financial statements...6 financial statements - year ended 31 july 2016 research and enterprise the...
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Financial StatementsYear Ended 31 July 2016
CONTENTSVice- Chancellor’s Statement 4
Report of the Governing Body 5
List of Members of Council 15
Statement of Council Primary Responsibilities 18
Statement of the Council’s Responsibilities and Internal Control 21
Independent Auditor’s Report to the Council of the University of Salford 23
Consolidated and University Statement of Comprehensive Income and Expenditure 25
Consolidated Statement of Changes in Reserves 27
University Statement of Changes in Reserve 28
Consolidated and University Balance Sheet 29
Consolidated Cash Flow Statement Year ended 31st July 2016 30
Statement of Principle Accounting Policies 31
Notes to the Accounts 37
4
Welcome to the University of Salford’s annual financial review for 2015/16.This is the second review I have presented since becoming Vice-Chancellor and it fills me with great pride to report on the great progress made across our University community. The University continues to generate healthy levels of cash inflows from operating activities which are required to service existing debts and to continue to invest in the student experience.
Following extensive consultation and engagement we launched our Vision and Strategy earlier this year and set out our single strategic priority of Industry Collaboration Zones (ICZs).
The ICZs promise to transform the University’s teaching, research and relationships with industry partners. By pioneering exception industry partnerships the University will lead the way in real world experiences, preparing students for life.
The ICZs will also create a dynamic student experience fit for the 21st century and give Salford a unique advantage in the highly competitive and evolving environment in which we operate.
They will help us to achieve our mission of transforming lives, stimulating discovery and realising potential.
During this past year we have consolidated and fulfilled many of our ambitions.
Our investment in our physical campus has continued apace and we have seen the completion of work on New Adelphi, our home for Arts and Media, and the opening of 1,367 new student rooms in the Peel Park Quarter.
We have continued to make progress and consolidate our improvements in the student experience, progression of students and in recruitment. Central to our offer, of course, is investment in our people and we are continuing to invest in programmes to build capability, leadership and engagement.
We also continue to develop partnerships with industry, public sector and third sectors partners for research and learning.
Our ambitions are not just regional but international and having been named in The Times Higher list of the top 200 most international universities in recognition of the diversity of the student body and the strength of academic collaboration with international colleagues we have a strong base from which to build.
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Vice-Chancellor’s Statement
Professor Helen Marshall Vice-Chancellor
October 2016
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Introduction In Autumn 2015, following extensive engagement and consultation, the University of Salford agreed a new strategy covering the period 2015/16 to 2020/21. The strategy set out a trajectory of growth both on campus and overseas through the development of a small number of Trans National Education partnerships.
The main vehicle by which the University will seek to grow, in what is anticipated to be a period of flat demand, is through the creation and development of Industry Collaboration Zones (ICZs). The ICZ programme will act as a focus for collaboration within and across the University with partners in particular industry sectors.
The ICZ programme builds on our areas of expertise across key industry sectors:
❚ Health, wellbeing and society
❚ Creative and digital media
❚ Sport
❚ Engineering and environments
Academic Improvement
In 2015/16, the student experience remained a focus for the University. We consolidated most of the improvements seen in 2014/15. We have been able to maintain or improve our performance on the National Student Survey metrics associated teaching on my course, assessment and feedback, and academic support. The University continues an approach of “red, amber, green” rating and analysis of academic schools and programmes to share good practice and target specific interventions as appropriate.
Retention has been challenging for the University, with performance on progression of 2014/15 undergraduate level 4 students to level 5 in 2015/16 declining by 1% to 78%. However, continuation from level 4 to level 5, which includes repeating students, has improved from 84.9% to 87.3%. We are committed to improving the student experience in this area because retention forms part of the set of Teaching Excellence Framework evidence metrics. Additional support is being provided to students who have joined through clearing and we have set a quality threshold on our entrants at no lower than 240 UCAS points.
The employability of our students, as reported in the Destination of Leavers from Higher Education (DLHE) survey showed a varied picture. The proportion of graduates in work and or further study fell 3.4%, while the percentage of graduates going on to professional employment increased by 1% to 52%.
Academic Growth and Diversification
Our recruitment at both undergraduate and postgraduate levels has exceeded targeted numbers overall and across the majority of the schools. Recruitment from home and EU countries in particular has performed well. We have grown our student numbers by 11% over the last three years at a time when the sector as a whole has fallen by 3%. Overseas recruitment to our on-campus provision has been challenging in markets with high visa refusal rates. The recruitment of on-campus international students has been offset by our Distance Learning / Trans National Education (TNE) offer. Here recruitment has exceeded target by 26% for undergraduates and 104% for post graduates.
2015/16 was a strong admissions round for the University with home undergraduate applications and firm choices performing better than the sector and a significant increase in applications for postgraduate study. Overseas applications have been in line with our expectations but there have been emerging challenges in our core overseas markets.
To further diversify our portfolio and to support us in addressing the changes to academic and vocational pathways, we have been successful in securing a funding grant towards the establishment of degree apprenticeship programmes to take effect from the 2017/18. A wider range of additional degree apprenticeship programmes is being developed in partnership with industry.
Report of the Governing Body
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Research and Enterprise
The University achieved 97% of research income target, with an increase of £266,000 (4.5%) on 2014/15. The University has also secured £7.9m in research awards, compared to £5.5m in 2014/15 and £6m in 2013/14. This is our highest value for five years.
We are continuing to monitor the impact of the EU referendum result and the impact on bidding to EU programmes. The funding horizon is not yet clear and we will be working with our networks in the University Alliance, the National Centre for Entrepreneurship in Education and the National Centre for Universities and Businesses to gain intelligence for the next 12-18 months of targeting income. We will also be using our relationships with Business Growth Hub, part of Manchester Growth Company, and the Confederation of British Industry locally.
The targets for full time and part time postgraduate research student completion have both been exceeded this year. This demonstrates a continuation of year on year growth in performance against these measures both for the University overall and positive results across the majority of the schools. These results reflect improvements derived from changes to our research supervision policy.
Our strategy to support academics in achieving high quality research outputs towards the University’s Research Excellence Framework (REF) 2020 return (in line with the Stern Review) continues. This is underpinned by the implementation of a new REF strategy with particular emphasis on effective peer review, recording of outputs and an ongoing programme of audit.
International Priorities
During 2015/16 we have further developed our plans for international activity. During the year we have opened “Launch Pad” offices in China and India, based on a similar model to the existing office in Abu Dhabi. The initial focus of the Launch Pads over the next two to three years will be to enhance and support our inbound recruitment of students through the traditional market channels.
Current market conditions, uncertainty over future immigration policy and the clear increasing demand for higher education globally, present us with an opportunity to expand our Trans National Education offer and to cement this offer by embedding our curriculum in educational partner institutions in a small number of key markets. In summer 2016 we announced a new partnership with the establishment of the British College Bahrain, providing consultancy support and provision of in-country teaching. We will look to develop this model further with a small number of high quality partnerships to be developed in the coming years.
Our People
The human resources division continues to roll-out innovative programmes through the organisational development team which aim to cultivate high performance and leadership behaviour at all levels. This includes the ‘Salford Dialogue’ programme, which introduces a fresh approach to leadership development through linking personal purpose and energy to the delivery of better outcomes for colleagues, students and the University. The ‘Salford Dialogue’ programme has been shortlisted this year for the “developing excellent practice” award run by the Staff Development Forum, which is supported by the Leadership Foundation for Higher Education.
To ensure there is a benchmark for levels of colleague engagement and a basis to tailor key development programmes, the University facilitates an annual colleague engagement survey. In October 2015, 1,271 colleagues (63%) participated in the national Best Companies workplace engagement survey for the first time.
Results of the survey have enabled more targeted planning and development in support of achieving strategic objectives, introducing programmes such as the ‘Salford Dialogue’. The ‘Leadership Forum’ was also introduced May 2016, chaired by the Vice Chancellor and Deputy Vice Chancellor. This provides an open forum where colleagues can directly hear about the University’s strategy and direction from senior leaders and where they can express their views. University-wide action planning to improve colleague engagement concluded in May 2016, allowing divisional and organisational groups to take progressive steps to address any areas for improvement.
In April 2016 the University was recognised for its commitment to gender equality by the Equality Challenge Unit (ECU) when it was granted the Athena SWAN bronze award. A new inclusion strategy was also introduced July 2016, providing a contemporary and fresh approach to address key challenges we have as a University.
The University also continues to offer in-house counselling and physiotherapy services, free of charge to employees. In addition, the employee assistance programme offers a range of support and advice on both work life and home life issues. Proactive early intervention and supporting employees’ health in work has enabled a significant and consistent reduction of time lost to sickness absence over the past two years. The average days lost to sickness per employee has reduced from 8.1 days in 2013/14 to 6.5 days in 2015/16, which was in line with the University’s KPI target for 2015/2016. The University also saw an improvement in its staff turnover, registering 4.8% for 2015/2016, which was significantly under the target of 7.3% for the year.
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Estates and Sustainability
As part of the University’s Estates Plan we have made significant investment in the physical campus. Creating exciting new academic space is a crucial part of our vision for a more integrated and vibrant campus. The opening of the New Adelphi building in autumn 2016 demonstrates our commitment to future-proof the delivery of creative courses, giving our creative people the most cutting-edge and flexible of environments.
In September 2015 the new student residences owned by our contracted operator Campus Living Villages opened. This major development, which is part of the £81m Peel Park Quarter, created 1,367 bedrooms with en-suite facilities, cinema rooms and social areas, quadrupling the number of students living on the main campus. The quarter has been so successful it is 100% full for the second year running.
Investment in the physical campus is at the design or construction phase elsewhere:
❚ Newton Extension (Industry Collaboration Zone maker space), façade and roof works
❚ Clifford Whitworth (£6.2m) refurbishment
❚ Business House - creation of one multi-faith centre
❚ Cockcroft Translational Medicine
Landscaping works across campus are near completion and have vastly improved mobility around campus, especially for students who stay on campus.
The People & Planet ‘Green’ League of universities placed Salford University 20th in the UK, earning a “first” against a range of measures such as water use, carbon emissions and recycling. We were proud to score highly for our environmental policies (100%), carbon reduction (90%), environmental auditing and monitoring (75%) and energy sources (63%). In line with the University’s commitment to the environment, both Peel Park Quarter and the New Adelphi are sustainable and energy efficient and will achieve an ‘Excellent’ BREEAM rating.
The University was delighted to be recognised for exceptional compliance with the Home Office’s surveillance camera code of practice, one of only of two universities in the UK.
In line with the Vision and Strategic Plan, the University is currently agreeing a long term framework for the development of its combined physical and virtual environment. This framework will set a high level pathway to which subsequent projects and initiatives can be measured and aligned.
Student Numbers
Student Type and Funding Source H
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Undergraduate 14,168 1,106 15,274 12,785 1,008 13,793
Postgraduate Taught 1,555 1,964 3,519 1,713 1,668 3,381
Postgraduate Research 304 429 733 274 394 668
Total 16,027 3,499 19,526 14,772 3,070 17,842
2015/16 Full Time Equivalents 2014/15 Full Time Equivalents
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Risk Management
The University adopts a proactive approach to the identification, assessment and management of the key risks that could prevent the successful implementation of the Strategic Plan.
A risk management policy is in place and the University Management Team (UMT) monitors and reviews the corporate risk register on a regular basis. The most significant corporate risks are considered at each meeting of the Audit and Risk Committee and at Council on a quarterly basis. This regular performance reporting is supplemented by an annual review of all risks by UMT and the Audit and Risk Committee. This review informs the future internal audit programme.
The risk reporting framework allows for the escalation of risks. This process of escalation, refinement and emergence of new risk is informed by local risk registers at school and professional services level, as well as those held by major cross institutional strategic projects such as capital programmes.
Risks are categorised with ownership of the mitigating actions lying with the strategic owner, usually a member of the UMT.
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The areas of risk and associated mitigations under review during the year were as follows:
Policy:
HE Funding Model: based on HE funding challenges, changes to the NHS funding and commissioning process and the implementation of Teaching Excellence Framework. We continue to look to new ways to diversify our portfolio and income streams, engaging in local non-NHS commissioning projects and the DevoManc agenda, while adopting prudent financial management.
Financial:
Student Recruitment: there has been increased competition across the sector following the increase of student fees, removal of student number controls and the government’s drive to create a more open market. Despite this 2015/16 registrations were ahead of overall target. We continue to evolve the quality and diversity of our academic offering, aligning it to our ICZ strategy and developing partnerships with further education and industry to ensure that our portfolio remains attractive to both existing and new students.
Pay Costs: a continuing financial challenge for us following the change in government policy giving rise to increased National Insurance contributions and increases in pension scheme contributions. In response to these issues we have factored increases in costs into plans and budgets.
Reputational:
Quality & Student Experience: we recognise the importance of delivering an excellent student experience. Student satisfaction, retention and employability are all integral to the new Teaching Excellence Framework and therefore our reputation, future recruitment and financial sustainability. Over the last year we have actively invested in improvements to the physical campus infrastructure, made improvements to timetabling and student support, with a number of initiatives planned for the next academic year to improve student engagement, employability and satisfaction.
Operational:
High Calibre Employees: as the sector becomes more competitive and with the impacts of Brexit, the risk of failure to attract and retain key staff has increased. We continue to promote our excellent work and build our reputation to help mitigate this risk.
Project Delivery: we have invested heavily in our estate and other infrastructure projects, including a series of substantial changes to our student information system and its internal processes. These projects continue to be scrutinised carefully through project boards which include student representation, to ensure that they meet user requirements and deliver to time and cost.
International Delivery: the international recruitment environment is increasingly complex and volatile due to issues with recruitment from our historically strong markets and the impacts of Brexit. As a result, we continue to keep visa applications, financial and legal and business risks under close review, diversify our international source markets, and ensure quality of overseas partners and agents.
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Benefit Statement
Overview
The University is an exempt charity under the terms of the Charities Act. The Council and Executive of the University have paid due regard to the Charity Commission’s guidance on the reporting of public benefit, and particularly to the supplementary guidance on the advancement of education, in accordance with the requirements of the Funding Council as the principal regulator of English higher education institutions under the Charities Act 2011.
The University’s objects, as set out in its Charter, reflect institutional commitment to public benefit: “The objects of the University shall be to advance education and knowledge by teaching and research, and in doing so to foster an academic environment which is enterprising and applied to business and the professions, and for the benefit of society at large.”
2014/15 saw the formal adoption and implementation of a Public Benefit Strategy. The University’s approach is posited on the development of a multi-dimensional process of engagement and interaction with the wider community, resulting in mutual benefit and enrichment of the staff and student experience.
The University directly employs a number of fundraisers to undertake activities designed to generate philanthropic income. These include telethons, direct mail, e-solicitation, bids to trusts and foundations, individual face-to-face meetings and corporate partnerships. We do not work with third party fundraisers. There is a robust system of line management in place and the activities of fundraisers are recorded and monitored. A system of approval is in place with regard to gift acceptance, and philanthropic priorities are strategically determined in consultation with University leadership. We have received no complaints about our fundraising activity.
We only contact individuals with whom we have a pre-existing relationship and we track the number of ‘asks’ they receive in a 12 month period. Furthermore, we record and comply with all communications preferences relating both to channels and type of communication, including specific reference to a person not wishing to be included in fundraising communications. We have also begun collecting advance consent to contact from individuals, in anticipation of new data protection legislation. We have an upper age limit of 75 years for solicitation by phone, email or post, unless an individual is an existing donor. Where we are given cause to believe that an individual is potentially vulnerable they will be removed from fundraising communications. On occasion we have also sought advice from the University’s wellbeing team with regard to accepting a gift from a potentially vulnerable person.
Fundraising in 2015/16
Total pledges and donations to the University in 2015/16 amounted to £944,172 (including partner payments). Major gifts secured in 2015/16 include £72,000 from the Wolfson Foundation and a further £66,000 from the Garfield Foundation in support of the hub for the Institute of Dementia. Of the total, £194,500 has been categorised as research income, contributing to the University’s Research Excellence Framework return. The University’s partnership with Santander Universities, which supports travel bursaries for students and staff as well as internships and enterprise activities, was renewed with a further commitment of £180,000 over the next three years.
In 2015/16 we started to explore an international component to our fundraising. Following the University’s registration with the Canada Revenue Agency as a prescribed university outside of Canada we received a £80,000 gift from a Canadian philanthropist in support of translational medicine at the School of Environment and Life Sciences. We also conducted a pilot telephone campaign in Canada leading to several hundred pounds pledged and donated to the annual fund.
The entire fundraising sector has been affected in 2016 by the impact of changes to the Telephone Preference Service. For the University of Salford this meant that between 50 and 60% of our calling pool were unable to be called. Despite this we conducted nearly 74,000 solicitations to alumni and friends, raising £91,500 for both Regular Giving and Salford Circle, a very small decrease on the £100,000 donated and pledged in 2014/15.
Financial Sustainability Review
The Financial Statements comprise the consolidated (Group) results of the University of Salford (University) and its subsidiary undertakings. The Group structure is set out in Note 27 of the accounts.
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Key Financial Highlights
2015/16
£8.8mSurplus for the Year
(£4.7m)Comprehensive Expenditure for Year
£21.7mCash flow from Operating Activities
£35.7mNet assets
2015/16 (Restated)
(£4.9m)Deficit for the Year
(£15.4m)Comprehensive Expenditure for Year
£22.9mCash flow from Operating Activities
£40.4mNet assets
Preparation of Financial Accounts and restatement of 2014/15 accounts
The financial statements have been prepared in accordance with the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education (2015) and Financial Reporting Standard (FRS) 102. This is the first time that the accounts have been prepared in accordance with the 2015 SORP and the 2014/15 accounts have been restated to comply with this SORP. The impact of transitioning the 2014/15 accounts to the 2015 SORP is set out in Note 32 of the accounts with the transition resulting in:
❚ A deficit after tax of £4.9m being reported compared to the previous surplus of £5.7m reported under the 2007 SORP. The key reasons for this are:
- The discounted cost of making good the University’s share of the University Superannuation Scheme (USS) deficit is now included in the balance sheet. The agreement of revised future USS employer contributions in 2014/15 resulted in a charge of £8.9m.
- The interest charge is £2.2m higher under the new SORP as more prudent assumptions are made in respect of the expected return on assets for the Tameside Local Government pension with a corresponding reduction in actuarial loss.
❚ A reduction of net assets of £46.9m to £40.4m. The key reasons for this include:
- The discounted cost of making good the University’s share of the deficit in the USS pension fund is now reflected on the balance sheet, reducing net assets by £17.3m.
- Under the new SORP Deferred Capital Grants are reanalysed from Reserves to Creditors, reducing net assets by £16.5m.
- The value of underlying hedges used to fix interest rates on long term loans is now included on the balance sheet, reducing net assets by £10.7m.
- The cost of untaken holiday pay is now reflected on the balance sheet, reducing net assets by £3.2m.
❚ Cash inflow from operating activities was unchanged at £22.9m.
Cash inflows from operating activities for 2014/15 are unchanged and under FRS102 the importance of this metric for assessing financial performance has grown. The healthy level of cash inflow demonstrates that the underlying financial foundations of the University remain strong.
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2015/16 Financial Performance
Surplus After Tax
In 2015/16 the University made a surplus of £8.8m, which represents 4.6% of total income.
Total Comprehensive Expenditure
In 2015/16 the University had a total comprehensive deficit of £4.7m after adverse actuarial movements on the Tameside Pension scheme of £9.3m and adverse hedge movements on loans of £4.2m. These adverse movements were mainly a consequence of the Brexit decision which has resulted in a fall in high quality corporate bonds that are used to calculate pension fund liabilities and long term interest rates.
Income
In 2015/16 total income increased by £4m (2.1%) to £192m.
Income Analysis - £m
Tuition fees from home students increased by £10.1m to £92.3m but Higher Education Funding Council for England (HEFCE) income fell by £7.5m to £19.1m as a consequence of the continued impact of the 2012/13 change in tuition fee regime. HEFCE teaching and research grant income fell by £3.7m and £2.9m respectively and HEFCE National Scholarship programme monies fell by £1.3m due to the ending of this programme. The remaining student income made up of international students, part time students, short courses and research training support grants was largely unchanged, increasing by £0.6m to £57.5m.
Research grants increased by £0.3m, which is largely a consequence of recognition of £0.2m Research and Development Expenditure Tax Credit income( RDEC). These monies are a one off research and development expenditure tax credit.
Other income has increased by £0.3m to £15.6m. Under concession accounting the 2015/16 residencies income includes £3.4m of notional income which is the value of one year’s nominations arrangements in respect of the onsite student accommodation with operator Campus Living Villages (CLV). Corresponding expenditure of £3.4m is reflected within operating expenditure.
Expenditure
Total expenditure fell by £10.4m (5.4%) to £182.4m
Expenditure Analysis - £m
Staff costs fell by £6.2m to £99.5m. This fall is largely as a result of a fall in the movement on the University Superannuation Scheme provision of £8.6m to £0.2m. Other recurrent payroll costs (excluding early retirement costs) increased by £4.1m as a consequence of an increase in staff numbers of 74, a 1% pay rise, increments and an increase in employer’s national insurance and pension contributions in April 2016.
Staff costs as a percentage of income now account for 51.9% of income, compared to 51.5% excluding the USS provision movement the previous year. This is a key University KPI and one that is kept under continuous review.
0.86.2
15.6
19.1
0.4149.9
Tuition fees and education contracts
Funding body grants
Other income
Research grants and contracts
6.8
13.3
62.8 99.5
Staff Costs
Other operating expenses
Depreciation
Interest
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Other operating expenses fell £2.2m to £62.8m. This is primarily due to the fact that in 2014/15 the University incurred a number of one off costs as it looked to improve the student experience through expenditure on estate maintenance and IT.
Depreciation fell by £3.4m to £13.3m from a reduction in building depreciation following no further accelerated depreciation on the Adelphi, Centenary and Allerton arts studio buildings in 2015/16.
Interest and other finance costs increased by £1.5m to £6.8m. This is due to £1.1m increased interest costs on the £35m Lloyds loan following the final draw down in 2014/15 and the finance interest lease costs on the car parking under the new student living accommodation.
Loss on disposal of fixed assets is primarily in respect of costs incurred to 31 July 2016 in demolishing Constantine and Horlock accommodation blocks.
Balance Sheet
Although the University made a surplus of £8.8m, the net assets of the group fell by £4.7m to £35.7m. The reason for this is the 2015/16 actuarial loss on the local government pension fund of £9.3m and the value of the hedge has deteriorated by £4.2m.
The University continues to have healthy net current assets of £47m (£49.6m at 31 July 2015), with cash and short term investments of £74m, which is enough to cover 160 days of expenditure.
The University has secured borrowings including derivatives and finance leases of £89.6m which represents 46.7% of income. This is a higher level of gearing than the sector average and the University will be looking to finance future capital expenditure through internally generated resources rather than additional borrowing.
The University has pension provisions totalling £101.5m which includes a deficit in the Greater Manchester Pension Fund scheme of £71.4m, obligation to fund deficit on USS pension of £17.9m and enhanced Teachers’ Pension Scheme pension liabilities of £11.8m.
Cash flow:
In 2015/16 the University made a surplus of £8.8m, which represents 4.6% of total income.
Cash inflow from operating activities - £m
Cash flow from operating activities is £21.7m (2014-15 £22.9m), which was 11.3% of income and is above the 2014/15 sector average of 8.4 %.
Cash flow generation is the key financial metric for the University as it recognises that it needs to generate above average cash flow (target of 10%) to service its existing loans and continue to invest in the student experience.
Capital Expenditure - £m
The University continued to invest in its estate spending £31.2m. The largest element of this was the completion of the New Adelphi Building which opened in autumn 2016. Over the last five years the University has spent £89m on its estate with the first stage Campus transformation now complete.
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30
35
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22.5
13.2
5.6
23.1
11.3
22.9
18.6
21.7
31.2
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2011-12
2012-13
2012-13
2013-14
2013-14
2014-15
2014-15
2015-16
2015-16
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Payment of Creditors
The Late Payment of Commercial Debts (Interest) Act 1998, which came into force on 1 November 1998, requires institutions, in the absence of agreement to the contrary, to make payments to suppliers within 30 days of either the provision of goods or services or the date on which the invoice was received. The University endeavoured to adhere to this policy during the year except where there were genuine reasons for dispute. Subject to the terms of individual contracts, where there are disputes on invoices, the University only withholds payment on the disputed element of the invoice.
Professional advisors
Bankers Lloyds Bank plc and Barclays Bank plc
Internal Auditor PwC
External Auditor KPMG LLP
Conclusion and Future Prospects
2015/16 is the third year of generating over £20m of cash from the University’s core operating activities and it continues the steady progress made following the academic portfolio review in 2012/13.
Key challenges for the University and the sector include:
❚ The impact of Brexit – the University is less exposed than some other universities but in the medium term there may be an adverse impact on EU and overseas tuition income and EU research grants.
❚ Funding of pensions. Following Brexit the discount rate used to calculate pension liabilities has fallen which has increased the level of liabilities at July 2016.
Recruitment for 2016/17 has been slightly below budget for home students as the University has looked to maintain a grade tariff of at least 240 UCAS points. It is also below budget for overseas as the University has been impacted by political turbulence in a number of its key overseas markets.
The University continues to target the generation of at least £20m of cash from its core operating activities in 2016/17 with investment planned on a new Engineering Industry Collaboration Zone in the Newton building and remodelling of the Clifford Whitworth library. This is part of the University plan to ensure that it has a financially sustainable model which will allow continued investment in facilities which will further enhance the student experience.
Professor H Marshall Vice-Chancellor
Baroness Beverley Hughes Chair of Council
25 November 2016
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Membership of the Council 2015/16
Name and term of expiry date
Audit [ARC]
Finance & Resources
[FRC]
Government and
Nominations [GNC]
Remuneration Committee [Remcom]
Student Experience
[SEC]
Lead Member
Beverley Hughes July 2017 Ex-officio Ex-officio Ex-officio
Derek Antrobus July 2016
Geoff Bean July 2018
Mike Burrows July 2018 Ex-officio Finance
Phil Cuasack July 2018
Garry Dowdle July 2017 IT
Jill Evans July 2017 HR
Julia Fawcett July 2016
Ben Gallop July 2a016
Ian Moston July 2018
Sean O’Hara July 2017 lnternational
Sam Plant July 2016
Susan Price July 2018
Joyce Redfearn July 2017
Tom Russell July 2016 Estates
Helen Marshall Ex-Officio Ex-officio Ex-officio Ex-officio
Jonathan Carson July 201
Amina Helal July 2016
Tony Warne July 2017
Marina Hristova July 2016
Ahmed Rafiq July 2016
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ers
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20
16
GN
C 8
/9/1
5
AR
C 8
/9/1
5
Re
mC
om
11/
9/1
5
FR
C 1
1/9
/15
SE
C 1
8/9
/15
Co
un
cil 2
5/1
1/15
Re
mC
om
3/1
1/15
FR
C 3
/11/
15
AR
C 3
/11/
15
Co
un
cil 2
7/1
1/15
GN
C 4
/12
/15
SE
C 4
/12
/15
Co
un
cil 1
8/1
2/1
5
INDEPENDANT MEMBERS
Baroness Bev Hughes
Cllr D Antrobus A A
Mr G Bean A
Dr M Burrows A
Mr P Cusack A A
Mr G Dowdle
Ms J Evans
Ms J Fawcett A
Mr B Gallop A v
Mr I Moston A A A
Mr S O’Hara A
Mr S Plant
Prof S Price A
Ms J Redfearn A
Mr T Russell A A A
INTERNAL MEMBERS
Mr J Carson (from Nov 2015)
Mrs A Helal A
Ms M Hristova
Prof H Marshall A
Mr A Rafiq
Prof A Warne A
CO-OPTED MEMBERS
Carl Acton A
Brent Wilkinson A
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Aw
ay D
ay 2
9/1
/16
AR
C 1
6/2
/16
GN
C 2
9/2
/16
HD
Co
mm
29
/2/1
6
FR
C 4
/3/1
6
SE
C 4
/3/1
6
Re
mC
om
4/3
/16
Co
un
cil 1
8/3
/16
FR
C 1
5/4
/16
Co
un
cil 6
/5/1
6
GN
C 6
/5/1
8
SE
C 2
5/5
/16
AR
C 2
5/5
/16
FR
C 6
/6/1
6
Re
mC
om
6/6
/16
Co
un
cil 1
7/6
/16
% A
TT
EN
DA
NC
E F
OR
T
HIS
YE
AR
100
A 64
91
A 82
A A 80
A 92
A 88
A 87
A v 82
A A A 64
A 85
A 83
A 75
A 83
A A A A 42
100
A 82
91
A 86
100
A 82
A 75
A 75
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Statement of Council Primary Responsibilities
The Council is the University’s governing body, responsible for the finance, property, investments and general business of the University and for setting the general strategic direction of the institution. Its primary responsibilities may be summarised as follows:-
1. Strategic planning
a) Considering and approving the vision, mission and strategic plans of the institution, longer-term business plans, key performance indicators and annual budgets, and ensuring that these meet the interests of stakeholders.
2. Monitoring effectiveness and performance
a) Ensuring that there are in place appropriate arrangements for the management of the University, particularly through appointment of the Vice-Chancellor and other designated senior positions.
b) Ensuring the establishment and monitoring of systems of control and accountability, including financial and operational controls and risk assessment.
c) Monitoring institutional performance against plans and approved key performance indicators which, wherever possible and appropriate, are benchmarked against other institutions.
d) Monitoring its own effectiveness as a governing body and reporting thereon.
e) Putting in place suitable arrangements for monitoring the performance of the Vice-Chancellor and other designated senior positions.
f) To conduct its business in accordance with best practice in corporate governance and with the principles of public life drawn up by the Committee of Standards in Public Life.
3. Finance
a) Ensuring the solvency of the University and safeguarding its assets.
b) Approving the financial strategy and the overall annual budget.
c) Ensuring that the funds provided by the Funding Council are used in accordance with the terms and conditions specified in the HEFCE Financial Memorandum.
d) Receiving and approving annual accounts.
4. Audit
a) Directing and overseeing the University’s arrangements for internal and external audit. This includes reviewing the effective risk management, control and governance (including ensuring the probity of the financial statements and the effective management and quality assurance of data submitted to funding bodies).
5. Estate management
a) Approving and keeping under review an estates strategy that identifies the property and space requirements needed to fulfil the objectives of the University’s strategic plan.
b) Providing for a planned programme of maintenance for the University’s estate.
c) Considering and approving all acquisitions and all disposals of land and property.
6. Human resource management
a) Approving the University’s human resources strategy and policies, including remuneration policy.
b) Ensuring the University has clear procedures for handling internal grievances and for managing conflicts of interest.
c) Appointing the Vice-Chancellor and other senior designated positions and setting the terms and conditions for these posts.
7. Equality and diversity
a) Ensuring that the University fulfils its statutory duties in relation to equality and diversity, including the obligation to promote equality of opportunity for staff and students.
b) Approving the University’s Equality and Diversity Strategy.
c) Approving the University’s access agreement with the Office for Fair Access and monitoring institutional performance.
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8. Health and safety
a) Oversight of the University’s arrangements for ensuring the health and safety of staff, students and other individuals while they are on the University’s premises and in other places where they may be affected by its operations.
b) Ensuring that the institution has a written statement of policy on health and safety.
9. Students’ Union
a) Ensuring that the Students’ Union operates in a fair and democratic manner and is accountable
Corporate Governance Statement
1. The University is committed to best practice in all aspects of corporate governance and seeks, in particular, to apply the principles set out in Part 1 of the Committee of University Chairmen (CUC) Guide for Members of Higher Education Governing Bodies in the UK. The purpose of this summary is to help the reader of the financial statements understand how the principles have been applied.
2. In the opinion of the Council, the University complies with the principles set out in the Guide. The Council operates with a maximum membership of 24 in accordance with the benchmark of good practice as set out in the Guide. The constitution ensures an independent/lay majority and adequate representation of internal stakeholder groups, management, staff and students.
3. The University is an independent corporation, whose legal status derives from a Royal Charter originally granted in 1967. Its objects, powers and framework of governance are set out in the Charter and its supporting statutes, the latest version of which, as mentioned above, was approved by Privy Council in 2016.
4. The revised Charter and Statutes require the University to have two separate bodies, each with clearly defined functions and responsibilities, to oversee and manage its activities as follows:
a) The Council – is the supreme governing body, responsible for the finance, property and investments and general business of the University, and for setting the strategic direction. A statement of the primary responsibilities of the Council is set out on page 18 and 19. It has a majority of members from outside the University described as independent members, from whom the Chair and Deputy Chair must be drawn. A full statement of the membership for year 2015/16 is provided on page 15. None of the independent members receive any payment, apart from the reimbursement of expenses, for the work which they do for the University (details of expenses paid to or on behalf of trustees are contained on page 39. However, following Council agreement, the Chair of Council was remunerated in 2015/16 for serving in this role for a fee of £20,200. (2014/15 - £20,000)
b) The Senate – is the academic authority of the University with responsibility for monitoring the academic quality and standards of the University and draws its membership from the academic staff and students of the institution. Council delegates to Senate functions relating to the planning, co-ordination and supervision of the academic work of the University.
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5. The principal academic and administrative officer of the University is the Vice-Chancellor who has a general responsibility to the Council for maintaining and promoting the efficiency and good order of the University. Under the terms of the Financial Memorandum between the University and HEFCE, the Vice-Chancellor is the Designated Officer of the University and in that capacity can be summoned to appear before the Public Accounts Committee of the House of Commons.
6. The Council met six times in 2015/16 and was supported by six Committees, Audit and Risk, Governance Nominations and Ethics, Remuneration, Finance and Resources, Student Experience and Honorary Degrees (Student Experience Committee and Honorary Degrees Committee are joint Committees of Council and Senate). The decisions and recommendations of these committees were reported to the Council. These committees were formally constituted with written terms of reference and specified membership, including the number of lay or independent members (from whom the Chair for each Committee was selected).
7. In other business areas, Council appoints independent members to act as lead members. Lead members have the responsibility for working with relevant members of the Executive in their portfolio area to ensure that the area is well managed, that decisions are evidence based, have followed appropriate processes and are aligned to institutional and local strategy. Lead members report to Council on areas of responsibility assigned to them. The role of the lead member is not to manage the business area but to ensure that it is being well managed and that managers are making appropriate, well-informed decisions and following due process. Key questions which the lead members report on to Council include:
a) To what extent are the objectives in the strategy/plans relating to the business area being delivered?
b) Are the risks relating to activity in the business area being well managed?
c) Is communication between the lead member and the management lead sufficient?
In 2015-16 Lead Members operated in the following portfolios; Estates, Finance, Human Resources, Information Technology and International.
8. The Audit and Risk Committee considers detailed reports together with recommendations for the improvement of the University’s systems of internal control and management’s responses and implementation plans. It also receives and considers reports from HEFCE as they affect the University’s business and monitors adherence to regulatory requirements. The Remuneration Committee determines the remuneration of the Vice-Chancellor and a small number of other senior staff as well as setting the remuneration policy for senior staff. The Governance, Nominations and Ethics Committee advises Council on its membership and representation on other internal and external bodies and the operation and effectiveness of corporate governance arrangements and on any associated ethical issues. Finance and Resources Committee considers matters concerning the effective and efficient use of physical and human resources, financial performance and sustainability. Student Experience Committee monitors and considers the nature of the student experience at the University in order to ensure it meets the needs of stakeholders, especially students. Honorary Degrees Committee considers candidates for the award of honorary degrees and makes its decisions under delegated authority from Council and Senate.
9. As Principal Officer of the University, the Vice-Chancellor exercises considerable influence upon the development of strategy, the identification and planning of new developments and the shaping of the ethos of the institution. The Pro-Vice-Chancellors and other senior managers who comprise the Executive all contribute in various ways to this aspect of the institution, but the ultimate responsibility for what is done rests with the Council. University Management Team and the Audit and Risk Committee receive regular reports from the internal auditors, which include recommendations for improvement.
10. The University maintains a register of interests of members of the Council and Senior Officers, which is published on the University’s website. Any enquiries about the constitution and governance of the University should be addressed to the University Secretary.
11. The effectiveness of governance arrangements is regularly assessed by the University’s internal auditors. The last formal review took place in 2013-14, with a further review scheduled for 2017.
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Statement of the Council’s Responsibilities and Internal Control
1. As the Council of the University of Salford, we have responsibility for maintaining a sound system of internal control that supports the achievement of policies, aims and objectives, while safeguarding the public and other funds and assets for which we are responsible, in accordance with the responsibilities assigned to the Council in the Charter and Statutes and the Financial Memorandum with the Higher Education Funding Council for England (HEFCE).
2. The Council is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and enable it to ensure that the Financial Statements comply with the University’s Charter of Incorporation, the 2015 Statement of Recommended Practice on Accounting in Further and Higher Education Institutions and other relevant Accounting Standards. In addition, within the terms and conditions of the Financial Memorandum agreed between the HEFCE and the Council of the University, the Council, through its designated officer, the Vice-Chancellor, is required to prepare Financial Statements for each financial year. Under those terms and conditions, the Council must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the University and Group and of the surplus or deficit, and cash flows for that year.
3. In preparing these Financial Statements the Council ensures that:-
a) suitable accounting policies have been selected and applied consistently;
b) judgements and estimates have been made that are reasonable and prudent;
c) applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;
d) Financial Statements have been prepared on the going concern basis, unless it is inappropriate to presume that the Group will continue in operation. The Council is satisfied that it has adequate resources to continue in operation for the foreseeable future: for this reason the going concern basis continues to be adopted in the preparation of the Financial Statements.
4. The Council takes reasonable steps to:-
a) ensure that funds from HEFCE are used only for the purposes for which they have been given and in accordance with the Financial Memorandum with the Funding Council and any other conditions which HEFCE may from time to time prescribe;
b) ensure that there are appropriate financial and management controls in place to safeguard public funds and funds from other sources;
c) safeguard the assets of the Group and prevent and detect fraud (including compliance with anti-bribery legislation);
d) secure the economical, efficient and effective management of the University’s resources and expenditure.
5. The key elements of the Group’s system of internal financial controls, which is designed to discharge the responsibilities set out above include the following:-
a) clear definitions of the responsibilities of, and the authority delegated to, heads of academic and professional support service departments;
b) a medium or short term planning process supplemented by annual budgets;
c) regular reviews of academic and professional support service performance;
d) clearly defined and formalised requirements for approval and control of expenditure, with capital expenditure being subject to formal detailed appraisal and review according to approval levels set by the University Council;
e) comprehensive Financial Regulations, detailing financial controls and procedures, approved by the University Council.
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6. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness.
7. The system of internal control is based on an ongoing process designed to identify the principal risks to the achievement of policies, aims and objectives; to evaluate the nature and extent of those risks; and to manage them efficiently and economically. These procedures have been in operation throughout the year ended 31 July 2016 and up to the date of the approval of the financial report and accounts.
8. We have undertaken the following actions to embed our risk management strategy: -
a) In accordance with the approved Policy for Risk and Risk Management, maintained and reviewed a Corporate Risk Register.
b) Charged the University’s Executive with overseeing the management of risk.
c) Requested the Audit and Risk Committee to provide advice on whether the University has an effective and mature risk management process.
d) Requested that the internal auditors adapt their audit planning arrangements, methodology and approach, so that the audit conforms to the latest professional standards reflecting the adoption of risk management.
9. We have ensured that our meeting calendar and agendas enable risk management and internal control to be considered on a regular basis during the year. Risk management has been incorporated more fully into the corporate planning and decision making processes of the institution.
10. We receive periodic reports from the Audit and Risk Committee concerning internal control, and we require regular reports from managers on the steps they are taking to manage risks in their areas of responsibility, including progress reports on key projects.
11. In the academic year 2015/16, the University’s internal audit service was provided by PwC which operates to standards defined in the HEFCE Audit Code of Practice. The internal auditors submit regular reports which include an independent opinion on the adequacy and effectiveness of the system of internal control, together with recommendations for improvement. Based on the reviews undertaken during 2015/16, PwC concluded that the University had (subject to a small number of high risk recommendations made which are now being addressed) adequate and effective arrangements in place, to provide assurance to the Council over the effectiveness and adequacy of internal control.
12. Our review of the effectiveness of the system of internal control is informed by the work of the internal auditors and the senior managers within the University who have responsibility for the development and maintenance of the internal control framework and by comments made by the external auditors in their management letter and other reports.
Baroness Beverley HughesChair of Council 25 November 2016
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We have audited the financial statements of The University of Salford for the year ended 31st July 2016 set out on pages 25 to 70. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
This report is made solely to the Council, in accordance with the Charters and Statutes of the institution. Our audit work has been undertaken so that we might state to the Council those matters we are required to state to it 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 Council for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Council and auditor
As explained more fully in the University of Salford Statement of Council Primary Responsibilities set out on pages 18 and 22 the Council is responsible for the preparation of financial statements which give a true and fair view.
Our responsibility is to audit, and express an opinion, on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and University’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Council; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Independent Auditor’s Report To The Council Of The University Of Salford
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Opinion on financial statements
In our opinion the financial statements:
❚ give a true and fair view of the state of the Group’s and the University’s affairs as at 31st July 2016 and of the Group’s and University’s income and expenditure, gains and losses, changes in reserves and consolidated cashflows for the year then ended;
❚ have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice and with the 2015 Statement of Recommended Practice – Accounting for Further and Higher Education; and
❚ meet the requirements of HEFCE’s Accounts direction to higher education institutions for 2015-16 financial statements.
Opinion on other matters prescribed in the HEFCE Audit Code of Practice (effective 1 August 2014) issued under the Further and Higher Education Act 1992
In our opinion, in all material respects:
❚ funds from whatever source administered by the Group and the University for specific purposes have been properly applied to those purposes and managed in accordance with relevant legislation;
❚ income has been applied in accordance with the University’s Statutes;
❚ funds provided by HEFCE have been applied in accordance with the Memorandum of Assurance and Accountability and any other terms and conditions attached to them; and
❚ the corporate governance and internal control requirements of HEFCE’s Accounts direction to higher education institutions for 2015-16 financial statements have been met.
Timothy CutlerFor and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants One St Peter’s Square, Manchester, M2 3AEDate:
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Consolidated and University Statement of Comprehensive Income and ExpenditureYear Ended 31 July 2016
Income
Tuition fees and education contractsFunding body grantsResearch grants and contractsOther incomeInvestment income
Total income before donations and endowments
Donations and endowments
Total income
Expenditure
Staff costs Other operating expensesDepreciation Interest and other finance costs
Total expenditure
Surplus/(Deficit) before other gains/(losses) Gain on disposal of companies(Loss) on disposal of fixed assets(Loss) on disposal of investments
Surplus / (Deficit) before tax
Taxation
Surplus / (Deficit) for the year
Actuarial loss in respect of pension schemesChange in fair value of hedging financial instruments
Total comprehensive expenditure for the year
Notes
12345
6
79118
10
28
29
Consolidated£’000
149,87919,1486,203
15,565770
191,565
406
191,971
99,49162,82813,3286,780
182,427
9,544-
(650)(41)
8,853
(52)
8,801
(9,283)
(4,220)
(4,702)
Consolidated£’000
139,13926,5575,937
15,319687
187,639
386
188,025
105,71364,99516,7725,325
192,805
(4,780)54
(211)-
(4,937)
-
(4,937)
(7,222)
(3,248)
(15,407)
University£’000
146,20719,1486,203
15,340767
187,665
997
188,662
96,90762,24113,3286,794
179,270
9,392-
(650)(41)
8,701
(52)
8,649
(9,283)
(4,220)
(4,854)
(4,702)
University£’000
136,72826,557
5,93714,904
690
184,816
386
185,202
103,90964,58516,772
5,337
190,603
(5,401)54
(211)-
(5,558)
-
(5,558)
(7,222)
(3,248)
(16,028)
(4,702)
Year ended 31 July 2016 Year ended 31 July 2015
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Consolidated and University Statement of Comprehensive Income and ExpenditureYear Ended 31 July 2016 (continued)
Represented by:
Endowment comprehensive income for the yearRestricted comprehensive income for the yearUnrestricted comprehensive income for the year
Surplus/(Deficit) for the year attributable to:University
Consolidated£’000
(27)229
(4,904)
(4,702)
8,801
Consolidated£’000
42332
(15,781)
(15,407)
(4,937)
University£’000
(27)229
(5,056)
(4,854)
8,649
University£’000
42332
(16,402)
(16,028)
(5,558)
Year ended 31 July 2016 Year ended 31 July 2015
The accompanying notes form part of the financial statements.
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Consolidated Statement of Changes in Reserves
Balance at 1 August 2014
Surplus/(deficit) from the income and expenditure statementOther comprehensive incomeTransfers between revaluation and income and expenditure reserve
Total comprehensive income for the year
Balance at 1 August 2015
Surplus/(deficit) from the income and expenditure statementOther comprehensive incomeTransfers between revaluation and income and expenditure reserve
Total comprehensive income for the year
Balance at 31 July 2016
Restricted
£’000
253
332
-
-
332
585
229-
-
229
814
Endowment
£’000
446
42
-
-
42
488
(27)-
-
(27)
461
Hedge reserve
£’000
(7,405)
-
(3,248)
-
(3,248)
(10,653)
-(4,220)
-
(4,220)
(14,873)
Unrestricted
£’000
(3,326)
(5,311)
(7,222)
5,467
(7,066)
(10,392)
8,599(9,283)
3,443
2,759
(7,633)
Revaluation reserve
£’000
65,808
-
-
(5,467)
(5,467)
60,341
- -
(3,443)
(3,443)
56,898
Total
£’000
55,776
(4,937)
(10,470)
-
(15,407)
40,369
8,801(13,503)
-
(4,702)
35,667
Income and expenditure account
The accompanying notes form part of the financial statements.
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University Statement of Changes in Reserve
Balance at 1 August 2014
Surplus/(deficit) from the income and expenditure statementOther comprehensive incomeTransfers between revaluation and income and expenditure reserve
Total comprehensive income for the year
Balance at 1 August 2015
Surplus/(deficit) from the income and expenditure statementOther comprehensive incomeTransfers between revaluation and income and expenditure reserve
Total comprehensive income for the year
Balance at 31 July 2016
Restricted
£’000
253
332-
-
332
585
229-
-
229
814
Endowment
£’000
446
42-
-
42
488
(27)-
-
(27)
461
Hedge reserve
£’000
(7,405)
-(3,248)
-
(3,248)
(10,653)
-(4,220)
-
(4,220)
(14,873)
Unrestricted
£’000
(4,418)
(5,932)(7,222)
5,467
(7,687)
(12,105)
8,447(9,283)
3,443
2,607
(9,498)
Revaluation reserve
£’000
65,808
- -
(5,467)
(5,467)
60,341
- -
(3,443)
(3,443)
56,898
Total
£’000
54,684
(5,558)(10,470)
-
(16,028)
38,656
8,649(13,503)
-
(4,854)
33,802
Income and expenditure account
The accompanying notes form part of the financial statements.
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Consolidated and University Balance Sheet
Non-current assetsFixed assetsInvestments
Current assetsStockTrade and other receivablesInvestmentsCash and cash equivalents
Less: Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities Creditors: amounts falling due after more than one year
Provisions for liabilitiesPension provisionsOther provisions
Total net assets
Restricted reserves Income and expenditure reserve - endowment reserveIncome and expenditure reserve - restricted reserve
Unrestricted reservesIncome and expenditure reserve - unrestrictedRevaluation reserveHedge reserve
Total reserves
Notes
1113
14151622
17
18
1919
20
21
Consolidated£’000
194,927199
195,126
8216,92347,90426,12391,032
(43,947)
47,085
242,211
(100,145)
(101,459) (4,940)
35,667
461
814
(7,633)56,898
(14,873)
35,667
Consolidated£’000
174,994209
175,203
7915,04053,119
34,449102,687
(53,087)
49,600
224,803
(93,889)
(88,685)(1,860)
40,369
488
585
(10,392)60,341
(10,653)
40,369
University£’000
194,9275
194,932
8216,98747,56125,37590,005
(44,591)
45,414
240,346
(100,145)
(101,459)(4,940)
33,802
461
814
(9,498)56,898
(14,873)
33,802
University£’000
174,9945
174,999
7915,67452,33033,933
102,016
(53,925)
48,091
223,090
(93,889)
(88,685)(1,860)
38,656
488
585
(12,105)60,341
(10,653)
38,656
As at 31 July 2016 As at 31 July 2015
The accompanying notes form part of the financial statements.
The financial statements were approved by the Council on 25 November 2016 and were signed on its behalf on that date by:Baroness Beverley Hughes Chair of Council Professor Helen Marshall Vice- ChancellorMrs Julie Charge Executive Director Finance
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20
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Consolidated Cash Flow Statement Year ended 31st July 2016
Cash flow from operating activitiesSurplus for the year
Adjustment for non-cash itemsDepreciationDeferred capital grant releaseIncrease in stockIncrease in debtorsIncrease/(decrease) in creditorsIncrease in pension provisionIncrease in other provisions
Adjustment for investing or financing activitiesInvestment incomeInterest payableLoss on disposal of fixed assetsNet cash inflow from operating activities
Cash flows from investing activitiesProceeds from sales of fixed assetsProceeds from disposal of companyWithdrawal of depositsInvestment incomePayments made to acquire fixed assetsNew non-current asset investmentsDeferred capital grants received
Cash flows from financing activitiesInterest paidNew unsecured loansRepayments of amounts borrowed
(Decrease)/increase in cash and cash equivalents in the year
Cash and cash equivalents at beginning of the yearCash and cash equivalents at end of the year
Notes
11
5 8
2222
Year ended 31 July 2016
£’000
8,801
13,328(2,962)
(3) (431)
(7,225) 1,031 3,080
(770)6,780
2421,653
509 64
5,058 770
(31,177) 9
2,107(22,660)
(4,236) -
(3,083)(7,319)(8,326)
34,44926,123
Year ended 31 July 2015
£’000
(4,937)
16,772(3,970)
(9)(1,516)
1,0169,4841,290
(687)5,325
112 22,880
-269
(22,041)687
(18,646)(7)
3,116(36,622)
(3,072)35,000(4,123)27,80514,063
20,38634,449
The accompanying notes form part of the financial statements.
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Statement of Accounting Policies for the year ended 31 July 2016
1.Basis of preparationThese financial statements have been prepared in accordance with the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education (2015) and in accordance with Financial Reporting Standards (FRS102). The University is a public benefit entity and therefore has applied the relevant public benefit requirement of FRS102. The financial statements are prepared in accordance with the historical cost convention (modified by the revaluation of fixed assets and derivative financial instruments).
2.Basis of accountingThe Financial Statements continue to be prepared on a going concern basis in accordance with the historic cost convention modified by the revaluation of certain fixed assets.
3.Basis of consolidationThe consolidated financial statements include the University and all its subsidiaries for the financial year to 31 July 2016. The consolidated financial statements do not include the income and expenditure of the Students’ Union as the University does not exert control or dominant influence over policy decisions.
4.Income recognitionIncome from the sale of goods or services is credited to the Consolidated Statement of Comprehensive Income and Expenditure when the goods or services are supplied to the external customers or the terms of the contract have been satisfied.
Fee income is stated gross of any expenditure which is not a discount and credited to the Consolidated Statement of Income and Comprehensive Expenditure over the period in which students are studying. Where the amount of the tuition fee is reduced, by a discount for prompt payment, income receivable is shown net of the discount. Bursaries and scholarships are accounted for gross as expenditure and not deducted from income.
Investment income is credited to the statement of income and expenditure on a receivable basis
Funds the University receives and disburses as paying agent on behalf of a funding body are excluded from the income and expenditure of the University where the University is exposed to minimal risk or enjoys minimal economic benefit related to the transaction.
Government revenue grants including funding council block and research grants are recognised in income over the periods in which the University recognises the related costs for which the grant is intended to compensate. Where part of a government grant is deferred it is recognised as deferred income within creditors and allocated between creditors due within one year and due after more than one year as appropriate.
Grants (including research grants) from non-government sources, are recognised in income when the University is entitled to the income and performance related conditions have been met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the balance sheet and released to income as the conditions are met.
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Statement of Accounting Policies for the year ended 31 July 2016 (continued)
Donations and endowments
Non exchange transactions without performance related conditions are donations and endowments. Donations and endowments with donor imposed restrictions are recognised in income when the University is entitled to the funds. Income is retained within the restricted reserve until such time that it is utilised in line with such restrictions at which point the income is released to general reserves through a reserve transfer.
Donations with no restrictions are recognised in income when the University is entitled to the funds.
Investment income and appreciation of endowments is recorded in income in the year in which it arises and as either restricted or unrestricted income according to the terms applied to the individual endowment fund.
Donations and endowments with restrictions are classified as restricted reserves with additional disclosure provided within the notes to the accounts.
There are four main types of donations and endowments with restrictions:
1. Restricted donations - the donor has specified that the donation must be used for a particular objective.
2. Unrestricted permanent endowments - the donor has specified that the fund is to be permanently invested to generate an income stream for the general benefit of the University.
3. Restricted expendable endowments - the donor has specified a particular objective other than the purchase or construction of tangible fixed assets, and the University has the power to use the capital.
4. Restricted permanent endowments - the donor has specified that the fund is to be permanently invested to generate an income stream to be applied to a particular objective.
Capital grants
Capital government grants and government research grants, in respect of buildings and equipment, are treated as deferred capital grants. Such grants are credited to deferred capital grants and an annual transfer made to the Consolidated Statement of Comprehensive Income and Expenditure over the useful life of the asset, at the same rate as the depreciation charge on the asset for which the grant is awarded. Where part of a capital grant is deferred it is recognised as deferred income within creditors and allocated between credits due within one year and due after more than one year as appropriate.
Capital government grants in respect of land and other capital grants and donations from non-government sources are recorded in income when the University is entitled to income subject to any performance related conditions being met.
5.Accounting for retirement benefitsThe three principal pension schemes for the University’s staff are the Universities Superannuation Scheme (USS), the Greater Manchester Pension Fund (GMPF) and the Teachers’ Pension Scheme (TPS). These schemes are defined benefit schemes, which are externally funded and contracted out of the State Second Pension (S2P). Each fund is valued every three years by professionally qualified independent actuaries.
The USS and TPS are multi-employer schemes for which it is not possible to identify the assets and liabilities to the University due to the mutual nature of the scheme and therefore these schemes are accounted for as a defined contribution retirement benefit scheme.
A liability is recorded within provisions for any contractual commitment to fund past deficits within the USS scheme.
Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.
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Defined benefit plan
Defined benefit plans are post-employment benefit plans other than defined contribution plans. Under defined benefit plans, the University’s obligation is to provide the agreed benefits to current and former employees, and actuarial risk (that benefits will cost more or less than expected) and investment risk (that returns on assets set aside to fund the benefits will differ from expectations) are borne, in substance, by the University. The Group should recognise a liability for its obligations under defined benefit plans net of plan assets. This net defined benefit liability is measured as the estimated amount of benefit that employees have earned in return for their service in the current and prior periods, discounted to determine its present value, less the fair value (at bid price) of plan assets. The calculation is performed by a qualified actuary using the projected unit credit method. Where the calculation results in a net asset, recognition of the asset is limited to the extent to which the University is able to recover the surplus either through reduced contributions in the future or through refunds from the plan.
6.Employment benefitsShort term employment benefits such as salaries and compensated absences are recognised as an expense in the year in which the employees render service to the University. Any unused benefits are accrued and measured as the additional amount the University expects to pay as a result of the unused entitlement.
7.Finance leasesLeases in which the University assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Leased assets acquired by way of finance leases and the corresponding lease liabilities are initially recognised at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease.
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
8.Service concession arrangementsFixed assets held under service concession arrangements are recognised on the Balance sheet at the present value of the minimum lease payments when the assets are bought into use with a corresponding financial liability.
Payments under the service concession arrangement are allocated between service costs, finance charges and financial liability repayments to reduce the financial liability to nil over the life of the arrangement.
9.Operating leasesCosts in respect of operating leases are charged on a straight-line basis over the lease term.Any lease premiums or incentives are spread over the minimum lease term.
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Statement of Accounting Policies for the year ended 31 July 2016 (continued)
10.Foreign currencyTransactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Surplus or Deficit (except for differences arising on the retranslation of a financial liability designated as a hedge of the net investment in a foreign operation that is effective, or qualifying cash flow hedges, which are recognised directly in other comprehensive Income). Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group’s presentational currency, (Sterling), at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while still retaining control, the relevant proportion of the accumulated amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while still retaining significant Influence or joint control, the relevant proportion of the cumulative amount is recycled to the Statement of Comprehensive Income and Expenditure.
11.Fixed assetsFixed assets are stated at deemed cost less accumulated depreciation and accumulated impairment losses. Certain items of fixed assets that had been revalued at 31 July 2014, the date of transition to 2015 SORP, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.
Land and buildings
Costs incurred in relation to land and buildings after initial purchase or construction, and post the 31 July 2014 valuation, are capitalised to the extent that they increase the expected future benefits to the University.
Freehold land is not depreciated as it is considered to have an indefinite useful life. Freehold buildings are depreciated on a straight line basis over their expected useful lives of up to 50 years on the amount at which the tangible fixed asset is included in the balance sheet less their estimated residual value.
Refurbishment costs are depreciated over 10 years.
No depreciation is charged on assets in the course of construction.
Equipment
Equipment, including computers and software, costing less than £50,000 (prior to 31 July 2013: £20,000) per individual item is written off in the year of acquisition. All other equipment is capitalised.
Capitalised equipment is stated at cost and depreciated over its expected useful life as follows:
Computer Equipment 3 years
Equipment acquired for specific research projects 2-5 years
Other Equipment up to 20 years
Depreciation methods, useful lives and residual values are reviewed at the date of preparation of each Balance Sheet.
Borrowing costs
Borrowing costs are recognised as an expense in the Consolidated Statement of Comprehensive Income and Expenditure in the period in which they are incurred.
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12.InvestmentsNon-current asset investments are held on the Balance Sheet at amortised cost less impairment.
Investments in associates and subsidiaries are carried at cost less impairment in the University’s accounts. Investments in associates are also carried at cost in the consolidated accounts as the University group does not participate in the day to day management of such companies and the value of the holding is not material to the consolidated accounts. Current asset investments are held at fair value with movements recognised in the Surplus or Deficit.
13.StockStock is held at the lower of cost and net realisable value, and is measured using an average cost formula.
14.Cash and cash equivalentsCash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable on demand if they are in practice available within 24 hours without penalty.
Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of change in value.
15.Provisions, contingent liabilities and contingent assetsProvisions are recognised in the financial statements when:
(a) the University has a present obligation (legal or constructive) as a result of a past event;
(b) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(c) a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
A contingent liability arises from a past event that gives the University a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the University. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably.
A contingent asset arises where an event has taken place that gives the University a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the University.
Contingent assets and liabilities are not recognised in the balance sheet but are disclosed in the notes.
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Statement of Accounting Policies for the year ended 31 July 2016 (continued)
16.TaxationThe University is an exempt charity within the meaning of Part 3 of the Charities Act 2011. It is therefore a charity within the meaning of Para 1 of schedule 6 to the Finance Act 2010 and accordingly, the University is potentially exempt from taxation in respect of income or capital gains received within categories covered by section 478-488 of the Corporation Tax Act 2010 (CTA 2010) or section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied to exclusively charitable purposes.
The University receives no similar exemption in respect of Value Added Tax. Irrecoverable VAT on inputs is included in the costs of such inputs. Any irrecoverable VAT allocated to fixed assets is included in their cost.
The University’s subsidiaries are liable to Corporation Tax in the same way as any other commercial organisation.
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in financial statements. Deferred tax assets are more likely than not to be recovered. Deferred tax assets and liabilities are not discounted.
17.DerivativesDerivatives are held on the Balance Sheet at fair value. The University has adopted and complied with the requirements of hedge accounting and as a result movements in fair value are recorded within other comprehensive income.
Statement of Accounting Policies for the year ended 31 July 2016 (continued)
18.ReservesReserves are allocated between restricted and unrestricted reserves. Restricted endowment reserves include balances which, through endowment to the University, are held as a permanently restricted fund as the University must hold the fund to perpetuity.
Other restricted reserves include balances through which the donor has designated a specific purpose and therefore the University is restricted in the use of these funds.
19.Transition to 2015 SORPThe University is preparing its financial statements in accordance with FRS 102 for the first time and consequently has applied the first time adoption requirements. An explanation of how the transition to 2015 SORP has affected the reported financial position, financial performance and cash flows of the consolidated results of the University is provided in note 31.
Application of first time adoption grants certain exemption from the full requirements of 2015 SORP in the transition period. The following exemptions have been taken into these financial statements:
Fair value or revaluation as deemed cost - at 31 July 2014 revaluation has been used for deemed cost for properties measured at fair value.
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Notes to the Accountsfor the year ended 31 July 2016
1. Tuition fees and education contracts
Full-time home and EU studentsFull-time international studentsPart-time students Other teaching contractsShort coursesResearch Training Support Grant
2. Funding body grantsHigher Education Funding Council recurrent grant
Teaching Research
Specific grants
Higher Education Special InitiativesHigher Education Innovation FundLearning and Teaching Capital Investment Fund and Research Capital Investment FundNational Scholarship ProgrammeDeferred capital grants released in year: BuildingsEquipment
3. Research grants and contractsResearch councils Research charitiesGovernment (UK and overseas)Industry and commerceKnowledge Transfer PartnershipsDeferred capital grants released in yearOther
4. Other incomeResidences, catering and conferencesOther incomeDeferred capital grants released in year:BuildingsEquipment
Consolidated£’000
92,33820,2734,340
27,9594,197
772149,879
9,5704,122
4311,652
613-
8051,955
19,148
1,425328
2,64633358019
8726,203
6,3199,063
10974
15,565
Consolidated£’000
82,217 21,069 4,020
26,9574,327
549139,139
13,3497,012
-
1,689
341,308
1,106 2,059
26,557
1,323557
2,36042864425
6005,937
5,2859,254
707 73
15,319
University£’000
92,33820,2734,340
27,959525772
146,207
9,5704,122
4311,652
613-
8051,955
19,148
1,425328
2,64633358019
8726,203
6,3198,838
10974
15,340
University£’000
82,21721,069
4,02026,957
1,916549
136,728
13,3497,012
-
1,689
341,308
1,1062,059
26,557
1,323557
2,360428644
25600
5,937
5,2858,839
707 73
14,904
As at 31 July 2016 As at 31 July 2015
Other income includes provision of products (including tenant and leisure facilities), consultancy, nursery services and various grants including those for funding of student placements.
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
5. Investment income
Investment income on endowmentsOther investment income
6. Donations and endowments
Donations with restrictionsUnrestricted donations/donations withPerformance criteria
7. Staff costs
SalariesSocial security costsMovement on USS provisionEnhanced Pension on Termination chargeOther pension costs Early Retirement, Voluntary Severance and Mutual Consent Initiative Total
Salary of Vice Chancellor (VC)
Salary of former VC Martin Hall for the period 01.1.15 to 30.6.15 while on sabbaticalRelocation costsCompensation to Martin Hall for loss of office including legal fees paid on his behalfBenefits in kind
Total
Pension Contributions for period to 31.12.14Pension Contributions for period 1.1.15 to 30.6.15 June 2015 while on sabbaticalTotal Emoluments
Consolidated£’000
(24)794770
305
101406
74,5806,628
2131,106
16,512
45299,491
2015-16£’000
202
---3
205
--
205
Consolidated£’000
44643687
296
90386
72,4045,9568,859
92215,233
2,339105,713
Notes
20
21
University£’000
(24)791767
305
692997
72,3746,431
2131,106
16,502
28196,907
University£’000
44646690
296
90386
70,7555,8188,859
92215,216
2,339103,909
2014-15£’000
209
12130
11011
481
1817
516
As at 31 July 2016 As at 31 July 2015
During the period 2014-15 Professor Martin Hall served as Vice Chancellor from the 1st August 2014 to 31 December 2014 with Professor Helen Marshall Interim Vice Chancellor for the period 1 January 2015 to 22 April 2015 before becoming Vice Chancellor from 23 April 2015. The figures for 2014-15 reflect the costs of both Professor Martin Hall and Professor Helen Marshall.
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7. Staff costs (continued)
£100,000 to £109,999£110,000 to £119,999£120,000 to £129,999 £130,000 to £139,999£140,000 to £149,999
Compensation for loss of office payable to a senior post-holder:Compensation payable recorded within staff costs
Average staff numbers by major category :Academic including technicians Administrative, including clerical and manual
No.523--
10
£’000123
No.922
1,1012,023
Year ended31 July 2016
£1,190,735
No.13321
10
£’00025
No.896
1,0531,949
Year ended31 July 2015
£1,190,735
Remuneration of other higher paid staff, excluding employer’s pension contributions and all shown before any salary sacrifice:
Key management personnelKey management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the University. Staff costs include compensation paid to key management personnel
In 2015-16 the team responsible for the strategic and operational leadership of the University was consolidated and made up of the Vice Chancellor, Deputy Vice Chancellor, Chief Operating Officer, Pro Vice Chancellor (PVC) for Education and Students, PVC Research & Enterprise, Executive Director of Finance and Executive Director of Human Resources.
Council Members In 2015 -16 the Chair of Council was paid £20,200 (2014-15; £20,000) for serving as a Council member - no other payments were made to Council members for serving as Council members (2014-15 Nil).
No council member, other than the Chair of Council, has received any remuneration/waived payments from the group during the year (2015 - none). The total expenses paid to or on behalf of council members was £3,871 in respect of 9 council members (2015 - £3,598). This represents travel, subsistence and course costs incurred in their role as Council member.
Year Ended 31 July
2015
Year Ended 31 July
2016
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
8. Interest and other finance costs
Loan interestOther Finance lease interest (including service concession finance charge) Net charge on pension scheme
9. Other operating expenses
Scholarships, bursaries and other student expenses Catering Student Union GrantIT Supplies and lease costsBooks and periodicals including online accessPrinting, stationery and office expensesLicences/ Insurance/ Subscriptions TelephonesEquipment and furniture including hire and maintenance Financial chargesConsumablesVehicles and transport costsProfessional and other feesAgency and contract staffStaff travel and subsistence costsMarketingStaff recruitment and welfare Premises, maintenance and repairsRates, rents and utilitiesSecurityConcession – Residents, Right to UK assets
Trading with subsidiary companies
Total
Consolidated£’000
3,992 3
3252,460 6,780
6,9442,690
9845,6862,9591,6201,723
271
3,418604
1,241752
8,8432,6463,3542,117
6485,6857,077
1263,440
-
62,828
Consolidated£’000
3,0684
-2,2535,325
6,5272,0191,6307,5672,9421,5161,602
364
4,3191,608
437690
9,3953,3622,8782,093
5299,4855,668
364--
64,995
University£’000
3,992 17
3252,460 6,794
6,9442,690
9845,6532,9571,5481,713
259
3,4111,2371,255
7167,9712,6073,2252,071
6205,6856,699
1263,440
430
62,241
University£’000
3,06816
- 2,2535,337
6,5271,9911,6307,5252,9411,4621,593
353
4,3341,548
420652
8,8433,3932,7562,031
4989,4895,592
364-
643
64,585
Year Ended 31 July 2016 Year Ended 31 July 2015
Notes
12
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9. Other operating expenses (continued)Analysis of total expenditure by activity
Academic and related expenditureAdministration and central servicesPremisesResidencies,catering and conferences (including service concession cost)
Research grantsOther expenses
Other operating expenses include:External auditors remuneration in respect of statutory audit services External auditors remuneration in respect of non statutory audit services:Grant and other audit related servicesTaxation including advicePension adviceOverseas representative offer advice Operating lease rentals:Land and buildingsOther
10.Taxation
Recognised in the statement of comprehensive income Current taxCurrent tax expense
Total tax expense
Consolidated£’000
20,40018,47314,2186,4871,6821,568
63,053
55
2349
-23
3,442 361
Consolidated£’000
22,440 18,761 17,611 3,259 1,241 1,683
64,995
57
2018818
-
2,503 1,873
University£’000
20,35917,905
14,2186,487
1,6821,590
62,466
46
2343
--
3,361 361
University£’000
22,362 18,811 17,611
3,259 859
1,68364,585
46
20178
18-
2,408 1,873
Year Ended 31 July 2016 Year Ended 31 July 2015
The external auditor’s non – audit remuneration includes costs incurred in respect of grant audits, corporation tax and tax advisory services.
The tax charge is in respect of the Research and Development Expenditure tax credit income.
Year ended 31 July 2016Consolidated and University
52
52
Year ended 31 July 2015Consolidated and University
-
-
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Freehold Land and Buildings
£’000
147,218678
2,803(13,940)
136,759
136,759
32,4426,318
(13,408)
25,352
111,407
114,776
Leasehold Land and Buildings
£’000
20,494328
- -
20,822
20,822
3,044878
-
3,922
16,900
17,450
Leased Assets
£’000
-4,745
--
4,745
4,745
-105
-
105
4,640
-
Equipment
£’000
57,9171,4041,740
-
61,061
61,061
45,5806,027
-
51,607
9,454
12,337
Assets in the Course of
Construction
£’000
30,43126,638(4,543)
-
52,526
52,526
---
-
52,526
30,431
Total
£’000
256,06033,793
- (13,940)
275,913
275,913
81,06613,328
(13,408)
80,986
194,927
174,994
Consolidated and University
Cost or valuationAt 1 August 2015Additions TransfersDisposals
At 31 July 2016
Consisting of valuation as at:
31 July 2014 DepreciationAt 1 August 2015Charge for the yearDisposals
At 31 July 2016
Net book valueAt 31 July 2016
At 31 July 2015
Notes to the Accountsfor the year ended 31 July 2016 (continued)
11. Fixed assets
A full valuation of University estate excluding Media City, Centenary Building, Adelphi Buildings and Allerton Arts studio was carried out on 31st July 2014 by DTZ (Independent Consultant surveyors). The Centenary Building, Adelphi Building & Allerton Arts Studio were excluded from the July 2014 valuation following the decision taken to no longer use these buildings for teaching and research from August 2016 and these have been depreciated down to their market value.
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12. Service concession arrangements
The University has one on Balance Sheet arrangement where service delivery has commenced.
In December 2013 the University entered into an agreement with Salford Village Limited which comprises of Equitix, Graham Construction, Kier Project Investment and student accommodation operator Campus Living Villages Limited to build and run a 1,367 student accommodation village on the Peel Park Campus with the accommodation being open to students from Autumn 2015. The finance for this £85m development is being provided by Standard Life Investments and under the terms of the agreement the University has entered into an annual nominations agreement with Campus Living Village Limited. Following a review of the transaction this is to be accounted for in accordance with a service concession arrangement. In May 2014 the University nominated 700 rooms in respect of academic year 2015-16 at a cost of £3,439,800. In line with concession accounting a notional current asset of £3.4m and a notional concession accounting liability of £3.4m was created at 31st July 2015.
In December 2015 the University nominated 1,000 rooms in respect of academic year 2016-17 at a cost of £4,956,000. In line with concession accounting a notional current asset (right to use an asset) of £4.956m and a national concession accounting liability of £4.956m has been created at 31st July 2016. As it is an annual occupancy guarantee at the 31st July 2016 the University has no future commitments other than those detailed above.
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Subsidiary companies
£’000
- - - -
-
£’000 --- -
-
Investment in spin outs
£’000
20919
-(29)
199
£’000 5- - -
5
Other fixed assets investments
£’000
-- - -
-
£’000 --- -
-
Total
£’000
20919
- (29)
199
£’000 5- - -
5
Consolidated
At 1 August 2015AdditionsDisposalsImpairment
At 31 July 2016
University
At 1 August 2015AdditionsDisposalsImpairment
At 31 July 2016
Notes to the Accountsfor the year ended 31 July 2016 (continued)
13. Non-current investments
The investment in the subsidiary company relates to the introduction of additional share capital to enable it to fund on extension to facilities.
Other non-current investments consist of:
Carbon Air LimitedOptimum Imaging LimitedLacerta Rehabilitation LimitedThe Protocol Lab LimitedBioMech Technologies International LimitedKnownfield LimitedProofID LimitedIncanthera LimitedSalford Valve Company LimitedUniversity Loan to Health & Education Co-operative LimitedDLAB Companies
£’00010218
-----
20-5
54
199
% Owned 28.84% 48.07% 15.00% 17.24% 15.00% 25.00% 5.46% 2.09% 5.00%
No ShareholdingNo Shareholding
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Building and Engineering Stores
14. Stock
Amounts falling due within one year:Research grants receivablesOther trade receivablesOther receivablesPrepayments and accrued incomeRight to use an Asset- concession accounting Amounts due from subsidiary companies
Short term investment in sharesShort term deposits
Deposits are held with banks and building societies operating in the London market and licensed by the Financial Services Authority with more than three months maturity at the transaction date. The interest rates for £37,058,380 of these deposits are fixed for the duration of the deposit at time of placement. The remaining £10,000,000 interest rates vary. Within the group accounts there is an additional £333,756 deposited in a performance bond for LLC and £10,361 deposited in a locked down capital account for the USE Rep Office, both of which do not attract any interest.
At 31 July 2016 the weighted average interest rate of these fixed rate deposits was 1.04% per annum and the remaining weighted average period for which the interest rate is fixed on these deposits was 106 days. The fair value of these deposits was not materially different from the book value.
50347,40147,904
7655,245
155,5753,440
- 15,040
Consolidated£’000
79
52852,59153,119
50347,05847,561
765 3,917
155,3383,440
2, 199 15,674
University£’000
79
528 51,80252,330
5505,512
1635,7424,956
-16,923
5504,196
1635,2454,9561,877
16,987
Consolidated£’000
82
University£’000
82
Year Ended 31 July 2016 Year Ended 31 July 2015
15. Trade and other receivables
16. Current investments
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Secured loans Service concession rights to use an asset Trade payables Social security and other taxation payableOther payroll creditorsAccruals and deferred incomeDeferred capital grant Student Union Deposit Amounts due to subsidiary undertakings
DonationsResearch grants received on account
Consolidated£’000
4,066 4,956 6,569 2,361 1,606
22,293 1,864
232 -
43,947
225460685
Consolidated£’000
3,0823,4408,6262,1691,322
31,4242,635
389-
53,087
Notes
12
199 293 492
University£’000
4,066 4,956 6,500 2,361 1,606
20,863 1,864
232 2,143
44,591
225460685
University£’000
3,0823,440
8,624 2,1691,322
30,1452,635
3892,119
53,925
199293492
Year Ended 31 July 2016 Year Ended 31 July 2015
17. Creditors : amounts falling due within one year
Deferred IncomeIncluded with accruals and deferred income are the following items of income which have been deferred until specific performance related conditions have been met.
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Deferred capital grantObligations under finance leaseDerivatives Secured loans banksUnsecured loansHEFCE loan
Analysis of secured and unsecured loans:Due within one year or on demand Due between one and two yearsDue between two and five years Due in five years or moreDue after more than one year Total secured and unsecured loans
Secured loans (repayable by as below)Unsecured loans repayable by 2017
Included in loans are the following:
Consolidated£’000
14,3264,828
14,87365,818
-300
100,145
4,0664,050
12,15049,61865,81869,884
69,86816
69,884
Lender
BarclaysBarclaysBarclaysLloydsLloyds
Amount£’0009,6903,840
15,4007,500
33,43869,868
Term
20302032203520272036
Interest Rate%
5.865.185.184.476.00
Borrower
UniversityUniversityUniversityUniversityUniversity
Notes
17
Consolidated£’000
13,052-
10,653 69,835
49300
93,889
3,082 4,066
12,150 53,66869,88472,966
72,917 49
72,966
University£’000
14,3264,828
14,87365,818
-300
100,145
4,0664,050
12,15049,61865,81869,884
69,86816
69,884
University£’000
13,052-
10,653 69,835
49300
93,889
3,082 4,066
12,150 53,66869,88472,966
72,917 49
72,966
Year Ended 31 July 2016 Year Ended 31 July 2015
18. Creditors: amount falling due after more than one year
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Consolidated & University
At 1 August 2015
Utilised in yearInterest on funds Net Transfer from/(to) SOCIActuarial lossAt 31 July 2016
(A) Obligation
to funddeficit on
USS Pension
£’000
17,373
(645) 309
858 -
17,895
(B)Pension
enhancementon termination
£’000
11,307
(661)391
715 -
11,752
(C) Standardisation
of Pension benefits of
former University of
College Salford Staff BenefitObligations
(Note 28)
£’000
500
- -
(67)-
433
D)Deficit in the Scheme- Net
pension liability
GMPF
£’000
59,505
(3,884)2,151
4,3249,283
71,379
TotalPensions
Provisions
£’000
88,685
(5,190)2,851
5,8309,283
101,459
Other
£’000
1,860
--
3,080-
4,940
Total Other
£’000
1,860
--
3,080-
4,940
19. Provisions for liabilities
(A) USS deficit The obligation to fund the past deficit on the University’s’ Superannuation Scheme (USS) arises from the contractual obligation with the pension scheme for total payments relating to benefits arising from past performance. Management have assessed future employees within the USS scheme and salary payment over the period of the contracted obligation in assessing the value of this provision. The assumptions for calculating the past deficit on USS are as follows:
USS Discount rate
Pensionable payroll growth:Salary inflation of USS employees
Staff changes of USS employees
Consolidated and University 1.78% (14-15 3.05%)
3% (14-15: 2.4% then 3.4%)
5% 2016-17, 0.6%2017-18, 0.8% 2018-2019(14-15; 5% 15-16, 4%2016-17, 2% 2017-18)
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The provision is for the enhanced pension benefits payable to retired staff who were members of the Teacher’s pension scheme. The provision for the enhanced pension benefits payable to retired staff has been calculated using a net interest rate of 1.3% ( 2015- 1.75%.) The Interest on funds has been calculated using an interest rate of 2.3% (2014/15: 3.46%).
(C) The provision is for the standardisation of pension benefits for former University College Salford Staff.
(D) Deficit in the scheme- net pension liability Greater Manchester Pension Fund GMPF. See note 28 for further details.
(B) Pension enhancement The assumptions for calculating the provision for pension enhancements on termination under FRS 102, are as follows:
Net Interest Rate
Interest Rate
Consolidated and University 1.3% (14-15 1.75%)
2.3% (14-15 3.46%)
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Balances 1 August 2015CapitalAccumulated income
New endowmentsInvestment incomeExpenditure
Decrease in market value of investments
At 31 July 2016
Represented by:CapitalAccumulated income
Analysis by type of purpose:Scholarships and bursariesResearch supportPrize fundsGeneral
Analysis by asset Current and non-current asset investments
Restricted permanent
endowments
£’000
129137 266
--
(2)(2)
(13)
251
127124251
10948868
251
Expendable endowments
£’000
15567
222--
(1)(1)
(11)
210
15555
210
28-
34148210
2016
Total £’000
284204488
--
(3)(3)
(24)
461
282179461
13748
120156461
461
2015
Total£’000
284162446
-44(2)42
-
488
284204488
144 51
129164488
488
20. Endowment reservesRestricted net assets relating to endowments are as follows:
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Balances 1 August 2015
New grants/ research grantsNew donationsInvestment incomeExpenditure
At 31 July 2016
ConsolidatedCash and cash equivalents
Analysis of other restricted funds /donations by type of purpose:Scholarships and bursariesResearch supportPrize fundsGeneral
2016Total £’000
585
524305
-(600)229
814
At 1st August 2015 £’000
34,449
Cash Flows £’000
(8,326)
175352287814
2015 Total
£’000
253
328296
-(292)
332
585
At 31st July 2016£’000
26,123
122277186585
21. Restricted reservesReserves with restrictions are as follows:
22. Cash and cash equivalentsReserves with restrictions are as follows:
23. Capital and other commitmentsProvision has not been made for the following capital commitments at 31 July 2016:
Commitments contracted for
Consolidated£’000
7,489
Consolidated£’000
21,445
University£’000
7,489
University£’000
21,445
Year Ended 31 July 2016 Year Ended 31 July 2015
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
24. Contingent liabilities
Guarantees to Barclays plc for Salford Software Ltd
Consolidated£’000
-
Consolidated£’000
100
University£’000
-
University£’000
100
Year Ended 31 July 2016 Year Ended 31 July 2015
Payable during the year
Not later than 1 yearLater than 1 year and not later than 5 yearsLater than 5 yearsTotal lease payments due
CompanyUniversity of Salford Enterprises LimitedSalford Professional Development LimitedSalford Consultancy LLCSkyscope LimitedSalford University Purchasing Services LimitedUniversity of Salford (Health Services TrainingSalford Digital Futures Limited
Principal ActivityBusiness Development, Consultancy and Investment managementDelivery of trainingConsulting in Abu DhabiManagement of representative office in ChinaPurchasing Services - DormantTraining - DormantCommercialisation of digital technology - Dormant
Status100% owned100% owned100% owned100% owned100% owned100% owned100% owned
Land and Buildings
£’000
3,442
3,646
14,19450,80468,644
Plant and Machinery
£’000
361
359
1,133-
1,492
31 July 2016
£’000
3,803
4,005
15,32750,80470,136
31 July 2015
£’000
4,370
3,589
14,27054,34972,208
25. Lease obligationsTotal rentals payable under operating leases:
27. Subsidiary undertakingsThe subsidiary companies (all of which are registered in England & Wales), wholly-owned or effectively controlled by the University, are as follows:
Future minimum lease payments due:
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28. Pension schemes
Three schemes are currently in operation :• Universities’ Superannuation Scheme (USS)• Greater Manchester Pension Fund (GMPF)• Teachers Pension Scheme (TPS)
The two main schemes, being USS and GMPF, are both defined-benefit schemes contracted out of the State Second Pension (S2P) the assets of which are held in separate trustee administered funds.
The table below analyses expenditure on “Other pension costs” detailed in Note 7 by pension fund:
(i) Universities’ Superannuation Scheme (USS)The institution participates in the Universities Superannuation Scheme (the scheme). Throughout the current and preceding periods, the scheme was a defined benefit only pension scheme until 31 March 2016 which was contracted out of the State Second Pension (S2P). The assets of the scheme are held in a separate trustee-administered fund. Because of the mutual nature of the scheme, the scheme’s assets are not hypothecated to individual institutions and a scheme-wide contribution rate is set. The institution is therefore exposed to actuarial risks associated with other institutions’ employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by Section 28 of FRS 102 “Employee benefits”, accounts for the scheme as if it were a defined contribution scheme. As a result, the amount charged to the income and expenditure account represents the contributions payable to the scheme in respect of the accounting period. Since the institution has entered into an agreement (the Recovery Plan that determines how each employer within the scheme will fund the overall deficit), the institution recognises a liability for the contributions payable that arise from the agreement to the extent that they relate to the deficit and the resulting expense in the income and expenditure account.
The latest available full actuarial valuation of the scheme was at 31 March 2014 which was carried out using the projected unit method.
Since the University cannot identify its share of scheme assets and liabilities, the following disclosures reflect those relevant for the scheme as a whole.
USSGMPF TPSOther
Consolidated£’000
11,8914,259
35210
16,512
Consolidated£’000
10,9873,872
35618
15,233
University£’000
11,8914,259
352-
16,502
University£’000
10,9873,872
3561
15,216
Year Ended 31 July 2016 Year Ended 31 July 2015
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
28. Pension schemes (continued)
The 2014 valuation was the third valuation for USS under the scheme-specific funding regime introduced by the Pensions Act 2004, which requires schemes to adopt a statutory funding objective, which is to have sufficient and appropriate assets to cover their technical provisions. At the valuation date, the value of the assets of the scheme was £41.6 billion and the value of the scheme’s technical provisions was £46.9 billion indicating a shortfall of £5.3 billion. The assets therefore were sufficient to cover 89% of the benefits which had accrued to members after allowing for expected future increases in earnings.
Defined benefit liability numbers for the scheme have been produced using the following assumptions: 2016 2015Discount rate 3.6% 3.3%Pensionable salary growth n/a 3.5% in the first year and 4.0% thereafterPension increase (CPI) 2.2% 2.2%
The main demographic assumption used relates to the mortality assumptions. Mortality in retirement is assumed to be in line with the Continuous Mortality Investigation’s (CMI) S1NA tables as follows:
Male members’ mortality 98% of S1NA (“light”) YoB tables – No age rating
Female members’ mortality 99% of S1NA (“light”) YoB tables – rated down 1 year
Use of these mortality tables reasonably reflects the actual USS experience. To allow for further improvements in mortality rates the CMI 2014 projections with a 1.5% pa long term rate were also adopted. The current life expectancies on retirement at age 65 are: 2016 2015Males currently aged 65 (years) 24.3 24.2Females currently aged 65 (years) 26.5 26.4Males currently aged 45 (years) 26.4 26.3 Females currently aged 45 (years) 28.8 28.7
2016 2015Scheme assets £49.8bn £49.1bnTotal scheme liabilities £58.3bn £60.2bnFRS102 total scheme deficit £8.5bn £11.1bnFRS102 total funding level 85% 82%
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(ii) Greater Manchester Pension Fund (GMPF)The University participates in the GMPF, which is an externally funded defined benefit pension scheme, which is contracted out of the State Second Pension, where contributions payable are held in a trust separately from the University.
The 31 July 2016 and 31 July 2015 information is based upon a full actuarial valuation of the fund as at 31 March 2013 updated to 31 July 2016 and 31 July 2015 respectively. Under the definitions set out in FRS 17, the GMPF is a multi-employer defined benefit pension scheme. In the case of the GMPF, the actuary of the scheme has identified the University’s share of its assets and liabilities as at 31 July 2016 and 31 July 2015.
The pension scheme assets are held in a separate Trustee-administered fund to meet long-term pension liabilities to past and present employees. The trustees of the fund are required to act in the best interest of the fund’s beneficiaries. The appointment of trustees to the fund is determined by the scheme’s trust documentation. The trustees are responsible for setting the investment strategy for the Scheme after consultation with professional advisers.
During the accounting period, the University paid contributions to the pension scheme at the rate of 19.4% from August 2015 to March 2016 and then 20.7% from April 2016 onwards of pensionable salaries.
AssumptionsThe financial assumptions used to calculate scheme liabilities under FRS102 are:
Rate of increase in salaries Rate of increase of pensions in payment for UXPS members Discount rate The most significant non-financial assumption is the assumed level of longevity. The table below shows the life expectancy assumptions used in the accounting assessments based on the life expectancy of male and female members at age 65. Pensioner Non-pensioner (male) Pensioner Non-pensioner Non-pensioner
(male) currently aged 45 (female) (female) currently aged 45
At 31 July 2015 21.4 24 24 26.6
At 31 July 2016 21.4 24 24 26.6
At 31 July 2016%pa
3.2%1.9%2.4%
At 31 July 2016%pa
3.80%2.60%3.60%
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
28. Pension schemes (continued)
Scheme assets and expected rate of return for GMPFThe expected return on assets has been derived as the weighted average of the expected returns from each of the main asset classes (i.e. equities and bonds). The expected return for each asset class reflects a combination of historical performance analysis, the forward looking views of the financial markets (as suggested by the yields available) and the views of investment organisations.
The assets in the scheme were:
The tables below include, where applicable, disclosures for GMPF and ex-gratia pension combined to enable clear presentation. The ex-gratia pensions account for £4,098,000 of the total liabilities of £212,622,000.
Analysis of the amount shown in the balance sheet for GMPFScheme assetsScheme liabilitiesDeficit in the scheme – net pension liabilityrecorded within pension provisions Current service costPast service costsTotal operating charge: Analysis of the amount charged to interest (payable)/credited to other finance income for GMPF and ex-gratia pensions Interest cost Expected return on assets Net charge to other finance income Analysis of other comprehensive income for GMPF and ex-gratia pensions:Gain on assets Experience loss on liabilities Changes in financial assumptions Total other comprehensive income before deduction for tax
Year Ended31/07/2016
£’000
141,243(212,622)
(71,379)
4,25965
4,324
(6,696)4,545
(2,151)
10,5392,654
(22,476)(9,283)
Year Ended31/07/2015
£’000
126,372(185,877)
(59,505)
3,872116
3,988
(6,736)4,735
(2,001)
3,3791,455
(12,056)(7,222)
Notes
19
EquitiesGovernment bondsPropertyCashTotal
The weighted average expected long-term rates of return were
31/07/2016£’000
103,10824,0117,0627,062
141,243
31/07/2016%pa
2.4
31/07/2015£’000
89,72422,7478,8465,055
126,372
31/07/2015%pa
3.60
Fair value as at31/07/2015
£’00084,25321,3607,1205,933
118,666
Fair value as at%pa
5.80
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History of experience gains and losses – GMPF
Difference between actual and expected return on scheme assets:
Amount (£m)% of assets at end of year
Experience (gains)/losses on scheme liabilities:Amount (£m)% of liabilities at end of year
31st July2016
10,5397.5
2,6541.25
31st July2015
3,3792.67
1,4550.78
31st July2014
(5,699)(4.80)
1,7881.06
31st July2013
n/an/a
170.01
31st July2012
n/an/a
(1,888)1.31
Year to
Cumulative actuarial loss recognised as other comprehensive income for GMPFCumulative actuarial losses recognised at the start of the year Cumulative actuarial losses recognised at the end of the year
Analysis of movement in surplus/(deficit) for GMPF Deficit at beginning of year Contributions or benefits paid by the University Current service cost
Past service cost Other finance charge Gain recognised in other comprehensive income Deficit at end of year
Analysis of movement in the present value of GMPFPresent value of GMPF at the start of the yearCurrent service cost (net of member contributions)Past service costInterest cost on defined benefit obligationActual member contributions (including notional contributions)Actuarial loss/(gain)Actual benefit paymentsPresent value of GMPF liabilities at the end of the year
At 31st July2016
£’000
(21,973)(31,256)
(59,505)3,884
(4,259)
(65)(2,151)(9,283)
(71,379)
Year to31st July 2016
£’000
(185,877)(4,259)
(65)(6,696)(1,140)
(19,822)5,237
(212,622)
At 31st July2015
£’000
(14,751)(21,973)
(49,821)3,527
(3,872)
(116)(2,001)(7,222)
(59,505)
Year to31st July 2015
£’000
(168,487)(3,872)
(116)(6,736)(1,114)
(10,601)5,049
(185,877)
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Analysis of movement in the fair value of scheme assetsFair value of assets at the start of the yearExpected return on assetsActuarial gain on assetsActual contributions paid by UniversityActual member contributions (including notional contributions)Actual benefit paymentsFair value of scheme assets at the end of the year
Actual return on scheme assetsExpected return on scheme assetsAsset gain/(loss)
Year to31 July 2016
£’000
126,3724,545
10,5393,8841,140
(5,237)141,243
Year to31 July 2016
£’000
4,54510,53915,084
Year Ended31 July 2015
£’000
118,6664,7353,3793,5271,114
(5,049)126,372
Year Ended31 July 2015
£’000
4,7353,3798,114
GMPF’s assets do not include any of the University’s own financial instruments, or any property occupied by the University.
Estimated contributions for GMPF in the Financial Year 2016–2017 is £3,558,000.
28. Pension schemes (continued)
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Teachers’ Pension Scheme (TPS) The Teachers’ Pension Scheme (“TPS”) is a statutory, contributory, defined benefit scheme. The regulations under which the TPS operates are the Teachers’ Pensions Regulations 2010 (as amended), and the Teachers’ Pensions Regulations 2014 (as amended). These regulations apply to teachers in schools and other educational establishments in England and Wales maintained by local authorities, to teachers in many independent and voluntary-aided schools, and to teachers and lecturers in establishments of further and higher education. Membership is automatic for full-time teachers and lecturers and from 1 January 2007 automatic too for teachers and lecturers in part-time employment following appointment or a change of contract. Teachers and lecturers are able to opt out of the TPS.
The Teachers’ Pension Budgeting and Valuation accountAlthough teachers and lecturers are employed by various bodies, their retirement and other pension benefits, including annual increases payable under the Pensions (Increase) Acts are, as provided for in the Superannuation Act 1972, paid out of monies provided by Parliament. Under the unfunded TPS, teachers’ contributions on a ‘pay-as-you-go’ basis, and employers’ contributions, are credited to the Exchequer under arrangements governed by the above Act.
The Teachers’ Pensions Regulations require an annual account, the Teachers’ Pension Budgeting and Valuation Account, to be kept of receipts and expenditure (including the cost of pensions’ increases). From 1 April 2001, the Account has been credited with a real rate of return (in excess of price increases and currently set at 3.0%), which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return
Valuation of the Teachers’ Pension scheme Not less than every four years the Government Actuary (“GA”), using normal actuarial principles, conducts a formal actuarial review of the TPS. The aim of the review is to specify the level of future contributions.
The contribution rate paid into the TPS is assessed in two parts. First, a standard contribution rate (“SCR”) is determined. This is the contribution, expressed as a percentage of the salaries of teachers and lecturers in service or entering service during the period over which the contribution rate applies, which if it were paid over the entire active service of these teachers and lecturers would broadly defray the cost of benefits payable in respect of that service.
Secondly, a supplementary contribution is payable if, as a result of the actuarial investigation, it is found that accumulated liabilities of the Account for benefits to past and present teachers, are not fully covered by standard contributions to be paid in future and by the notional fund built up from past contributions. The total contribution rate payable is the sum of the SCR and the supplementary contribution rate.
The last valuation of the TPS related to the period 1 April 2004 - 31 March 2012. The GA’s report of June 2014 revealed that the total liabilities of the Scheme (pensions currently in payment and the estimated cost of future benefits) amounted to £191.5 billion. The value of the assets (estimated future contributions together with the proceeds from the notional investments held at the valuation date) was £176.6 billion. The assumed rate of return is 3.0% in excess of prices. The rate of real earnings growth is assumed to be 2.75%. The assumed gross rate of return is 5.06%.
As from 1 April 2015, and as part of the cost-sharing agreement between employers’ and teachers’ representatives, the SCR was assessed at 20.4%, and the supplementary contribution rate was assessed to be 5.6% (to balance assets and liabilities as required by the regulations within 15 years). This resulted in a total contribution rate of 26.0%, which translated into an average employee contribution rate of 9.6% and employer contribution rate of 16.4% payable. The cost-sharing agreement also introduced a 10.9% cap on employer contributions payable. It has been agreed that these revised contributions will be implemented from 1 September 2015.
Scheme changesFrom 1 September 2015, the employer contribution rate increased to 16.48% from 14.1%.
From 1 April 2015, the TPS is being reformed, with a different benefit structure for a number of members. These changes have been allowed for in the contribution rate set out above.
The pension costs paid to TPS in the year amounted to £352,000 (2015: £356,000).
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
29. Hedge Reserve movements
Consolidated and University
At 1 August 2015 Change in fair value of Hedging financial instruments At 31 July 2016
30. Related party transactions
The University council members are the trustees for charitable law purposes. Due to the nature of the University’s operations and the compositions of the Council, being drawn from local public and private sector organisations, it is inevitable that transactions will take place with organisations in which a member of the Council may have an interest. All transactions involving organisations, in which a member of Council may have an interest, are conducted at arm’s length and in accordance with the University’s Financial Regulations and usual Procurement procedures. The University undertook transactions with the following public sector bodies, charities and not for profit organisations to which Councilmembers had connections – Salford University Students’ Union, BBC, Greater Manchester Chamber of Commerce, Salford City Council, Quality Assurance Agency for Higher Education (QAA), Lowry Centre Trust, Fusion 21, The Lowry and various NHS bodies as well as The Open University.
The Salford University Students’ Union is an independent organisation largely funded by the University. The financial transactions between the two organisations can be summarised as:-
At the 31 July 2016 Student’s Union had £232,000 (2015: £389,000) invested with the University of Salford as detailed in Note 17. At the 31 July 2016, the University had a creditor with the Students’ Union of £17,435 (2015: £940) and a debtor with the Students’ Union of £7,045 (2015: £32,013).
Annual Grant Paid to Students’ Union from UniversityGrant to upgrade facilitiesGrant to underwrite Atmosfield festivalPayments made to the Students’ Union from the University for Services providedPayments made to the University from Students’ Union for Services provided
2015-16£’000
984--
57 (56)
2014-15£’000
985624
2117
(73)
£’000 10,653
4,220 14,873
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31. Accounting estimates and judgements
This is the first year of producing accounts in accordance with the Statement of Recommended Practice (SORP): Accounting for further and Higher Education (2015). The reader’s attention is drawn to the accounting policy notes and in particular income recognition.
The following accounting judgements are considered critical in applying the university’s accounting policies:
(a) Accounting for service concession arrangementsThe University has an annual nominations arrangement with campus Living Villages where it nominates rooms for students on the Peel Park accommodation within the University campus. As detailed in Note 12 the University accounted for this under the service concession arrangement reflecting the value of these nominations within the balance sheet with the annual nominations then unwound in the SOCE the following financial year.
(b) Accounting for car parking at the Peel Park accommodationIn autumn 2015 the University entered into a 45 year arrangement with Standard Life Investments for the provision of car parking at the Peel Park accommodation. As the University assumes the risks and rewards of ownership this has been accounted for as a finance lease with an asset and liability of £4,744,000 recognised on the balance sheet which is then accounted for in accordance with the finance lease accounting policies.
(c) Accounting for retirement benefitsFRS 102 makes the distinction between a Group Plan and a multi-employer scheme. A Group Plan consists of a collection of entities under common control typically with a sponsoring employer. A multi-employer scheme is a scheme for entities not under common control and represents (typically) an industry-wide scheme such as that provided by USS. In the case of USS it is not possible to identify the assets and liabilities to University at members due to the mutual nature of the scheme and this scheme is accounted for as a defined contribution retirement scheme. The accounting for a multi-employer scheme where the employer has entered into an agreement with the scheme that determines how the employer will fund a deficit results in the recognition of a liability for the contributions payable that arise from the agreement (to the extent that they relate to the deficit) and the resulting expense is recognised in profit or loss.
The University Council are satisfied that the scheme provided by USS meets the definition of a multi-employer scheme and has therefore recognised the discounted fair value of the contractual contributions under the funding plan in existence at the date of approving the financial statements. Details of this liability are disclosed in note 19.
(d) Accounting for hedge arrangementsThe University has derivatives in place on some of its loans in order to fix the interest rate for the period of the loan. The University Council is satisfied that the conditions are satisfied to account for this under hedge accounting so that movements are separately disclosed after surplus after tax within the Consolidated Statement of Comprehensive Income and Expenditure and a separate hedge reserve is created within reserves in the balance sheet.
(e) Accounting for bad debt provisionsThe University has bad debt provisions in respect of both student and commercial and research debt. The student bad debt provision is calculated on a specific basis according to where the student or the student sponsor is in the debt collection cycle with most debt over 12 months old provided for in full. The commercial and research debt is also calculated on a specific basis according to where the debt is in the debt collection cycle with most debt over 12 months old provided for in full except for EU funded research grants where the recovery period is longer.
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
32. Transition to FRS102 and the 2015 SORP consolidation
As explained in the accounting policies, these are the University’s first financial statements prepared in accordance with FRS 102 and the SORP. The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 2016, the comparative information presented in these financial statements for the year ended 2015 and in the preparation of an opening FRS 102 Statement of Financial Position at 1 August 2014. In preparing its FRS 102, SORP based Statement of Financial Position; the University has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (2007 SORP). An explanation of how the transition to FRS 102 and the SORP has affected the University’s financial position and financial performance is set out in the following tables.
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Non-current assetsFixed assetsInvestments
Endowment assets Current assetsStockTrade and other receivablesInvestmentsCash and cash equivalents
Less: Creditors: amounts falling due within one yearService concession liabilities due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilitiesPension provisionsOther provisionTotal net assets
Restricted reservesIncome and expenditure reserve – endowment reserveIncome and expenditure reserve- restricted reserve Unrestricted reserves Income and expenditure reserve- unrestricted Revaluation reserve Hedge reserve Pension reserve Deferred capital grant Total reserves
2007 SORP£’000
172,495237
172,732446
7010,35349,4051,575
61,403
(39,585)-
21,818
194,996
(39,748)
(49,821)(12,213)93,214
446-
57,39466,440
-123,834(49,821)18,75593,214
31-Jul-15 Effect of
transition to 2015
SORP£’000
(632)(35)
(667)(446)
-1
(18,329)18,811
483
(7,043)-
(6,560)
(7,673)
(21,501)
(19,717)11,453
(37,438)
-253
(60,720)(632)
(7,405)(68,757)49,821
(18,755)(37,438)
2014SORP£’000
171,863202
172,065-
7010,35431,07620,38661,886
(46,628)-
15,258
187,323
(61,249)
(69,538)(760)
55,776
446253
(3,326)65,808(7,405)55,077
- -
55,776
Note
1
2
44
5
7
88
9
10
10
11 12
Consolidated Balance Sheet at 1 August 2014
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Non-current assetsFixed assetsInvestments
Endowment assets Current assetsStockTrade and other receivablesInvestmentsCash and cash equivalents
Less: Creditors: amounts falling due within one yearService concession liabilities due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilitiesPension provisionsOther provisionTotal net assets
Restricted reservesIncome and expenditure reserve – endowment reserveIncome and expenditure reserve- restricted reserve Unrestricted reserves Income and expenditure reserve- unrestricted Revaluation reserve Hedge reserve Pension reserve Deferred capital grant Total reserves
2007 SORP£’000
172,49540
172,535446
7010,17449,4051,487
61,136
(40,212)-
20,924
193,905
(39,748)
(49,821)(12,213)92,123
446-
56,30366,440
-122,743(49,821)18,75592,123
31-Jul-15 Effect of
transition to 2015
SORP£’000
(632)(35)
(667)(446)
-1
(18,331)18,813
483
(7,044)-
(6,561)
(7,674)
(21,501)
(19,717)11,453
(37,439)
-253
(60,721)(632)
(7,405)(68,758)49,821
(18,755)(37,439)
2014SORP£’000
171,863 5
171,868 -
70 10,175 31,074 20,300 61,619
(47,256) -
14,363
186,231
(61,249)
(69,538) (760)
54,684
446 253
(4,418)
65,808 (7,405) 53,985
- -
54,684
Note
1
2
344
56
7
88
9
10
10
1112
32. Transition to FRS102 and the 2015 SORP University (continued)
University Balance Sheet at 1 August 2014
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Notes in respect of balance sheets at 31 July 2014 and 31 July 2015
Note 1 – As part of the transition to the new SORP the valuation of the University property Technology House was undertaken on a market value basis rather than on a depreciated replacement cost with a corresponding release of revaluation reserve.
Note 2 – The new SORP requires endowment assets to be included within Investments rather than separately disclosed.
Note 3 – Under the new SORP for 31 July 2015 the University has reflected one year’s worth of student nominations with Campus Living Villages on the balance sheet [see Note 31 a] with a corresponding liability included within Creditors less than one year.
Note 4 – The new SORP treats cash as any bank deposits that are repayable in less than less than 3 months at the time of placement which has resulted in a re-categorisation between Investments and Cash and cash equivalents. Additionally the endowments have been re-categorised as investments rather than separately disclosed.
Note 5 – The new SORP reanalyses Deferred capital grants from reserves to net assets splitting them between Creditors due within one year and creditors greater than one year. A liability for accrued holiday pay is also reflected for the first time.
Note 6 – Under the new SORP for 31 July 2015 the University has reflected one year’s worth of nominations with Campus Living Villages on the balance sheet [see Note 31 a] with a corresponding liability included within Creditors less than one year.
Note 7 – The new SORP reanalyses Deferred capital grants from reserves splitting them between Creditors due within one year and Creditors greater than one year. The creditor also includes the market value of derivatives for the first time.
Note 8 – The Pension provision now includes all pension provisions including pension enhancements on termination and standardisation of pension benefits of former University College staff which were previously included in Other provisions. For the first time Pension provisions includes the obligation to fund the deficit on USS pensions.
Note 9 – The new SORP makes a distinction between Restricted reserves and Unrestricted reserves as per accounting policies.
Note 10 – The new SORP no longer allows the Pension reserve to be separately disclosed and this reserve has been combined with the Income and expenditure reserve. The remainder of the impact is largely due to the recognition of the new liabilities highlighted in Note 4 and Note 5.
The University is accounting for derivatives in line with the requirements of hedge accounting with Hedges separately disclosed within reserves.
Note 11 – The new SORP no longer allows the separate disclosure of the Pension reserve and it is combined with the Income and expenditure reserve.
Note 12 – Deferred capital grants are no longer recorded as a reserve and are recorded within net assets splitting the liability between Creditors less than one year and Creditors greater than one year.
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Non-current assetsFixed assetsInvestments
Endowment assets Current assetsStockTrade and other receivablesInvestmentsCash and cash equivalents
Less: Creditors: amounts falling due within one yearService concession liabilities due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilitiesPension provisionsOther provisionTotal net assets
Restricted reservesIncome and expenditure reserve – endowment reserveIncome and expenditure reserve- restricted reserve Unrestricted reserves Income and expenditure reserve- unrestricted Revaluation reserve Hedge reserve Pension reserve Deferred capital grant Total reserves
2007 SORP£’000
175,601249
175,850488
7911,59284,7962,244
98,711
(45,518)-
53,193
229,531
(70,184)
(59,505)(12,567)87,275
488-
68,80160,948
-130,237(59,505)16,54387,275
31-Jul-15 Effect of
transition to 2015
SORP£’000
(607)(40)
(647)(488)
-3,448
(31,677)32,2053,976
(4,129)(3,440)
(3,593)
(4,728)
(23,705)
(29,180)10,707
(46,906)
-585
(79,193)(607)
(10,653)(89,868)59,505
(16,543)(46,906)
2014SORP£’000
174,994209
175,203-
7915,04053,11934,449
102,687
(49,647)(3,440)
49,600
224,803
(93,889)
(88,685)(1,860)40,369
488585
(10,392)60,341
(10,653)40,369
--
40,369
Note
1
2
344
56
7
88
9
10
10
1112
32. Transition to FRS102 and the 2015 SORP consolidation (continued)
Consolidated Balance Sheet at 31 July 2015
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Non-current assetsFixed assetsInvestments
Endowment assets Current assetsStockTrade and other receivablesInvestmentsCash and cash equivalents
Less: Creditors: amounts falling due within one yearService concession liabilities due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilitiesPension provisionsOther provisionTotal net assets
Restricted reservesIncome and expenditure reserve – endowment reserveIncome and expenditure reserve- restricted reserve Unrestricted reserves Income and expenditure reserve- unrestricted Revaluation reserve Hedge reserve Pension reserve Deferred capital grant Total reserves
2007 SORP£’000
175,60145
175,646488
7912,22584,0061,729
98,039
(46,356)-
51,683
227,817
(70,184)
(59,505)(12,567)85,561
488-
67,08760,948
128,523(59,505)16,54385,561
31-Jul-15 Effect of
transition to 2015
SORP£’000
(607)(40)
(647)(488)
-3,449
(31,676)32,2043,977
(4,129)(3,440)
(3,592)
(4,727)
(23,705)
(29,180)10,707
(46,905)
-585
(79,192)(607)
(10,653)(89,867)59,505
(16,543)(46,905)
2014SORP£’000
174,9945
174,999-
7915,67452,33033,933
102,016
(50,485)(3,440)
48,091
223,090
(93,889)
(88,685)(1,860)38,656
488585
(12,105)60,341
(10,653)38,656
--
38,656
Note
1
2
344
56
7
88
9
10
10
1112
32. Transition to FRS102 and the 2015 SORP University (continued)
University Balance Sheet at 31 July 2015
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Income
Tuition fees and education contracts Funding body grants Research grants and contracts Other income Investment income
Total income before donations and endowments Donations and endowments Total income Expenditure Staff costs Other operating expenses Depreciation Interest and other finance costs Total expenditure Gain on disposal of companies (Loss) on disposal of fixed assets Surplus/(deficit) before tax Taxation Surplus/(deficit) after tax Actuarial (loss)/gain in respect of pension schemes Change in fair value of hedging financial instruments Total comprehensive income/(expenditure) for the year
2007 SORP£’000
139,13926,5575,779
15,526863
187,864-
187,864
97,17064,99516,7983,072
182,035
54(211)
5,672-
5,672
--
5,672
STRGLItems*
-----
--
-
----
-
--
---
(9,399)-
(9,399)
31-Jul-15 Effect of
transition to 2015
SORP£’000
--
158(207)(176)
(225)386
161
8,543-
(26)2,253
10,770
--
(10,609)-
(10,609)
2,177(3,248)
(11,680)
2015SORP£’000
139,13926,5575,937
15,319687
187,639386
188,025
105,71364,99516,772
5,325
192,805
54(211)
(4,937)-
(4,937)
(7,222)(3,248)
(15,407)
Note
1
2
23
32. Transition to FRS102 and the 2015 SORP consolidation (continued)
Consolidated Statement of Comprehensive Income & Expenditure for 2014-15
* This column represents items that were previously recorded within the Statement of Total Recognised Gains and Losses (STRGL) and are now recorded within the statement of Comprehensive Income (SoCI).
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Income
Tuition fees and education contracts Funding body grants Research grants and contracts Other income Investment income
Total income before donations and endowments Donations and endowments Total income Expenditure Staff costs Other operating expenses Depreciation Interest and other finance costs Total expenditure Gain on disposal of companies (Loss) on disposal of fixed assets Surplus/(deficit) before tax Taxation Surplus/(deficit) after tax Actuarial (loss)/gain in respect of pension schemes Change in fair value of hedging financial instruments Total comprehensive income/(expenditure) for the year
2007 SORP£’000
136,72826,5575,779
15,112865
185,041-
185,041
95,36864,58516,7983,084
179,835
54(211)
5,049-
5,049
--
5,049
STRGLItems*
-----
--
-
----
-
--
---
(9,399)-
(9,399)
31-Jul-15 Effect of
transition to 2015
SORP£’000
--
158(208)(175)
(225)386
161
8,541-
(26)2,253
10,768
--
(10,607)-
(10,607)
2,177(3,248)
(11,678)
2015SORP£’000
136,72826,557
5,93714,904
690
184,816386
185,202
103,90964,58516,772
5,337
190,603
54(211)
(5,558)-
(5,558)
(7,222)(3,248)
(16,028)
Note
1
2
23
32. Transition to FRS102 and the 2015 SORP University (continued)
University Statement of Comprehensive Income & Expenditure for 2014-15
* This column represents items that were previously recorded within the Statement of Total Recognised Gains and Losses (STRGL) and are now recorded within the statement of Comprehensive Income (SoCI).
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Notes to the Accountsfor the year ended 31 July 2016 (continued)
Notes in respect of Statement of Comprehensive Income and Expenditure Year Ended 31 July 2015
Note 1 – In 2014-15 the USS pension scheme agreed revised USS employer contributions resulting in a charge of £8.9m. The remainder of the movement was due to a reduction in the holiday pay accrual.
Note 2 – The interest charge is higher under the new SORP as more prudent assumptions are made in the expected return on assets resulting in an increased charge with corresponding reduction in actuarial loss.
Note 3 – Under the new SORP movements in the market value of derivatives have to be reflected in then Statement of Comprehensive Income & Expenditure (SoCI). Under hedge accounting this is separately identified in the SoCI.
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71
Campus Fram
ework – The future is ours to im
agine...
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