust as lesseeProperty, plant and equipment held under finance leases are initially recognised, at the inception of the lease, at fair valueor, if lower, at the present value of the minimum lease payments, with a matching liability for the lease obligation to thelessor. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve aconstant rate on interest on the remaining balance of the liability. Finance charges are recognised in calculating theTrust‟s surplus/deficit.Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives arerecognised initially as a liability and subsequently as a reduction of rentals on a straight-line basis over the lease term.Contingent rentals are recognised as an expense in the period in which they are incurred.Where a lease is for land and buildings, the land and building components are separated. Leased land is treated as anoperating lease. Leased buildings are assessed as to whether they are operating or finance leases.The Trust as lessorAmounts due from lessees under finance leases are recorded as receivables at the amount of the Trust‟s net investment inthe leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return onthe Trust‟s net investment outstanding in respect of the leases.Rental income from operating leases is recognised on a straight-line basis over the term of the lease. Initial direct costsincurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset andrecognised on a straight-line basis over the lease term.Page 8

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 20101.10 Private Finance Initiative (PFI) transactionsHM Treasury has determined that government bodies shall account for infrastructure PFI schemes where the governmentbody controls the use of the infrastructure and the residual interest in the infrastructure at the end of the arrangement asservice concession arrangements, following the principles of the requirements of IFRIC 12. The Trust therefore recognisesthe PFI asset as an item of property, plant and equipment together with a liability to pay for it. The services received underthe contract are recorded as operating expenses.The annual unitary payment is separated into the following component parts, using appropriate estimation techniques wherenecessary:a) Payment for the fair value of services received;b) Payment for the PFI asset, including finance costs; andc) Payment for the replacement of components of the asset during the contract „lifecycle replacement‟.Services receivedThe fair value of services received in the year is recorded under the relevant expenditure headings within „operatingexpenses‟.PFI assetThe PFI assets are recognised as property, plant and equipment, when they come into use. The assets are measured initiallyat fair value in accordance with the principles of IAS 17. Subsequently, the assets are measured at fair value, which is keptup to date in accordance with the Trust‟s approach for each relevant class of asset in accordance with the principles of IAS16.PFI liabilityNOTES TO THE ACCOUNTSA PFI liability is recognised at the same time as the PFI assets are recognised. It is measured initially at the same amount asthe fair value of the PFI assets and is subsequently measured as a finance lease liability in accordance with IAS 17.An annual finance cost is calculated by applying the implicit interest rate in the lease to the opening lease liability for theperiod, and is charged to „Finance Costs‟ within the Statement of Comprehensive Income.The element of the annual unitary payment that is allocated as a finance lease rental is applied to meet the annual financecost and to repay the lease liability over the contract term.An element of the annual unitary payment increase due to cumulative indexation is allocated to the finance lease. Inaccordance with IAS 17, this amount is not included in the minimum lease payments, but is instead treated as contingent rentand is expensed as incurred. In substance, this amount is a finance cost in respect of the liability and the expense is presentedas a contingent finance cost in the Statement of Comprehensive Income.Lifecycle replacementComponents of the asset replaced by the operator during the contract („lifecycle replacement‟) are capitalised where theymeet the Trust‟s criteria for capital expenditure. They are capitalised at the time they are provided by the operator and aremeasured initially at their fair value.The element of the annual unitary payment allocated to lifecycle replacement is pre-determined for each year of the contractfrom the operator‟s planned programme of lifecycle replacement. Where the lifecycle component is provided earlier or laterthan expected, a short-term finance lease liability or prepayment is recognised respectively.Where the fair value of the lifecycle component is less than the amount determined in the contract, the difference isrecognised as an expense when the replacement is provided. If the fair value is greater than the amount determined in thecontract, the difference is treated as a „free‟ asset and a deferred income balance is recognised. The deferred income isreleased to the operating income over the shorter of the remaining contract period or the useful economic life of thereplacement component.Assets contributed by the Trust to the operator for use in the schemeAssets contributed for use in the scheme continue to be recognised as items of property, plant and equipment in the Trust‟sStatement of Financial Position.Page 9

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 20101.11 InventoriesNOTES TO THE ACCOUNTSInventories are valued at the lower of cost and net realisable value. Pharmacy stocks are valued using a weighted averagecost method. This is considered to be a reasonable approximation to fair value due to the high turnover of stocks.1.12 Cash and cash equivalentsCash is cash in hand and deposits with any financial institution repayable without penalty on notice of not more than 24hours. Cash equivalents are investments that mature in 3 months or less from the date of acquisition and that are readilyconvertible to known amounts of cash with insignificant risk of change in value.In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demandand that form an integral part of the Trust‟s cash management.1.13 ProvisionsProvisions are recognised when the Trust has a present legal or constructive obligation as a result of a past event, it isprobable that the Trust will be required to settle the obligation, and a reliable estimate can be made of the amount of theobligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the obligationat the end of the reporting period, taking into account the risks and uncertainties. Where a provision is measured usingthe cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows using HMTreasury‟s discount rate of 2.2% in real terms.When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,the receivable is recognised as an asset if it is virtually certain that reimbursements will be received and the amount of thereceivable can be measured reliably.Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract isconsidered to exist where the Trust has a contract under which the unavoidable costs of meeting the obligations under thecontract exceed the economic benefits expected to be received under it.A restructuring provision is recognised when the Trust has developed a detailed formal plan for the restructuring and hasraised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan orannouncing its main features to those affected by it. The measurement of a restructuring provision includes only thedirect expenditures arsing from the restructuring, which are those amounts that are both necessarily entailed by therestructuring and not associated with ongoing activities of the entity.1.14 Clinical negligence costsThe NHS Litigation Authority (NHSLA) operates a risk pooling scheme under which the Trust pays an annualcontribution to the NHSLA which in return settles all clinical negligence claims. The contribution is charged toexpenditure. Although the NHSLA is administratively responsible for all clinical negligence cases the legal liabilityremains with the Trust. The total value of clinical negligence provisions carried by the NHSLA on behalf of the Trust isdisclosed at note 22.1.15 Non-clinical risk poolingThe Trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are riskpooling schemes under which the Trust pays an annual contribution to the NHS Litigation Authority and, in return,receives assistance with the costs of claims arising. The annual membership contributions, and any excesses payable inrespect of particular claims are charged to operating expenses as and when they become due.Page 10

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 20101.16 EU Emissions Trading SchemeThe Trust has not entered into any arrangements permitted under the EU Emission Trading Scheme.1.17 ContingenciesNOTES TO THE ACCOUNTSA contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only bythe occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Trust, or apresent obligation that is not recognised because it is not probable that a payment will be required to settle the obligationor the amount of the obligation cannot be measured sufficiently reliably. A contingent liability is disclosed unless thepossibility of a payment is remote.A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by theoccurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Trust. Acontingent asset is disclosed where an inflow of economic benefits is probable.Where the time value of money is material, contingencies are disclosed at their present value.1.18 Financial assetsFinancial assets are recognised when the Trust becomes party to the financial instrument contract or, in the case of tradereceivables, when the goods or services have been delivered. Financial assets are derecognised when the contractualrights have expired or the asset has been transferred.Financial assets are initially recognised at fair value.Financial assets are classified into the following categories: financial assets at fair value through profit and loss; held tomaturity investments; available for sale financial assets, and loans and receivables. The classification depends on thenature and purpose of the financial assets and is determined at the time of initial recognition.Financial assets at fair value through Income and ExpenditureEmbedded derivatives that have different risks and characteristics to their host contracts, and contracts with embeddedderivatives whose separate value cannot be ascertained, are treated as financial assets at fair value through profit and loss.They are held at fair value, with any resultant gain or loss recognised in calculating the Trust‟s surplus or deficit for theyear. The net gain or loss incorporates any interest earned on the financial asset. The Trust currently has no embeddedderivatives.Held to maturity investmentsHeld to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity,and there is a positive intention and ability to hold to maturity. After initial recognition, they are held at amortised costusing the effective interest method, less any impairment. Interest is recognised using the effective interest method.Available for sale financial assetsAvailable for sale financial assets are non-derivative financial assets that are designated as available for sale or that donot fall within any of the other three financial asset classifications. They are measured at fair value with changes in valuetaken to the revaluation reserve, with the exception of impairment losses. Accumulated gains or losses are recycled tosurplus/deficit on de-recognition. The Trust does not currently hold assets of this nature.Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments which are not quoted in anactive market. After initial recognition, they are measured at amortised cost using the effective interest method, less anyimpairment. Interest is recognised using the effective interest method.Page 11

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Fair value is determined by reference to quoted market prices where possible, otherwise by valuation techniques specified in IAS 39 AG74 which includes the following:The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset,to the initial fair value of the financial asset.At the end of the reporting period, the Trust assesses whether any financial assets, other than those held at „fair value through profit andloss‟ are impaired. Financial assets are impaired and impairment losses recognised if there is objective evidence of impairment as a resultof one or more events which occurred after the initial recognition of the asset and which has an impact on the estimated future cash flowsof the asset.1.19 Financial liabilitiesFinancial liabilities are recognised on the Statement of Financial Position when the Trust becomes party to the contractual provisions ofthe financial instrument or, in the case of trade payables, when the goods or services have been received. Financial liabilities are derecognisedwhen the liability has been discharged, that is, the liability has been paid or has expired.Loans from the Department of Health are recognised at historical cost. Otherwise, financial liabilities are initially recognised at fairvalue.Financial guarantee contract liabilitiesFinancial guarantee contract liabilities are subsequently measured at the higher of:- ●The premium received (or imputed) for entering into the guarantee less cumulative amortisation; and- The amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent'Liabilities and Contingent Assets.Financial liabilities at fair value through profit and lossEmbedded derivatives that have different risks and characteristics to their host contracts, and contracts with embedded derivatives whoseseparate value cannot be ascertained, are treated as financial liabilities at fair value through profit and loss. They are held at fair value,with any resultant gain or loss recognised in the Trust‟s surplus/deficit. The net gain or loss incorporates any interest payable on thefinancial liability.Other financial liabilitiesAfter initial recognition, all other financial liabilities are measured at amortised cost using the effective interest method, except for loansfrom Department of Health, which are carried at historic cost. The effective interest rate is the rate that exactly discounts estimated futurecash payments through the life of the asset, to the net carrying amount of the financial liability. Interest is recognised using the effectiveinterest method.1.20 Value Added TaxNOTES TO THE ACCOUNTSMost of the activities of the Trust are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases isnot recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixedassets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.Page 12

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 20101.21 Foreign currenciesThe Trust's functional currency and presentational currency is sterling. Transactions denominated in a foreign currencyare translated into sterling at the exchange rate ruling on the dates of the transactions. At the end of the reporting period,monetary items denominated in foreign currencies are retranslated at the spot exchange rate on 31 March. Resultingexchange gains and losses for either of these are recognised in the Trust‟s surplus/deficit in the period in which theyarise.1.22 Third party assetsNOTES TO THE ACCOUNTSAssets belonging to third parties (such as money held on behalf of patients) are not recognised in the accounts since theTrust has no beneficial interest in them. Details of third party assets are given in Note 24 to the accounts.1.23 Public Dividend Capital (PDC) and PDC dividendPublic dividend capital represents taxpayers‟ equity in the NHS Foundation Trust. At any time the Secretary of State canissue new PDC to, and require repayments of PDC from, the Trust. PDC is recorded at the value received. As PDC isissued under legislation rather than under contract, it is not treated as an equity financial instrument.An annual charge, reflecting the cost of capital utilised by the Trust, is payable to the Department of Health as publicdividend capital dividend. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the averagecarrying amount of all assets less liabilities, except for donated assets and cash balances with the Office of the PaymasterGeneral. The average carrying amount of assets is calculated as a simple average of opening and closing relevant netassets. Prior to 2009/10 the PDC dividend was determined using forecast average relevant net assets and a note to theaccounts discloses the rate that the dividend represents as a percentage of the actual average carrying amount of assetsless liabilities in the year. From 1 April 2009, the dividend payable is based on the actual average relevant net assets forthe year instead of forecast amounts.1.24 Losses and Special PaymentsLosses and special payments are items that Parliament would not have contemplated when it agreed funds for the healthservice or passed legislation. By their nature they are items that ideally should not arise. They are therefore subject tospecial control procedures compared with the generality of payments. They are divided into different categories, whichgovern the way that individual cases are handled.Losses and special payments are charged to the relevant functional headings in expenditure on an accruals basis,including losses which would have been made good through insurance cover had NHS Trusts not been bearing their ownrisks (with insurance premiums then being included as normal revenue expenditure).Page 13

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010NOTES TO THE ACCOUNTS1.25 Accounting standards that have been issued but have not yet been adoptedThe following standards and interpretations have been adopted by the European Union but are not required to befollowed until 2010/11. None of them are expected to impact upon the Trust financial statements.- IAS 27 (Revised) Consolidated and separate financial statements;- Amendment to IAS 32 Financial instruments: Presentation on classification or rights issues;- Amendment to IAS 39 Eligible hedged items;- IFRS 3 (Revised) Business combinations;- IFRIC 17 Distributions of Non-cash Assets to Owners; and- IFRIC 18 Transfer of assets from customers.1.26 Accounting standards issued that have been adopted earlyThe amendment to IFRS 8 Operating segments that was included in the April 2009 Improvements to IFRS has beenadopted early. As a result, total assets are not reported by operating segment.1.27 Research and DevelopmentResearch and development expenditure is charged against income in the year in which it is incurred, except insofar asdevelopment expenditure relates to a clearly defined project and the benefits of it can reasonably be regarded as assured.Expenditure so deferred is limited to the value of future benefits expected and is amortised through the Operating CostStatement on a systematic basis over the period expected to benefit from the project. It should be revalued on the basis ofcurrent cost. The amortisation is calculated on the same basis as depreciation, on a quarterly basis.Page 14

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010NOTES TO THE ACCOUNTS1.28 Pension costsPast and present employees are covered by the provisions of the NHS Pensions Scheme. Details of the benefits payable under theseprovisions can be found on the NHS Pensions website at www.pensions.nhsbsa.nhs.uk. The scheme is an unfunded, defined benefitscheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in Englandand Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying schemeassets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS Body ofparticipating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period.The scheme is subject to a full actuarial valuation every four years (until 2004, every five years) and an accounting valuation every year.An outline of these follows:a) Full actuarial (funding) valuationThe purpose of this valuation is to assess the level of liability in respect of the benefits due under the scheme (taking into account its recentdemographic experience), and to recommend the contribution rates to be paid by employers and scheme members. The last such valuation,which determined current contribution rates was undertaken as at 31 March 2004 and covered the period from 1 April 1999 to that date.The conclusion from the 2004 valuation was that the scheme had accumulated a notional deficit of £3.3 billion against the notional assetsas at 31 March 2004. However, after taking into account the changes in the benefit and contribution structure effective from 1 April 2008,the scheme actuary reported that employer contributions could continue at the existing rate of 14% of pensionable pay. On advice fromthe scheme actuary, scheme contributions may be varied from time to time to reflect changes in the scheme‟s liabilities. Up to 31 March2008, the vast majority of employees paid contributions at the rate of 6% of pensionable pay. From 1 April 2008, employees contributionsare on a tiered scale from 5% up to 8.5% of their pensionable pay depending on total earnings.b) Accounting valuationA valuation of the scheme liability is carried out annually by the scheme actuary as at the end of the reporting period by updating theresults of the full actuarial valuation.Between the full actuarial valuations at a two-year midpoint, a full and detailed member data-set is provided to the scheme actuary. At thispoint the assumptions regarding the composition of the scheme membership are updated to allow the scheme liability to be valued.The valuation of the scheme liability as at 31 March 2008, is based on detailed membership data as at 31 March 2006 (the latest midpoint)updated to 31 March 2008 with summary global member and accounting data.The latest assessment of the liabilities of the scheme is contained in the scheme actuary report, which forms part of the annual NHSPension Scheme (England and Wales) Resource Account, published annually. These accounts can be viewed on the NHS Pensionswebsite. Copies can also be obtained from The Stationery Office.c) Scheme provisionsThe scheme is a “final salary” scheme. Annual pensions are normally based on 1/80th of the best of the last 3 years pensionable pay foreach year of service. A lump sum normally equivalent to 3 years pension is payable on retirement. Annual increases are applied topension payments at rates defined by the Pensions (Increase) Act 1971, and are based on changes in retail prices in the twelve monthsending 30 September in the previous calendar year. On death, a pension of 50% of the member‟s pension is normally payable to thesurviving spouse.Early payment of a pension, with enhancement, is available to members of the scheme who are permanently incapable of fulfilling theirduties effectively through illness or infirmity. A death gratuity of twice final year‟s pensionable pay for death in service, and five timestheir annual pension for death after retirement, less pension already paid, subject to a maximum amount equal to twice the member‟s finalyear‟s pensionable pay less their retirement lump sum for those who die after retirement, is payable.For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount ofthe liability for the additional costs is charged to the statement of comprehensive income at the time the Trust commits itself to theretirement, regardless of the method of payment.The scheme provides the opportunity to members to increase their benefits through money purchase additional voluntary contributions(AVCs) provided by an approved panel of life companies. Under the arrangement the employee/member can make contributions toenhance an employee's pension benefits. The benefits payable relate directly to the value of the investments made.Page 15

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 2. OPERATING SEGMENTSThe Trust has given due consideration to the issue of Segmental Reporting and after analysing the financial, reporting and performancedecision making activities of the Trust and has concluded that only one Operating Segment, “Healthcare”, is to be reported. This meetsthe requirements and aggregation criteria laid out in IFRS 8.Note 2.1 OPERATING INCOME (by classification)31 March 2010 31 March 2009TotalTotal£000 £000Income from ActivitiesAcute TrustsElective income (a) 37,282 32,577Non elective income 27,912 24,018Outpatient income 21,539 20,421A & E income 3,458 3,094Other NHS clinical income (b) 80,192 79,392All TrustsPrivate patient income 227 372Other non-protected clinical income (c) 212 309Total income from activities 170,822 160,183Other operating incomeResearch and development 3,309 2,953Education and training 13,292 10,011Charitable and other contributions to expenditure 6,373 1,405Transfer from donated asset reserve in respect of depreciation on donated assets451 647Non-patient care services to other bodies 5,804 5,648Other 5,016 3,706Total other operating income 34,245 24,370TOTAL OPERATING INCOME 205,067 184,553(a)Elective income includes £782,000 (31 March 2009: £816,000) from the Royal Orthopaedic Hospital NHS Foundation Trust whichrelates to payment for activity undertaken at the Trust on behalf of the Royal Orthopaedic Hospital NHS Foundation Trust.(b)Other NHS clinical income represents income outside the scope of Payments by Results (PbR). This income comprises Department ofHealth funding from the National Commissioning Group (NCG), the Specialised Commissioning Team (West Midlands) and PrimaryCare Trusts for PbR exclusions.(c) Other non-protected clinical income relates to income from the NHS Injury Scheme in respect of road traffic accidents.Note 2.2 Private patient income 31 March 2010 31 March 2009 Base Year 2002/03£000 £000 £000Private patient income 227 372 940Total patient related income 170,952 160,164 96,085Proportion (as percentage) 0.13% 0.23% 0.98%The private patient cap has not been exceeded in 2009/10. The private patient cap percentage was calculated in 2002/03 as thepercentage of the Trusts's income generated by private patient income. The Trust is not permitted by Monitor to exceed this percentageso that private patient income does not grow at a faster rate than the Trust's income to ensure that the needs of private patients are notput before those of NHS patients.New guidance on how private patient income should be operated by Foundation Trusts has been issued by Monitor. This comes intoeffect on 1 April 2010 and therefore does not impact on income received in 2009/10.Note 2.3 Operating lease incomeThere has been no Operating Lease Income in either the current or previous accounting periods.Page 16

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 2.4 OPERATING INCOME (by type)Note 31 March 2010 31 March 2009TotalTotal£000 £000Income from activitiesNHS Foundation Trusts (a) 914 828Strategic Health Authorities 264 -Primary Care Trusts (a) 149,328 134,774Department of Health - other (a),(b) 16,656 21,359NHS Other 711 -Non NHS: Private patients 227 372NHS injury scheme (formerly RTA) (c) 212 309Non NHS: Other (d) 2,510 2,541Total income from activities 170,822 160,183Other operating incomeResearch and development 3,309 2,953Education and training 13,292 10,011Charitable and other contributions to expenditure 6,373 1,405Transfer from donated asset reserve in respect of depreciation ondonated assets451 647Non-patient care services to other bodies 5,804 5,648Other 5,016 3,706Total other operating income 34,245 24,370TOTAL OPERATING INCOME 205,067 184,553Notes:(a) The Department of Health is regarded as the parent Department of the Primary Care Trusts and NHS Foundation Trusts.When combined these three areas are regarded as a related party as outlined in Note 27.(b)(c)(d)In 2008/09 Department of Health income included £8,441k related to Market Forces Factor (MFF) funding which hasnow been devolved to commissioners.The balance of Department of Health income relates to contracts with the National Commissioning Group (NCG).NHS Injury Scheme income is subject to a provision for doubtful debts of 100% of debts over 2 years old and 7.8% ofdebts that are 2 years or less to reflect expected rates of collection and the probability of not receiving income due towithdrawn cases.Non-NHS other includes the income from activities by Non-English Health bodies: Wales, Scotland and NorthernIreland.(e) All activity income is associated with mandatory services. No activity is derived from non-mandatory services.Analysis of Other Operating Income: Other 31 March 2010 31 March 2009£000 £000Car parking* 361 332Estates recharges 22 65Staff recharges 20 943IT recharges 3 535Pharmacy Sales - 1Clinical Tests - 83Clinical excellence awards 1,090 1,101Property rentals 20 45Other 3,500 601Total 5,016 3,706*The Trust does not make a surplus on activities related to car parking.Page 17TotalTotal

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 3.1 OPERATING EXPENSES31 March 2010 31 March 2009TotalTotal£000 £000Services from NHS Foundation Trusts 1,513 1,669Services from NHS Trusts 213 233Services from other NHS Bodies 562 45Employee Expenses - Executive directors 729 795Employee Expenses - Non-executive directors 157 147Employee Expenses - Staff 127,472 112,894Drug costs 16,184 21,106Supplies and services - clinical (excluding drug costs) 19,954 14,452Supplies and services - general 3,307 2,336Establishment 3,275 2,709Research and development - 1,212Transport 1,549 1,089Premises 3,486 6,800Increase / (decrease) in bad debt provision (191) 337Depreciation on property, plant and equipment 4,615 4,172Impairments of property, plant and equipment * 13,346 -Audit feesaudit services- statutory audit 51 61Other auditors remunerationother services 83 70Clinical negligence 1,238 1,195Loss on disposal of land and buildings - 297(Gain)/Loss on disposal of other property, plant and equipment (128) 7Legal fees 183 593Consultancy costs 478 68Training, courses and conferences 1,500 115Patient travel 17 -Car parking & Security 127 -Insurance 4 -Other services, eg external payroll 1,341 189Losses, ex gratia & special payments - 356Other (146) 632TOTAL 200,919 173,579*The charge for impairments of property, plant and equipment relates to the Modern Equivalent AssetValuation which is explained in more detail in Note 8.5.RestatedAudit remuneration 31 March 2010 31 March 2009£000 £000Taxation services 36 48Other services: Performance Review 41 22Other services: IFRS Review 6 -TOTAL 83 70Page 18

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 3.2 Arrangements containing an operating lease 31 March 2010 31 March 2009£000 £000Minimum lease payments 879 1,060TOTAL 879 1,060Note 3.3 Arrangements containing an operating lease 31 March 2010 31 March 2009£000 £000Future minimum lease payments due:- not later than one year; 23 41- later than one year and not later than five years; 834 977- later than five years. 22 42TOTAL 879 1,060There are no future sublease lease payments receivable by the Trust in either the current or previous accounting periods.Note 3.4 Limitation on auditor's liability 31 March 2010 31 March 2009£000 £000Limitation on auditor's liability as per agreement dated 19th March 2008. 1,000 1,000Note 3.5 The late Payment of Commercial Debts (Interest) Act 1998There are no amounts included within 'other interest payable' arising from claims made under this legislation in either the currentor previous accounting periods.There has been no compensation paid to cover debt recovery costs under this legislation in either the current or previousaccounting periods.Page 19

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 4 Salary and Pension entitlements of senior managersRemuneration 2009-101st April 2009 to 31st March 2010Name and Title Notes Salary Other Remuneration Benefits in Kind(bands of £5,000)£000(bands of £5,000)£000Rounded to thenearest £100Ms Joanna Davis Chairman 55-60 - -Ms Sarah-Jane Marsh Interim Chief Executive Officer / Chief Executive Officer 3 140-145 5-10 -Mr Kevin Stringer Chief Financial Officer 4 40-45 - 2,500Mr Philip Foster Interim Chief Financial Officer 5 10-15 - -Mr David Melbourne Chief Financial Officer 6 45-50 - 1,700Mr David Eltringham Interim Chief Operating Officer / Chief Operating Officer 7 90-95 0-5 -Mrs Michelle McLoughlin Chief Nursing Officer 85-90 5-10 -Dr Charles Ralston Chief Medical Officer 8 / 10 20-25 55-60 1,800Dr Vinod Diwakar Interim Chief Officer for Strategy / Interim Chief Medical Officer /Chief Medical Officer9 / 10 55-60 95-100 400Mr Garrett Taylor Chief Officer for Governance, Communication and Education 11 70-75 0-5 -Mrs Judith Green Non Executive Director 10-15 - -Mrs Lynne Todd Non Executive Director 12 10-15 - -Professor Lawrence Young Non Executive Director 10-15 - -Mr Colin Horwath Non Executive Director 10-15 - -Mr Keith Lester Non Executive Director 15-20 - -Dr Suzy Walton Non Executive Director 10-15 - -1) The definition of Senior Managers includes only the Chief Officers and the Non-Executive Directors. These are the senior officers of the Trust having Board of Director voting powers.2) Benefit in kind relates to lease cars.3) Sarah-Jane Marsh was Interim Chief Executive Officer until 17/6/09 when she was appointed Chief Executive Officer.4) Kevin Stringer left BCH on 31st August 2009.5) Philip Foster was Interim Chief Finance Officer for the period 1st September 2009 to 1st November 2009.6) David Melbourne commenced as Chief Finance Officer on 2nd November 2009.7) David Eltringham was Interim Chief Operating Officer until 5/11/09 when he was appointed Chief Operating Officer.8) Dr Charles Ralston resigned as Chief Medical Officer on 1st September 2009.9) Dr Vinod Diwakar was Interim Chief Officer for Strategy until 1st September 2009 when was appointed Interim Chief Medical Officer. On 9th November 2009 he was appointed as ChiefMedical Officer.10) Other Remuneration relates to work not directly related to Chief Officer duties.11) Mr Garrett Taylor commenced as Chief Officer Governance Communication and Education on 1st July 2009.12) Mrs Lynne Todd resigned her position of Non Executive Director on 31st December 2009.Page 20

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 4 Salary and Pension entitlements of senior managers (continued)Remuneration 2008-09Name and TitleNotes1st April 2008 to 31st March 2009SalaryOther Benefits in KindRemuneration(bands of £5000)£000(bands of £5000)£000Rounded to thenearest £100Ms Joanna Davis Chairman 45-50 - -Mr Paul O'Connor Chief Executive Officer 3 135-140 0-5 -Mr Kevin Stringer Chief Financial Officer 2 95-100 - 5,300Ms Sarah-Jane Marsh Chief Operating Officer / Chief Executive Officer 3/4 90-95 0-5 -Mr David Eltringham Chief Operating Officer 4 0-5 0-5 -Mrs Michelle McLoughlin Chief Nursing Officer 80-85 0-5 -Dr Charles Ralston Chief Medical Officer 5 85-90 85-90 900Mr Andrew Hughes Chief Commercial Development Officer 6 65-70 0-5 -Dr Vinod Diwakar Interim Director of Strategy 7 5-10 0-5 -Mrs Judith Green Non Executive Director 10-15 - -Mrs Lynne Todd Non Executive Director 10-15 - -Professor Lawrence Young Non Executive Director 10-15 - -Mr Colin Horwath Non Executive Director 10-15 - -Mr Keith Lester Non Executive Director 15-20 - -Dr Suzy Walton Non Executive Director 10-15 - -1) The definition of Senior Managers includes only the Chief Officers and the Non-Executive Directors. These are the senior officers of the Trust having Board of Director votingpowers.2) Benefit in kind relates to lease cars.3) Mr Paul O'Connor resigned as Chief Executive with effect from 6th March 2009. He was replaced with Ms Sarah-Jane Marsh from 6th March 2009.4) Mr David Eltringham replaced Ms Sarah-Jane Marsh as Chief Operating Officer from 6th March 2009.5) Other Remuneration relates to work not directly related to Chief Officer duties.6) Mr Andrew Hughes resigned as Chief Commercial Development Officer with effect from 31st December 2008.7) Dr Vinod Diwakar commenced as Director of Strategy on 6th March 2009.Page 21

Note 4 Salary and Pension entitlements of senior managers (continued)Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Pension Benefits 2009-10Name and TitleReal increase inpension andrelated lump sumat age 60(bands of £2500)£000Total accrued pensionand related lump sum atage 60 at 31 March 2010(bands of £5000)£000Cash EquivalentTransfer Value at 31March 2010Cash EquivalentTransfer Value at31 March2009Real Increase in CashEquivalent TransferValueTo nearest £1000 To nearest £1000 To nearest £1000EmployersContribution toStakeholderPensionTo nearest £100Ms Sarah-Jane Marsh Interim Chief Executive Officer / Chief Executive Officer 20-22.5 60 - 65 173 107 66 0Mr Kevin Stringer Chief Financial Officer 20-22.5 130 - 135 576 466 110 0Mr Philip Foster Interim Chief Financial Officer 7.5-10 75 - 80 302 251 51 0Mr David Melbourne Chief Financial Officer 30-32.5 125 - 130 561 397 164 0Mr David Eltringham Interim Chief Operating Officer / Chief Operating Officer 35-37.5 85 - 90 328 188 140 0Mrs Michelle McLoughlin Chief Nursing Officer 7.5-10 95 - 100 400 345 55 0Dr Charles Ralston Chief Medical Officer 22.5-25 200 - 205 1,130 952 178 0Dr Vinod DiwakarInterim Chief Officer for Strategy / Interim Chief Medical Officer / Chief 7.5-10 115 - 120 451 398 53 0Medical OfficerMr Garrett Taylor Chief Officer for Governance, Communication and Education 10-12.5 35 - 40 171 118 53 0As Non-Executive members do not receive pensionable remuneration, there will be no entries in respect of pensions for Non-Executive members.A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member's accrued benefits and any contingentspouse's pension payable from the scheme. A CETV is a payment made by a pension scheme, or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer thebenefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which thedisclosure applies. The CETV figures, and from 2004-05 the other pension details, include the value of any pension benefits in another scheme or arrangement which the individual has transferred to the NHS pension scheme. They also includeany additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the institute andFaculty of Actuaries.Real Increase in CETV - This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferredfrom another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.Page 22

Note 4 Salary and Pension entitlements of senior managers (continued)Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Pension Benefits 2008-09Real increase inpension and relatedlump sum at age 60Total accruedpension and relatedlump sum at age 60at 31 March 2009Cash EquivalentTransfer Value at31 March 2009Cash EquivalentTransfer Value at31 January 2008Real Increase inCash EquivalentTransfer ValueEmployersContribution toStakeholderPensionName and Title(bands of £250)£000(bands of £5000)£000 £000 £000 £000To nearest £100Mr Paul O'Connor Chief Executive Officer 15.25-15.50 130-135 644 418 226 0Mr Kevin Stringer Chief Financial Officer 8.00-8.25 110-115 466 341 125 0Ms Sarah Jane MarshChief Operating Officer / Chief Executive Officer 11.25-11.50 40-45 107 64 43 0Dr Charles Ralston Chief Medical Officer 17.00-17.25 180-185 952 666 286 0Ms Michelle McLoughlin Chief Nursing Officer 11.25-11.50 85-90 345 239 106 0Mr Andrew Hughes Chief Commercial Development Officer 4.25-4.50 40-45 88 101 (13) 0Mr David Eltringham Chief Operating Officer 8.75-9.00 50-55 188 126 62 0Dr Vinod Diwakar Interim Director of Strategy 25.25-25.00 110-115 398 244 154 0As Non-Executive members do not receive pensionable remuneration, there will be no entries in respect of pensions for Non-Executive members.A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member's accruedbenefits and any contingent spouse's pension payable from the scheme. A CETV is a payment made by a pension scheme, or arrangement to secure pension benefits in another pension scheme or arrangement when themember leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membershipof the pension scheme, not just their service in a senior capacity to which the disclosure applies. The CETV figures, and from 2004-05 the other pension details, include the value of any pension benefits in anotherscheme or arrangement which the individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years ofpension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the institute and Faculty of Actuaries.Real Increase in CETV - This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including thevalue of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.Page 23

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 4.1 Employee Expenses31 March201031 March201031 March201031 March201031 March201031 March201031 March200931 March2009Inter NHSFoundationTrustInter NHSFoundationTrustTotal Permanent Other Total Permanent OtherTotalInter NHSFoundationTrust£000 £000 £000 £000 £000 £000 £000 £000Salaries and wages 102,647 102,647 - 792 792 - 89,267 719Social security costs 8,006 8,006 - 61 61 - 6,947 56Pension costs - defined contribution plansEmployers contributions to NHS Pensions12,112 12,112 - 93 93 - 10,573 85Agency/contract staff 5,436 5,436 - - - - 6,902 -TOTAL 128,201 128,201 - 946 946 - 113,689 860The analysis above does not include any costs in respect of non-executive directors.Note 4.2 Average number of employees (WTEbasis)31 March201031 March201031 March2010Total Permanent Other31 March2009Number Number Number NumberMedical and dental 328 155 173 317Administration and estates 675 639 36 594Healthcare assistants and other support staff 216 212 4 193Nursing, midwifery and health visiting staff 923 901 22 860Scientific, therapeutic and technical staff 375 341 34 450Bank and agency staff - - - 171Other 118 113 5 4TOTAL 2,635 2,361 274 2,589Note 4.3 Employee benefits31 March201031 March2009£000 £000TOTAL 6 6Employee benefits relate to lease car contributions for directors and higher-paid employees.Note 4.4 Early retirements due to ill healthThere have been no early retirements due to ill-health in either the current or previous accounting periods.Page 24

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 5 Finance income 31 March 2010 31 March 2009£000 £000Interest on loans and receivables 158 847Other 19 -TOTAL 177 847Interest on loans and receivables has been earned from investing surplus funds during the year in accordance with the Trust'sTreasury Policy.There is no interest on impaired financial assets included in finance income in either the current or previous accounting periods.Note 6 Finance costs 31 March 2010 31 March 2009£000 £000Finance Costs in PFI obligationsMain Finance Costs 335 341Contingent Finance Costs 152 -TOTAL 487 341Note 6.1 Impairment of assets (PPE & intangibles) 31 March 2010 31 March 2009£000 £000Changes in market price 22,611 -Total Impairments 22,611 -Impairments are as a result of the Modern Equivalent Asset Valuation undertaken by the District Valuer as at 31 March 2010.Page 25

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010SoftwareNote 7 Intangible assets 2009/10 Licenses Total£000 £000Gross cost at 1 April 2009Reclassifications * 218 218Additions - purchased 84 84Gross cost at 31 March 2010 302 302Amortisation at 1 April 2009Provided during the year 51 51Reclassifications * 42 42Amortisation at 31 March 2010 93 93Net book valueNBV - Purchased at 1 April 2009 (restated) - -NBV - Donated at 1 April 2009 (restated) - -NBV total at 1 April 2009 as restated - -Net book valueNBV - Purchased at 31 March 2010 209 209NBV - Donated at 31 March 2010 - -NBV total at 31 March 2010 209 209* Intangible assets reclassified relate to Computer Software and Computer Software Licenses formerly describedas Property, Plant and Equipment .The Trust did not classify any assets as Intangible during 2008/09.Note 7.1 Intangible assets acquired by government grantThere were no assets acquired by government grant in either the current or previous accounting periods.Note 7.2 Economic life of intangible assets Min Life Max LifeYearsYearsIntangible assets - purchasedSoftware 3 3Licences & Trademarks 3 3Other 3 5Page 26

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 8 Property, plant and equipment 2009/10TotalLandBuildingsexcludingdwellingsAssets underConstruction & POAPlant &MachineryInformationTechnologyFurniture &Fittings£000 £000 £000 £000 £000 £000 £000Cost or valuation at 1 April 2009 106,435 14,655 58,553 5,111 20,472 3,079 4,565Additions - purchased 9,940 3,012 1,237 1,936 3,229 378 148Additions - donated 5,886 - 93 5,507 272 14 -Impairments charged to revaluation reserve (9,266) (2,176) (6,995) - (15) - (80)Reclassifications * (218) 172 10,481 (11,508) 559 (56) 134Revaluation surpluses 150 - - - 74 - 76Disposals (8,078) - - - (3,076) (1,844) (3,158)Cost or valuation at 31 March 2010 104,849 15,663 63,369 1,046 21,515 1,571 1,685Accumulated depreciation at 1 April 2009 24,606 - 3,269 - 15,040 2,456 3,841Provided during the year 4,563 - 2,120 - 1,921 197 325Impairments recognised in operating expenses 13,346 2,858 10,279 - 134 - 75Reclassifications * (42) - - - - (42) -Revaluation surpluses 85 - - - 54 - 31Disposals (8,061) - - - (3,062) (1,841) (3,158)Accumulated depreciation at 31 March 2010 34,497 2,858 15,668 - 14,087 770 1,114Net book valueNBV - Owned at 1 April 2009 76,143 14,655 53,596 2,371 4,204 604 713NBV - Donated at 1 April 2009 5,686 - 1,688 2,740 1,228 19 11NBV total at 1 April 2009 81,829 14,655 55,284 5,111 5,432 623 724Net book valueNBV - Owned at 31 March 2010 64,974 12,805 43,453 1,046 6,311 788 571NBV - Donated at 31 March 2010 5,378 - 4,248 - 1,117 13 -NBV total at 31 March 2010 70,352 12,805 47,701 1,046 7,428 801 571* Assets reclassified relate to Computer Software and Computer Software Licenses which have been reclassified as Intangible Assets during 2009/10.Note 8.1 Analysis of property, plant and equipment 31 Mar 2010TotalLandBuildingsexcludingdwellingsAssets underConstruction & POAPlant &MachineryInformationTechnologyFurniture &Fittings£000 £000 £000 £000 £000 £000 £000Net book valueNBV - Protected assets at 31 March 2010 ** 59,954 12,805 47,149 - - - -NBV - Unprotected assets at 31 March 2010 10,398 - 552 1,046 7,428 801 571Total at 31 March 2010 70,352 12,805 47,701 1,046 7,428 801 571** Protected property is property designated as protected in the Terms of Authorisation (ToA) of the Trust. Condition 9 of the ToA defines property as protected if it isrequired for the purposes of providing either the mandatory goods and services or the mandatory education and training as defined in the ToA („mandatory goods andservices‟).Page 27

Note 8.2 Property, plant and equipment 2008/09Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010TotalLandBuildingsexcludingdwellingsAssets underConstruction& POAPlant &MachineryInformationTechnologyFurniture &Fittings£000 £000 £000 £000 £000 £000 £000Cost or valuation at 1 April 2008 99,013 14,655 58,613 859 17,890 2,691 4,305Additions - purchased 4,352 - 528 1,755 1,565 366 138Additions - donated 3,470 - - 2,736 721 13 -Reclassifications - - 148 (199) 32 9 10Revaluation surpluses 574 - - - 462 - 112Disposals (974) - (736) (40) (198) - -Cost or valuation at 31 March 2009 106,435 14,655 58,553 5,111 20,472 3,079 4,565Accumulated depreciation at 1 April 2008 20,159 - 1,199 - 13,218 2,316 3,426Provided during the year 4,172 - 2,076 - 1,631 140 325Revaluation surpluses 342 - - - 342 - -Transferred to disposal group as asset held for sale 90 - - - - - 90Disposals (157) - (6) - (151) - -Accumulated depreciation at 31 March 2009 24,606 - 3,269 - 15,040 2,456 3,841Net book valueNBV - Owned at 1 April 2008 73,705 14,655 53,068 859 3,905 361 857NBV - Donated at 1 April 2008 5,149 - 4,346 - 767 14 22NBV total at 1 April 2008 78,854 14,655 57,414 859 4,672 375 879Net book valueNBV - Purchased at 31 March 2009 74,461 14,655 51,916 2,370 4,203 604 713NBV - Donated at 31 March 2009 7,368 - 3,368 2,741 1,229 19 11NBV total at 31 March 2009 81,829 14,655 55,284 5,111 5,432 623 724Note 8.3 Analysis of property, plant and equipment 31 Mar 2009TotalLandBuildingsexcludingdwellingsAssets underConstruction& POAPlant &MachineryInformationTechnologyFurniture &Fittings£000 £000 £000 £000 £000 £000 £000Net book valueNBV - Protected assets at 31 March 2009 69,334 14,655 54,679 - - - -NBV - Unprotected assets at 31 March 2009 12,495 - 605 5,111 5,432 623 724Total at 31 March 2009 81,829 14,655 55,284 5,111 5,432 623 724Page 28

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 8.4 Economic life of property, plant and equipment Min Life Max LifeLand Infinite InfiniteBuildings excluding dwellings 5 66Assets under Construction & POA 2 15Plant & Machinery 2 25Information Technology 3 10Furniture & Fittings 10 10YearsYearsProperty ValuationsAll NHS Trusts were required by the Department of Health to carry out and adopt Modern Equivalent Asset (MEA) valuations of their specialisedassets by the 31st of March 2010. This excercise was carried out by the District Valuer on 31 March 2010.LandBuildings excludingdwellingsYear of revaluation 2009/10 2009/10Method of accounting for revaluationIn yearrevaluationIn yearrevaluationAlternative Site method used No NoBuildings excludingTotalLanddwellingsNBV of assets covered by valuation method£000 £000 £000Modern Equivalent Asset (no Alternative Site) 60,506 12,805 47,701Modern Equivalent Asset (Alternative Site) - - -Other Professional Valuations - - -Total 60,506 12,805 47,701The impact of the MEA valuation is as follows:Buildings excludingTotalLandMEA transactionsdwellings£000 £000 £000Revaluation surplus 676 - 676Impairment charge to Revaluation Reserve (9,940) (2,176) (7,764)Impairment charge to Statement of Comprehensive Income (7,609) (2,858) (4,751)Total (16,873) (5,034) (11,839)Page 29

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 9 Net book value of assets held under finance leases 2009/10The Scheme is for the refurbishment and management of previously dilapidated buildings at sites on Whittall Street andSteelhouse Lane Birmingham, to bring them into use as offices, on-call accommodation and general staff accommodation.The Scheme was with English Churches Housing Group (ECHG) who, in October 2006, subsequently merged withRiverside Housing Group.The main agreements made between the Trust and ECHG (dated 22 August 1997 and 11 May 1998) outline thearrangements for land and premises on 3 related sites of the former Birmingham General Hospital (Block B – OldMusson House, Block H – New Musson House and Block W) to be transferred to ECHG under 3 separate Headleases fora term of 99 years at a peppercorn rent.ECHG were to undertake development/ refurbishment works in respect of the premises under a separate DevelopmentAgreement. On practical completion of those works ECHG granted secondary Underleases of the newly refurbishedpremises to the Trust. These three Underleases are for a period of 25 years. The Trust has an option to extend theUnderleases in 5 yearly increments up to a maximum of 50 years.Note 9.1 Net book value of assets held under finance leases 2009/10TotalBuildingsexcludingdwellings£000 £000Cost or valuation at 1 April 2009 2,998 2,998Cost or valuation at 31 March 2010 2,998 2,998Accumulated depreciation at 1 April 2009 1,319 1,319Provided during the year 120 120Accumulated depreciation at 31 March 2010 1,439 1,439Net book valueNBV - Purchased at 1 April 2009 - -NBV - Donated at 1 April 2009 1,679 1,679NBV total at 1 April 2009 1,679 1,679Net book valueNBV - Purchased at 1 April 2010 - -NBV - Donated at 31 March 2010 1,559 1,559NBV total at 31 March 2010 1,559 1,559Note 9.2 Net book value of assets held under finance leases 2008/09TotalBuildingsexcludingdwellings£000 £000Cost or valuation at 1 April 2008 2,998 2,998Cost or valuation at 31 March 2009 2,998 2,998Accumulated depreciation at 1 April 2008 1,199 1,199Provided during the year 120 120Accumulated depreciation at 31 March 2009 1,319 1,319Net book valueNBV - Purchased at 1 April 2008 - -NBV - Donated at 1 April 2008 1,799 1,799NBV total at 1 April 2008 1,799 1,799Net book valueNBV - Purchased at 31 March 2009 - -NBV - Donated at 31 March 2009 1,679 1,679NBV total at 31 March 2009 1,679 1,679Note 10 Non-current assets for sale, assets in disposal groups and liabilities in disposal groups 2009/10The value of non-current assets for sale, assets in disposal groups and liabilities in disposal groups at 31March 2010 was £nil (2009 : £nil).Page 30

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 11 InvestmentsThe Trust did not hold any investments in subsidiaries, associates or jointly controlled operations at 31st March in either the current or previous accounting periods.Note 11.1 Investment PropertyThe Trust did not hold any investment property in either the current or previous accounting periods.Note 12 Inventories 31 March 2010 31 March 2009 1 April 2008£000 £000 £000Materials 3,493 2,990 2,795Total Inventories 3,493 2,990 2,795The Trust did not incur any write-down of inventories or incur any expenses in relation to inventories in either the current or previous accounting periods.Note 13 Trade receivables and other receivablesCurrentTotal Financial assets Non-financial assets Total Financial assets Non-financial assets Total Financial assetsNon-financialassets31 March 2010 31 March 2010 31 March 2010 31 March 2009 31 March 2009 31 March 2009 1 April 2008 1 April 2008 1 April 2008£000 £000 £000 £000 £000 £000 £000 £000 £000NHS Receivables 8,023 8,023 - 5,831 5,831 - 6,074 6,074 -Provision for impaired receivables (746) (746) - (1,014) (1,014) - (755) (755) -Prepayments - - - 122 - 122 316 - 316Accrued income 1,097 1,097 - 1,237 1,237 - 334 334 -Public Dividend Capital receivable * 110 - 110 - - - - - -Other receivables 4,525 3,794 731 4,209 4,209 - 3,557 3,557 -Total current trade and other receivables 13,009 12,168 841 10,385 10,263 122 9,526 9,210 316Non-current PFI PrepaymentsOther receivables 612 612 - 305 305 -260 260-Total non current trade and other receivables 612 612 - 305 305 - 260 260 -*The Public Dividend Capital (PDC) receivable has arisen because the value of PDC paid in the year was higher than the final calculated value. This ismainly due to the impact of the revaluation as at 31 March 2010. This decrease in value was not known until after PDC had been paid.Page 31

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 13.1 Provision for impairment of receivables 31 March 2010 31 March 2009£000 £000At 1 April 1,014 755Increase in provision - 337Amounts utilised (77) (78)Unused amounts reversed (191) -At 31 March 746 1,014Note 13.2 Analysis of impaired receivables 31 March 2010 31 March 2009£000 £000Ageing of impaired receivablesUp to three months - 4In three to six months 175 190Over six months 448 820Total 623 1,01431 March 2010 31 March 2009£000 £000Ageing of non-impaired receivables past their due date £000 £000Up to three months 3,939 3,250In three to six months 197 417Over six months 95 440Total 4,231 4,107Note 13.3 Finance lease receivablesThe Trust did not have any finance lease receivables at either the current or previous year-end.Note 14 Other assetsThe Trust did not hold any pension scheme assets or other assets at either the current or previous year-end.Page 32

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 15 Trade and other payables Total Financial liabilitiesCurrentNon-financialliabilitiesTotalFinancialliabilitiesNon-financialliabilitiesTotalFinancialliabilitiesNon-financialliabilities31 March 2010 31 March 2010 31 March 2010 31 March 2009 31 March 2009 31 March 2009 1 April 2008 1 April 2008 1 April 2008£000 £000 £000 £000 £000 £000 £000 £000 £000`NHS payables 4,811 4,811 - 3,952 3,952 - 4,555 4,555 -Trade payables - capital 1,089 1,089 - 1,247 1,247 - 1,166 1,166 -Other trade payables 1,307 1,307 - - - - - - -Taxes payable 2,685 - 2,685 2,576 - 2,576 2,417 - 2,417Other payables 927 927 - 3,134 3,134 - 3,273 3,273 -Accruals 4,792 4,792 - 4,634 4,634 - 4,562 4,562 -Total current trade and other payables 15,611 12,926 2,685 15,543 12,967 2,576 15,973 13,556 2,417Non-currentNon-current trade and other payables are as follows: 31 March 2010 31 March 2009 1 April 2008£000 £000 £000Other payables - - 2,210Note 15.1 - Early retirements detail included in NHS payables aboveThe Trust did not incur any expenditure in respect of early retirement in either the current or previous accounting period.Note 16 Other liabilities31 March 2010 31 March 2009 31 March 2008Current £000 £000 £000Deferred Income 6,398 6,687 6,800Total other current liabilities 6,398 6,687 6,80031 March 2010 31 March 2009 31 March 2008Non-current £000 £000 £000Deferred Income 2,036 2,482 -Deferred PFI credits 2,088 2,153 1,865Total other non-current liabilities 4,124 4,635 1,865Note 17 BorrowingsThe Trust has no liability for either current or non-current borrowing at either the current or previous year-end.Page 33

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 18 Prudential borrowing limit 31 March 2010 31 March 2009£000 £000Total long term borrowing limit set by Monitor 39,000 32,800Working capital facility agreed by Monitor 11,400 11,400Total prudential borrowing limit 50,400 44,200The Trust has a Prudential Borrowing Limit of £50,400k in 2009/10 (£44,200k in 2008/09). The Trust has notutilised its Working Capital Facility in 2009/10 (£nil in 2008/09).The Trust is required to comply and remain within a Prudential Borrowing Limit. This is made up of two elements:- the maximum cumulative amount of long-term borrowing. This is set by reference to the five ratio tests set outin Monitor's Prudential Borrowing Code. The financial risk rating set under Monitor's Compliance Frameworkdetermines one of the ratios and therefore can impact on the long term borrowing limit.- the amount of any working capital facility approved by Monitor.The on SoFP PFI is taken into account in the calculation of the Trust's Prudential Borrowing.Further information on the NHS Foundation Trust Prudential Borrowing Code and Compliance Framework canbe found on the website of Monitor, the Independent Regulator of NHS Foundation Trusts.The following table shows the actual ratio values against the approved ratios in the current and prior periods:Financial RatioActual ratios2009/10Approved PBLratios 2009/10 (1)Actual ratios2008/09Approved PBLratios 2008/09Minimum Dividend Cover 9.7x 5.0x 6.4x 3.5xMinimum Interest Cover 66.6x 36.1x - -Minimum Debt Service Cover - - - -Minimum Debt Service to Revenue 0.0% 0.0% 0.0% 0.0%Note 1 - the Approved PBL ratios are those approved in the Trust's Annual Plan.Note 19 Finance lease obligationsThe Trust has no finance lease obligations arising in either the current or previous accounting period.Note 20 The Trust is committed to make the following payments for on-SoFP PFIs obligations during the next year inwhich the commitment expires:31 March 2010 31 March 2010Total PFI 1£000 £000Within one year 648 6482nd to 5th years (inclusive) 2,489 2,4896th to 10th years (inclusive) 2,723 2,72311th to 15th years (inclusive) 1,259 1,259The current on-SoFP PFI obligations are due to expire on 31st March 2023.Page 34

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 21 Provisions for liabilities and chargesCurrentNon-current31 March 2010 31 March 2010 31 March 2009 1 April 2008 31 March 2010 31 March 2009 1 April 2008£000 £000 £000 £000 £000 £000 £000Pensions relating to other staff 42 13 13 - 29 42 -Other legal claims 488 488 650 430 - 5 57Agenda for Change - - 120 - - - -Total 530 501 783 430 29 47 57At 1 April 2009Arising during the yearUtilised during the yearReversed unusedTotalPensions - otherstaffOther legal claimsAgenda forChange£000 £000 £000 £000830 55 655 120488-488(86) (13) (73)(702)-(582) (120)At 31 March 2010 530 42 488 ---Expected timing of cashflows:- not later than one year;- later than one year and not later than five years;TotalPensions - otherstaffOther legal claimsAgenda forChange£000 £000 £000 £000501 13 48829 29- -TOTAL 530 42 488 --Note 22 Clinical Negligence liabilities 31 March 2010 31 March 2009Amount included in provisions of the NHSLA in respect of clinical negligence liabilities ofBirmingham Children's Hospital NHS Foundation Trust.£000 £0007,539 10,337Page 35

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 23 Revaluation reserveTotal RevaluationReserve£000Revaluation reserve at 1 April 2009 22,737Revaluation losses and impairment losses property, plant and equipment (9,206)Transfers to the income and expenditure account in respect of assets(144)Revaluationdisposed ofreserve at 31 March 2010 13,387Revaluation reserve at 1 April 2008 22,757Revaluation gains on property, plant and equipment 121Transfers to the income and expenditure account in respect of assets(141)Revaluationdisposed ofreserve at 31 March 2009 22,737Note 24 Cash and cash equivalents 31 March 2010 31 March 2009£000 £000At 1 April 26,097 16,276Net change in year 2,526 9,821At 31 March 28,623 26,097Broken down into:Cash at commercial banks and in hand 4 8,860Cash with the Government Banking Service 28,619 17,237Cash and cash equivalents as in SoFP 28,623 26,097Bank overdraft - -Cash and cash equivalents as in SoCF 28,623 26,097Note 24.1 Third Party AssetsThe Trust did not hold any third party assets at either the current or previous year-end.Note 25 Contractual Capital CommitmentsCommitments under contract at the date of the Statement of Financial Position are:£000Property, Plant and Equipment* 16,464Total as at 31 March 2010 16,464Property, Plant and Equipment 2,450Total as at 31 March 2009 2,450* Contractual commitments at 31st March 2010 mainly comprise improvements to Cardiac Catheter Laboratories (£6.7m),Paediatric Intensive Care (£6.6m), MRI Scanner (£1.5m) and Combined Heat and Power Plant (£523k).Page 36

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 25.1 Events after the reporting periodThere have been no post balance sheet events having a material effect on the Accounts.Note 26 Contingent (Liabilities) / Assets 31 March 2010 31 March 2009£000 £000Gross value of contingent liabilities (421) (60)Amounts recoverable against liabilities 13 37Net value of contingent liabilities (408) (23)The contingent liabilities relate to ongoing legal cases where there remains uncertainty that a loss of economic benefit will arise. Cases wherea loss of economic benefit is probable have been provided for within the Statement of Financial Performance.The net value of contingent assets is £nil (2009: £nil).Note 27 Related Party TransactionsBirmingham Children‟s Hospital NHS Foundation Trust is a corporate body authorised by Monitor, the Independent Regulator of NHSFoundation Trusts in exercise of the powers conferred by Schedule 7 of the National Health Service Act 2006.During the year none of the Board members or members of the key management staff or parties related to them has undertaken any materialtransactions with Birmingham Children‟s Hospital NHS Foundation Trust.The Department of Health is regarded as a related party. During the period the Trust has had a significant number of material transactionswith the Department and with other entities for which the Department is regarded as the parent Department. The key entities are listed below:West Midlands Strategic Health Authority;National Commissioning Group;Specialised Commissioning Team (West Midlands);Staffordshire and Shropshire Local Specialised Commissioning Board;Black Country Local Specialised Commissioning Board;Pan Birmingham Local Specialised Commissioning Board;Hereford and Worcestershire Local Specialised Commissioning Board;Coventry and Warwickshire Local Specialised Commissioning Board;South Birmingham Primary Care Trust;Heart of Birmingham Teaching Primary Care Trust;Birmingham East and North Primary Care Trust;The NHS Litigation Authority;The National Blood Authority;University Hospital Birmingham NHS Foundation Trust;Sandwell and West Birmingham Hospitals NHS Trust;Royal Orthopaedic Hospital NHS Foundation Trust;The Trust has also had material transactions with other NHS health bodies outside of the West Midlands as well as Non-English healthbodies.In addition the Trust has had a significant number of material transactions with other Government Departments and other local and centralGovernment bodies, including the University of Birmingham and Birmingham City Council.The Trust has also received revenue and capital payments from the Birmingham Children's Hospital Charity which is an arm's lengthcharitable organisation.The Trust is exempt from the full related party disclosure requirements as the Trust is a fully owned subsidiary and the consolidated financialstatements of the parent are publicly available.Page 37

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 27.1 Related Party Transactions Income Expenditure£000 £000Value of transactions with board members in 2009/10 - -Value of transactions with key staff members in 2009/10 - -Value of transactions with other related parties in 2009/10 - -Department of Health 16,656 -Other NHS Bodies 150,714 3,924Charitable Funds - -Subsidiaries / Associates / Joint Ventures - -Other - -NHS Shared Business Services - -- -Value of transactions with board members in 2008/09 - -Value of transactions with key staff members in 2008/09 - -Value of transactions with other related parties in 2008/09 - -Department of Health 9,098 -Other NHS Bodies 162,439 7,200Charitable Funds - -Subsidiaries / Associates / Joint Ventures - -Other - -NHS Shared Business Services - -Note 27.2 Related Party Balances Receivables Payables£000 £000Value of balances (other than salary) with board members at 31 March 2010 - -Value of balances (other than salary) with key staff members at 31 March 2010 - -Value of balances (other than salary) with related parties in relation to doubtful debts at 31 March2010- -Value of balances (other than salary) with related parties in respect of doubtful debts written off inyear at 31 March 2010- -Value of balances with other related parties at 31 March 2010Department of Health 3 217Other NHS Bodies 8,188 4,671Charitable Funds - -Subsidiaries / Associates / Joint Ventures - -Other - -NHS Shared Business Services - -Value of balances (other than salary) with board members at 31 March 2009 - -Value of balances (other than salary) with key staff members at 31 March 2009 - -Value of balances (other than salary) with related parties in relation to doubtful debts at 31 March2009- -Value of balances (other than salary) with related parties in respect of doubtful debts written off inyear at 31 March 2009- -Value of balances with other related parties at 31 March 2009Department of Health 841 -Other NHS Bodies 5,011 6,530Charitable Funds - -Subsidiaries / Associates / Joint Ventures - -Other - -NHS Shared Business Services - -Page 38

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 28 Financial assets by category Total Loans and receivables£000 £000Assets as per SoFPTrade and other receivables excluding non financial assets (at 31 Mar 2010) 11,903 11,903Cash and cash equivalents (at bank and in hand (at 31 Mar 2010)) 28,623 28,623Total at 31 March 2010 40,526 40,526Trade and other receivables excluding non financial assets (at 31 Mar 2009) 10,263 10,263Cash and cash equivalents (at bank and in hand (at 31 Mar 2009)) 26,097 26,097Total at 31 March 2009 36,360 36,360Trade and other receivables excluding non financial assets (at 1 Apr 2008) 9,210 9,210Cash and cash equivalents (at bank and in hand (at 1 Apr 2008)) 16,276 16,276Total at 1 April 2008 25,486 25,486Note 29 Financial liabilities by categoryTotalOther financialliabilities£000 £000Liabilities as per SoFPObligations under Private Finance Initiative contracts (31 Mar 2010) 334 334Trade and other payables excluding non financial assets (31 Mar 2010) 12,077 12,077Total at 31 March 2010 12,411 12,411Obligations under Private Finance Initiative contracts (31 Mar 2009) 341 341Trade and other payables excluding non financial assets (31 Mar 2009) 12,967 12,967Total at 31 March 2009 13,308 13,308Obligations under Private Finance Initiative contracts (1 Apr 2008) 347 347Trade and other payables excluding non financial assets (1 Apr 2008) 13,556 13,556Total at 1 April 2008 13,903 13,903Note 30 Fair values of current and non-current financial assets and financial liabilities at 31 March 2010The Trust has considered the values of current and non-current financial assets and current and non-current financial liabilities andhas concluded that there is no significant difference between book values and fair values that requires further disclosure in either thecurrent or previous accounting period.Note 31 Changes in the benefit obligation and fair value of plan assets during the year for the amounts recognised in theStatement of Financial Performance and the Statement of Comprehensive IncomeThe Trust did not hold any plan assets at either the current or previous year end.Note 32 Losses and Special PaymentsThere were 161 cases of losses and special payments totalling £129k paid during the twelve months to 31 March 2010 (31 March2009: 55 cases, totalling £220k).The Trust did not incur any cases in excess of £100,000 in either the current or previous accounting period.Page 39

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 33 Corporation TaxThe Trust has no liability for UK Corporation tax arising from either the current or previous accounting period.Note 34 Financial AssetsThe Trust's financial assets at 31 March 2009 were £41,367k (31 March 2009: £36,787k, 1 April 2008: £25,802k) denominatedentirely in £ Sterling and consisting only of 'loans and receivables' as follows:31 March 2010 31 March 2009 1 April 2008£000 £000 £000Loans and receivablesNHS debtors (net of provision for irrecoverable debts) 8,691 4,817 5,319Other prepayments and accrued income 1,828 1,359 650Other debtors 2,115 4,514 3,557Cash at bank and in hand 28,623 26,097 16,276Total 41,257 36,787 25,802Note 35 Financial LiabilitiesThe Trust's financial liabilities at 31 March 2010 were £12,077k (31 March 2009: £12,509k, 1 April 2008: £13,096k) denominatedentirely in £ Sterling as follows:31 March 2010 31 March 2009 1 April 2008£000 £000 £000Financial liabilitiesNHS creditors 5,317 3,952 4,555Other creditors 2,262 4,055 3,979Accruals 4,498 4,502 4,562Total 12,077 12,509 13,096Page 40

Birmingham Children's Hospital NHS Foundation Trust - Statutory Accounts Year to 31 March 2010Note 36 IFRS TransitionRevaluation Donated Assets Public DividendIncome andExpenditureReserve Reserve Capital ReserveNote £000 £000 £000 £000Taxpayers' Equity as at 31 March 2009 under UK GAAP 22,737 5,686 82,414 (15,861)IFRS changes:Employee Benefits (a) - - - (272)PFI Lease (b) - - - (793)Taxpayers' Equity as at 31 March 2009 under IFRS 22,737 5,686 82,414 (16,926)Notes(a) The IFRS adjustment in respect of employee benefits relates to employees' holiday pay not taken in the year that was still outstanding at thedate of the Statement of Financial Position.(b) The IFRS adjustment in respect of the PFI lease represents the (unwinding) difference between the amortised cost of the PFI asset and theannual unitary payments which remain constant over the term of the PFI arrangement which ends in 2023.£000Surplus for 2008/09 under UK GAAP 9,241Employee Benefits (272)PFI Lease (51)Surplus for 2008/09 under IFRS 8,918Revaluation Donated Assets Public DividendIncome andExpenditureReserve Reserve Capital ReserveNote £000 £000 £000 £000Taxpayers' Equity as at 31 March 2008 under UK GAAP 22,757 2,842 81,030 (25,102)IFRS changes:Employee Benefits (a) - - - (410)PFI Lease (b) - - - (741)Taxpayers' Equity as at 31 March 2008 under IFRS 22,757 2,842 81,030 (26,253)Notes(a) The IFRS adjustment in respect of employee benefits relates to employees' holiday pay not taken in the year that was still outstanding at thedate of the Statement of Financial Position.(b) The IFRS adjustment in respect of the PFI lease represents the (unwinding) difference between the amortised cost of the PFI asset and theannual unitary payments which remain constant over the term of the PFI arrangement which ends in 2023.£000Surplus for 2007/08 under UK GAAP 1,159Employee Benefits (410)PFI Lease (57)Surplus for 2007/08 under IFRS 692Page 41