Topics: Investment, Finance, Risk Pages: 11 (1752 words) Published: April 15, 2014

capital Investment

Robert Woolley, Director of Corporate Development
Version 2
18 July 2008
Submitted to Capital Prioritisation Group 16 July to note.
Submitted to Trust Executive Group 23 July 2008 to support.
Submitted to Trust Board for approval 29 July 2008
Version 1
24 June 2008
Draft considered at Trust Board 1 July 2008

1. Purpose
This policy sets out the governance arrangements for capital investments undertaken by the University Hospitals Bristol Foundation Trust.

The policy takes into account the best practice guidance issued by Monitor, particularly that contained in Risk Evaluation for Investment Decisions by NHS Foundation Trusts (Monitor, February 2006).

This policy will be subject to annual review by the Board of Directors. It should be read in conjunction with the standing orders and standing financial instructions of the Trust. 2. Scope
The policy applies to capital investments by the University Hospitals Bristol Foundation Trust. It does not apply to investment of in-year surplus operating cash, pension funds, funds of associated charities or funds managed on behalf of other organisations.

Particular consideration is given to capital investments classed as major or high-risk.

The Trust’s definition of a major investment is given in section 4. The Trust follows the Monitor definition of high risk investments as below:

Reportable transactions: all investments that are reportable to Monitor under the thresholds for reporting investments in the Compliance Framework. The applicable thresholds are shown at Annex 1.

Other transactions: all investments that have any one or more of the following characteristics:

an equity component, which is defined as any participation involving shares and securities, debt instruments convertible into equity, options conferring the right to acquire equity in the future, royalties, participation in the profits of the enterprise, and all types of mezzanine finance where the returns exceed normal secured debt returns; significant reputation risk;

the potential to destabilise the core business; or
the creation of material contingent liabilities.

Monitor also provides the following examples of the types of transactions that may be considered high risk: significant capital expenditure, acquisitions, joint ventures, equity stakes, major property transactions, mergers and alliances (eg formal or informal agreements to work with other institutions), irrespective of how they are financed. These definitions will be applied to risk assessment of capital investment proposals in the Trust. 3. Investment philosophy and objectives

The Trust will invest in opportunities that are consistent with its purpose, mission and aims.

The statutory and principal purpose of the Trust is the provision of goods and services for the health service in England.

In fulfilling its core purpose, the Trust’s mission is to provide patient care, education and research of the highest quality.

When appropriate, the Trust will make investments in line with the following key strategic aims, set out in the Integrated Business Plan:

to be the major specialist service provider for the population of Bristol and the South West region; to provide additional services for the local population;
to develop the Trust's research portfolio in line with its service strategy; to develop research activities in partnership with academic and healthcare organisations; to pursue teaching and learning partnerships with education providers and others; to achieve a sustainable financial surplus;

to improve the environment for patients and staff, to improve ease of access for patients and visitors and to develop the Trust’s estate to give the optimal configuration of services.

The investment philosophy conditions the criteria which will be used by the Trust to evaluate potential major or...
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