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MINUTE of MEETING of the ENDOWMENT FUNDS COMMITTEE
Board Room, Assynt House, Inverness / 30 September 2013–11.00 am

PresentMr Ray Stewart, Employee Director (In the Chair)

Mr Robin Creelman, Non-Executive Director (from 12.45pm)

Mrs Myra Duncan, Non-Executive Director (from 11.10am)

Mr Mike Evans, Non-Executive Director

Mrs Gillian McCreath, Non-Executive Director

Mr Okain McLennan, Non-Executive Director

In AttendanceMr Iain Addison, Head of Area Accounting

Mrs Kelly Dallas, Endowment Support Officer

Ms Brenda Dunthorne, Head of Finance, RaigmoreHospital (from 11.45am)

Mr Mark Ivory, Adam & Co, Investment Brokers

Mr Brian Mitchell, Board Committee Administrator

Ms Donna Smith, Service Performance & Partnership Manager (from 11.45am)

1WELCOME, APOLOGIES AND DECLARATION OF INTERESTS

Apologies for absence were received from Dr Iain Kennedy, Mr Nick Kenton, Dr Rhona MacDonald, Mr Adam Palmer, Ms Sarah Wedgwood, Mrs Elaine Wilkinsonand Mrs Lyn Wormald.

Members were asked to consider whether they had an interest to declare in relation to any Item on the Agenda for this meeting. The following interests were declared:

  • Ray Stewart – Member of Unite, Staffside Chair and employee of NHS Highland.
  • All Members – NHS Board Non-Executive Director.

The Committee Noted the declarations of interest.
2MINUTE OF MEETING HELD ON 1 JULY2013

The Committee Approved the Minute of the Meeting held on 1 July 2013.

3MATTERS ARISING

3.1Kyle Court Upgrade, RaigmoreHospital

The Chair advised he had visited the refurbished facilities at Kyle Courtand urged other Committee members to do the same. The upgraded facilities were much improved over that previously available and had generated positive feedback from patients.

The Committeeso Noted.

3.2Murdo Graham Bequest

At their meeting held on 1 July 2013 the Committee had agreed that legal advice be sought on potentially changing the existing Restriction in relation to this donation. Mr Addison confirmed relevant legal advice had been sought and a response was awaited. Should the conditions of the original donation be upheld then the assistance of the original Solicitor involved would also be sought.

The Committee so Noted.

3.4Donation from Novartis Pharmaceuticals UK Ltd

Mrs M Duncan advised that Mr R Creelman had expressed concern in relation to this donation and the associated potential effect on purchasing behaviour by staff. Mr Addison advised that Standing Financial Procedures applied to all purchasesand as such this was appropriately controlled.

The Committee so Noted.

4PRESENTATION BY ADAM & CO, INVESTMENT BROKERS

Mr M Ivoryadvised as to the current economic and market position and outlook, this having endured a volatile period following a strong start to the year. UK Government Bond yields had risen over the period to end August 2013 although investment preference at that time remained in relation to overseas government debt and corporate bonds. Whilst European economies were showing signs of growth, elections in Germany could lead to investor uncertainty. It was advised that corporate confidence within Europe was improving and the circulated report further outlined current dividend yield and yields across relevant asset classes. With regard to the NHS Highland portfolio and discretionary investment mandate, this indicated a medium balanced return from income and capital growth over a ten year period, with a 0.4% fee per annum applying. Mr Ivory advised the current portfolio comprised approximately 70% Equities and 30% cash/Fixed interest investment and indicated performance to 31 August 2013, detailing those elements that made significant contributions to overall performance, and providing detail as to transactions undertaken. The current asset allocation was outlined, and it was advised that cash holdings would remain at a low level.

There followed short discussion, during which it was acknowledged that overall the current market position remained volatile. Mr Ivory advised this position was likely to be maintained. Mr I Addison stated there was a need for discussion as to how best to utilise resource income from the ARCHIE campaign, in investment terms, and Mr Ivory indicated he would be willing to further discuss this point.

On the point raised, Mr I Addison advised the current arrangements for investment services were for an initial period of three years, with an option for a further year plus one more.

The Committee:

  • Noted the position relating to management of the NHSH Endowment Fund Portfolio.
  • Thanked Mr Ivory for attending and addressing the meeting.

Mr M Ivory left the meeting at 11.45 am

5APPLICATIONS

5.1RaigmoreHospital – Outpatient Coffee Bar, Reception and Facilities Upgrade

At their meeting held on 1 July 2013 the Committee had agreed to consider this applicationsubject to provision of greater detail of projected income levels, provision of income and costs data for the main entrance café prior and post development, and a separation of the Exchequer and Non-Exchequer elements. The Committee took the opportunity to hold an initial discussion of the application submitted, and agreed a series of points requiring clarification to enable this to be fully considered.

Ms Smith and Ms Dunthornejoined the meeting at this point.

There had been circulated an application seeking agreement for investment funding in the sum of £185,000 for the redesign of the Outpatient Coffee Bar, Reception and Facilities at RaigmoreHospital. It was noted the overall project cost was £478,000 and that the proposed contribution from Raigmore Specific Endowment Funds was in the sum of £15,000. The nature of Raigmore Specific Funds made it difficult to identify appropriate level of contributions and as such it had been proposed this contribution be made from the General Fund for RaigmoreHospital. The Committee also noted the communication with the Blood Transfusion Service regarding a contribution toward provision of a Blood Letting room within the overall proposal, provision of income trend detail relating to Front Entrance Coffee bar project, and the proposed repayment phasing of any Endowment Fund contribution. On the latter point it was proposed that repayment of the investment be over a five year period based on 11% of income from the Coffee bar. The proposal had been presented to the Asset Management Group at their meeting held on 11 September 2013 where support for the project, in principle was given, for consideration as part of the 2014/2015 Capital Plan process, with agreement that the Endowment Funds Committee further consider the request for an investment contribution.

During discussion, Ms Smith advised that the opening times for the Coffee bar were to be extended from 9.00am – 3.30pm to 8.00am - 6.00pm (Monday to Friday), with any proposals for additional opening hours to be tested prior to full introduction. Financial projections for the new facility were not entirely based on the increased income levels generated by the refurbished Zone 5 facility. Increased costs were likely to relate to pay (30%), non-pay (20%) and the repayment of any Endowment Funds contribution as indicated. It was emphasised that there were cost implications even if the project did not proceed given the current need for improvement work in this area and existing environmental health requirements. With regard to implications for the Ophthalmic clinic area, the proposals involved creation of a large Main Reception area, meaning the existing Ophthalmic reception desk could be removed to increase available space in that area. This would improve the patient experience. Moving forward, it was anticipated that upgrade work would be carried out in 2014/2015. The project phasing plan sought to minimise the associated impact of the work and would involve a degree of weekend working.

Ms Smith and Ms Dunthorne stepped out of the meeting at this point.

The Committee took the opportunity to discuss, in private, aspects relating to the request for a contribution from Endowment Funds.

Ms Smith and Ms Dunthorne rejoined the meeting again at this point.

After discussion, the Committee:

  • Agreedto make a contribution up to the value of £185,000 towards the overall project.
  • Agreed the Raigmore Senior Management Team again consider the level of contribution from Restricted Funds.
  • Noted the Raigmore Senior Management Team was to consider a voluntary donation of £43,475 per annum to the Endowment Funds for five years.

Ms Smith and Ms Dunthorne left the meeting at 12.40pm

6INVESTMENT FUNDS

6.1Funds Report – Portfolio Valuation

There had been circulated a report indicating that as at 30 June 2013 the NHS Highland Endowment Funds portfolio market value stood at approximately £7,507,824.88.

The CommitteeNoted the position in relation to Investment Funds.

7FINANCIAL REPORTS

7.1Financial Position to 31 August 2013

There had been circulated Financial Report outlining that the balance of the Unrestricted Funds as at 31 August 2013 was £5,253,217.10 and that for 2013/2014 Budget Funds, some £151,497.83 remained unspent.

The Committee otherwise Noted the financial position.

7.2Inactive Funds Position Statement as at 31 August 2013

There had been circulated update report detailing those Specific Funds where little, or no, activity had been evidenced in the previous two year period and outlining responses to requests for indication of associated spend proposals. There was also an indication of those Funds closed since June 2013.

The CommitteeNoted the circulated report.

7.3Exception Reportto 31 August 2013

There had been circulated report detailing expenditure from Endowment Funds in excess of £5,000 to 31 August 2013.

The CommitteeNoted the report.

7.4Donations Received Over £5,000 to 31 August 2013

There had been circulated report detailing donations over £5,000 received to 31 August 2013.

Members suggested there be included, in the next NHS Highland Newsletter, a general statement of appreciation relating to the receipt of donations to Endowment Funds along with examples of the benefits accrued from such donations.

The Committee otherwise Noted the report.

8ANY OTHER COMPETENT BUSINESS

8.1Valedictory

The Committee took the opportunity to thank Mr Stewart, who was chairing his last meeting of the Committee as Employee Director and Non-Executive Member of the NHS Board, for his commitment and valuable contribution over the years of his tenure. The Committee wished Mr Stewart well in his future endeavours.

8.2ARCHIE Campaign

Mr Addison advised that Mr D Cunningham had indicated the level of donations received to date had reached £1.16m. Mr Cunningham had offered to attend and present an update to the next meeting of the Committee. Members welcomed the offer although the view was expressed this should perhaps be to a future NHS Board Development session.

9DATE OF NEXT MEETING

The next scheduled meeting of the Committeewill be held on 6 January 2014 at 11.00am in the Board Room, Assynt House.

The meeting closed at 12.50pm

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