Financial statements

This section of the annual report will cover:

• Statement of the chief executive’s responsibilities as the accountable officer of the trust
• Statement of directors’ responsibilities in respect of the accounts
• Independent auditor’s report to the board of directors of Lincolnshire Community Health Services NHS Trust report on the audit of the financial statements
• Annual Governance Statement
• Directors’ and Accountable Officer’s responsibilities
• Auditor’s responsibilities
• The purpose of our audit work and to whom we owe our responsibilities
• Certificate of completion of the audit
• Statement of Comprehensive Income
• Statement of Financial Position
• Statement of Changes in Equity for the year ended 31 March 2021
• Statement of Changes in Equity for the year ended 31 March 2020
• Statement of Cash Flows
• Notes to the Accounts

Statement of the chief executive’s responsibilities as the accountable officer of the trust

The Chief Executive of NHS Improvement, in exercise of powers conferred on the NHS Trust Development Authority, has designated that the Chief Executive
should be the Accountable Officer of the trust. The relevant responsibilities of Accountable Officers are set out in the NHS Trust Accountable Officer
Memorandum. These include ensuring that:

• there are effective management systems in place to safeguard public funds and assets and assist in the implementation of corporate governance
• value for money is achieved from the resources available to the trust
• the expenditure and income of the trust has been applied to the purposes intended by Parliament and conform to the authorities which govern them
• effective and sound financial management systems are in place and
• annual statutory accounts are prepared in a format directed by the Secretary of State to give a true and fair view of the state of affairs as at the end of
• the financial year and the income and expenditure, other items of comprehensive income and cash flows for the year.

As far as I am aware, there is no relevant audit information of which the trust’s auditors are unaware, and I have taken all the steps that I ought to have taken
to make myself aware of any relevant audit information and to establish that the entity’s auditors are aware of that information.

To the best of my knowledge and belief, I have properly discharged the responsibilities set out in my letter of appointment as an Accountable Officer.

Maz Fosh, Chief Executive Officer
Date: 08/06/2021

Statement of directors’ responsibilities in respect of the accounts

The directors are required under the National Health Service Act 2006 to prepare accounts for each financial year. The Secretary of State, with the approval of HM Treasury, directs that these accounts give a true and fair view of the state of affairs of the trust and of the income and expenditure, other items of comprehensive income and cash flows for the year. In preparing those accounts, the directors are required to:

• apply on a consistent basis accounting policies laid down by the Secretary of State with the approval of the
• Treasury
• make judgements and estimates which are reasonable and prudent
• state whether applicable accounting standards have been followed, subject to any material departures disclosed
• and explained in the accounts and
• prepare the financial statements on a going concern basis and disclose any material uncertainties over going
• concern.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the trust and to enable them to ensure that the accounts comply with requirements outlined in the above mentioned direction of the Secretary of State. They are also responsible for safeguarding the assets of the trust and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.

The directors confirm to the best of their knowledge and belief they have complied with the above requirements in preparing the accounts.

The directors confirm that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for patients, regulators and stakeholders to assess the NHS trust’s performance, business model and strategy.

By order of the Board
 Maz Fosh, Chief Executive Officer
08/06/2021
  Sam Wilde, Director of Finance and Business Intelligence
08/06/2021

Independent auditor’s report to the board of directors of Lincolnshire Community Health Services NHS Trust report on the audit of the financial statements

Opinion

We have audited the f inancial statements of Lincolnshire Community Health Services NHS Trust (“the Trust”) for the year ended 31 March 2021 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Taxpayers Equity and Statement of Cash Flows, and the related notes, including the accounting policies in note 1.

In our opinion the financial statements:

• give a true and fair view of the state of the Trust’s affairs as at 31 March 2021 and of its income and expenditure for the year then ended; and
• have been properly prepared in accordance with the accounting policies directed by the Secretary of State with the consent of the Treasury as being relevant to NHS Trusts in England and included in the Department of Health and Social Care Group Accounting Manual 2020/21.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulf illed our ethical responsibilities under, and are independent of the Trust in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Going concern

The Directors have prepared the financial statements on the going concern basis as they have not been informed by the relevant national body of the intention to dissolve the Trust without the transfer of its services to another public sector entity. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the
going concern period”).

In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Trust’s business model and analysed how those risks might affect the Trust’s f inancial resources or ability to continue operations over the going concern period.

Our conclusions based on this work:

• we consider that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
• we have not identif ied, and concur with the Directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Trust’s ability to continue as a going concern for the going concern period.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Trust will continue in operation.

Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

• Enquiring of management, the Audit Committee and internal audit and inspection of policy documentation as to the Trust’s high-level policies and procedures to prevent and detect f raud, including the internal audit function, and the Trust’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud.
• Assessing the incentives for management to manipulate reported financial performance as a result of the need to achieve statutory break-even duties and/or control totals delegated to the Trust by NHS Improvement.
• Reading Board and Audit Committee minutes.
• Using analytical procedures to identify any unusual or unexpected relationships.
• Reviewing the Trust’s accounting policies.

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.

As required by auditing standards, and taking into account possible pressures to meet delegated targets, we performed procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular the risk of incentive for revenue to be manipulated into the wrong period around the year end and the risk that Trust management may be in a position to make inappropriate accounting entries.

In line with the guidance set out in Practice Note 10 Audit of Financial Statements of Public Sector Bodies in the United Kingdom we also recognised a f raud risk related to expenditure recognition, particularly in relation to year-end accruals and provisions.

We did not identify any additional fraud risks.

We also performed procedures including:

• Identifying journal entries and other adjustments to test based on risk criteria and comparing the identified entries to supporting documentation. These included postings containing key words, postings to accounts that contain significant estimates, postings by individuals who do not typically post, and postings between unrelated accounts.
• Assessing significant estimates for bias.
• Inspecting transactions in the period prior to and following 31 March 2021 to verify revenue had been recognised in the correct accounting period.
• Inspecting transactions in the period prior to and following 31 March 2021 to verify expenditure had been recognised in the correct accounting period.
• Evaluating accruals posted as at 31 March 2021 and verifying accruals are appropriate and accurately recorded.
• Assessing the completeness of disclosed related party transactions and verifying they had been accurately recorded within the financial statements.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations.

We identified areas of laws and regulations that could reasonably be expected to have a material ef fect on the financial statements f rom our general sector experience and through discussion with the directors and other management (as required by auditing standards), and from inspection of the Trust’s regulatory and legal correspondence and discussed with the directors and other management the policies and procedures regarding compliance with laws
and regulations.

As the Trust is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures f or complying with regulatory requirements.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
The potential ef fect of these laws and regulations on the f inancial statements varies considerably.

The Trust is subject to laws and regulations that directly affect the f inancial statements including financial reporting legislation. Under paragraph 2(1) of Schedule 5 to the National Health Service Act 2006 the Trust must ensure that its revenue is not less than sufficient, taking one financial year with another, to meet outgoings properly chargeable to revenue account (the breakeven duty). In reporting on compliance with the breakeven duty the Trust is required to comply with the Department of Health and Social Care’s ‘Guidance on Breakeven Duty and Provisions’, We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Whilst the Trust is subject to many other laws and regulations, we did not identify any others where the consequences of non-compliance alone could have a material effect on amounts or disclosures in the financial statements.1

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the f inancial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is f rom the events and transactions ref lected in the f inancial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect noncompliance with all laws and regulations.

Other information in the Annual Report

The Accountable Officer is responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:

• we have not identified material misstatements in the other information; and
• in our opinion the other information included in the Annual Report for the financial year is consistent with the financial statements.

1. If we have identified indirect laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements this wording should be replaced by the wording in Example Report 2.2.1 in Appendix 2 of Chapter 2 of the AARM and “Firstly” should be included in the paragraph on direct laws and regulations.

Annual Governance Statement

We are required to report to you if the Annual Governance Statement has not been prepared in accordance with the requirements of the Department of Health and Social Care Group Accounting Manual 2020/21. We have nothing to report in this respect.

Remuneration and Staff Report

In our opinion the parts of the Remuneration and Staff Report subject to audit have been properly prepared in accordance with the Department of Health and Social Care Group  Accounting Manual 2020/21.

Directors’ and Accountable Officer’s responsibilities

As explained more fully in the statement set out on page 3, the directors are responsible for the preparation of financial statements that give a true and fair view. They are also responsible for: such internal control as they determine is necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error; assessing the Trust’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they have been informed by the relevant national body of the intention to dissolve the Trust without the transfer of its services to another public sector entity. As explained more fully in the statement of the Chief Executive's responsibilities, as the Accountable Officer of the Trust, on Page 2 the Accountable Officer is responsible for ensuring that annual statutory accounts are prepared in a format directed by the Secretary of State.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

Report on other legal and regulatory matters

Report on the Trust’s arrangements for securing economy, efficiency and effectiveness in its use of resources.

Under the Code of Audit Practice, we are required to report if we identify any significant weaknesses in the arrangements that have been made by the Trust to secure economy, efficiency and effectiveness in its use of resources. We have nothing to report in this respect.

Respective responsibilities in respect of our review of arrangements for securing economy, efficiency and effectiveness in the use of resources

As explained in the statement set out on page 57, the Chief Executive, as the Accountable Officer, is responsible for ensuring that value for money is achieved from the resources available to the Trust. We are required under section 21(3)(c), as amended by schedule 13 paragraph 10(a), of the Local Audit and Accountability Act 2014 to be satisfied that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use
of resources.

We are not required to consider, nor have we considered, whether all aspects of the Trust’s arrangements for securing economy, efficiency and effectiveness in the use of resources are operating effectively.

We have undertaken our review in accordance with the Code of Audit Practice and related statutory guidance having regard to whether the Trust had proper arrangements in place to ensure financial sustainability, proper governance and to use information about costs and performance to improve the way it manages and delivers its services. Based on our risk assessment, we undertook such work as we considered necessary.

Statutory reporting matters

We are required by Schedule 2 to the Code of Audit Practice issued by the Comptroller and Auditor General (‘the Code of Audit Practice’) to report to you if:

• we refer a matter to the Secretary of State under section 30 of the Local Audit and Accountability Act 2014 because we have reason to believe that the Trust, or an officer of the Trust, is about to make, or has made, a decision which involves or would involve the body incurring unlawful expenditure, or is about to take, or has begun to take a course of action which, if followed to its conclusion, would be unlawful and likely to cause a loss or
• def iciency; or
• we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014; or
• we make a written recommendation to the Trust under section 24 of the Local Audit and Accountability Act 2014.

We have nothing to report in these respects.

The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Board of Directors of Lincolnshire Community Health Services NHS Trust, as a body, in accordance with Part 5 of the Local Audit and Accountability Act 2014. Our audit work has been undertaken so that we might state to the Board of the Trust, as a body, those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Board of the Trust, as a body, for our audit work, for this report or for the opinions we have formed.

Certificate of completion of the audit

We certify that we have completed the audit of the accounts of Lincolnshire Community Health Services NHS Trust for the year ended 31 March 2021 in accordance with the requirements of the Local Audit and Accountability Act 2014 and the Code of Audit Practice.

Andrew Cardoza

for and on behalf of KPMG LLP

Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH

10 June 2021

 

Notes to the Accounts

Note 1 Accounting policies and other information

Note 1.1 Basis of preparation

The Department of Health and Social Care has directed that the financial statements of the Trust shall meet the accounting requirements of the Department of Health and Social Care Group Accounting Manual (GAM), which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the GAM 2020/21 issued by the Department of Health and Social Care. The accounting policies contained in the GAM follow International Financial Reporting Standards to the extent that they are meaningful and appropriate to the NHS, as determined by HM Treasury, which is advised by the Financial Reporting Advisory Board. Where the GAM permits a choice of accounting policy, the accounting policy that is judged to be most appropriate to the particular circumstances of the Trust for the purpose of giving a true and fair view has been selected. The particular policies adopted are described below. These have been applied consistently in dealing with items considered material in relation to the accounts.

1. Note 1.1.1 Accounting convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets, inventories and certain financial assets and financial liabilities.

Note 1.2 Going concern

These financial statements have been prepared on a going concern basis. The financial reporting framework applicable to NHS bodies, derived from the HM Treasury Financial Reporting Manual, defines that the anticipated continued provision of the entity’s services in the public sector is normally sufficient evidence of going concern. The directors have a reasonable expectation that this will continue to be the case.

The Trust has prepared its financial plans and cash flow forecasts for the coming year on the assumption that funding will be received from the Department of Health and Social Care consistent with the revised funding arrangements in response to the COVID-19 pandemic. Discussions to date indicate this funding will be forthcoming. These funds are expected to be sufficient to enable the Trust to meet its obligations as they fall due and will be accessed through the nationally agreed process published by NHS Improvement and the Department of Health and Social Care.

The Board of Directors has therefore concluded that these financial statements should be prepared on a going concern basis as there is a reasonable expectation that the Trust will have adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements.

Note 1.3.1 Critical accounting judgements and key sources of estimation uncertainty

In the application of Lincolnshire Community Health Services NHS Trust accounting policies, management is required to make various judgements, estimates and assumptions. These are regularly reviewed.

1. Note 1.3.2 Sources of estimation uncertainty

The following are assumptions about the future and other major sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

In the application of Lincolnshire Community Health Services NHS Trust's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from those estimates and the estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The Trust has made a key estimate and accounting judgement with regards to its level of provision for the historic employment status liabilities in respect of Out of Hours General Practioners. Details of the provision amount and associated context can be found within note 33 (provisions) and note 34 (contingent liabilties).

The Trust has used professional estimates with regards to valuations of Property, Plant and Equipment values. Further details can be found in Note 18 (revaluations of property, plant and equipment).

Note 1.4 Transfer of Functions

As public sector bodies are deemed to operate under common control, business reconfigurations within the DHSC group are outside the scope of IFRS 3 Business Combinations. Where functions transfer between two public sector bodies, the GAM requires the application of ‘absorption accounting’. Absorption accounting requires that entities account for their transactions in the period in which they took place. Where assets and liabilities transfer, the gain or loss resulting is recognised in the Statement of Comprehensive Income, and is disclosed separately from operating costs

Note 1.5 Pooled Budgets

Lincolnshire Community Health Services NHS Trust is party to a S75 agreement with Lincolnshire County Council and Lincolnshire Clinical Commissioning Group (CCG) with regards to the provision of transitional care nursing beds to the Lincolnshire patient population. Lincolnshire County Council is the host organisation and Lincolnshire Community Health Services NHS Trust contribution is detailed within note 2 to these accounts.

Note 1.6 Revenue from contracts with customers

Where income is derived from contracts with customers, it is accounted for under IFRS 15. The GAM expands the definition of a contract to include legislation and regulations which enables an entity to receive cash or another financial asset that is not classified as a tax by the Office of National Statistics (ONS).

Revenue in respect of goods/services provided is recognised when (or as) performance obligations are satisfied by transferring promised goods/services to the customer and is measured at the amount of the transaction price allocated to those performance obligations. At the year end, the Trust accrues income relating to performance obligations satisfied in that year. Where the Trust’s entitlement to consideration for those goods or services is unconditional a contract receivable will be recognised. Where entitlement to consideration is conditional on a further factor other than the passage of time, a contract asset will be recognised. Where consideration received or receivable relates to a performance obligation that is to be satisfied in a future period, the income is deferred and recognised as a contract liability.

The main source of revenue for Lincolnshire Community Health Services NHS Trust is contracts with commissioners in respect of healthcare services. Revenue in respect of services provided is recognised when (or as) performance obligations are satisfied by transferring promised services to the customer, and is measured at the amount of the transaction price allocated to that performance obligation. At the year end, Trust accrues income relating to performance obligations satisfied in that year. Where a patient care spell is incomplete at the year end, revenue relating to the partially complete spell is accrued in the same manner as other revenue.

Where income is received for a specific performance obligation that is to be satisfied in the following year, that income is deferred.

The Trust receives income under the NHS Injury Cost Recovery Scheme, designed to reclaim the cost of treating injured individuals to whom personal injury compensation has subsequently been paid, for instance by an insurer.

The Trust recognises the income when it receives notification from the Department of Work and Pension's Compensation Recovery Unit, has completed the NHS2 form and confirmed there are no discrepancies with the treatment. The income is measured at the agreed tariff for the treatments provided to the injured individual, less a provision for unsuccessful compensation claims and doubtful debts in line with IFRS 9 requirements of measuring expected credit losses over the lifetime of the asset.

Income from the sale of non-current assets is recognised only when all material conditions of sale have been met, and is measured as the sums due under the sale contract.

Revenue in respect of services provided is recognised when (or as) performance obligations are satisfied by transferring promised services to the customer, and is measured at the amount of the transaction price allocated to that performance obligation.

Payment terms are standard reflecting cross government principles. Significant terms include payment in line with the Better Payments Practice Code (BPPC).

The value of the benefit received when the Trust accesses funds from the Government’s apprenticeship service are recognised as income in accordance with IAS 20, Accounting for Government Grants. Where these funds are paid directly to an accredited training provider, non-cash income and a corresponding non-cash training expense are recognised, both equal to the cost of the training funded.

Revenue from NHS contracts

The accounting policies for revenue recognition and the application of IFRS 15 are consistently applied. The contracting arrangements in the NHS changed between 2019/20 and 2020/21 affecting the application of the accounting policy under IFRS

15. This difference in application is explained below.

2020/21

The main source of income for the Trust is contracts with commissioners for health care services. In 2020/21, the majority of the trust’s income from NHS commissioners was in the form of block contract arrangements. During the first half of the year the trust received block funding from its commissioners. For the second half of the year, block contract arrangements were agreed at a Sustainability and Transformation Partnership level. The related performance obligation is the delivery of healthcare and related services during the period, with the trust’s entitlement to consideration not varying based on the levels of activity performed.

The Trust has received additional income outside of the block and system envelopes to reimburse specific costs incurred and other income top-ups to support the delivery of services. Reimbursement and top-up income is accounted for as variable consideration.

Comparative period (2019/20)

In the comparative period (2019/20), the trust’s contracts with NHS commissioners included those where the trust’s entitlement to income varied according to services delivered. A performance obligation relating to delivery of a spell of health care was generally satisfied over time as healthcare was received and consumed simultaneously by the customer as the Trust performed it. The customer in such a contract was the commissioner, but the customer benefited as services were provided to their patient. Even where a contract could be broken down into separate performance obligations, healthcare generally aligned with paragraph 22(b) of the Standard entailing a delivery of a series of goods or services that were substantially the same and had a similar pattern of transfer. At the year end, the Trust accrued income relating to activity delivered in that year, where a patient care spell was incomplete. This accrual was disclosed as a contract receivable as entitlement to payment for work completed was usually only dependent on the passage of time.

Revenue from research contracts

Where research contracts fall under IFRS 15, revenue is recognised as and when performance obligations are satisfied. For some contracts, it is assessed that the revenue project constitutes one performance obligation over the course of the multi-year contract. In these cases it is assessed that the Trust’s interim performance does not create an asset with alternative use for the Trust, and the Trust has an enforceable right to payment for the performance completed to date. It is therefore considered that the performance obligation is satisfied over time, and the Trust recognises revenue each year over the course of the contract.

Some research income alternatively falls within the provisions of IAS 20 for government grants.

NHS injury cost recovery scheme

The Trust receives income under the NHS injury cost recovery scheme, designed to reclaim the cost of treating injured individuals to whom personal injury compensation has subsequently been paid, for instance by an insurer. The Trust recognises the income when performance obligations are satisfied. In practical terms this means that treatment has been given, it receives notification from the Department of Work and Pension's Compensation Recovery Unit, has completed the NHS2 form and confirmed there are no discrepancies with the treatment. The income is measured at the agreed tariff for the treatments provided to the injured individual, less an allowance for unsuccessful compensation claims and doubtful debts in line with IFRS 9 requirements of measuring expected credit losses over the lifetime of the asset.

Provider sustainability fund (PSF) and Financial recovery fund (FRF)

The PSF and FRF enable providers to earn income linked to the achievement of financial controls and performance targets.

Income earned from the funds is accounted for as variable consideration.

Note 1.7 Other forms of income

Grants and donations

Government grants are grants from government bodies other than income from commissioners or trusts for the provision of services. Where a grant is used to fund revenue expenditure it is taken to the Statement of Comprehensive Income to match that expenditure. Where the grants is used to fund capital expenditure, it is credited to the consolidated statement of comprehensive income once conditions attached to the grant have been met. Donations are treated in the same way as government grants.

Apprenticeship service income

The value of the benefit received when accessing funds from the Government's apprenticeship service is recognised as income at the point of receipt of the training service. Where these funds are paid directly to an accredited training provider from the Trust's Digital Apprenticeship Service (DAS) account held by the Department for Education, the corresponding notional expense is also recognised at the point of recognition for the benefit.

Note 1.8 Expenditure on employee benefits

Short-term employee benefits

Salaries, wages and employment-related payments such as social security costs and the apprenticeship levy are recognised in the period in which the service is received from employees. The cost of annual leave entitlement earned but not taken by employees at the end of the period is recognised in the financial statements to the extent that employees are permitted to carry-forward leave into the following period.

Pension costs

NHS Pension Scheme

Past and present employees are covered by the provisions of the two NHS Pension Schemes. Both schemes are unfunded, defined benefit schemes that cover NHS employers, general practices and other bodies, allowed under the direction of Secretary of State for Health and Social Care in England and Wales. The scheme is not designed in a way that would enable employers to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as though it is a defined contribution scheme: the cost to the trust is taken as equal to the employer's pension contributions payable to the scheme for the accounting period. The contributions are charged to operating expenses as and when they become due.

Additional pension liabilities arising from early retirements are not funded by the scheme except where the retirement is due to ill health. The full amount of the liability for the additional costs is charged to the operating expenses at the time the trust commits itself to the retirement, regardless of the method of payment.

Note 1.9 Expenditure on other goods and services

Expenditure on goods and services is recognised when, and to the extent that they have been received, and is measured at the fair value of those goods and services. Expenditure is recognised in operating expenses except where it results in the creation of a noncurrent asset such as property, plant and equipment.

Note 1.10 Discontinued operations

Discontinued operations occur where activities either cease without transfer to another entity, or transfer to an entity outside of the boundary of Whole of Government Accounts, such as private or voluntary sectors. Such activities are accounted for in accordance with IFRS 5. Activities that are transferred to other bodies within the boundary of Whole of Government Accounts are ‘machinery of government changes’ and treated as continuing operations.

Note 1.11 Other Expenses

Other operating expenses are recognised when, and to the extent that, the goods or services have been received. They are measured at the fair value of the consideration payable.

1.12 Property, plant and equipment

Recognition

Property, plant and equipment is capitalised where:

• it is held for use in delivering services or for administrative purposes
• it is probable that future economic benefits will flow to, or service potential be provided to, the trust
• it is expected to be used for more than one financial year
• the cost of the item can be measured reliably
• the item has cost of at least £5,000, or
• collectively, a number of items have a cost of at least £5,000 and individually have cost of more than £250, where the assets are functionally interdependent, had broadly simultaneous purchase dates, are anticipated to have similar disposal dates and are under single managerial control.

Where a large asset, for example a building, includes a number of components with significantly different asset lives, eg, plant and equipment, then these components are treated as separate assets and depreciated over their own useful lives.

Subsequent expenditure

Subsequent expenditure relating to an item of property, plant and equipment is recognised as an increase in the carrying amount of the asset when it is probable that additional future economic benefits or service potential deriving from the cost incurred to replace a component of such item will flow to the enterprise and the cost of the item can be determined reliably. Where a component of an asset is replaced, the cost of the replacement is capitalised if it meets the criteria for recognition above. The carrying amount of the part replaced is de-recognised. Other expenditure that does not generate additional future economic benefits or service potential, such as repairs and maintenance, is charged to the Statement of Comprehensive Income in the period in which it is incurred.

Measurement

Valuation

All property, plant and equipment assets are measured initially at cost, representing the costs directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management.

Assets are measured subsequently at valuation. Assets which are held for their service potential and are in use (ie operational assets used to deliver either front line services or back office functions) are measured at their current value in existing use. Assets that were most recently held for their service potential but are surplus with no plan to bring them back into use are measured at fair value where there are no restrictions on sale at the reporting date and where they do not meet the definitions of investment properties or assets held for sale.

Revaluations of property, plant and equipment are performed with sufficient regularity to ensure that carrying values are not materially different from those that would be determined at the end of the reporting period. Current values in existing use are determined as follows:

• Land and non-specialised buildings – market value for existing use
• Specialised buildings – depreciated replacement cost on a modern equivalent asset basis.

Properties in the course of construction for service or administration purposes are carried at cost, less any impairment loss. Cost includes professional fees and, where capitalised in accordance with IAS 23, borrowings costs. Assets are revalued and depreciation commences when the assets are brought into use.

IT equipment, transport equipment, furniture and fittings, and plant and machinery that are held for operational use are valued at depreciated historic cost where these assets have short useful lives or low values or both, as this is not considered to be materially different from current value in existing use.

Depreciation

Items of property, plant and equipment are depreciated over their remaining useful lives in a manner consistent with the consumption of economic or service delivery benefits.

Revaluation gains and losses

Revaluation gains are recognised in the revaluation reserve, except where, and to the extent that, they reverse a revaluation decrease that has previously been recognised in operating expenses, in which case they are recognised in operating expenditure.

Revaluation losses are charged to the revaluation reserve to the extent that there is an available balance for the asset concerned, and thereafter are charged to operating expenses.

Gains and losses recognised in the revaluation reserve are reported in the Statement of Comprehensive Income as an item of ‘other comprehensive income’.

Impairments

In accordance with the GAM, impairments that arise from a clear consumption of economic benefits or of service potential in the asset are charged to operating expenses. A compensating transfer is made from the revaluation reserve to the income and expenditure reserve of an amount equal to the lower of (i) the impairment charged to operating expenses; and (ii) the balance in the revaluation reserve attributable to that asset before the impairment.

An impairment that arises from a clear consumption of economic benefit or of service potential is reversed when, and to the extent that, the circumstances that gave rise to the loss is reversed. Reversals are recognised in operating expenditure to the extent that the asset is restored to the carrying amount it would have had if the impairment had never been recognised. Any remaining reversal is recognised in the revaluation reserve. Where, at the time of the original impairment, a transfer was made from the revaluation reserve to the income and expenditure reserve, an amount is transferred back to the revaluation reserve when the impairment reversal is recognised.

Other impairments are treated as revaluation losses. Reversals of ‘other impairments’ are treated as revaluation gains.

De-recognition

Assets intended for disposal are reclassified as ‘held for sale’ once the criteria in IFRS 5 are met. The sale must be highly probable and the asset available for immediate sale in its present condition.

Following reclassification, the assets are measured at the lower of their existing carrying amount and their ‘fair value less costs to sell’. Depreciation ceases to be charged and the assets are not revalued, except where the 'fair value less costs to sell' falls below the carrying amount. Assets are de-recognised when all material sale contract conditions have been met.

Property, plant and equipment which is to be scrapped or demolished does not qualify for recognition as ‘held for sale’ and instead is retained as an operational asset and the asset’s useful life is adjusted. The asset is de-recognised when scrapping or demolition occurs.

Donated and grant funded assets

Donated and grant funded property, plant and equipment assets are capitalised at their fair value on receipt. The donation/grant is credited to income at the same time, unless the donor has imposed a condition that the future economic benefits embodied in the grant are to be consumed in a manner specified by the donor, in which case, the donation/grant is deferred within liabilities and is carried forward to future financial years to the extent that the condition has not yet been met.

The donated and grant funded assets are subsequently accounted for in the same manner as other items of property, plant and equipment.

In 2020/21 this includes assets donated to the trust by the Department of Health and Social Care as part of the response to the coronavirus pandemic. As defined in the GAM, the trust applies the principle of donated asset accounting to assets that the trust controls and is obtaining economic benefits from at the year end.

Note 1 Accounting policies and other information (continued)

Private Finance Initiative (PFI) and Local Improvement Finance Trust (LIFT) transactions

PFI and LIFT transactions which meet the IFRIC 12 definition of a service concession, as interpreted in HM Treasury’s FReM , are accounted for as ‘on-Statement of Financial Position’ by the trust. In accordance with HM Treasury’s FReM, the underlying assets are recognised as property, plant and equipment, together with an equivalent liability. Subsequently, the assets are accounted for as property, plant and equipment and/or intangible assets as appropriate.

The annual contract payments are apportioned between the repayment of the liability, a finance cost, the charges for services and lifecycle replacement of components of the asset.

The service charge is recognised in operating expenses and the finance cost is charged to finance costs in the Statement of Comprehensive Income.

Lincolnshire Community Health Services NHS Trust had not entered into any arrangements involving PFI or LIFT Transactions

Useful lives of property, plant and equipment

Useful lives reflect the total life of an asset and not the remaining life of an asset. The range of useful lives are shown in the table below:	Min life	Max life
	Years	Years
Land	-	-
Buildings, excluding dwellings	1	24
Dwellings	-	-
Plant & machinery	1	10
Transport equipment	-	-
Information technology	1	4
Furniture & fittings	1	4

Finance-leased assets (including land) are depreciated over the shorter of the useful life or the lease term, unless the trust expects to acquire the asset at the end of the lease term in which case the assets are depreciated in the same manner as owned assets above.

Note 1.13 Intangible assets

Recognition

Intangible assets are non-monetary assets without physical substance which are capable of being sold separately from the rest of the trust’s business or which arise from contractual or other legal rights. They are recognised only where it is probable that future economic benefits will flow to, or service potential be provided to, the trust and where the cost of the asset can be measured reliably.

• Expenditure on research is not capitalised: it is recognised as an operating expense in the period in which it is incurred. Internally generated assets are not captialised as intangible assets.
• Expenditure on development is only capitalised when all of the following can be demonstrated:
• the technical feasibility of completing the intangible asset so that it will be available for use
• the intention to complete the intangible asset and use it
• the ability to sell or use the intangible asset
• how the intangible asset will generate probable future economic benefits or service potential
• the availability of adequate technical, financial and other resources to complete the intangible asset and sell or use
• the ability to measure reliably the expenditure attributable to the intangible asset during its development

Measurement

Intangible assets are recognised initially at cost, comprising all directly attributable costs needed to create, produce and prepare the asset to the point that it is capable of operating in the manner intended by management.

Subsequently intangible assets are measured at current value in existing use. Where no active market exists, intangible assets are valued at the lower of depreciated replacement cost and the value in use where the asset is income generating. Revaluations gains and losses and impairments are treated in the same manner as for property, plant and equipment. An intangible asset which is surplus with no plan to bring it back into use is valued at fair value where there are no restrictions on sale at the reporting date and where they do not meet the definitions of investment properties or assets held for sale.

Intangible assets held for sale are measured at the lower of their carrying amount or fair value less costs to sell.

Amortisation

Intangible assets are amortised over their expected useful lives in a manner consistent with the consumption of economic or service delivery benefits.

Useful lives of intangible assets

Useful lives reflect the total life of an asset and not the remaining life of an asset. The range of useful lives are shown

	Min life	Max life
	Years	Years
Information technology	1	4
Development expenditure	-	-
Websites	-	-
Software licences	1	4
Licences & trademarks	-	-
Patents	-	-
Other (purchased)	-	-
Goodwill	-	-

Note 1.14 Inventories

The Trust does not hold a material level of inventories. No value for inventories is included on the Statement of Financial Position.

In 2020/21, the Trust received inventories including personal protective equipment from the Department of Health and Social Care at nil cost. In line with the GAM and applying the principles of the IFRS Conceptual Framework, the Trust has accounted for the receipt of these inventories at a deemed cost, reflecting the best available approximation of an imputed market value for the transaction based on the cost of acquisition by the Department.

Note 1.15 Cash and cash equivalents

Cash is cash in hand and deposits with any financial institution repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in 3 months or less from the date of acquisition and that are readily convertible 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 demand and that form an integral part of the Trust’s cash management. Cash, bank and overdraft balances are recorded at current values.

Note 1.16 Financial assets and financial liabilities

Recognition

Financial assets and financial liabilities arise where the Trust is party to the contractual provisions of a financial instrument, and as a result has a legal right to receive or a legal obligation to pay cash or another financial instrument. The GAM expands the definition of a contract to include legislation and regulations which give rise to arrangements that in all other respects would be a financial instrument and do not give rise to transactions classified as a tax by ONS.

This includes the purchase or sale of non-financial items (such as goods or services), which are entered into in accordance with the Trust’s normal purchase, sale or usage requirements and are recognised when, and to the extent which, performance occurs, ie, when receipt or delivery of the goods or services is made.

Classification and measurement

Financial assets and financial liabilities are initially measured at fair value plus or minus directly attributable transaction costs except where the asset or liability is not measured at fair value through income and expenditure. Fair value is taken as the transaction price, or otherwise determined by reference to quoted market prices or valuation techniques.

Financial assets or financial liabilities in respect of assets acquired or disposed of through finance leases are recognised and measured in accordance with the accounting policy for leases described below.

Financial assets and financial liabilities at amortised cost

Financial assets and financial liabilities at amortised cost are those held with the objective of collecting contractual cash flows and where cash flows are solely payments of principal and interest. This includes cash equivalents, contract and other receivables, trade and other payables, rights and obligations under lease arrangements and loans receivable and payable.

After initial recognition, these financial assets and financial liabilities are measured at amortised cost using the effective interest method less any impairment (for financial assets). The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.

Interest revenue or expense is calculated by applying the effective interest rate to the gross carrying amount of a financial asset or amortised cost of a financial liability and recognised in the Statement of Comprehensive Income and a financing income or expense. In the case of loans held from the Department of Health and Social Care, the effective interest rate is the nominal rate of interest charged on the loan.

Financial assets measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income where business model objectives are met by both collecting contractual cash flows and selling financial assets and where the cash flows are solely payments of principal and interest. Movements in the fair value of financial assets in this category are recognised as gains or losses in other comprehensive income except for impairment losses. On derecognition, cumulative gains and losses previously recognised in other comprehensive income are reclassified from equity to income and expenditure, except where the Trust elected to measure an equity instrument in this category on initial recognition.

Financial assets and financial liabilities at fair value through income and expenditure

Financial assets measured at fair value through profit or loss are those that are not otherwise measured at amortised cost or at fair value through other comprehensive income. This category also includes financial assets and liabilities acquired principally for the purpose of selling in the short term (held for trading) and derivatives. Derivatives which are embedded in other contracts, but which are separable from the host contract are measured within this category. Movements in the fair value of financial assets and liabilities in this category are recognised as gains or losses in the Statement of Comprehensive income.

Impairment of financial assets

For all financial assets measured at amortised cost including lease receivables, contract receivables and contract assets or assets measured at fair value through other comprehensive income, the Trust recognises an allowance for expected credit losses.

The Trust adopts the simplified approach to impairment for contract and other receivables, contract assets and lease receivables, measuring expected losses as at an amount equal to lifetime expected losses. For other financial assets, the loss allowance is initially measured at an amount equal to 12-month expected credit losses (stage 1) and subsequently at an amount equal to lifetime expected credit losses if the credit risk assessed for the financial asset significantly increases (stage 2).

For financial assets that have become credit impaired since initial recognition (stage 3), expected credit losses at the reporting date are measured as the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.

Expected losses are charged to operating expenditure within the Statement of Comprehensive Income and reduce the net carrying value of the financial asset in the Statement of Financial Position.

Derecognition

Financial assets are de-recognised when the contractual rights to receive cash flows from the assets have expired or the Trust has transferred substantially all the risks and rewards of ownership.

Financial liabilities are de-recognised when the obligation is discharged, cancelled or expires.

Note 1.17 Leases

Leases are classified as finance leases when substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases.

Note 1.17.1 Lincolnshire Community Health Services NHS Trust as lessee

Property, plant and equipment held under finance leases are initially recognised, at the commencement of the lease, at fair value or, if lower, at the present value of the minimum lease payments, with a matching liability for the lease obligation to the lessor. Lease payments are apportioned between finance charges and reduction of the lease obligation to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the Statement of Comprehensive Income.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives are recognised 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 and individually assessed as to whether they are operating or finance leases.

Note 1.17.2 Lincolnshire Community Health Services NHS Trust as lessor

Amounts due from lessees under finance leases are recorded as receivables at the amount of the Trust's net investment in the leases. Finance lease income is allocated to accounting periods to reflect a constant periodic rate of return on the 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 costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense on a straight-line basis over the lease term.

Note 1.18 Provisions

The Trust recognises a provision where it has a present legal or constructive obligation of uncertain timing or amount; for which it is probable that there will be a future outflow of cash or other resources; and a reliable estimate can be made of the amount. The amount recognised in the Statement of Financial Position is the best estimate of the resources required to settle the obligation. Where the effect of the time value of money is significant, the estimated risk-adjusted cash flows are discounted using HM Treasury's discount rates effective for 31 March 2021:

		Nominal rate
Short-term	Up to 5 years	-0.02%
Medium-term	After 5 years up to 10 years	0.18%
Long-term	Exceeding 10 years	1.99%

HM Treasury provides discount rates for general provisions on a nominal rate basis. Expected future cash flows are therefore adjusted for the impact of inflation before discounting using nominal rates. The following inflation rates are set by HM Treasury, effective 31 March 2021:

		Inflation rate
	Year 1	1.20%
	Year 2	1.60%
	Into perpetuity	2.00%

Early retirement provisions and injury benefit provisions both use the HM Treasury's pension discount rate of minus 0.95% in real terms.

Clinical negligence costs

NHS Resolution operates a risk pooling scheme under which the trust pays an annual contribution to NHS Resolution, which, in return, settles all clinical negligence claims. Although NHS Resolution is administratively responsible for all clinical negligence cases, the legal liability remains with the Trust. The total value of clinical negligence provisions carried by NHS Resolution on behalf of the trust is disclosed at note 33.2 but is not recognised in the Trust’s accounts.

Non-clinical risk pooling

The trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are risk pooling schemes under which the trust pays an annual contribution to NHS Resolution and in return receives assistance with the costs of claims arising. The annual membership contributions, and any excesses payable in respect of particular claims are charged to operating expenses when they become due.

Note 1.19 Contingencies

Contingent assets (that is, assets arising from past events whose existence will only be confirmed by one or more future events not wholly within the entity’s control) are not recognised as assets, but are disclosed in note 34 where an inflow of economic benefits is probable.

Contingent liabilities are not recognised, but are disclosed in note 34, unless the probability of a transfer of economic benefits is remote.

Contingent liabilities are defined as:

• possible obligations arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity’s control; or
• present obligations arising from past events but for which it is not probable that a transfer of economic benefits will arise or for which the amount of the obligation cannot be measured with sufficient reliability.

Note 1.20 Public dividend capital

Public dividend capital (PDC) is a type of public sector equity finance based on the excess of assets over liabilities at the time of establishment of the predecessor NHS organisation. HM Treasury has determined that PDC is not a financial instrument within the meaning of IAS 32.

The Secretary of State can issue new PDC to, and require repayments of PDC from, the trust. PDC is recorded at the value received.

A charge, reflecting the cost of capital utilised by the trust, is payable as public dividend capital dividend. The charge is calculated at the rate set by HM Treasury (currently 3.5%) on the average relevant net assets of the trust during the financial year. Relevant net assets are calculated as the value of all assets less the value of all liabilities, with certain additions and deductions as defined by the Department of Health and Social Care.

This policy is available at https://www.gov.uk/government/publications/guidance-on-financing-available-to-nhs-trusts-and- foundation-trusts.

In accordance with the requirements laid down by the Department of Health and Social Care (as the issuer of PDC), the dividend for the year is calculated on the actual average relevant net assets as set out in the “pre-audit” version of the annual accounts. The dividend calculated is not revised should any adjustment to net assets occur as a result the audit of the annual accounts.

Note 1.21 Value added tax

Most of the activities of the trust are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

Note 1.22 Foreign exchange

Lincolnshire Community Health Services NHS Trust's functional currency and presentational currency is pounds sterling, and figures are presented in thousands of pounds unless expressly stated otherwise. Transactions denominated in a foreign currency are translated into sterling at the spot exchange rate on the date of the transaction. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the spot exchange rate on 31 March. Exchange gains and losses on monetary items (arising on settlement of the transaction or on retranslation at the Statement of Financial Position date) are recognised in the Statement of Comprehensive Income in the period in which they arise.

Lincolnshire Community Health Services NHS Trust has not undertaken any transactions involving foreign currency in the financial year.

Note 1.23 Third party assets

Assets belonging to third parties in which the Trust has no beneficial interest (such as money held on behalf of patients) are not recognised in the accounts. However, they are disclosed in a separate note to the accounts in accordance with the requirements of HM Treasury’s FReM .

Note 1.24 Losses and special payments

Losses and special payments are items that Parliament would not have contemplated when it agreed funds for the health service or passed legislation. By their nature they are items that ideally should not arise. They are therefore subject to special control procedures compared with the generality of payments. They are divided into different categories, which govern the way that individual cases are handled. Losses and special payments are charged to the relevant functional headings in expenditure on an accruals basis.

The losses and special payments note is compiled directly from the losses and compensations register which reports on an accrual basis with the exception of provisions for future losses.

Note 1.25 Gifts

Gifts are items that are voluntarily donated, with no preconditions and without the expectation of any return. Gifts include all transactions economically equivalent to free and unremunerated transfers, such as the loan of an asset for its expected useful life, and the sale or lease of assets at below market value.

Note 1.26 Early adoption of standards, amendments and interpretations

No new accounting standards or revisions to existing standards have been early adopted in 2020/21.

Note 1.27 Standards, amendments and interpretations in issue but not yet effective or adopted

IFRS 16 Leases

IFRS 16 Leases will replace IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease and other interpretations and is applicable in the public sector for periods beginning 1 April 2022. The standard provides a single accounting model for lessees, recognising a right of use asset and obligation in the statement of financial position for most leases: some leases are exempt through application of practical expedients explained below. For those recognised in the statement of financial position the standard also requires the remeasurement of lease liabilities in specific circumstances after the commencement of the lease term. For lessors, the distinction between operating and finance leases will remain and the accounting will be largely unchanged.

IFRS 16 changes the definition of a lease compared to IAS 17 and IFRIC 4. The trust will apply this definition to new leases only and will grandfather its assessments made under the old standards of whether existing contracts contain a lease.

On transition to IFRS 16 on 1 April 2022, the trust will apply the standard retrospectively with the cumulative effect of initially applying the standard recognised in the income and expenditure reserve at that date. For existing operating leases with a remaining lease term of more than 12 months and an underlying asset value of at least £5,000, a lease liability will be recognised equal to the value of remaining lease payments discounted on transition at the trust’s incremental borrowing rate. The trust's incremental borrowing rate will be defined by HM Treasury. Currently this rate is 0.91% but this may change between now and adoption of the standard. The related right of use asset will be measured equal to the lease liability adjusted for any prepaid or accrued lease payments. For existing peppercorn leases not classified as finance leases, a right of use asset will be measured at current value in existing use or fair value. The difference between the asset value and the calculated lease liability will be recognised in the income and expenditure reserve on transition. No adjustments will be made on 1 April 2022 for existing finance leases.

For leases commencing in 2022/23, the trust will not recognise a right of use asset or lease liability for short term leases (less than or equal to 12 months) or for leases of low value assets (less than £5,000). Right of use assets will be subsequently measured on a basis consistent with owned assets and depreciated over the length of the lease term.

HM Treasury revised the implementation date for IFRS 16 in the UK public sector to 1 April 2022 on 19 April 2021 . Due to the need to reassess lease calculations, together with uncertainty on expected leasing activity in from April 2022 and beyond, a quantification of the expected impact of applying the standard in 2022/23 is currently impracticable. However, the trust does expect this standard to have a material impact on non-current assets, liabilities and depreciation.

Other standards, amendments and interpretations

The DHSC GAM does not require the following IFRS Standards and Interpretations to be applied in 2020-21. These Standards are still subject to HM Treasury FReM adoption, with IFRS 16 now being for implementation in 2022-23 (see above), and the government implementation date for IFRS 17 still subject to HM Treasury consideration.

IFRS 17 Insurance Contracts – Application required for accounting periods beginning on or after 1 January 2021, but not yet adopted by the FReM: early adoption is not therefore permitted.

Note 2 Operating Segments

No segmental analysis is shown as the sole activity of Lincolnshire Community Health Services NHS Trust in 2020/21 was the provision of community health services for the people of Lincolnshire and surrounding areas

The "Chief Operating Decision Maker" is deemed to be the Trust Board of Directors. The Board receives high level financial reporting information and does not therefore review information or allocate resources in any way that could be perceived to represent operating segments. This is reviewed during the year by the Trust Board, dependent on the information required or requested by the Chief Operating Decision Maker.

The Trust has a grouping of customers, Lincolnshire Clinical Commissioning Groups from which more than 10% of its total revenue is derived for the provision of community health services.

Note 2.1 Pooled Budgets

From October 2016, Lincolnshire Community Health Services NHS Trust has participated in a pooled budget arrangement under Section 75 of the Health Act 2012 with Lincolnshire County Council and Lincolnshire Clinical Commissioning Groups (CCGs) for the provision of Transitional Care nursing beds. Lincolnshire County Council are the hosting body.

Lincolnshire Community Health Services NHS Trust's share of the income and expenditure handled by the pooled budget in the financial year were;

		£000s		£000s
		2020/21		2019/20
Revenue		1523		1750
Expenditure		1523		1750

Note 3 Operating income from patient care activities

All income from patient care activities relates to contract income recognised in line with accounting policy 1.6

Note 3.1 Income from patient care activities (by nature)	2020/21		2019/20
	£000		£000
Community services
Block contract / system envelope income*	92,616		89,291
Income from other sources (e.g. local authorities)	5,921		5,681
All services
Private patient income	-		-
Additional pension contribution central funding**	3,119		2,793
Other clinical income	500		261
Total income from activities	102,156		98,026

*As part of the coronavirus pandemic response, transaction flows were simplified in the NHS and providers and their commissioners moved onto block contract payments at the start of 2020/21. In the second half of the year, a revised financial framework built on these arrangements but with a greater focus on system partnership and providers derived most of their income from these system envelopes. Comparatives in this note are presented to be comparable with the current year activity. This does not reflect the contracting and payment mechanisms in place during the prior year.

**The employer contribution rate for NHS pensions increased from 14.3% to 20.6% (excluding administration charge) from 1 April 2019. Since 2019/20, NHS providers have continued to pay over contributions at the former rate with the additional amount being paid over by NHS England on providers' behalf. The full cost and related funding have been recognised in these accounts.

Note 3.2 Income from patient care activities (by source)
	2020/21		2019/20
Income from patient care activities received from:	£000		£000
NHS England	6,725		5,659
Clinical commissioning groups	89,078		86,460
Department of Health and Social Care	-		-
Other NHS providers	17		43
NHS other	-		-
Local authorities	5,904		5,639
Non-NHS: private patients	-		-
Non-NHS: overseas patients (chargeable to patient)	-		-
Injury cost recovery scheme	239		204
Non NHS: other	193		21
Total income from activities	102,156		98,026
Of which:
Related to continuing operations	102,156		98,026
Related to discontinued operations	-		-

Note 3.3 Overseas visitors (relating to patients charged directly by the provider)
	2020/21	2019/20
	£000	£000
Income recognised this year	-	-
Cash payments received in-year	-	-
Amounts added to provision for impairment of receivables	-	-
Amounts written off in-year	-	-

Note 4 Other operating income	2020/21				2019/20
	Contract income	Non-contract income	Total		Contract income	Non-contract income	Total
	£000	£000	£000		£000	£000	£000
Research and development	193	-	193		129	-	129
Education and training	875	191	1,066		730	158	888
Non-patient care services to other bodies	5,200		5,200		6,871		6,871
Provider sustainability fund (2019/20 only)			-		2,001		2,001
Reimbursement and top up funding	127		127				-
Income in respect of employee benefits accounted on a gross basis	361		361		395		395
Receipt of capital grants and donations		8	8			-	-
Charitable and other contributions to expenditure		1,577	1,577			35	35
Other income	7	-	7		2	-	2
Total other operating income	6,763	1,776	8,539		10,128	193	10,321
Of which:
Related to continuing operations			8,539				10,321
Related to discontinued operations			-				-

Note 5.1 Additional information on contract revenue (IFRS 15) recognised in the period
	2020/21		2019/20
	£000		£000
Revenue recognised in the reporting period that was included in within contract liabilities at the previous period end	346		810
Revenue recognised from performance obligations satisfied (or partially satisfied) in previous periods	-		-

Note 5.2 Transaction price allocated to remaining performance obligations
Revenue from existing contracts allocated to remaining performance obligations is expected to be recognised:	31 March 2021		31 March 2020
	£000		£000
within one year	-		-
after one year, not later than five years	-		-
after five years	-		-
Total revenue allocated to remaining performance obligations	-		-

The trust has exercised the practical expedients permitted by IFRS 15 paragraph 121 in preparing this disclosure. Revenue from (i) contracts with an expected duration of one year or less and (ii) contracts where the trust recognises revenue directly corresponding to work done to date is not disclosed.

Note 6.1 Operating expenses
	2020/21		2019/20
	£000		£000
Staff and executive directors costs	76,023		69,339
Remuneration of non-executive directors	80		74
Supplies and services - clinical (excluding drugs costs)	10,808		11,486
Supplies and services - general	3,503		3,222
Drug costs (drugs inventory consumed and purchase of non-inventory drugs)	2,388		2,721
Consultancy costs	47		152
Establishment	798		880
Premises	8,186		8,350
Transport (including patient travel)	1,203		1,699
Depreciation on property, plant and equipment	1,484		1,233
Amortisation on intangible assets	195		187
Net impairments	(33)		(3)
Movement in credit loss allowance: contract receivables / contract assets	(9)		(2)
Movement in credit loss allowance: all other receivables and investments	-		-
Increase/(decrease) in other provisions	-		-
Change in provisions discount rate(s)	-		-
Audit fees payable to the external auditor
audit services- statutory audit*	60		44
other auditor remuneration (external auditor only)	-		-
Internal audit costs	98		74
Clinical negligence	349		253
Legal fees	250		401
Insurance	-		-
Research and development	9		60
Education and training	872		740
Rentals under operating leases	4,383		4,288
Early retirements	-		-
Redundancy	-		-
Car parking & security	-		-
Hospitality	-		-
Losses, ex gratia & special payments	-		-
Grossing up consortium arrangements	-		-
Other services, eg external payroll	-		-
Other	22		10
Total	110,716		105,208
Of which:
Related to continuing operations	110,716		105,208
Related to discontinued operations	-		-

*Statutory audit fee expenditure includes annual audit fee of £58k (exc. VAT), with the remaining relating to additional COVID-19 related costs billed in 20/21

Note 6.2 Other auditor remuneration
	2020/21		2019/20
	£000		£000
Other auditor remuneration paid to the external auditor:
1. Audit of accounts of any associate of the trust	-		-
2. Audit-related assurance services	-		-
3. Taxation compliance services	-		-
4. All taxation advisory services not falling within item 3 above	-		-
5. Internal audit services	-		-
6. All assurance services not falling within items 1 to 5	-		-
7. Corporate finance transaction services not falling within items 1 to 6 above	-		-
8. Other non-audit services not falling within items 2 to 7 above	-		-
Total	-		-

Note 6.3 Limitation on auditor's liability

The limitation on auditor's liability for external audit work is £1 million (2019/20: £1 million).

Note 7 Impairment of assets
	2020/21		2019/20
	£000		£000
Net impairments charged to operating surplus / deficit resulting from:
Loss or damage from normal operations	-		-
Over specification of assets	-		-
Abandonment of assets in course of construction	-		-
Unforeseen obsolescence	-		-
Loss as a result of catastrophe	-		-
Changes in market price	(33)		(3)
Other	-		-
Total net impairments charged to operating surplus / deficit	(33)		(3)
Impairments charged to the revaluation reserve	11		-
Total net impairments	(22)		(3)

Note 8 Employee benefits
	2020/21		2019/20
	Total		Total
	£000		£000
Salaries and wages	57,084		49,479
Social security costs	5,514		4,707
Apprenticeship levy	267		236
Employer's contributions to NHS pensions	10,352		9,221
Pension cost - other	50		37
Other post employment benefits	-		-
Other employment benefits	-		-
Termination benefits	-		-
Temporary staff (including agency)	2,756		5,659
Total gross staff costs	76,023		69,339
Recoveries in respect of seconded staff	-		-
Total staff costs	76,023		69,339
Of which
Costs capitalised as part of assets	-		-

Note 8.1 Retirements due to ill-health                                

During 2020/21 there were no early retirements from the trust agreed on the grounds of ill-health (1 in the year ended 31 March 2020). The estimated additional pension liabilities of these ill-health retirements is 0k (£143k in 2019/20).

These estimated costs are calculated on an average basis and will be borne by the NHS Pension Scheme

Note 9 Pension costs

Past and present employees are covered by the provisions of the two NHS Pension Schemes. Details of the benefits payable and rules of the Schemes can be found on the NHS Pensions website at www.nhsbsa.nhs.uk/pensions.  Both are unfunded defined benefit schemes that cover NHS employers, GP practices and other bodies, allowed under the direction of the Secretary of State in England and Wales. They are not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, each scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in each scheme is taken as equal to the contributions payable to that scheme for the accounting period.

In order that the defined benefit obligations recognised in the financial statements do not differ materially from those that would be determined at the reporting date by a formal actuarial valuation, the FReM requires that “the period between formal valuations shall be four years, with approximate assessments in intervening years”. An outline of these follows:

Accounting valuation

A valuation of scheme liability is carried out annually by the scheme actuary (currently the Government Actuary’s Department) as at the end of the reporting period. This utilises an actuarial assessment for the previous accounting period in conjunction with updated membership and financial data for the current reporting period, and is accepted as providing suitably robust figures for financial reporting purposes. The valuation of the scheme liability as at 31 March 2021, is based on valuation data as at 31 March 2020, updated to 31 March 2021 with summary global member and accounting data. In undertaking this actuarial assessment, the methodology prescribed in IAS 19, relevant FReM interpretations, and the discount rate prescribed by HM Treasury have also been used.

The latest assessment of the liabilities of the scheme is contained in the report of the scheme actuary, which forms part of the annual NHS Pension Scheme Accounts. These accounts can be viewed on the NHS Pensions website and are published annually. Copies can also be obtained from The Stationery Office.

Full actuarial (funding) valuation

The purpose of this valuation is to assess the level of liability in respect of the benefits due under the schemes (taking into account recent demographic experience), and to recommend contribution rates payable by employees and employers.

The latest actuarial valuation undertaken for the NHS Pension Scheme was completed as at 31 March 2016. The results of this valuation set the employer contribution rate payable from April 2019 at 20.6%, and the Scheme Regulations were amended accordingly.

The 2016 funding valuation was also expected to test the cost of the Scheme relative to the employer cost cap set following the 2012 valuation. Following a judgment from the Court of Appeal in December 2018 Government announced a pause to that part of the valuation process pending conclusion of the continuing legal process.

The Trust also has a small number of employees who pay into the National Employment Savings Trust (NEST) pension scheme and this is not connected to the NHS Pensions Scheme.

Note 10 Operating leases

Note 10.1 Lincolnshire Community Health Services NHS Trust as a lessor

Lincolnshire Community Health Services NHS Trust has not acted as a lessor in any leasing arrangements in 2020/21 (2019/20: £0)

Note 10.2 Lincolnshire Community Health Services NHS Trust as a lessee

This note discloses costs and commitments incurred in operating lease arrangements where Lincolnshire Community Health Services NHS Trust is the lessee.

Lincolnshire Community Health Services NHS Trust operates patient services in a variety of locations across the county of Lincolnshire and neighbouring counties. As a result, the Trust is party to a number of leasing arrangements for the occupation of properties. Many of these arrangements are with NHS Property Services Ltd.

The Trust also operates a lease car scheme to enable staff to deliver services in the community, these arrangements involve three-year leasing arrangements between the Trust and private leasing providers.

	2020/21		2019/20
	£000		£000
Operating lease expense
Minimum lease payments	4,383		4,288
Contingent rents	-		-
Less sublease payments received	-		-
Total	4,383		4,288
	31 March 2021		31 March 2020
	£000		£000
Future minimum lease payments due:
- not later than one year;	4,076		3,854
- later than one year and not later than five years;	13,732		13,320
- later than five years.	28,400		28,413
Total	46,208		45,587
Future minimum sublease payments to be received	-		-

Note 11 Finance income
Finance income represents interest received on assets and investments in the period.
	2020/21		2019/20
	£000		£000
Interest on bank accounts	6		180
Interest income on finance leases	-		-
Interest on other investments / financial assets	-		-
Other finance income	-		-
Total finance income	6		180

Bank interest represents interest on cash balances held within the Government Banking Service. LCHS is not permitted to hold balances with commercial banks. Interest received for 2020/21 was significantly impacted by the interest rate reduction in March 2020 as part of the UK Government economic response to the Covid-19 pandemic.

Note 12.1 Finance expenditure
Finance expenditure represents interest and other charges involved in the borrowing of money or asset financing.
	2020/21		2019/20
	£000		£000
Interest expense:
Loans from the Department of Health and Social Care	-		-
Other loans	-		-
Overdrafts	-		-
Finance leases	-		-
Interest on late payment of commercial debt	-		-
Main finance costs on PFI and LIFT schemes obligations	-		-
Contingent finance costs on PFI and  LIFT scheme obligations	-		-
Total interest expense	-		-
Unwinding of discount on provisions	-		-
Other finance costs	-		-
Total finance costs	-		-

Note 12.2 The late payment of commercial debts (interest) Act 1998 / Public Contract Regulations 2015
	2020/21		2019/20
	£000		£000
Total liability accruing in year under this legislation as a result of late payments	-		-
Amounts included within interest payable arising from claims made under this legislation	-		-
Compensation paid to cover debt recovery costs under this legislation	-		-

Note 13 Other gains / (losses)
	2020/21		2019/20
	£000		£000
Gains on disposal of assets	3		-
Losses on disposal of assets	-		(2)
Total gains / (losses) on disposal of assets	3		(2)
Gains / (losses) on foreign exchange	-		-
Fair value gains / (losses) on investment properties	-		-
Fair value gains / (losses) on financial assets / investments	-		-
Fair value gains / (losses) on financial liabilities	-		-
Recycling gains / (losses) on disposal of financial assets mandated as fair value through OCI	-		-
Other gains / (losses)	-		-
Total other gains / (losses)	3		(2)

Note 14 Discontinued operations

Lincolnshire Community Health Services NHS Trust has none of its operations classified as discontinued in 2020/21 (2019/20: £0)

Note 15.1 Intangible assets - 2020/21
	Software  licences	Internally generated information technology	Total
	£000	£000	£000
Valuation / gross cost at 1 April 2020 - brought forward	923	299	1,222
Transfers by absorption	-	-	-
Additions	326	-	326
Impairments	-	-	-
Reversals of impairments	-	-	-
Revaluations	-	-	-
Reclassifications	-	-	-
Transfers to / from assets held for sale	-	-	-
Disposals / derecognition	(305)	-	(305)
Valuation / gross cost at 31 March 2021	944	299	1,243
Amortisation at 1 April 2020 - brought forward	612	182	794
Transfers by absorption	-	-	-
Provided during the year	145	50	195
Impairments	-	-	-
Reversals of impairments	-	-	-
Revaluations	-	-	-
Reclassifications	-	-	-
Transfers to / from assets held for sale	-	-	-
Disposals / derecognition	(305)	-	(305)
Amortisation at 31 March 2021	452	232	684
Net book value at 31 March 2021	492	67	559
Net book value at 1 April 2020	311	117	428

Note 15.2 Intangible assets - 2019/20
	Software  licences	Internally generated information technology	Total
	£000	£000	£000
Valuation / gross cost at 1 April 2019 - restated	886	198	1,084
Transfers by absorption	-	-	-
Additions	100	85	185
Impairments	-	-	-
Reversals of impairments	-	-	-
Revaluations	-	-	-
Reclassifications	(16)	16	-
Transfers to / from assets held for sale	-	-	-
Disposals / derecognition	(47)	-	(47)
Valuation / gross cost at 31 March 2020	923	299	1,222
Amortisation at 1 April 2019 - restated	568	85	653
Transfers by absorption	-	-	-
Provided during the year	137	50	187
Impairments	-	-	-
Reversals of impairments	-	-	-
Revaluations	-	-	-
Reclassifications	(47)	47	-
Transfers to / from assets held for sale	-	-	-
Disposals / derecognition	(46)	-	(46)
Amortisation at 31 March 2020	612	182	794
Net book value at 31 March 2020	311	117	428
Net book value at 1 April 2019	318	113	431

Note 16.1 Property, plant and equipment - 2020/21
	Land	Buildings excluding dwellings	Assets under construction	Plant & machinery	Information technology	Furniture & fittings	Total
	£000	£000	£000	£000	£000	£000	£000
Valuation/gross cost at 1 April 2020 - brought forward	691	3,443	61	2,723	4,384	575	11,877
Transfers by absorption	-	-	-	-	-	-	-
Additions	-	32	7	440	1,232	-	1,711
Impairments	(16)	(15)	-	-	-	-	(31)
Reversals of impairments	-	14	-	-	-	-	14
Revaluations	-	38	-	-	-	-	38
Reclassifications	-	2	(25)	-	-	23	-
Transfers to / from assets held for sale	-	-	-	-	-	-	-
Disposals / derecognition	-	(40)	-	(686)	(1,244)	(349)	(2,319)
Valuation/gross cost at 31 March 2021	675	3,474	43	2,477	4,372	249	11,290
Accumulated depreciation at 1 April 2020 - brought forward	-	982	-	1,819	2,105	446	5,352
Transfers by absorption	-	-	-	-	-	-	-
Provided during the year	-	258	-	275	897	54	1,484
Impairments	-	(10)	-	-	-	-	(10)
Reversals of impairments	-	(29)	-	-	-	-	(29)
Revaluations	-	(44)	-	-	-	-	(44)
Reclassifications	-	-	-	-	-	-	-
Transfers to / from assets held for sale	-	-	-	-	-	-	-
Disposals / derecognition	-	(40)	-	(686)	(1,212)	(349)	(2,287)
Accumulated depreciation at 31 March 2021	-	1,117	-	1,408	1,790	151	4,466
Net book value at 31 March 2021	675	2,357	43	1,069	2,582	98	6,824
Net book value at 1 April 2020	691	2,461	61	904	2,279	129	6,525

 

Note 16.2 Property, plant and equipment - 2019/20
	Land	Buildings excluding dwellings	Assets under construction	Plant & machinery	Information technology	Furniture & fittings	Total
	£000	£000	£000	£000	£000	£000	£000
Valuation / gross cost at 1 April 2019 - as previously stated	681	3,045	362	2,402	3,684	519	10,693
Prior period adjustments	-	-	-	-	-	-	-
Valuation / gross cost at 1 April 2019 - restated	681	3,045	362	2,402	3,684	519	10,693
Transfers by absorption	-	-	-	-	-	-	-
Additions	-	103	52	321	1,201	56	1,733
Impairments	-	-	-	-	-	-	-
Reversals of impairments	-	(16)	-	-	-	-	(16)
Revaluations	10	(42)	-	-	-	-	(32)
Reclassifications	-	353	(353)	-	-	-	-
Transfers to / from assets held for sale	-	-	-	-	-	-	-
Disposals / derecognition	-	-	-	-	(501)	-	(501)
Valuation/gross cost at 31 March 2020	691	3,443	61	2,723	4,384	575	11,877
Accumulated depreciation at 1 April 2019 - as previously stated	-	774	-	1,562	1,961	394	4,691
Prior period adjustments	-	-	-	-	-	-	-
Accumulated depreciation at 1 April 2019 - restated	-	774	-	1,562	1,961	394	4,691
Transfers by absorption	-	-	-	-	-	-	-
Provided during the year	-	280	-	257	644	52	1,233
Impairments	-	-	-	-	-	-	-
Reversals of impairments	-	(19)	-	-	-	-	(19)
Revaluations	-	(53)	-	-	-	-	(53)
Reclassifications	-	-	-	-	-	-	-
Transfers to / from assets held for sale	-	-	-	-	-	-	-
Disposals / derecognition	-	-	-	-	(500)	-	(500)
Accumulated depreciation at 31 March 2020	-	982	-	1,819	2,105	446	5,352
Net book value at 31 March 2020	691	2,461	61	904	2,279	129	6,525
Net book value at 1 April 2019	681	2,271	362	840	1,723	125	6,002

 

Note 16.3 Property, plant and equipment financing - 2020/21
	Land	Buildings excluding dwellings	Assets under construction	Plant & machinery	Information technology	Furniture & fittings	Total
	£000	£000	£000	£000	£000	£000	£000
Net book value at 31 March 2021
Owned - purchased	675	2,238	43	1,046	2,580	95	6,677
Finance leased	-	-	-	-	-	-	-
On-SoFP PFI contracts and other service concession arrangements	-	-	-	-	-	-	-
Off-SoFP PFI residual interests	-	-	-	-	-	-	-
Owned - donated/granted	-	119	-	23	2	3	147
NBV total at 31 March 2021	675	2,357	43	1,069	2,582	98	6,824

Note 16.4 Property, plant and equipment financing - 2019/20
	Land	Buildings excluding dwellings	Assets under construction	Plant & machinery	Information technology	Furniture & fittings	Total
	£000	£000	£000	£000	£000	£000	£000
Net book value at 31 March 2020
Owned - purchased	691	2,308	61	868	2,277	122	6,327
Finance leased	-	-	-	-	-	-	-
On-SoFP PFI contracts and other service concession arrangements	-	-	-	-	-	-	-
Off-SoFP PFI residual interests	-	-	-	-	-	-	-
Owned - donated/granted	-	153	-	36	2	7	198
NBV total at 31 March 2020	691	2,461	61	904	2,279	129	6,525

Note 17 Donations of property, plant and equipment

Lincolnshire Community Health Services NHS Trust received a cash donation for property, plant equipment in 2020/21 of £8k (2019/20: £0)

Note 18 Revaluations of property, plant and equipment

A desktop revaluation exercise of the Trust owned property assets was undertaken during 2020/21 by DVS Property Specialist, an executive arm of the Valuation Office Agency, with an effective date of 31st March 2021.

The valuations have been undertaken in accordance with International Financial Reporting Standards (IFRS) as interpreted and applied by the HM Treasury FReM compliant Department of Health and Social Care Group Accounting Manual (DHSC GAM).

Within the valuation report, the valuation is not reported as being subject to ‘material valuation uncertainty’ as defined by VPS 3 and VPGA 10 of the RICS Valuation – Global Standards

Note 19.1 Investment Property

Lincolnshire Community Health Services NHS Trust does not hold any properties for the purposes of capital appreciation (investment)

Note 19.2 Investment property income and expenses

Lincolnshire Community Health Services NHS Trust does not hold any properties for the purposes of capital appreciation (investment) and thus incurred no income or expenditure in relation to 2020/21 (2019/20: £0)

Note 20 Investments in associates and joint ventures

Lincolnshire Community Health Services NHS Trust does not hold any Investment in associates and joint ventures and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 21 Other investments / financial assets (non-current)

Lincolnshire Community Health Services NHS Trust does not hold any Other Investments and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 21.1 Other investments / financial assets (current)

Lincolnshire Community Health Services NHS Trust does not hold any Other Investments and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 22 Disclosure of interests in other entities

Lincolnshire Community Health Services NHS Trust holds no interests within other entities in 2020/21 (2019/20: £0)

Note 23 Inventories

Inventories recognised in expenses for the year were £1,526k (2019/20: £0k). Write-down of inventories recognised as expenses for the year were £0k (2019/20: £0k).

In response to the COVID 19 pandemic, the Department of Health and Social Care centrally procured personal protective equipment and passed these to NHS providers free of charge. During 2020/21 the Trust received £1,526k of items purchased by DHSC.

The deemed cost of these inventories was charged directly to expenditure on receipt with the corresponding benefit recognised in income.

Note 24.1 Receivables
	31 March 2021		31 March 2020
	£000		£000
Current
Contract receivables	1,407		5,829
Contract assets	-		-
Capital receivables	-		-
Allowance for impaired contract receivables / assets	(23)		(32)
Allowance for other impaired receivables	-		-
Deposits and advances	-		-
Prepayments (non-PFI)	1,021		742
Interest receivable	-		-
VAT receivable	483		254
Other receivables	153		51
Total current receivables	3,041		6,844
Non-current
Contract receivables	-		-
Contract assets	-		-
Capital receivables	-		-
Allowance for impaired contract receivables / assets	-		-
Allowance for other impaired receivables	-		-
VAT receivable	-		-
Other receivables	-		-
Total non-current receivables	-		-
Of which receivable from NHS and DHSC group bodies:
Current	1,234		5,187
Non-current	-		-

Note 24.2 Allowances for credit losses
	2020/21			2019/20
	Contract receivables and contract assets	All other receivables		Contract receivables and contract assets	All other receivables
	£000	£000		£000	£000
Allowances as at 1 April - brought forward	32	-		34	-
Transfers by absorption	-	-		-	-
New allowances arising	16	-		20	-
Changes in existing allowances	(7)	-		(7)	-
Reversals of allowances	(18)	-		(15)	-
Utilisation of allowances (write offs)	-	-		-	-
Changes arising following modification of contractual cash flows	-	-		-	-
Foreign exchange and other changes	-	-		-	-
Allowances as at 31 Mar 2021	23	-		32	-

Note 24.3 Exposure to credit risk

As at the end of 2020/21, the Trust held no liabilities classed in disposal groups (2019/20: £0)

Note 25 Other assets

Lincolnshire Community Health Services NHS Trust does not hold any Other Assets and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 26.1 Non-current assets held for sale and assets in disposal groups

Lincolnshire Community Health Services NHS Trust does not hold any Non-current assets held for sale and assets in disposal groups and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 26.2 Liabilities in disposal groups

As at the end of 2020/21, the Trust held no liabilities classed in disposal groups (2019/20: £0)

Note 27.1 Cash and cash equivalents movements
Cash and cash equivalents comprise cash at bank, in hand and cash equivalents. Cash equivalents are readily convertible investments of known value which are subject to an insignificant risk of change in value.
	2020/21		2019/20
	£000		£000
At 1 April	29,532		24,968
Prior period adjustments			-
At 1 April (restated)	29,532		24,968
Transfers by absorption	-		-
Net change in year	2,759		4,564
At 31 March	32,291		29,532
Broken down into:
Cash at commercial banks and in hand	1		1
Cash with the Government Banking Service	32,290		29,531
Deposits with the National Loan Fund	-		-
Other current investments	-		-
Total cash and cash equivalents as in SoFP	32,291		29,532
Bank overdrafts (GBS and commercial banks)	-		-
Drawdown in committed facility	-		-
Total cash and cash equivalents as in SoCF	32,291		29,532

Note 27.2 Third party assets held by the trust
Lincolnshire Community Health Services NHS Trust held cash and cash equivalents which relate to monies held by the Trust on behalf of patients or other parties and in which the trust has no beneficial interest. This has been excluded from the cash and cash equivalents figure reported in the accounts.
	31 March 2021		31 March 2020
	£000		£000
Bank balances	22		-
Monies on deposit	-		-
Total third party assets	22		-

Note 28.1 Trade and other payables
					31 March 2021		31 March 2020
					£000		£000
Current
Trade payables					4,569		5,716
Capital payables					150		256
Accruals					4,062		4,848
Receipts in advance and payments on account					-		-
PFI lifecycle replacement received in advance					-		-
Social security costs					844		723
VAT payables					-		-
Other taxes payable					604		463
PDC dividend payable					-		-
Other payables					1,018		895
Total current trade and other payables					11,247		12,901
Non-current
Trade payables					-		-
Capital payables					-		-
Accruals					-		-
Receipts in advance and payments on account					-		-
PFI lifecycle replacement received in advance					-		-
VAT payables					-		-
Other taxes payable					-		-
Other payables					22		-
Total non-current trade and other payables					22		-
Of which payables from NHS and DHSC group bodies:
Current					3,757		6,505
Non-current					-		-

Note 28.2 Early retirements in NHS payables above
The payables note above includes amounts in relation to early retirements as set out below:
	31 March 2021		31 March 2021		31 March 2020		31 March 2020
	£000		Number		£000		Number
- to buy out the liability for early retirements over 5 years	-				-
- number of cases involved			-				-

Note 29 Other liabilities
	31 March 2021		31 March 2020
	£000		£000
Current
Deferred income: contract liabilities	1,091		740
Deferred grants	-		-
Deferred PFI credits / income	-		-
Lease incentives	-		-
Other deferred income	-		-
Total other current liabilities	1,091		740
Non-current
Deferred income: contract liabilities	-		-
Deferred grants	-		-
Other deferred income	-		-
Total other non-current liabilities	-		-

Note 30 Borrowings

Lincolnshire Community Health Services NHS Trust does not have or undertake any borrowing activities (overdrafts or loan arrangements) during 2020/21. (2019/20: £0)

Note 31 Reconciliation of liabilities arising from financing activities - 2020/21

Lincolnshire Community Health Services NHS Trust does not hold any liabilities arising from financing activities and thus no reconciliation table is included within the Trust accounts (2019/20: £0)

Note 32 Finance leases

Lincolnshire Community Health Services NHS Trust does not hold any finance leases and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 33 Movements in provisions for liabilities and charges - 2020/21
	Pensions: early departure costs	Pensions: injury benefits	Legal claims	Re-structuring	Equal Pay (including Agenda for Change)	Redundancy	Other	Total
	£000	£000	£000	£000	£000	£000	£000	£000
At 1 April 2020	4	-	2,572	130	-	-	438	3,144
Transfers by absorption	-	-	-	-	-	-	-	-
Change in the discount rate	-	-	-	-	-	-	-	-
Arising during the year	-	-	200	-	-	-	219	419
Utilised during the year	-	-	(30)	-	-	-	-	(30)
Reclassified to liabilities held in disposal groups	-	-	-	-	-	-	-	-
Reversed unused	-	-	(23)	-	-	-	(11)	(34)
Unwinding of discount	-	-	-	-	-	-	-	-
At 31 March 2021	4	-	2,719	130	-	-	646	3,499
Expected timing of cash flows:
- not later than one year;	-	-	2,719	130	-	-	386	3,235
- later than one year and not later than five years;	-	-	-	-	-	-	37	37
- later than five years.	4	-	-	-	-	-	223	227
Total	4	-	2,719	130	-	-	646	3,499

Provisions included within the accounts of Lincolnshire Community Health Services NHS Trust as at 31 March 2021:

Pensions: these represent costs associated with departures where pension has been taken early as an alternative to ordinary termination. The Trust provides for the additional cost associated.

Legal: the Trust has provided against ongoing legal cases which may incur settlement costs at a future date. Further information can be found at Note 34.

Restructuring: are estimated costs relating to organisational restructuring and associated potential exit packages required.

Other: provisions categorised here relate to provisions estimated associated with leased buildings and dilapidations clauses within these leases

Note 33.1 Clinical negligence liabilities

At 31 March 2021, £409k was included in provisions of NHS Resolution in respect of clinical negligence liabilities of Lincolnshire Community Health Services NHS Trust (31 March 2020: £801k).

Note 34 Contingent assets and liabilities

During 2020/21, Lincolnshire Community Health Services NHS Trust has continued to engage in discussions with HM Revenue and Customs with regards to liabilities due in respect of pay-as-you-earn tax and national insurance. These liabilities relate to individuals engaged by the Trust in the delivery of its services (specifically the GP out-of-hours services), since the Trust’s inception in 2011

The arrangements were inherited from the Trust’s predecessor organisation (Lincolnshire Primary Care Trust). Discussions with HMRC to date have included explanation of the detail of the arrangement involved and complying with requests for additional information.

Depending on the outcome of this issue, there is a potential for a liability to arise. The Trust has included an estimate within its 2020/21 financial position as a provision (refer to note 33). The Trust continues to discuss with HMRC and legal advisors.

Note 35 Contractual capital commitments
	31 March 2021			31 March 2020
	£000			£000
Property, plant and equipment	16			224
Intangible assets	-			-
Total	16			224
Note 36 Other financial commitments
The trust is committed to making payments under non-cancellable contracts (which are not leases, PFI contracts or other service concession arrangement), analysed by the period during which the payment is made:
	31 March 2021		31 March 2020
	£000		£000
not later than 1 year	-		-
after 1 year and not later than 5 years	-		-
paid thereafter	-		-
Total	-		-

Note 37 On-SoFP PFI, LIFT or other service concession arrangements

Lincolnshire Community Health Services NHS Trust does not hold any On-SoFP PFI, LIFT or other service concessions and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 38 Off-SoFP PFI, LIFT and other service concession arrangements

Lincolnshire Community Health Services NHS Trust does not hold any On-SoFP PFI, LIFT or other service concessions and thus incurred no income or expenditure in relation to this (2019/20: £0)

Note 39 Financial instruments

Note 39.1 Financial risk management

Financial reporting standard IFRS 7 requires disclosure of the role that financial instruments have had during the period in creating or changing the risks a body faces in undertaking its activities. Because of the continuing service provider relationship that the NHS Trust has with Clinical Commissioning Groups (CCGs) and the way those CCGs are financed, the NHS Trust is not exposed to the degree of financial risk faced by business entities. Also financial instruments play a much more limited role in creating or changing risk than would be typical of listed companies, to which the financial reporting standards mainly apply. Lincolnshire Community Health Services NHS Trust has limited powers to borrow or invest surplus funds and financial assets and liabilities are generated by day-to-day operational activities rather than being held to change the risks facing the Trust in undertaking its activities

The Trust’s treasury management operations are carried out by the finance department, within parameters defined formally within the Trust’s standing financial instructions and policies agreed by the board of directors. Lincolnshire Community Health Services NHS Trust treasury activity is subject to review by the Trust’s internal auditors.

Interest Rate Risk

NHS Trusts are eligible to borrow from government for capital expenditure purposes, subject to affordability assessments as confirmed by NHS Improvement. The borrowings are for 1 – 25 years, in line with the life of the associated assets, and interest is charged at the National Loans Fund rate, fixed for the life of the loan. The Trust therefore has low exposure to interest rate fluctuations. Lincolnshire Community Health Services NHS Trust currently has no borrowings.

The Trust therefore has low exposure to interest rate fluctuations.

Credit Risk

Because the majority of the Trust’s revenue comes from contracts with other public sector bodies, the Trust has low exposure to credit risk. The maximum exposures as at 31 March 2021 are in receivables from customers, as disclosed in the trade and other receivables note.

Liquidity Risk

The Trust’s operating costs are incurred under contracts with Clinical Commissioning Groups (CCGs), Local Authorities or NHS England, which are financed from resources voted annually by Parliament . The Trust funds its capital expenditure from funds obtained within its prudential borrowing limit. The Trust is not, therefore, exposed to significant liquidity risks.

Note 39.2 Carrying values of financial assets
Carrying values of financial assets as at 31 March 2021	Held at amortised cost	Held at fair value through I&E	Held at fair value through OCI	Total book value
	£000	£000	£000	£000
Trade and other receivables excluding non financial assets	1,536	-	-	1,536
Other investments / financial assets	-	-	-	-
Cash and cash equivalents	32,291	-	-	32,291
Total at 31 March 2021	33,827	-	-	33,827
Carrying values of financial assets as at 31 March 2020	Held at amortised cost	Held at fair value through I&E	Held at fair value through OCI	Total book value
	£000	£000	£000	£000
Trade and other receivables excluding non financial assets	5,763	-	-	5,763
Other investments / financial assets	-	-	-	-
Cash and cash equivalents	29,532	-	-	29,532
Total at 31 March 2020	35,295	-	-	35,295

Note 39.3 Carrying values of financial liabilities
Carrying values of financial liabilities as at 31 March 2021		Held at amortised cost	Held at fair value through I&E	Total book value
		£000	£000	£000
Loans from the Department of Health and Social Care		-	-	-
Obligations under finance leases		-	-	-
Obligations under PFI, LIFT and other service concession contracts		-	-	-
Other borrowings		-	-	-
Trade and other payables excluding non financial liabilities		9,800	-	9,800
Other financial liabilities		-	-	-
Provisions under contract		3,499	-	3,499
Total at 31 March 2021		13,299	-	13,299
Carrying values of financial liabilities as at 31 March 2020		Held at amortised cost	Held at fair value through I&E	Total book value
		£000	£000	£000
Loans from the Department of Health and Social Care		-	-	-
Obligations under finance leases		-	-	-
Obligations under PFI, LIFT and other service concession contracts		-	-	-
Other borrowings		-	-	-
Trade and other payables excluding non financial liabilities		10,820	-	10,820
Other financial liabilities		-	-	-
Provisions under contract		-	-	-
Total at 31 March 2020		10,820	-	10,820

Note 39.4 Maturity of financial liabilities
	31 March 2021		31 March 2020 restated*
	£000		£000
In one year or less	13,034		10,820
In more than one year but not more than five years	36		-
In more than five years	228		-
Total	13,298		10,820

*This disclosure has previously been prepared using discounted cash flows. The comparatives have therefore been restated on an undiscounted basis.

Note 39.5 Fair values of financial assets and liabilities

The majority of the Trust's financial assets relate either to cash or money due from other NHS organisations. Other NHS organisations are extremely unlikely to default on payments, and the Trust is only permitted to invest cash deposits within strict guidelines. Lincolnshire Community Health Services NHS Trust does not undertake any transactions involving hedging, foreign currency or other investments prone to market fluctuations. There is therefore, no material exposure to credit, market or liquidity risks.

The Trust's financial liabilities are generally of a short-term and uncomplicated nature which are not particularly influenced by external factors. The Trust updates a long term financial plan each year, which includes a detailed cash flow forecast, and has no reason to assume it will be unable to meet its obligations to suppliers, employees and financing costs. There are therefore not any material liquidity risks.

Note 40 Losses and special payments
	2020/21			2019/20
	Total number of cases	Total value of cases		Total number of cases	Total value of cases
	Number	£000		Number	£000
Losses
Cash losses	4	2		12	1
Fruitless payments and constructive losses	2	1		1	-
Bad debts and claims abandoned	5	5		12	2
Stores losses and damage to property	-	-		-	-
Total losses	11	8		25	3
Special payments
Compensation under court order or legally binding arbitration award	1	7		3	22
Extra-contractual payments	-	-		-	-
Ex-gratia payments	2	2		4	1
Special severance payments	-	-		-	-
Extra-statutory and extra-regulatory payments	-	-		-	-
Total special payments	3	9		7	23
Total losses and special payments	14	17		32	26
Compensation payments received		-			-

Note 41 Gifts

Lincolnshire Community Health Services NHS Trust did not expend on gifts during 2020/21 (2019/20: £0)

Note 42 Related parties
Details of related party transactions are as follows:	Payments to Related Party		Receipts from Related Party		Amounts owed to Related Party		Amounts due from Related Party
	£		£		£		£
E Baylis, Chair, Lincolnshire Community Health Services NHS Trust
1. Chair, United Lincolnshire Hospitals NHS Trust	1,912,252		2,395,134		758,870		391,310
E Libiszewski, Non- Executive Director, Lincolnshire Community Health Services NHS Trust
1. Non Executive Director, United Lincolnshire Hospitals NHS Trust	1,912,252		2,395,134		758,870		391,310
2. Via Relation - St Barnabas Hospice - Registered Charity No: 1053814	-		681		-		-
Dr Y Owen, Medical Director, Lincolnshire Community Health Services NHS Trust
1. Trustee - Lincolnshire Integrated Voluntary Emergency Service (LIVES)	600		-		-		-
2. East Lindsay Medical Group - GP Partner	16,960		110		-		-
S Wilde, Director of Finance and Business Intelligence, Lincolnshire Community Health Services NHS Trust
1. Member of the HFMA Costing for Value Institute Council	-		2,400		-		-

The Department of Health is regarded as a related party. During the year 2020/21, the Trust has had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent Department. For example:

• Clinical Commissioning Groups (primarily with NHS Lincolnshire CCG)
• NHS England (for the commissioning of specialised health services)
• NHS Foundation Trusts (particularly North Lincolnshire and Goole NHS Foundation Trust and Lincolnshire Partnership NHS Foundation trust)
• NHS Trusts (particularly with United Lincolnshire Hospitals NHS Trusts)
• NHS Resolution (in respect of Clinical Negligence contributions)
• NHS Property Services (in respect of buildings, rentals and service charges)
• NHS Business Services Authority

In addition, the Trust has had a number of material transactions with other government departments and other central and local government bodies. Most of these transactions have been with Lincolnshire County Council in respect of services commissioned by the local authority.

The Trust has also received revenue payments from a number of charitable funds, Lincolnshire Community Health Services is the corporate trustee of the charitable fund.

Note 43 Events after the reporting date

At the time of preparation, the Trust had not been notified or become aware of any significant events which require disclosure.

Note 44 Better Payment Practice code
	2020/21		2020/21		2019/20		2019/20
Non-NHS Payables	Number		£000		Number		£000
Total non-NHS trade invoices paid in the year	8,983		23,077		8,127		21,036
Total non-NHS trade invoices paid within target	6,932		19,502		6,227		17,590
Percentage of non-NHS trade invoices paid within target	77.2%		84.5%		76.6%		83.6%
NHS Payables
Total NHS trade invoices paid in the year	1,140		17,860		1,061		15,905
Total NHS trade invoices paid within target	759		14,629		715		12,938
Percentage of NHS trade invoices paid within target	66.6%		81.9%		67.4%		81.3%

The Better Payment Practice code requires the NHS body to aim to pay all valid invoices by the due date or within 30 days of receipt of valid invoice, whichever is later.

Note 45 External financing limit
The trust is given an external financing limit against which it is permitted to underspend
					2020/21		2019/20
					£000		£000
Cash flow financing					(2,506)		(5,021)
Finance leases taken out in year
Other capital receipts
External financing requirement					(2,506)		(5,021)
External financing limit (EFL)					3,076		949
Under / (over) spend against EFL					5,582		5,970

Note 46 Capital Resource Limit
					2020/21		2019/20
					£000		£000
Gross capital expenditure					2,037		1,918
Less: Disposals					(32)		(2)
Less: Donated and granted capital additions					(8)		-
Plus: Loss on disposal from capital grants in kind					-		-
Charge against Capital Resource Limit					1,997		1,916
Capital Resource Limit					2,078		2,074
Under / (over) spend against CRL					81		158

Note 47 Breakeven duty financial performance
							2020/21
							£000
Adjusted financial performance surplus / (deficit) (control total basis)							9
Remove impairments scoring to Departmental Expenditure Limit							-
Add back non-cash element of On-SoFP pension scheme charges							-
IFRIC 12 breakeven adjustment							-
Breakeven duty financial performance surplus / (deficit)							9

Note 48 Breakeven duty rolling assessment
	2013/14	2014/15	2015/16	2016/17	2017/18	2018/19	2019/20	2020/21
	£000	£000	£000	£000	£000	£000	£000	£000
Breakeven duty in-year financial performance	1,825	1,274	569	3,940	4,903	4,607	3,410	9
Breakeven duty cumulative position	4,379	5,653	6,222	10,162	15,065	19,672	23,082	23,091
Operating income	109,612	110,487	105,943	109,336	104,457	102,217	108,347	110,695
Cumulative breakeven position as a percentage of operating income	4.0%	5.1%	5.9%	9.3%	14.4%	19.2%	21.3%	20.9%