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31.2 Total on-SoFP PFI, LIFT Liquidity Risk
and Other Service Concession Alder Hey Children’s NHS Foundation Trust net
Arrangement Commitments operating costs are incurred under legally binding
contracts with local CCGs. The Trust receives regular
This note provides an analysis of the trust’s payments monthly payments form CCGs based on an agreed
in 2017/18: contract value with adjustments made for actual
2017/18 2016/17 services provided.
£000 £000 The Trust finances its capital expenditure from internally

generated funds or Public Dividend Capital made
Unitary Payment Payable to
12,094 13,566 available by the Department of Health and Social Care.
Service Concession Operator
The Trust is therefore not exposed to significant liquidity
risks.
Consisting of:
8,098 8,249
- Interest Charge
Interest Rate Risk
- Repayment of 2,070 2,044
Finance Lease Liability All of the trust’s financial assets carry nil or fixed rates of
interest. The Trust is not exposed to significant interest
- Service Element rate risk.
and Other Charges to 1,174 2,803
Operating Expenditure Foreign Currency Risk

- Revenue Lifestyle The Trust is principally a domestic organisation with
202 -
Maintenance the majority of transactions, assets and liabilities being
in the UK and sterling based. The Trust has limited
- Contingent Rent 550 470
business with overseas clients. The Trust therefore has
Total Amount Paid to low exposure to currency rate fluctuations.
Service Concession 12,094 13,566
Operator Price Risk

The contracts from NHS commissioners in respect
The unitary payment service element for 2017/18 of healthcare services have a pre-determined price
includes a credit for service failures.
structure which negates the risk of price fluctuation.
32 FINANCIAL INSTRUMENTS Credit Risk

32.1 Financial Risk Management The contracts from NHS commissioners in respect of
healthcare services are agreed annually and take into
account the commissioners’ ability to pay and hence
Financial reporting standard IFRS7 requires disclosure credit risk is minimal.
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 trust has with
clinical commissioning groups (CCGs) and the way
those CCGs are financed, the 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.

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. Trust treasury activity is subject to review by
the trust’s internal auditors.

Alder Hey Children’s NHS Foundation Trust 189 Annual Report & Accounts 2017/18