FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 2017
University of Winchester, a private charitable company limited by guarantee in England and Wales number 05969256. Registered office: Sparkford Road, Winchester, Hampshire, SO224NR.
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University of Winchester Financial Statements 2016/17
CONTENTS Vice-Chancellor’s Foreword.......................................................................................................................................................... page 2 Our Mission and Values..................................................................................................................................................................... page 3 Our values........................................................................................................................................................................................... page 3 Our Strategic Plan................................................................................................................................................................................. page 4 Strategic Priority 1: Educate.................................................................................................................................................. page 4 Strategic Priority 2: Advance Knowledge................................................................................................................... page 4 Strategic Priority 3: Sustain.................................................................................................................................................... page 4 Public Benefit............................................................................................................................................................................................ page 6 Our Faculty of Arts........................................................................................................................................................................ page 6 Our Faculty of Business, Law and Sport...................................................................................................................... page 7 Our Faculty of Education, Health and Social Care............................................................................................... page 8 Our Faculty of Humanities and Social Sciences.................................................................................................... page 9 Strategic Report incorporating the Operational and Financial Review......................................................... page 10 Corporate and social responsibility................................................................................................................................. page 10 Equality and Diversity................................................................................................................................................................ page 10 Health and Safety......................................................................................................................................................................... page 10 Modern Slavery.............................................................................................................................................................................. page 11 Business Continuity..................................................................................................................................................................... page 12 Sustainable Development..................................................................................................................................................... page 12 Community Engagement....................................................................................................................................................... page 12 Value for Money and Procurement................................................................................................................................. page 13 Employee Involvement............................................................................................................................................................ page 15 Treasury Management Policy.............................................................................................................................................. page 16 Public Benefit................................................................................................................................................................................... page 17 The Estate........................................................................................................................................................................................... page 19 Financial Review............................................................................................................................................................................ page 20 Statement of Directors’ Responsibilities in Respect of the Strategic Report, the Directors’ Report and the Financial Statements................................................................................................... page 26 Statement of Corporate Governance and Internal Control.................................................................................... page 28 Governors.................................................................................................................................................................................................... page 32 Corporate Governance...................................................................................................................................................................... page 33 Risk Management......................................................................................................................................................................... page 33 Brexit and Tuition Fee Cap..................................................................................................................................................... page 36 Excellence and Continuous Improvement................................................................................................................ page 35 Independent Auditor’s Report to the Board of Governors of the University of Winchester......... page 36 Report on the Audit of the Financial Statements................................................................................................. page 36 Statement of Principal Accounting Policies for the year ended 31 July 2017.................................. page 42 Administrative Information............................................................................................................................................................. page 63
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University of Winchester Financial Statements 2016/17
VICE-CHANCELLOR’S FOREWORD It has been another very successful year at the University of Winchester and you will discover over the coming pages that the financial statements reflect a year of excellent financial performance. We have grown in undergraduate student recruitment, enhanced our academic partnerships in the UK and across the globe and continue to invest in our students’ experience, academic endeavours and capital infrastructure. The Higher Education (HE) sector is operating in a climate of political uncertainty, with a UK population decline in 18-20 year olds, uncertainty of how the UK will exit the European Union and uncertainty over longer term funding of the sector. Despite this financial environment which remains extremely challenging, the University of Winchester is in a strong, financially sustainable position. 2016/17 results show another healthy surplus before tax of £5m which represents 7.0% of income. Our balance sheet also continues to grow in strength, reporting a net worth of £136m as at 31st July 2017. The University was awarded Silver in the national Teaching Excellence Framework (TEF) for consistently exceeding rigorous national quality requirements for UK higher education. This result reflects the high quality of our teaching and the tireless commitment and hard work of all our staff to teaching excellence. I am delighted that the University of Winchester has been shortlisted for University of the Year in the prestigious Times Higher Education (THE) Awards 2017. It is a huge achievement for Winchester to make the shortlist for the University of the Year award and testament to the excellent work of our staff and students in making Winchester an outstanding institution. We have a bold and distinctive vision to provide world-leading, values-driven higher education: this means everything we do is built upon our deep commitment to our values and aims to make a real difference in the world. The University has actively invested in widening access to higher education, including £2.5m in the form of non-repayable bursaries, scholarships and prizes to support our students. Through our dedication and commitment to widening participation, I am delighted to say that the University received the Widening Participation and Outreach Initiative of the Year Award. This prestigious THE Award is granted for our pioneering work encouraging and supporting young carers to access and succeed in higher education. The future for the University of Winchester is also very exciting. I am pleased to present this years’ Financial Statements with our new corporate identity branding. We are about to embark upon the construction of a new £48m learning and teaching facility which will be complemented by the development of new programmes to add to our diverse and appealing academic portfolio. We will also continue to expand our apprenticeship degree offering, forming new and lasting partnerships with both large corporate businesses and small to medium sized enterprises (SME). Our success in 2016/17 would not have been possible without the hard work and commitment of all our partners and colleagues. And I would like to thank all our staff, students, alumni and partners who, in the past year, have helped us build on our success and to plan for the future. I am confident that, with their continued support, we can achieve great things in the year ahead.
Professor Joy Carter Vice-Chancellor
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University of Winchester Financial Statements 2016/17
OUR MISSION AND VALUES The University of Winchester is a successful institution which is world-leading in values-driven higher education. Our values underpin all that we do – our teaching and learning, our research, and our flourishing partnerships which are increasingly global in reach. The University has a Christian Foundation and is an inclusive institution that offers excellent programmes of study sustained by teaching and research. Our mission is ‘to educate, to advance knowledge and to serve the common good.’ We are a community committed to making a difference. Through relentless commitment to our values, excellence in liberal education and research impact, we challenge convention with compassion, invigorate and shake up the world around us, lead and bring about change. Our students are empowered through the rigorous education we offer in a supportive and creative environment. They grow as whole, confident and successful individuals committed to lives of meaning and purpose, determined to challenge the status quo. Our world-leading research and strategic partnerships focus on making a better, more secure and sustainable world. We are a university community where people are valued as individuals, where the wellbeing of students and staff is paramount and our pastoral care is exceptional. We are proud to be a special kind of university, in everything we do endeavouring to help individuals and communities flourish. By putting our values first we are helping transform society for the common good.
OUR VALUES The University is passionate about its values and what we believe in. We are a community committed to making a difference and passionate about seeing individuals and communities flourish. The plans and actions of the University of Winchester are founded in these ideals together with our core values. We believe academic freedom leads to big ideas which in turn lead to social justice, equality and creativity for a better world. We value freedom, truth, human rights and collective effort for the common good. Our values of Compassion, Individuals Matter and Spirituality shape how we do this and why:
Compassion Conscious of the kinship that exists between all life, we seek to nurture compassion for people, animals and the planet. We seek to embody social justice. Our students will be prepared to challenge the status quo and stand up for what they believe to be true.
Individuals Matter The wellbeing of individuals is important as are their opinions and views. We are committed to diversity; ensuring a welcoming and inclusive experience; striving to ensure equality for all, both in our community and beyond.
Spirituality The University celebrates its Christian foundation and welcomes people of all faiths and none. Together, we aim to explore the mystery of life and grow in wisdom and love. Permeability, agility, and imagination are central to our thinking; we endeavour to act as a crucible for the generation and the exchange of knowledge. Intellectual freedom and its appropriate expression are at the heart of our business.
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University of Winchester Financial Statements 2016/17
OUR STRATEGIC PLAN In light of the ever changing funding and policy landscape and in the aftermath of Brexit it was agreed that an annual review of our Strategic Plan would be appropriate. The strategic plan is formed around the three Strategic Priorities of Educate, Advance Knowledge and Sustain:
STRATEGIC PRIORITY 1: EDUCATE The University strives to provide world-leading values-driven higher education. The student experience at Winchester is underpinned by an unremitting focus on the place of values in higher education. Winchester students are taught by research-active and professionally engaged staff who seek to engage students in shaping their own learning as a transformational endeavour. Higher education should be a force for opportunity and social mobility, not for the entrenchment of privilege. It is implicit in our Mission that we should seek to ensure that all who can benefit from a Winchester education will have the opportunity to do so, regardless of their background, and that we should do this with particular regard for marginalised groups. We also view enhanced graduate employability as a vital outcome from all our programmes. The effective expression and integration of international issues is now a defining feature of the work of a 21st century university. The expected skill-set of a graduate increasingly requires international perspectives and a strong and clear sense of our collective responsibilities. Here at the University of Winchester we strive to embed internationalism in all our students through our recruitment, our curriculum, our partnerships and our exchange programmes. The University also takes spirituality seriously: as a personal experience; as a wellspring for social transformation; as a subject for academic study; and as a focus for debate within the University and wider society. Our portfolio of programmes is reviewed regularly and vigorously, developing new offerings which meet demand from students and employers and which reflect and build upon our institutional values.
STRATEGIC PRIORITY 2: ADVANCE KNOWLEDGE A university is about becoming, not being. The nature of the University enterprise is inescapably rooted in research and knowledge exchange. We will build an ever stronger research environment and seek further recognition for the excellence and creativity of our research in strategically important areas. Indeed the University’s principal assets are the intellectual and professional skills of its academy. Research and professional practice underpin the quality of teaching and the student experience here at Winchester. We value all scholarship which impacts positively on lives beyond the university. The creation and exchange of knowledge is essential to a strong economy and society. The University plays a vital role in contributing to a global knowledge-based society.
STRATEGIC PRIORITY 3: SUSTAIN Institutional sustainability and global sustainability are at the heart of our values. Our University’s success is founded on the commitment, professionalism, enthusiasm and talents of the individuals who are part of the University community. The University is a leader in society’s efforts to achieve sustainability, work which is vital to enhance and protect the quality of life for future generations. We have grown significantly in recent years and aspire to continue that growth in both domestic and international markets in the future. Continuous improvement and efficient practices underpin our organisational structures and processes. The University has an enduring role in delivering high quality values-driven teacher education and in securing a positive impact on young lives. It offers its intellectual and physical resources to serve the common good and to bring mutual benefits for communities and for the University. In order to support the achievement of our strategic priorities the University is continually seeking opportunities to invest in its estate. The University has prepared an Estates Master Plan, a working document which outlines our future planned investments.
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University of Winchester Financial Statements 2016/17
PUBLIC BENEFIT The annual report and financial statements provide extensive information on the public benefit of the University’s activities as described in the following sections, which demonstrate how the University has met its charitable objectives during the year. However, of particular relevance to public benefit is our commitment to widening participation, engagement with the community and wider public and our contributions to environmental sustainability and a healthy society. The University will aim to provide outstanding educational opportunities for undergraduates, postgraduates and research students, producing critically and socially engaged graduates of the highest calibre who enrich society through their role as global citizens. The University will further develop as a values driven learning community facilitated by developments in learning technology. Winchester will be a leading university of choice for an increasingly diverse student population, maximising the learning gain for all students regardless of background or level of study, and equipping students to transition successfully to the next stage of their lives. The University of Winchester is regulated by HEFCE from whom we receive some block grant to assist with funding our teaching and research. Winchester enables more than 7,500 students to enjoy the benefits of higher education and agrees policies to encourage access to the University on an annual basis with the Office for Fair Access (OFFA). These policies will include details of specific financial support schemes to our students dependent on their needs and initiatives to encourage more applicants from students from disadvantaged backgrounds. The University already makes a significant contribution to the widening participation agenda. For example in the last year we supported our students with £2.5m in the form of non-repayable bursaries, scholarships and prizes. Each of our four academic faculties is not only directly engaged with teaching but also research and other activities that directly benefit the public and society more generally. Some examples of the value we are adding include:
OUR FACULTY OF ARTS In the National Student Survey (NSS) for 2017 the undergraduate programmes in American Studies, Creative Writing, Drama, English Literature, Media Communication, and Performing Arts all gained scores for Overall Satisfaction of 90% or higher, a very positive reflection on the quality of provision for our students and a measure of the value generated. The Department of Performing Arts provides undergraduate and postgraduate programmes which draw upon the creativity of staff and students in the dramatic arts. Students study across a range of performance disciplines, ranging from Drama to Musical Theatre and in all of them, creativity, self-expression and personal fulfilment are key goals. There is a thriving Master’s programme in Cultural Arts Management. Research and Knowledge Exchange is central to the Department and often involves staff in innovative performative or curative work, partnering with local festivals, theatre groups and other community interest groups. Our research also provides considerable public benefit such as the creation of a not for profit company, Tract and Touch. The company has received funding (including from Arts Council England) to create “The Narcissus Box,” a specially designed artwork for young people with profound and multiple learning disabilities. Our English, Creative Writing and American Studies programmes encourage students to explore their critical and creative capabilities. There are thriving Master’s programmes in Creative Writing, and a new programme in English Literature was developed to give students an additional graduate outcome. There is a strong connection to the community with examples such as hosting the annual Winchester Writer’s Festival and the Department’s support for the Winchester Poetry Festival. Innovative projects such as Professor Andrew Melrose’s Art Council England funded project “The Boat”, which conveys the stories of refugee children, attest to a concern with ethics, community and contemporary culture which the University shares. Other examples in 2016/17 included American Studies students participation in the “Civil Rights Pilgrimage” (collaborating with an American partner university), exploring the legacies of segregation and racism in the American South. Environmental issues are prominent and a compilation of music and poetry from students exploring Climate Change was produced by our Programme Leader of Creative Writing. This piece of work is a finalist in the 2017 “Green Gown” awards, which commend excellence in sustainability education. The School of Media and Film provides programmes in which students can explore the practical and
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University of Winchester Financial Statements 2016/17
theoretical basis of film, television, sound and other new media. Staff are active as practitioners and researchers. Many practical student film and TV projects involved work in the community and this year the School partnered with the Winchester Short Film Festival, including planning, programming and delivery of this local documentary and feature event. We continue to look for new programmes of delivery to complement those already established and 2017 saw the successful validation of a new BA degree in Music and Sound Production along with the construction of a new recording studio suite to facilitate this new course. We anticipate this will be the foundation to establish a world class music technology Department over the next few years. The Faculty also encourage students to broaden their global awareness through international exchanges and field trips. Students from the Faculty of Arts took part in exchanges with universities in the USA, Japan and Europe. Other programmes organised short term trips, including American Studies, Film Production and Choreography and Dance. Our staff also engage internationally, for example, our Head of Performing Arts collaborated with the National Conservatoire for the Performing Arts of the Seychelles Islands to create a project to bring drama education to Seychelles schoolchildren in the year.
OUR FACULTY OF BUSINESS, LAW AND SPORT As a signatory to the United Nations (UN) Principles for Responsible Management Education (PRME), since its inception in 2007, the Business School‘s vision of creating a more equitable and sustainable economy and society is closely aligned with the values and mission of the University. The School has been awarded PRME Champion status (one of only 3 Business Schools in the UK and 30 globally) in recognition of its contribution to thought and action leadership on responsible management education in the context of the UN’s sustainable development agenda. As a member of the PRME Champions group, the Business School is working collaboratively with the broader international PRME community to contribute to UN goals and issues, particularly helping to realise the UN Sustainable Development Goals. Our reputation, nationally and internationally, for leading-edge research and teaching develops responsible managers and leaders who make a positive impact on climate change. The Hoare Research Centre for Responsible Management is playing an important part in achieving this vision by influencing curriculum design and portfolio development, by engagement in Research and Knowledge Exchange activity and through collaboration with local, national and international partners. The Business School launched a Lean Ambassadors Network that aims to embed a creative culture of continuous improvement, based on lean principles. The Improvement Community of Practice, led by colleagues at the Business School, launched its 2016/17 programme which focussed on leading and sustaining improvement. A series of workshops were crafted around the needs of the community of practice members who were drawn from the public sector, Higher Education, consultancies, manufacturing, defence and the third sector. The 2016 theme of ‘the human dynamics of change’ culminated in a celebration event hosted by Winchester Business School. The Business School also supported the knowledge transfer of lean and improvement in Higher Education through the global Lean Higher Education hub. The steering group have guided the network to the development of 3 chapters – Europe, Australasia and the Americas. The Faculty recognises the changing needs of students and employers and across the faculty we have continued to develop new academic programmes at undergraduate and postgraduate levels. This academic year has seen the successful delivery of further degree apprenticeship programmes in Data Analytics and Business Analytics. In line with the internationalisation agenda, a Study Abroad module, in collaboration with Erasmus Partners, has also been validated for the Event Management programme. All our programmes offer international exchange opportunities for staff and students which further enhances the internationalisation of the curriculum and research environment. The University’s vision for embedding climate change education across the university by 2021 is ambitious and exciting. Inspiring our students and staff to engage together to learn about and explore the extensive range of issues generated by climate change is taking shape. Guided by the work of the Centre for Responsible Management Education, and led by colleagues in the Business School, a cross university Centre for Climate Change Education and Information is currently being developed. Further community engagement has come from our Social Enterprise undergraduate programme engaging students with volunteering and social outreach to support local communities. As part of the Business Schools broader exercise in network-building with social enterprises, relationships with charities that have social enterprise arms have been established. Students are invited to act as social enterprise consultants, using their new knowledge and skills to solve problems for these enterprises.
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University of Winchester Financial Statements 2016/17
Other Business School community engagements include the Hoare Centre for Responsible Management which delivered its 2016 programme of talks which focused on responsible management, climate change and sustainability. The Business School also continues to support the development of a “Woman’s Entrepreneurship Network” hosted at the University. This network includes members from 80 small companies and is being extended to a number of additional hubs in North/East Hampshire. The Business School is working with the Trussell Trust in several geographic sites including Portsmouth, North West Bristol, East Kent and the London Borough of Richmond, more recently with a new international collaborative study entitled: Ending Hunger – Empowering Innovative Local Solutions. The University of Winchester Business School is the only UK school to be involved in this values-driven international initiative. Following publication of their peer-reviewed article ‘The not-so-secret life of five-year-olds’, the Law Department secured grant funding from the British and Irish Law, Education and Technology Association to run the inaugural BILETA seminar in London. Our Sport and Exercise Research Centre (SERC) continues to grow, engaging with a range of collaborative research partners including Hobbs Rehabilitation, Hampshire Hospitals Foundation Trust, Andrew Simpson Sailing Foundation, Hampshire and Isle of Wight sports partnership, and the English Institute of Sport. There has also been significant external consultancy activity through the Sport and Exercise Consultancy Unit (SECU) with clients including: English Institute of Sport, World Cycling Governing Body (UCI), British Triathlon, Saracens Rugby Club. The Department began pilot work on an exercise referral and rehabilitation programme. Working in collaboration with the Hampshire Hospital Foundation Trust and local GP surgeries, the stages of the research will include a rehabilitation programme for stroke patients and overweight patients.
OUR FACULTY OF EDUCATION, HEALTH AND SOCIAL CARE The Department for Teacher Development is a leading provider of high quality initial teacher education with an ‘outstanding’ Ofsted rating. Our campus-based programmes for primary education are complemented by collaborative partnerships with regional schools to provide a successful ‘School Direct’ route into the teaching profession. The Department continues to provide CPD and Knowledge Exchange opportunities across the South Central area for physical education and mathematics, and is the regional provider of the PGCert SENCO accreditation. The Department also engages with the community by leading the Quality Through Leadership (QTL) consortium, working closely with Local Authorities and Teaching School Alliances to provide leadership development at Middle, Senior and Headship levels. The close collaborations with the Local Authority means that teacher education at Winchester is central to local teacher supply and development, and this will be consolidated further in the collaborative development of degree apprenticeships for classroom assistants over the next year. The Department for Inter-professional Studies offers a combination of academic study and vocational training in community, health and social care settings. Social Work training is offered at undergraduate and postgraduate level, and Winchester is the regional provider of the intensive ‘Step Up’ programme delivered in partnership with the Local Authority. In the coming year, the university and Local Authority will collaborate to validate degree apprenticeships in social care and social work. Future programme development is being focused around community development, disability studies and research and training about human well-being and flourishing. The Department for Education Studies and Liberal Arts maintains a national reputation for excellence in academic studies in education. Its staff featured highly in the Education submission to REF 2014, with 60% of outputs judged to be either world-leading or internationally excellent and 87% overall being of international quality or above. BA (Hons) Education Studies received a 100% overall satisfaction rating in the NSS 2017 and continues to be an excellent preparation for PGCEs and other postgraduate training in people-focussed professions. Winchester’s Modern Liberal Arts programmes were pioneers in the recent expansion of liberal arts education in UK universities, and the Institute for Value Studies is a highly distinctive aspect of the Winchester’s provision, which encapsulates our strategic aims.
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University of Winchester Financial Statements 2016/17
OUR FACULTY OF HUMANITIES AND SOCIAL SCIENCES The Faculty of Humanities and Social Sciences has developed new courses in Anthropology and in Occupational Psychology. The Faculty led our submission to the Green Impact Award scheme, succeeding in a ‘Gold’ award for our work in sustainability. Our research and knowledge exchange continues to thrive with academic staff members presenting research in the United States of America, Germany, Italy, Spain, Hong King, China, the Czech Republic, and Portugal amongst other locations. This international theme is mirrored in our student delivery, offering our students international field trips. Colleagues in Archaeology, Religious Studies, and History have worked closely with the local community, including the Winchester Conservation Trust, to understand more about the West Hill Cemetery, based on the edge of the University campus. This is leading to the creation of a PhD studentship dedicated to the understanding of this Cemetery. Two substantial conferences have been hosted in the Faculty in the past year; Medieval History and Death Studies. Further community engagement in July 2017 included a conference held in collaboration with the Hampshire Cultural Trust, entitled Winchester: An Early Medieval City. Two centres with very different purposes, Animal Welfare and English Identity and Politics, are located in the Faculty. The Centre for Animal Welfare held a lively, public symposium on Religion and Animal Welfare. The Centre for English Identity and Politics also held several public events. The Faculty has recently established an Institute of Policing, through which it is planning to engage closely with the College of Policing and neighbouring constabularies in the provision of a Policing Degree aligned with the Degree Apprenticeship requirements. The Faculty also plans to work closely with the Anglican Diocese of Winchester in the development of a new Masters in Mission. Partnership with students, with the local community, with scholars across the disciplines in which we work, and with stakeholders across different sectors underpins all that we do as a University.
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University of Winchester Financial Statements 2016/17
STRATEGIC REPORT INCORPORATING THE OPERATIONAL AND FINANCIAL REVIEW CORPORATE AND SOCIAL RESPONSIBILITY The value of social justice is at the core of the University’s work and we seek to extend and employ our resources in ways which address inequalities and encourage the development of potential wherever it is found. There are many examples of our work and recognition in this area, two of which are: • The University is one of only five higher education institutions to have been awarded the Gender Equality Charter Mark bronze award across each of its departments. This award is in recognition of its work to date in addressing obstacles to women’s career progression. • The University of Winchester is one of a small number of universities in the UK who are committed to paying all employees on a nationally-accepted salary scale. The University was accredited as a Living Wage Employer in 2015. From climate change and resource scarcity to youth unemployment and gender equality, the world is facing some unprecedented challenges. The University of Winchester has a responsibility to be part of the solution, and the University intends to play its part. Two examples of the steps the University are taking include Higher Education Achievement Report (HEAR) and Building Research Establishment Environmental Assessment Method (BREEAM): • Our students are offered the HEAR which is designed to showcase graduates’ employability by making it easier for recruiters to see the full range of experiences and skills they attained while studying. The HEAR allows all undergraduate and taught postgraduate students to record University-approved activities and achievements, including volunteering roles. • Both our new and some existing buildings have been developed to meet BREEAM ‘excellent’ standards for environmental sustainability. And our Estates Team regularly lead various student and staff sustainability initiatives on campus to reduce the institution’s impact on the environment, including an inaugural campus blackout event held in February 2016, which achieved a 16 per cent reduction in energy use overall in those buildings taking part.
EQUALITY AND DIVERSITY The University is committed to equality and supporting the diversity of our staff, students and local communities. It is core to the University’s values and assists the University to grow. It is important to the local, and wider community that, as a public service provider, we continue to reflect the environment we serve. As an employer and as a service provider, the University continually monitors and updates its policies, processes and public sector duties to ensure they are compliant with the protections and obligations found in the Equality Act 2010 thereby ensuring that we have the structures in place to allow us to pursue our equality, diversity and inclusion agenda. The University of Winchester is a Stonewall Diversity Champion and holds an Athena Swan institutional bronze award. We are accredited at stage one of the Disability Confident Scheme and are committed to achieving stage three by 2020. As a values-led institution, we delight in diversity and strive continually to ensure a safe and supportive working environment for all staff and students. We are committed to ensuring that the learning environment of the University reflects a diverse student and staff body and also to reflect a wider learning perspective, inclusive of varied gender, cultural, racial, ability and sexual orientation experiences and representations.
HEALTH AND SAFETY The University recognises the importance of health and safety in all its undertakings. It relies upon the initiative, teamwork, and active participation of management and workforce to maintain safe working practices and procedures in order to fulfil its legal obligations under the Health and Safety at Work Act 1974, the Management of Health and Safety at Work Regulations 1999 and all other relevant health and safety legislation in force at any time. In addition to fulfilling its legal obligations, the aim of the University is to achieve best health and
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University of Winchester Financial Statements 2016/17
safety practice in all that it does. The University is a member of the Universities Safety and Health Association (USHA). The Association in partnership with the Universities and Colleges Employers Association (UCEA) have written the guidance document ‘Leadership and Management of Health and Safety in Higher Education Institutions’ to help HEIs understand their legal duties and demonstrate their visible commitment to the success of their health and safety management system. The University continually reviews health and safety provision to ensure the safety of all users of its facilities and introduces new systems and replaces or upgrades its existing systems. The University’s Health and Safety Policy has been developed to ensure the health and safety of all employees, students, visitors, other employers and their employees and all others who may be affected by activities on its premises. However, a policy can achieve nothing on its own – it’s what people do in their everyday working life that counts. To help achieve that, the Policy establishes a range of necessary procedures and practices. The safety and security of our students is paramount and our 24 hour Site Steward Team provide security emergency call out and pastoral care amongst other duties. Our Police liaison officer is also on hand to provide advice and support to students and staff.
MODERN SLAVERY Our Modern Slavery Statement is designed to satisfy the requirements of Part 6 Section 54 of the Modern Slavery Act (2015). The University’s Financial Regulations, Procurement Policy and Procedures and Ethical Investment Policy state our commitments to the highest standards of ethical conduct in all our activities, along with making continuous improvements in this area. The University does not engage in, or condone, the practices of human trafficking, slavery or forced labour. As a values driven institution, our values underpin all that we do. We promote a community where all individuals matter, where wellbeing is paramount and pastoral care is of the highest quality, where we are driven by our pursuit of social justice and the common good, and where people, the planet, and all living things are held in the highest regard. We are committed to improving our business practices to combat modern slavery and human trafficking and to ensure that we are not complicit in any human rights violations. We are committed to zero tolerance of slavery and human trafficking or child labour practices.
Our supply chains The University’s supply chains predominantly fall within the following categories: • Estates and facilities management (works, services and goods) • ICT equipment and services • Professional services • Teaching materials The University is a member of the Southern Universities Purchasing Consortium (SUPC) which has also published its own Modern Slavery Statement. We channel in excess of 30% of the value of our addressable spend through SUPC and other agreements arranged by higher education and public sector purchasing consortia or frameworks. The particular business and supply chains which may pose particular risks in terms of slavery are in IT and AV equipment, construction, and uniform/clothing supplies. Our campus services are almost entirely in-sourced and the University has made a commitment to honouring the Living Wage for all our employees, full time or fractional. The University is committed to making sure that there is no modern slavery or human trafficking in our supply chain or in any part of the University’s business. We continue to develop our policies and procedures to reflect our commitment to acting sustainably, ethically and with integrity in all our business relationships. We continue to develop, implement and enforce effective procurement systems, processes and controls to make sure child labour, slavery and human trafficking is not taking place within our supply chains. The University mitigates the risk of modern slavery occurring in its workforce by ensuring that directly employed staff are recruited by following robust HR recruitment policies. There is a whistleblowing policy in place for members of staff to raise any concerns about wrongdoing by the University. Staff employed on a temporary staff basis via agencies are only recruited through established sources who can provide assurance
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University of Winchester Financial Statements 2016/17
that they comply fully with the requirements of legislation relating to the rights and welfare of their candidates and employees. Our Ethical Investment policy has been developed to reflect our commitment to ensuring that our investments are not complicit in any human rights violations, in so far as possible. To this extent the University does not knowingly invest directly or indirectly in organisations that breach human or animal rights or that are in breach of the Modern Slavery Act 2015. Our Modern Slavery Statement will be reviewed on an annual basis.
BUSINESS CONTINUITY The Governance documents ‘Crisis, Incident and Emergency Plans’ have been drafted to outline the University’s business continuity process. All members of the incident management team have been trained and regular familiarisation with the plans is conducted through running incident management exercises involving all tiers of staff. Such exercises are followed up with a critical review to inform improvements to the plans. The development of an appropriate response and planning framework, routine governance and embedding of business continuity, (collectively known as the business continuity management system (BCMS)), is essential to the successful development of a resilience capability for the University of Winchester. Whilst planning is important, the development of individual skills, knowledge, attitudes and behaviours is vital in providing the level of resilience assurance the University desires.
SUSTAINABLE DEVELOPMENT The University is deeply committed to reducing our environmental impacts and has achieved a significant amount since the inception of our Environmental Sustainability. To further embed this commitment, the University has committed that all new building work must meet BREEAM Excellence Requirements. Sustainability metrics are monitored annually through the University’s key performance indicator reporting. The Environment Strategy and Carbon Management Strategy are reported annually to the Board of Governors. Sustainability also forms part of our Strategic Plan, as the University strives to remain an exemplar of environmental sustainability. As well as taking steps as an organisation to reduce our impact on the environment, we aim to develop our students’ understanding of global issues, including climate change. At Winchester 100% of grid bought electricity is sourced from renewable energy, and 2% of electricity used at Winchester is generated on site. The University has targeted reductions for carbon emissions, waste energy and water consumption, leading to a reduction in the carbon emission intensity of the estate by 45% since 2006/7, exceeding the 2015 target of 30%. This reduction has resulted in the University being the second lowest producer of carbon emissions per person in 2014/15. There has also been a 41% reduction in water usage since 2006/7. The University is proud of its zero waste to landfill policy, and a 70% recycling rate. The University launched an innovative new 25p tax on disposable coffee cups, in addition to issuing free reusable coffee cups to staff and students, which has increased coffee sales in reusable cups from 4% to 31% and reduced the amount of recyclable waste. The University continues its innovative carbon charging for staff and student parking permits based on income levels and emissions of the vehicle. Our Green Travel Plan has set targets for a number of green initiatives to improve green modes of transport including electric vehicle charging points which have been introduced for electric vehicles and smart cars. Students and staff are also being encouraged to use public transport, car share or cycle to and from work. Various salary deduction schemes for staff have been introduced to support all of these initiatives. In 2015/16 and 2016/17 a campaign targeted on promoting the Winchester Park and Ride sites has resulted in a 181% increase in the number of Park and Ride cards sold and an increase of 131% in the number of staff and students using the service, thus reducing inner city vehicle emissions and congestion.
COMMUNITY ENGAGEMENT The University of Winchester has been engaging with the local community and serving the public good in a variety of ways since its foundation in 1840. For us, community engagement is to be found in our mission and at the core of our values and in all that we do. We are an integral part of the local community and it is our aim to make a positive contribution to the local, regional, national and international community in a variety of imaginative and sometimes unexpected ways.
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University of Winchester Financial Statements 2016/17
These can range from volunteering projects working in local and international communities to participation by members of staff in local decision making bodies. We engage with a wide range of people and organisations, including schools, faith groups, government, special interest groups and charities. Our Community Engagement Strategy draws together our community engagement activities into one overarching strategy so as to ensure that our community engagement is planned, coordinated, efficient and meaningful. It also serves as a mechanism for monitoring our achievements, identifying best practice and driving continuous improvement. The strategy has two key priorities; to embed community engagement activities in teaching, learning, research and knowledge exchange and involve staff in all areas of the University and to strengthen our partnership with the Student Union in this area to realise a step change in student awareness and participation in community engagement. One example of our community engagement is our support for the introduction of a Hampshire Community Bank through a direct investment. The goal of the bank is to help create a strong and sustainable local economy in Hampshire, serving the needs of the local community. The bank will focus on local economic growth and have a remit to promote economic, social and environmental wellbeing in Hampshire. The bank will: • Simplify access to finance for business investment • Increase the availability of low-cost, long-term finance for sustainability projects • Be proactive in its support for local enterprise • Retain its profits for reinvestment in the local economy.
VALUE FOR MONEY AND PROCUREMENT The HEFCE Audit Code of Practice requires the Finance and Audit Committee to state formally in its annual report to the Board of Governors whether or not it is satisfied with the arrangements in place to promote economy, efficiency and effectiveness. At Winchester, the responsibility for Value for Money (VFM) is delegated to management and the Board’s responsibility is discharged through proper scrutiny of the University’s affairs and through exercising appropriate oversight of strategies and policies. The Finance and Audit Committee is the main channel for reporting on arrangements for securing VFM to the Board. Whilst it is no longer a mandatory requirement by HEFCE, the University of Winchester continues to report on its VFM achieved in the year. The University signed up to HE Shared Legal, since its commissioning on the 1st May 2012. In the last year the University has saved £35,215 in legal fees by using this service, against a nominal external law firm charge of £250/hour. During this period, the University has consulted the service in relation to 10 individual enquiries, a total of over 141 hours of legal advice. The University continues to benefit from membership of and active engagement in a number of cross sector organisations including: • Academic Registrars Council (ARC) • BUFDG’s Procurement Professionals Group (PPG) • Gov.UK – via Crown Commercial Services (CCS) • HE Shared Legal – legal services provision • Southern Internal Audit Partnership with Hampshire County Council • Universities and Colleges Admissions Service (UCAS) • Higher Education Liaison Officers Association (HELOA) • UK Council for International Student Affairs (UKCISA) • Universities Human Resources (UHR) • Universities UK and Guild HE • Advanced Procurement for Universities and Colleges based in Scotland (APUC) • British Universities Finance Directors Group (BUFDG)
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University of Winchester Financial Statements 2016/17
• Eduserv – for the purchase of software licences • Higher Education Access Tracker (HEAT). • iESE – construction framework • JISC – for broadband purchasing. • Local Government Procurement Network (LGPN) • London Universities Purchasing Consortium (LUPC) • NHS – TDS Framework • SUCCAG – (Southern Universities Construction Consultancy Affinity Group) • The Association of Managers in Higher Education Colleges (AMHEC) • The Energy Consortium (TEC) • The Society of College, National and University Libraries (SCONUL) • The Southern Universities Purchasing Consortium (SUPC) • The Universities and Colleges Employers Association (UCEA) • The University Caterers Organisation (TUCO) • University and Colleges Information Systems Association (UCISA) The Higher Education sector is served by regional purchasing consortia and Winchester is an associate member of SUPC. Figures published by SUPC based on 2016/17 expenditure demonstrates that the University has succeeded in saving £194,394 through channelling the University’s non-pay spend through regional and national collaborative agreements where possible. This is based on a total collaborative spend of £2,543,464 to SUPC affiliated suppliers, the majority of which is associated with computer supplies and services. By using the SUPC for larger value contracts it has avoided the cost of undertaking OJEU tenders on 6 agreements which exceed the EU threshold. The University continues to utilise a shared service arrangement for the provision of internal audit services, provided by Southern Internal Audit Partnership. This is a partnership arrangement setup by Hampshire County Council pooling expertise and enabling a flexible, responsive and resilient cost effective service to all participating partners. The University of Winchester was first recognised by the Fairtrade Foundation as a Fairtrade University in 2007. We are continually working to ensure we maintain and improve our Fairtrade activities and collaborate with the Winchester City Fairtrade Network. The University, which is a Hampshire Fare member, has been awarded a number of accolades for its sustainable procurement including: • Sustainable Restaurant Association Accreditation at three gold stars (the first University to achieve this award) • Good Egg award for using only free range eggs • Good Chicken award for using only free range chicken • Good Dairy award for using organic milk • Soil Association’s Food for Life award at Bronze, Silver and Gold level • The TUCO Innovation award 2016 for the Gourmet Burger Company, the University’s new organic burger restaurant which uses locally produced beef and buffalo burgers. The Catering Department purchases through the TUCO (The Universities Catering Organisation) and continues to engage local suppliers ensuring, where possible, students, staff and visitors receive ethical, local produce. They encourage those suppliers to join framework agreements as tenders are issued helping maintain supply and supporting the growth of independent business.
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University of Winchester Financial Statements 2016/17
EMPLOYEE INVOLVEMENT Staff Volunteering The University provides a range of expertise and support to local communities through its staff volunteering and outreach scheme, which offers staff an opportunity to participate in voluntary work. Students are also active in raising funds for charity and in community action projects. The University provides facilities open to the public, including lectures, concerts, art gallery, sports facilities and other visitor attractions. This is only part of the local impact of the University. There are a number of ways that this takes place: • Staff can choose to use the University’s Employer Supported Volunteering scheme (ESV) to engage with volunteering/community activities during their normal working hours. • Other staff might wish to volunteer for activities out of normal working hours, either independently of the university or via engaging with on-campus community activities. • Departments can undertake a Team Volunteering Day during normal working hours During 2016/17, 158 staff engaged with practical volunteering and community activities:
FTE
% of Total Staff
Staff activities - ESV scheme / Team Days (i.e. during normal working hours)
66
8.5%
Staff activities – non-ESV (i.e. during non-working hours)
92
11.9%
158
20.5%
TOTAL
A total of 25 organisations were supported by volunteering and community engagement, including: Art Talk
NHS Dementia Befriending
Christian Aid
Royal Victoria Country Park
CIWF
School PTA committees
Emmaus Hampshire
Scouting UK
Girlguiding UK
The Rural Refugee Network
Hampshire and IOW Wildlife Trust
The Trussell Trust Christmas Box Appeal
HANTSAR
Trinity Winchester
Helping Hooves
Winchester Basics Bank
This year has seen an overall increase in staff volunteering and community engagement, with a diverse array of organisations benefitting from our staff volunteers’ actions. Qualities of compassion and radical hospitality, among others, have been borne by these actions. The quality of the University’s community engagement and staff volunteering was sighted in this years’ EFQM assessment. In future, the aim is to build upon the successful level of engagement from 2016/17, joining forces with the new JUMP initiative, it is hoped that more staff will be encouraged to volunteer and get involved with community activities. Opportunities for new contacts and ideas will be explored, including the sharing of good practice with partner universities that offer similar staff volunteering schemes.
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University of Winchester Financial Statements 2016/17
Employee Wellbeing and Engagement Winchester is dependent on the quality of the workforce we recruit. This applies to all aspects of the University, high calibre academics are needed to deliver excellence in teaching, research and knowledge exchange activities, while professional services staff must be capable of meeting the myriad challenges that face any large organisation on a daily basis. High productivity and effectiveness have helped enable Winchester to deliver excellent outcomes through a period of change and uncertainty within the sector. Wellbeing of Winchester’s staff is of paramount importance to senior leaders and the University continues to place emphasis on helping staff to thrive and flourish through wellbeing and engagement. One of our core values is ‘individuals matter’ and we are committed to the wellbeing and development of our staff. We have a range of benefits, discounts, sources of support, development and wellbeing events available to our staff, to support them both within and outside of our University. As well as regular events, such as Tai Chi, Yoga, and a summer boot camp, the University organises a series of events aimed at improving our employee wellbeing, e.g. mindfulness, resilience and nutrition events. Our Staff Wellbeing Officer is working to raise the profile of wellbeing at the University, and has organised various wellbeing initiatives including taking part in the ‘Time to Change’ Employers Pledge Action Plan, a growing movement working towards the removal of the stigma surrounding mental health issues. The creation of the Staff Wellbeing Advisory Group has allowed colleagues from across the University to come together and discuss wellbeing initiatives including the drafting of a new Staff Wellbeing Policy. A new software platform, ‘Logbuy’, provides a facility to recognise the hard work of colleagues, for example by sending a thank you to someone for their efforts, and to acknowledge their birthdays or specific achievements at work. The advisory group has supported the development of a number of wellbeing groups for staff, including: • Disability and Equality Interest Group • Equality and Diversity Forum and Committee • LGBT Staff Support Network • Programme Leaders Forum • Race & Ethnic Diversity Group • Staff Development & Training Group • UNISON & UCU Discussions Forum • Working Parents and Careers Forum
TREASURY MANAGEMENT POLICY The University defines its treasury management activities in accordance with the Code of Practice for Treasury Management in the Public Services published by the Chartered Institute of Public Finance and Accountancy (CIPFA) as: “The management of the University’s investments and cash flows, its banking, money market and capital market transactions, effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.” All treasury management activities involve risk and potential reward. Our treasury strategy is determined in the context of expected future revenue and capital plans and the need to ensure that sufficient funds are available to meet commitments on a day to day basis. In forming our policy, a number of risks are considered including: • Credit risk • Liquidity risk • Interest Rate risk • Exchange Rate risk • Refinancing risk management • Legal and Regulatory risk management Our strategy and policy seek to mitigate these risks in-so-far as it is practical to do so.
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University of Winchester Financial Statements 2016/17
We adopt a prudent approach to investing surplus funds. In order to manage risk, cash deposits are spread amongst a range of counterparties. To protect capital sums invested, we make full use of reports compiled by leading Credit Rating Agencies and only institutions carrying at least short term credit ratings of P-1 (Moody’s) or equivalent are considered sufficiently secure. In order to ensure adequate liquidity, deposits are placed to mature over a range of maturity dates. Our counterparty policy is monitored closely to achieve an appropriate balance of counterparty risk and diversification. Due to its ambitious future capital expenditure plans, the University has restricted its short term deposits to no longer than one year. The University’s Finance and Audit Committee is responsible for the approval and amendment of the Treasury Management Policy and the Director of Finance and Planning reports annually on treasury management to the University’s Finance and Audit Committee; the report includes a proposed Treasury Management Strategy for the forthcoming year. The University has embraced sustainability - both for our University and for our planet. Given our focus on values-driven higher education, we have reflected on issues such as climate change, population growth and poverty and in March 2017 the University implemented an Ethical Investment Policy. The policy seeks a constructive engagement with the corporate world in order that responsible business practices and high standards of corporate behaviour are encouraged and supported. The University of Winchester is supportive of companies that seek to develop their businesses successfully and sustainably in the interests of shareholders. The use of positive ethical criteria in assessing companies is firmly incorporated within the ethical investment policy through a process of constructive engagement with business. Criteria have been identified across five broad areas as: • Responsible employment practices • Best corporate governance practice • Conscientiousness with regard to human and animal rights • Sustainable environmental practice • Sensitivity towards the communities in which business operates The University has fully divested its endowment funds held on long term deposit.
PUBLIC BENEFIT The principal objectives of the University, in accordance with Section 124 of the Education Reform Act 1988, are concerned with the provision of higher education and the conduct of research. Supporting this, the University also undertakes other activities including knowledge exchange, consultancy and the provision of accommodation, catering and conference services. As the University of Winchester is an exempt charity under the terms of the Charities Act 2011, the trustees of the charity are the members of the Board of Governors. HEFCE is the principal regulator of English higher education institutions covered within the act. In setting and reviewing the University’s strategy and activities, the Board of Governors takes into consideration the Charity Commission’s guidance on the reporting of public benefit and the supplementary public benefit guidance on the advancement of education. As an exempt charity the Governors of the University of Winchester have had regard to the guidance on public benefit published by the Charity Commission in exercising their powers and performing their duties. The University is also required to demonstrate that it has due regard to the Charity Commission’s guidance on public benefit and this is embedded in both our mission and values, as detailed in section 1. Our Mission and Values. The Board of Governors have due regard to any detrimental harm that may arise from the University’s activities and particularly to the impact of its campus developments on its immediate locality. We aim to minimise this impact through extensive community discussion and consultation in addition to working closely with Winchester City Council. The University does not currently incur private benefit from its activities undertaken in pursuance of its purposes. The Board of Governors recognise that students, both undergraduate and postgraduate, are the principal beneficiaries of the provision of higher education whilst the public at large are beneficiaries of the University’s Research and Knowledge Exchange and community engagement activities.
17
University of Winchester Financial Statements 2016/17
Artists impression of west downs learning and teaching building viewed from romsey road. 18
University of Winchester Financial Statements 2016/17
THE ESTATE Estates Strategy and Masterplan The University Estate occupies 12.2 hectares of land on two separate sites. The built estate comprises 69,000 square metres of building ranging from grade two listed Victorian buildings to award winning contemporary buildings constructed within the last fifteen years. For the University of Winchester to realise its strategic priorities and remain at the forefront of higher education, it continually develops its Estate Master Plan which outlines the campus in its overall context to determine an exciting and realistic vision of development for the University’s future sustainability. A master plan was created in 2013 to look at the campus in its overall context to determine an exciting and realistic vision for the University’s future. The master plan aimed to address: • Opportunities within the campus for potential cost effective redevelopment with enhanced buildings • Utilise the site footprint to its greatest advantage • Provide room for growth through the provision of buildings that are flexible and adaptable to meet the changing needs of the University • Integrate with current and future Estates Strategies The master-planning exercise revealed that in order for the University to develop an improved and more efficient estate, it must first provide additional learning and teaching space to decant faculties and occupiers currently residing in buildings identified for future redevelopment. The first phase of the Master Plan was given approval by the Board of Governors in March 2016. This £48m scheme will comprise 7,500 square metres of new innovative teaching and learning space which will facilitate new programme development in Digital Technology, Cyber and Computer Science. The development will include modern social learning spaces, a state of the art library, catering facilities and a 250 seat auditorium. The new building will be located on the southern edge of the West Downs campus and will be designed and built to a BREEAM ‘excellent’ standard. Planning consent has been granted for the scheme which is planned to commence on site in autumn 2017, subject to contract, with a planned completion date in 2019.
2016/17 Projects The most substantial projects undertaken within the 2016/17 financial year were the partial renovation of the original University building dating from 1860. Stonework repairs have been carried out along with replacement windows, mechanical and electrical infrastructure works. This is the first phase of this regenerative project with the remaining phases due for completion by 2020. The University continues to invest in growth and new programmes with the creation of two new sound recording studios designed to deliver music recording and music for film programmes to our students. This exciting new build is complete and ready for use in the 2017/18 academic year.
Biodiversity The University’s campuses feature a mosaic of different habitats, including grassland, hedgerows, ponds and woodland. These are havens for wildlife - from nesting swifts to mining bees, and from resident hedgehogs to the rare White helleborine orchid. A joint project with the Student Union was launched in summer 2012 with the aim of increasing biodiversity on campus. Hampshire Wildlife Trust (HWT) was commissioned to undertake a full biodiversity audit of all campuses and the Biodiversity Action Plan (BAP) has now been received and put into action. HWT have been working with the University and Student Union to refresh and implement a new BAP which was produced in January 2017.
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University of Winchester Financial Statements 2016/17
FINANCIAL REVIEW Financial Strategy Our Financial Strategy is to enable the University to reach its potential and its ambition. It has been drafted with reference to the five principles identified in HEFCEs’ good practice circular (2002/34 ‘Financial strategies in higher education institutions.’): 1. Long-term viability and matching resources with objectives 2. Maintaining productive capacity to meet current objectives 3. Financing development and investment 4. Evaluating strategic alternatives and managing risks 5. Integrating financial and other corporate strategies The Financial Strategy is approved by the Board of Governors and, in light of the context within which the University is operating, it identifies our strategic priorities as: Surplus
To maintain healthy operating surpluses which produce sufficient cash to support the University’s strategic objectives and provide institutional sustainability.
Operational efficiency
To continuously improve efficiency and effectiveness - managing the cost of operations and delivering value for money whilst continuing to maintain a sustainable recurrent investment in the academic, corporate and support operations. To this extent Finance and Planning are introducing contribution costing to the University.
Capital investment
To develop capital and other strategic investment projects to deliver future benefit to the University and, if required, to borrow for investment at a level that will not put the University at risk.
Treasury management
To assess and manage risk in all University growth and development activities and to operate sound treasury management.
Financial Environment Government funding through the Higher Education Funding Council for England (HEFCE) recurrent and capital grants has reduced significantly in place of the home undergraduate fee loan arrangements. The University currently receives less than 3% of its income from HEFCE for teaching. In 2015 the Government announced that universities reaching a certain threshold, governed by a new Teaching Excellence Framework (TEF), will be able to uplift the standard tuition fees by an inflationary factor. Whilst this has been possible for our 2017/18 tuition fee, which rises to £9,250 for home and EU undergraduates, the Government has subsequently withdrawn the original TEF proposal to permit a further inflationary rise in 2018/19. However, it is worth noting that after taking into account a range of scholarships, bursaries and tuition fee waivers available to many of our students, our average actual fee level is substantially lower. The reduction in direct HEFCE funding coupled with the freezing of the 2017/18 undergraduate tuition fee cap means that a very significant proportion of our income will not move in line with inflation. This inevitably creates financial pressure in an inflationary environment; against assumptions of pay awards on top of incremental drift arising from rising pension costs, additional apprenticeship levy, inflation on energy costs and goods and services. This makes it increasingly challenging to maintain the University’s financial surplus strategy at a time when the University is planning for growth. On 23 June 2016, UK citizens voted in support of leaving the EU. We now face a degree of political and economic uncertainty about the future as the UK Government think and work through how best to respond to this result and negotiate the best outcome for the UK. It is important that we remain focused on the long-term
20
University of Winchester Financial Statements 2016/17
ambitions and aspirations of the University. We are a people organisation and our values and purpose support us to deliver opportunities for our staff and students as global citizens in a global knowledge economy. We are engaging, and will continue to engage, in the long-term; delivering inclusive and inspirational teaching, learning and research to the diverse and talented communities we serve. We will support each other to achieve the best we can for our students and staff and we will engage with policy makers to shape our future as a successful institution which is world-leading in values-driven higher education. Over the past few years we have been working on a number of initiatives to strengthen the University’s financial base, to deal with existing and known pressures and to put the University into the best possible position to contend with the rapidly changing and uncertain financial environment. These have included: • Investment in a number of new core systems to improve our service delivery including a new learning management system (LMS), finance system, CRM system and data warehouse. • A review of our portfolio of programmes with a number of new programmes coming online and in development, including STEM subjects. • Continued investment and focus on degree apprenticeships with a number of new partnerships developing in the year. • Considerable planned investment in our estate to enable growth of the University as the sector starts to recover from the demographic downturn in 18-20 year old students from 2020/21 (based on the Office for National Statistics national projections for 18-20 year old UK citizens).
Financial Performance The financial statements reflect a year of excellent financial performance achieved by the University. We have also grown in undergraduate student recruitment, enhancement of our academic partnerships in the UK and across the globe and investment in our students’ experience, academic endeavours and capital infrastructure. Together with robust cost control, we have mitigated the future freezing of UK tuition fees, rising staff costs and in particular, pension charges. Financial performance during the year shows a 39% (£1.5m) improvement on 2015/16 and exceeded the 2016/17 budget and forecast. The surplus before tax of £5.2m represents 7.0% (2015/16: 5.3%) of income. A major factor underpinning this success has been the University’s ability to continue to achieve strong recruitment to its courses despite the aforementioned demographic downturn in 18-20 year old students. Total income for the year is £75.0m (2015/16 £70.4m), of which tuition fee income accounts for 77%, and this has increased by 6.9% to £57.4.m. Whilst the majority of this increase is due to student recruitment and retention, the improvement has also been supported by the undergraduate home and EU tuition fee increase from £8,500 to £9,000 in 2016/17, and inflationary increases in international and postgraduate tuition fees.
21
University of Winchester Financial Statements 2016/17
TUITION FEE INCOME (%)
TOTAL INCOME 2016/17 (£m) £0.2
3%
£13.5
4%
8%
£0.5 £3.4
£57.4
85%
Tuition fees and education contracts
Full‐time home and EU students
Funding body grants
Full‐time international students
Research grants and contracts Other income
Part‐time students
Endowment and investment income
Self‐financing courses
The income for the year also saw increases in all our non-tuition income streams, including: • Funding body grants
9.2%
Note 2
• Research grants and contracts
12.0%
Note 3
• Other income (income from residences, catering and conferencing and other services rendered)
4.3%
Note 4
• Endowment and investment income
7.9%
Note 5
Total expenditure was £69.8m (2015/16 £66.6m), an increase of 4.7%. Whilst the cost of staff and other operating expenditure have increased, the charge for depreciation and interest and other finance costs has decreased in the year. The interest and other finance costs decrease (10.9%) reflects a decrease in loan interest as our loan capital is further repaid in the year. The reduction in depreciation reflects a change to the lease term for Queens Road Student Village to 40 years amortisation. The impact of this correction has been to reduce fixed assets by £23.1m and finance lease liabilities by £24.7m as detailed in the Statement of Principal Accounting Policies on page 42.
EXPENDITURE 2016/17 (£m) £4.7
£1.7
£24.6
£38.8
Staff costs Other operating expenses Depreciation Interest and other finance costs
22
University of Winchester Financial Statements 2016/17
Other operating expenditure has increased by 2.0% during a time when inflation has been at 2.6% across the same period. However, the underlying expenditure showed a 35.5% increase in books and periodicals; a 27.8% increase in expenditure on bursaries, scholarships and prizes; and a 58.7% increase in expenditure on the estate repairs and maintenance. All of these increases have been focused at improving the student experience at Winchester and to widen our access to less privileged students. Total staff costs for the year have increased by 9.2% to £38.8m due to the following changes: • Salary costs increase of 5.9% to £30.6m • Social security costs have increased by 17.0% as 2016/17 has the full effect of the abolition in April 2016 of the ‘D’ rate of National Insurance. • The new apprenticeship levy and other pension costs increase of 27.2%, primarily due to an actuarial adjustment to the Local Government Pension Scheme. The latter two increases mentioned above are not within the control of the University. Staff costs as a percentage of income has increased to 51.8%, although this remains below the sector average. Staff numbers have increased by 33 (4.4%) to 775, with the increase predominantly within academic staff to support the delivery of education.
Estates investment The University continues with the implementation of phase one of the Estates Masterplan; the construction of a 7,500 metre square major development at West Downs as described in section 4 The Estate. A budget of £48m has been set by the Governors, with approximately a third of the project to be funded from internally generated cash reserves. £2.5m of project costs to date are included in ‘assets in the course of construction’ at 31st July 2017. Other significant capital projects during the year included: • A new music and sound recording studio to support our academic programme developments. • Completion of the work to the University’s main entrance, including health and safety works. • Works to the south side of our main campus building, incorporating window replacements, replacement heating and refurbishment of the internal and external areas. This work has improved the efficiency of this building and supports our initiative to further reduce our carbon emissions.
Cash position The University continues to be a strong generator of cash with £12.3m (2015/16 £11.6m) generated from operating activities in the year. After adjusting for investing and financing activities, cash and shortterm deposits increased by £5.7m in the year to £34.3m. In the last four years the University has increased its cash reserves by over £21.7m. We have been accumulating our cash reserves in preparation to support our major West Downs capital development. The University’s policy is to hold no less than 10% of turnover in available cash, permitting at least £15.0m of cash reserves to be used to part fund the West Downs Development, and also minimising our debt exposure and future loan servicing cost.
Cash (£m) 40 35
34.4 28.6
30 22.5
25
£m
20 15
16.8 12.4
10 5 0
23
University of Winchester Financial Statements 2016/17
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE STRATEGIC REPORT, THE DIRECTORS’ REPORT AND THE FINANCIAL STATEMENTS The Board of Governors (who are the Directors of the University company for the purposes of company law) are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with the Memorandum of Assurance and Accountability issued by HEFCE and applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the group and parent University financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The Memorandum of Assurance and Accountability further requires the financial statements to be prepared in accordance with the 2015 Statement of Recommended Practice – Accounting for Further and Higher Education and the requirements of HEFCE’s Accounts Direction to higher education institutions. Under company law the directors 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 group and parent University and of their income and expenditure, gains and losses and changes in reserves for that period. In preparing each of the group and parent University financial statements, the directors are required to: • Select suitable accounting policies and then apply them consistently; • Make judgements and estimates that are reasonable and prudent; • State whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; • Assess the group and parent University’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and • Use the going concern basis of accounting unless they either intend to liquidate the group or the parent University or to cease operations, or have no realistic alternative but to do so. The Board of Governors is responsible for keeping adequate accounting records that are sufficient to show and explain the parent University’s transactions and disclose with reasonable accuracy at any time the financial position of the parent University and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities. The Board of Governors are also responsible under the Memorandum of Assurance and Accountability for: • Ensuring that funds from HEFCE and other funding bodies are used only for the purposes for which they have been given and in accordance with the Memorandum of Assurance and Accountability and any other conditions which HEFCE may from time to time prescribe; • Ensuring that there are appropriate financial and management controls in place to safeguard public funds and funds from other sources; and • Securing the economical, efficient and effective management of the university’s resources and expenditure. The Board of Governors is responsible for the maintenance and integrity of the corporate and financial information included on the University’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
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University of Winchester Financial Statements 2016/17
STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL Corporate Governance The University is committed to exhibiting best practice in all aspects of corporate governance. This statement details the manner in which the University has applied the principles set out in UK Corporate Governance Code issued by the Financial Reporting Council in June 2010 in so far as they relate to Higher Education Institutions. Its purpose is to help the reader of the Financial Statements understand how the principles have been applied.
Legal Status The University of Winchester is a company limited by guarantee, registered company number 05969256. Every Director and member of the company is also an acting Governor of the University. The University is an exempt charity with its Governors as managing trustees.
Responsibilities of the Board of Governors The Board of Governors of the University, which meets formally three times a year, is responsible for but limited to the determination of the educational character and objectives of the University, the oversight of its activities, the effective and efficient use of resources, the solvency of the University, for safeguarding its assets and for approving annual estimates of income and expenditure. The University’s Board of Governors comprises persons appointed under the University’s Memorandum and Articles of Association. The Board comprises five diocesan appointed members (non-executive), six co-opted members (nonexecutive), three academic governors, two support staff governors, one former student governor and one student governor. The Diocesan Governors of the Board of Governors shall be appointees of the Church of England by the Winchester Diocesan Synod. A student governor shall hold office until the end of the academic year in which the student governor is appointed or until their appointment by the students comes to an end, whichever is sooner. Other Governors (not being Governors ex-officio) shall hold office for a term of three years and shall be eligible for re-appointment up to a maximum of three terms of three years each in total. The role of the Chair of the Board of Governors is separated from the University’s Chief Executive, the ViceChancellor. The Chair is elected from amongst the independent members. No member of the Board of Governors receives any remuneration for work they do for that Board. The current Memorandum and Articles of Association for the University of Winchester were adopted by the Board of Governors on 16 March 2011. The Board has determined that the Vice-Chancellor shall be the Accountable Officer responsible for satisfying the Board that all conditions of receiving and using grant aid from HEFCE have been met, as per our Memorandum of Assurance and Accountability with HEFCE. The University’s constitution places responsibility for the University’s operations with the Vice-Chancellor who as the Accountable Officer, supported by the Senior Management Team, implements the Board’s policies and develops and manages the University’s business. The University endeavours to conduct its business in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership) and with guidance to institutions of higher education which has been provided by the Committee of University Chairs in its Guide for Members of Higher Education Governing Bodies in the UK. In accordance with the Memorandum and Articles of Association, the Board of Governors of the University of Winchester is the most senior body of the University, responsible for determining the educational character and objectives of the University and for the oversight of its activities including approving its mission, values, strategic vision and long-term business plans. The Board of Governors is also the principal financial and business authority of the University and oversees the financial health of the University. A ‘Statement of Primary Responsibilities’ provides more detail of the responsibilities of the Board.
Governors’ liability on dissolution As per section 7 of the Memorandum and Articles of Association every Governor of the University undertakes, if the University is dissolved while he or she is a Governor, or within one year afterwards, to pay up to one pound (£1.00) towards the costs of dissolution and the liabilities incurred by the University while he or she was a Governor.
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University of Winchester Financial Statements 2016/17
The Standing Committee Subject to the Memorandum and Articles of Association, the Standing Committee has the authority to act for the Board of Governors between meetings. Under delegated powers and within general policy laid down by the Board of Governors, the Standing Committee has responsibility for the governance of: • Strategic planning, including Estates planning • Academic affairs • Financial affairs • Student affairs • Such other matters as the Board of Governors may determine. The Standing Committee undertake the detailed examination of the annual Budget, and recommend to the Board of Governors its approval or otherwise. The Standing Committee meet four times a year and agrees the agenda for meetings of the Board of Governors.
The Finance and Audit Committee The Finance and Audit Committee is responsible for undertaking a detailed examination of the annual estimates of income and expenditure, and the annual accounts, and for recommending to the Board of Governors for their approval or otherwise. The Finance and Audit Committee meets three times annually with auditors present, to review the internal auditors’ Risk Assessment and Plan and to consider the findings of internal audit investigations, together with the management’s response and implementation plans. It also receives and considers reports from HEFCE as they affect the University’s business and monitors adherence with regulatory requirements. It reviews the University’s annual financial statements together with the accounting policies. Whilst senior managers attend meetings of the Audit Committee as necessary, they are not members. The Committee meets at least once a year with the external and internal auditors without any officers present. It also meets once a year without the external and internal auditors to consider the auditors’ performance and to consider and advise the Board of Governors on the appointment of the external auditors. The Vice-Chancellor is the Chief Executive Officer who has a general responsibility to the Board of Governors for the organisation, direction and management of the University. Under the terms of the MAA between HEFCE and the Board of Governors, the Vice-Chancellor is the Accountable Officer of the University and in that capacity can be summoned to appear before the Public Accounts Committee of the House of Commons. The University maintains a Register of Interests of members of the Board (and senior managers) which may be consulted by arrangement with the Clerk to the Governors. In accordance with its Memorandum and Articles of Association, the University has appointed a Clerk to the Governors who provides independent advice on matters of governance to Board members.
Remuneration Committee The Remuneration Committee is responsible for determining the emoluments of senior post holders, including annual salary reviews. The holders of senior posts are the Vice-Chancellor, Deputy Vice-Chancellors, Assistant Vice-Chancellor, Clerk to the Governors, and such other staff as shall be designated from time to time by the Board of Governors. The Committee determines any severance payment to be offered to a senior post holder in relation to the termination of his/her employment under the terms of a Settlement Agreement, should such an event occur. The Remuneration Committee meets normally at least once a year with further meetings convened as required. The Committee comprises the Chair of the Board of Governors, Vice-Chair of the Board of Governors and four members elected by the Board of Governors from members of the Board of Governors other than Academic Governors, Support Staff Governors, and Student Governor. One member should be a member of the Audit Committee. The Vice-Chancellor leaves the Commitee before any salary decisions are approved.
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University of Winchester Financial Statements 2016/17
Other Committees In addition to the aforementioned committees, the University holds the following committee meetings at least once per year: Governor meetings • Nominations Committee • Estates Committee • Human Resources Committee • Foundation Committee Management meetings • Planning and Resources Committee • Senate meeting • Research and Knowledge Exchange Senate meeting • Student Academic Council meeting
Statement of internal controls 1. The Board of Governors has responsibility for maintaining a sound system of internal controls that supports the achievement of policies, aims and objectives, while safeguarding the public and other funds and assets for which they are responsible, in accordance with the responsibilities assigned to the governing body in the MAA with HEFCE. The University complies with the Committee of University Chairs (CUC) Code of Practice and refers to best practice guidance, including guidance from the British Universities Finance Directors Group (BUFDG). 2. The system of internal controls 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. 3. The system of internal controls is based on an on-going process designed to identify risks to the achievement of policies, aims and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. This process has been in place for the year ended 31 July 2017 and up to the date of approval of the Financial Statements, and accords with HEFCE guidance. 4. The Board of Governors has responsibility for reviewing the effectiveness of the system of internal controls. The following processes have been established: • The Board meets at regular intervals of at least three times per year to consider the plans and strategic direction of the University. • The Board receives periodic reports from the Chair of the Finance and Audit Committee concerning internal controls, and it requires regular reports from managers on the steps they are taking to manage risks in their areas of responsibility, including progress reports on key projects. The Board and ViceChancellor receive an annual report from the Chair of the Finance and Audit Committee covering the business of the Committee over that year. • The Board has delegated to the Finance and Audit Committee some of the responsibility for providing oversight of risk management. • The Finance and Audit Committee receives regular reports from internal auditors, which include their independent opinion on the adequacy and effectiveness of the University’s system of internal controls, together with recommendations for improvement. • A regular programme of review is undertaken to identify and keep up to date the record of risks facing the organisation. • Risk awareness is facilitated at University and operational levels as appropriate to the risk. Risk management is embedded in the operation of the University. • A system of key performance and risk indicators has been developed.
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• A robust risk prioritisation methodology based on risk ranking and cost-benefit analysis has been established.
University of Winchester Financial Statements 2016/17
GOVERNORS The following are current Governors (Directors) of the University or those who served during the year ended 31 July 2017
Appointed on
Resigned on
Diocesan Members Alan Lovell (Chair) Winifred Harris (Vice-Chair) Mark Byford Tim Dakin, The Right Revd The Bishop of Winchester (ex-officio) David Williams, The Right Revd The Bishop of Basingstoke Andrew Robinson Paul Moore
31 July 2017
David Walton
31 July 2017
Co-opted Members Dr Emma Page Margaret Chin-Wolf David Cook Jane Jessop Peter North Professor Christopher Gaskell
1 August 2017
Academic Governors Professor Joy Carter (ex-officio) Professor Elizabeth Stuart (ex-officio) Professor Neil Marriott (ex-officio) Professor Louise Curth
1 August 2017
Professor Nigel Tubbs
1 August 2017
Graham Ixer
31 July 2017
Paul Jackson
2 October 2017
Support Staff Governors Catherine Beck Dr Lesley Black Former Student Governor John McKenna Student Governor Harry Sampson Talivaldis Atvars Clerk to the Governors / Company Secretary Nigel Trethewy
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30 June 2017 1 July 2017
University of Winchester Financial Statements 2016/17
CORPORATE GOVERNANCE RISK MANAGEMENT Risk management is at the core of the University’s Governance and each year the University produces an updated risk register. The University operates processes for the identification, evaluation and management of significant risks that threaten the achievement of its strategic objectives. It records them in the University Risk Register which has been informed by HEFCE’s guidance Risk Management: A Guide to good practice for higher education institutions. The register identifies those risks which may prevent us from achieving our strategic priorities. The Senior Management Team co-ordinate a Risk Management Working Group (RMWG) which monitors and reviews emerging and changing risks throughout the year and informs the Finance and Audit Committee. The Finance and Audit Committee presents the register annually to the Board of Governors for endorsement. Risk owners regularly assess the risks that they can impact and each of the risks in the Register is formally assessed at least once each year and reviewed by the RMWG. RMWG ensures that the risks are being actively managed, with the appropriate strategies in place to work effectively. Internal Audit supports this process and undertakes reviews of key areas throughout the year according to a rolling audit plan. The University’s approach is to minimise its exposure to reputational, compliance and financial risk, while accepting and encouraging an increased degree of risk in pursuit of its mission and strategic plan objectives. It recognises that its appetite for risk varies according to the activity undertaken. Acceptance of risk is always subject to ensuring that potential benefits and risks are fully understood before developments are authorised, and that sensible measures to mitigate risk are established. Set out on the following pages are the main risks and uncertainties that could adversely affect the University, impacting on our reputation, staff, students, estates, operations and/or finances. The University’s risk register is continually updated and the latest revision was published in October 2017. The top five principal risks and uncertainties identified in this register and how they are being mitigated are: Risk title
Description of risk
Mitigating factors
Financial sustainability
Failure to ensure the financial sustainability of the University.
The University continues to develop its portfolio of programmes to support student demand, along with a targeted approach to marketing. A new internationalisation strategy to complement the University’s recognised areas of excellence: outstanding Institute of Technical Education outcome (ITE); excellent Quality Assurance Agency (QAA) Review outcome; Student Union in top 10 in the country. The University has been and continues to be prudent when considering all capital or revenue long term commitments. The University budgets for a strong surplus and has returned successive years of exceeding budget.
33
University of Winchester Financial Statements 2016/17
34
Risk title
Description of risk
Mitigating factors
Graduate employability/ further study
Relatively low rates of graduate-level employability compared with sector/competitors.
New opportunities for volunteer / placements together with extended alumni bursary schemes. A new Employability Strategy, faculty based employability advisers and introducing programmes with explicit career paths. Further factors include professional accreditation secured for relevant programmes and the Winchester University Hub to support aspiring entrepreneurs.
Teacher Education
Teacher education becomes increasingly school-based/led rather than University based.
Two outstanding Ofsted reviews, a three year allocation of Postgraduate Certificate in Education (PGCE) students and an increased number of School Direct (SD) partners for primary and secondary Initial Teacher Education (ITE). An increased allocation of SD partnered places. The University is also expanding the University of Winchester Academy Trust.
Changes in Government Policy / Funding
Uncertain and rapidly changing government policy on HE and its funding.
All political parties publish clear manifestos. The University’s Vice-Chancellor is engaged with Governmental decision through co-chairing HE Commission on challenger institutions, chair of Guild HE, Board member of the Universities and Colleges Admissions Service (UCAS) and the Quality Assurance Agency for Higher Education (QAA) and a member of the All Party Parliamentary University Group (APPUG), the Teacher Education Advisory Group (TEAG) and Universities UK (UUK). The Deputy Vice-Chancellor is a member of the HEFCE Audit Committee. The University also retains a senior policy advisor post. The University also currently holds a strong financial position and unique selling point (USP) and brand.
Student Residences
Insufficient supply and/or quality of student residential accommodation.
The University continually reviews its options within the Estates Master Plan and the accommodation options strategy was approved by the Board of Governors in March 2017. There is considerable interest from private developers of student accommodation locally. The University continues to grow its portfolio of University Managed Housing with private landlords. An Accommodation Strategy Working Group has been established to regularly review our portfolio and accommodation plans.
University of Winchester Financial Statements 2016/17
BREXIT AND TUITION FEE CAP The University management team and the Board of Governors have considered, and continue to monitor, the impact of the United Kingdom exiting the European Union on the University and on the HEI sector as a whole. The Vice-Chancellor continues to take an active role in informing and supporting various national policy and decision making bodies within the sector including participating as Chair of Guild HE and a trustee of Universities and Colleges Admissions Service (UCAS), amongst others. The First Deputy Vice-Chancellor formed a Brexit task group, including Directors and Deans, to examine the impact of Brexit on the University. The group was tasked with identifying the significant risks to the University and suggested mitigations, as the reality of Brexit is crystallised. Any significant risks will be reported back to the RMWG as and when they are identified. The impact of Brexit and the capping of undergraduate home and EU tuition fees to ÂŁ9,250 was also considered during the development of our West Downs build planning. Financial modelling was undertaken to stress test the impact of various factors on the project including the potential fee cap or a reduction in tuition fees. At this stage the University does not foresee an immediate impact on its financial sustainability as a result of Brexit or the fee cap of ÂŁ9,250.
EXCELLENCE AND CONTINUOUS IMPROVEMENT The Continuous Improvement Unit (CIU) works across the University to remove inefficiencies in processes and eliminate wasted effort, so resources can be focussed on making the University world leading in values-driven higher education. Having a dedicated team provides the resources, in terms of time and expertise, to drive change at all levels of the organisation and work on improvement projects whilst also aiming to develop and embed a culture of continuous improvement across the organisation. The success of the work the unit has been performing was evidenced last year at the British Quality Foundation (BQF) UK Excellence Awards. The University succeeded in winning the overall award for excellence in the UK. Entrants to the Awards are assessed against the European Foundation for Quality Management (EFQM) Excellence Model, a management framework which helps organisations to evaluate and understand their key strengths and continuously improve their operations. The award scheme included national corporate companies and other higher education institutions, competition which the University overcame to gain recognition for excellence across all areas of its operations. The University also won the BQF Sustainable Future Achievement Award for outstanding environmental or social contribution to achieving a more sustainable world. The University of Winchester is one of the most efficient estates in the country for sustainability, with its low-carbon initiatives leading the way in ensuring a more sustainable future. This award recognises a raft of University projects which were aimed at tackling the challenge of reducing our environmental impact and mitigating the risks of climate change in all our operations.
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University of Winchester Financial Statements 2016/17
INDEPENDENT AUDITOR’S REPORT TO THE BOARD OF GOVERNORS OF THE UNIVERSITY OF WINCHESTER REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion We have audited the financial statements of the University of Winchester (“the University”) for the year ended 31 July 2017 which comprise the statement of comprehensive income, statement of changes in reserves, balance sheet, cash flow statement and related notes, including the accounting policies. In our opinion the financial statements: • give a true and fair view of the state of the University’s affairs as at 31 July 2017, and of the University’s income and expenditure, gains and losses and changes in reserves, and of the University’s cash flows, for the year then ended; • have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and with the 2015 Statement of Recommended Practice – Accounting for Further and Higher Education; • meet the requirements of HEFCE’s Accounts Direction to higher education institutions for 2016-17 financial statements; and • have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the group in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Going concern We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the financial statements. We have nothing to report in these respects.
Other information The directors are responsible for the other information, which comprises the Strategic Report incorporating the Operational and Financial Review, and Statement of Corporate Governance and Internal Control. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work: • we have not identified material misstatements in the other information; • in our opinion the information given in the Strategic Report incorporating the Operational and Financial Review, and Statement of Corporate Governance and Internal Control, which together constitute the strategic report and the directors’ report for the financial year, is consistent with the financial statements; and • in our opinion the strategic report and the directors’ report have been prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception Under the Companies Act 2006, we are required to report to you if, in our opinion: • adequate accounting records have not been kept by the University, or returns adequate for our audit have not been received from branches not visited by us; or
36
University of Winchester Financial Statements 2016/17
• the University’s financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. We have nothing to report in these respects.
Board of Governors responsibilities As explained more fully in their statement set out on page 26, the Board of Governors (who are the Directors of the University company for the purposes of company law) is responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the University’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless it either intends to liquidate the University or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS We are required to report on the following matters under the HEFCE Audit Code of Practice (effective 1 August 2016) issued under the Further and Higher Education Act 1992. In our opinion, in all material respects: • funds from whatever source administered by the University for specific purposes have been properly applied to those purposes and managed in accordance with relevant legislation; and • 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.
THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES This report is made solely to the Board of Governors, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and paragraph 13(2) of the University’s Articles of Government and section 124B of the Education Reform Act 1988. Our audit work has been undertaken so that we might state to the Board of Governors those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the University and the Board of Governors for our audit work, for this report, or for the opinions we have formed.
.............................................................................................................................................................. Rees Batley (Senior Statutory Auditor) Date 15 November 2017 For and on behalf of KPMG LLP Statutory Auditor Chartered Accountants Office Address: KPMG LLP, Gateway House, Tollgate, Chandler’s Ford, Eastleigh, Hampshire. SO53 3TG.
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University of Winchester Financial Statements 2016/17
UNIVERSITY OF WINCHESTER Statement of Comprehensive Income Year Ended 31 July 2017
2017
Restated 2016
ÂŁ'000
ÂŁ'000
Notes Income Tuition fees and education contracts Funding body grants Research grants and contracts Other income Endowment and Investment income Total income before endowments and donatons
1 2 3 4 5
57,362 3,392 494 13,498 240 74,986
53,672 3,105 441 12,933 226 70,377
Endowments and donations
5
6
2
74,992
70,379
38,828 24,507 4,698 1,741 69,774
35,570 24,020 5,073 1,953 66,616
5,218
3,763
-
-
Surplus for the year
5,218
3,763
Actuarial gain / (loss) in respect of pension schemes
2,280
(5,200)
Total comprehensive income for the year
7,498
(1,437)
Represented by: Endowment Comprehensive Income for the year Unrestricted comprehensive income for the year
6 7,492
2 (1,439)
7,498
(1,437)
Total income Expenditure Staff costs Other operating expenses Depreciation Interest and other finance costs Total expenditure
6 7 11 8
Surplus before tax Taxation
9
All items of income and expenditure relate to continuing activities.
University of Winchester Financial Statements 2016/17 38
40
University of Winchester Financial Statements 2016/17
UNIVERSITY OF WINCHESTER Statement of Changes in Reserves Year ended 31 July 2017
Income and Revaluation Endowment expenditure reserve account
Total
£'000
£'000
£'000
£'000
30
36,591
92,374
128,995
Income and expenditure surplus
2
3,213
-
3,215
Other comprehensive income
-
(5,200)
-
(5,200)
Transfers between revaluation and income and expenditure reserves
-
1,976
(1,976)
-
Total comprehensive income for the year
2
(11)
(1,976)
(1,985)
32
36,580
90,398
127,010
-
1,678
-
1,678
32
38,258
90,398
128,688
Income and expenditure surplus
6
5,212
-
5,218
Other comprehensive income
-
2,280
-
2,280
Transfers between revaluation and income and expenditure reserves
-
1,975
(1,975)
Total comprehensive income for the year
6
9,467
(1,975)
7,498
38
47,725
88,423
136,186
Balance at 31 July 2015
Balance at 31 July 2016 Prior Year Adjustment Restated Balance at 31 July 2016
Balance at 31 July 2017
University of Winchester Financial Statements 2016/17
-
41 39
University of Winchester Financial Statements 2016/17
UNIVERSITY OF WINCHESTER Cash Flow Statement For the year ended 31 July 2017
Notes
31 July 2017 ÂŁ'000
Restated 31 July 2016 ÂŁ'000
Cash flow from operating activities Surplus for the year Adjustment for non-cash items Amortisation Depreciation Impairments Decrease / (Increase) in stock Increase in debtors Increase in creditors due within one year Increase / (Decrease) in creditors due after one year Increase in provisions Cashflow from operating activities
5,218
3,763
22 4,698 10 8 (380) 710 36 726 11,048
77 5,073 1,016 (1) (54) 1,133 (706) 38 10,339
Adjustment for investing or financing activities Investment income Interest payable Endowment income Capital grant income Net cash inflow from operating activities
(189) 1,741 (6) (318) 12,276
(277) 1,895 (313) 11,644
Cash flows from investing activities Capital grant receipts New investment deposits Investment deposits withdraws Investment income New non-current asset investments Payments made to acquire fixed assets
520 430 (31) (10,000) 2,500 188 141 (83) (4,490) (3,346) (1,396) (12,775)
Cash flows from financing activities Interest paid Interest element of finance lease payments Repayments of amounts borrowed Endowment income Capital element of finance lease payments
Increase / (Decrease) in cash and cash equivalents in the year Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year
University of Winchester Financial Statements 2016/17
16 16
(444) (1,048) (954) 6 (253) (2,693)
(500) (852) (883) (574) (2,809)
8,187
(3,940)
13,579 21,766
17,519 13,579
43 41
University of Winchester Financial Statements 2016/17
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES FOR THE YEAR ENDED 31 JULY 2017 BASIS OF PREPARATION These 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 (FRS) 102. The University is a public benefit entity and therefore has applied the relevant public benefit requirement of FRS 102. The financial statements are prepared in accordance with the historical cost convention (modified by the revaluation of fixed assets). The financial statements have been prepared on a going concern basis. This assessment has been informed by the University’s future financial forecasts/plans and its healthy cash balances. In preparing the financial statements of the University, the functional and presentational currency is sterling. Transactions in currencies other than the functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. No monetary or non-monetary items are carried at denominations other than sterling. The financial statements are presented in thousands of pounds sterling unless stated otherwise.
PRIOR YEAR ADJUSTMENT The financial statements include a prior year adjustment following a review of leasing arrangements. The lease for Burma Road Student Village, previously classified as a finance lease, is more appropriately classified as an operating lease. The effect of the adjustment on the balance sheet has been to reduce fixed assets in the prior year by £23,057k and finance lease liabilities by £24,660k. The net impact on the income and expenditure statement for the prior year was £548k increase in the reported surplus before tax from £3,215k to £3,763k.
BASIS OF CONSOLIDATION The financial statements do not include the results of the University’s three wholly owned subsidiary companies, KAC Enterprises Ltd, Winchester Business School Limited and Winchester Management School Limited. These companies have been dormant since incorporation. The financial statements do not include the income and expenditure of Winchester Student Union as the University does not exert significant control or dominant influence over policy decisions.
INCOME RECOGNITION Income from the sale of goods or services is credited to the Statement of Comprehensive Income (SCI) 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 Statement of Comprehensive Income (SCI) over the period in which students are studying. Where the amount of the tuition fees 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 SCI 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.
TAXATION STATUS The University is an exempt charity within the meaning of Part 3 of the Charities Act 2011 and is considered to pass the tests set out in Paragraph 1 Schedule 6 to the Finance Act 2010 and therefore meets the definition of a charitable company for UK Corporation Tax purposes. 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
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University of Winchester Financial Statements 2016/17
Corporation Tax Act 2010 (CTA 2010) or section 256 of the Taxation of Chargeable Gains Act, 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 cost 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.
GRANT FUNDING Government revenue grants including funding council block grant 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.
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 or restrictions applied to the individual endowment fund. Capital grants Government capital grants are recognised in income over the expected useful life of the asset. Other capital grants are recognised in income when the University is entitled to the funds subject to any performance related conditions being met.
ACCOUNTING FOR RETIREMENT BENEFITS The University contributes to the Local Government Pension Scheme (LGPS), the Teachers’ Pension Scheme (TPS) and the University Superannuation Scheme (USS). The schemes are defined benefit schemes but the TPS and USS schemes are multi-employer schemes where it is not possible to identify the assets of the scheme that are attributable to the University. Accordingly these schemes are accounted for as a defined contribution basis and contributions to the schemes are recognised as expenditure in the period to which they are payable. The University is able to identify its share of the assets and liabilities of the LGPS and accordingly the University recognises its share of the scheme’s assets and liabilities in its balance sheet. A liability is recorded within provisions for any contractual commitment to fund past deficits within the USS scheme.
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University of Winchester Financial Statements 2016/17
EMPLOYMENT BENEFITS Short 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. Enhanced Pensions The actual cost of any enhanced on-going pension to a former member of staff is paid by a university annually. An estimate of the expected future cost of any enhancement to the on-going pension of a former member of staff is charged in full to the University’s income in the year that the member of staff retires. In subsequent years a charge is made to provisions in the balance sheet using a basis provided by the funding bodies.
FINANCE LEASES Leases 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 lease 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 the 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.
OPERATING LEASES Costs in respect of operating leases are charged to the Statement of Comprehensive Income in the period in which they are incurred.
FIXED ASSETS Where parts of a fixed asset have different useful lives, they are accounted for as separate items of fixed assets.
LAND AND BUILDINGS Land and buildings that were owned by the University at the FRS 102 transition date of 1 August 2014 were valued by Alder King. The valuations were on a depreciated replacement cost basis for specialist assets and at market value where this was reasonable to obtain. Depreciation and impairment losses are subsequently charged on the revalued amount. Subsequent costs incurred that enhance the asset are capitalised and recognised at cost. Freehold land is not depreciated as it is considered to have an indefinite useful life. Buildings, plant and machinery are depreciated on a straight line basis over their expected useful lives at the date of the 1 August 2014 valuation
Buildings
between 10 and 50 years
Plant and Machinery between 5 and 20 years
No depreciation is charged on assets in the course of construction. Equipment Equipment, including computers and software, costing less than de minimus of ÂŁ5,000 per individual item is recognised as expenditure. All other equipment is capitalised. Capitalised equipment is stated at cost and depreciated over its expected useful life as follows:
IT Equipment
3 years
Motor Vehicles
5 years
Fixtures and fittings
10 years
Depreciation methods, useful lives and residual values are reviewed at the date of preparation of each Balance Sheet.
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University of Winchester Financial Statements 2016/17
BORROWING COSTS Borrowing costs are recognised as expenditure in the period in which they are incurred.
INTANGIBLE ASSETS Intangible assets are amortised over a period of between 3 and 10 years representing the estimated economic life of the assets and are subject to impairment review each year.
INVESTMENT PROPERTIES Investment property consists of land and buildings held for rental income or capital appreciation (or both) rather than for use in delivering services. Investment properties are revalued at 31 July each year at market value with movements recognised in the Statement of Comprehensive Income (SCI).
INVESTMENTS Non-current asset investments are held on the Balance Sheet at fair value unless it is not possible to determine a value in which case they are held at amortised cost less impairment.
STOCKS Stocks are valued at the lower of cost and net realisable value.
CASH AND CASH EQUIVALENTS Cash includes cash in hand, deposits repayable on demand and overdrafts. Short term deposits that exist at the balance sheet date that have a maturity term of less than 3 months are classified as cash equivalents. Those with more than 3 months are classified as non-current investment assets.
PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Provisions 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 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.
RESERVES Reserves are classified as restricted or unrestricted. Restricted endowment reserves include balances which, through endowment to the University, are held as a permanently restricted fund which the University must hold in perpetuity. Other restricted reserves include balances where the donor has designated a specific purpose and therefore the University is restricted in the use of these funds.
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University of Winchester Financial Statements 2016/17
Judgements in applying accounting policies and key sources of estimation uncertainty In preparing these financial statements, management have made the following judgements: • Determine whether leases entered into by the University either as a lessor or a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis. • Determine whether there are indicators of impairment of the University’s assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
OTHER KEY SOURCES OF ESTIMATION UNCERTAINTY Tangible fixed assets Tangible fixed assets, other than investment properties, are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Local Government Pension Scheme The present value of the Local Government Pension Scheme defined benefit liability depends on a number of factors that are determined on an actuarial basis using a variety of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions, which are disclosed in Note 24, will impact the carrying amount of the pension liability. Furthermore a roll forward approach which projects results from the latest full actuarial valuation performed at 31 March 2016 has been used by the actuary in valuing the pensions liability at 31 July 2017. Any differences between the figures derived from the roll forward approach and a full actuarial valuation would impact on the carrying amount of the pension liability.
AGENCY ARRANGEMENTS The University acts as an agent in the collection and payment of discretionary support funds. Related payments received from the funding bodies and subsequent disbursements to students 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.
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University of Winchester Financial Statements 2016/17
UNIVERSITY OF WINCHESTER Notes to the Accounts for the year ended 31 July 2017
Note 1 Tuition fees and education contracts Full-time home and EU students Full-time international students Part-time students Self-financing courses
Note 2 Funding body grants Recurrent grant from HEFCE Recurrent grant from NCTL Recurrent research grant Specific grants
Note 3 Research grants and contracts Grants
Note 4 Other income Residences, catering and conferences Other services rendered Other income
Note 5 Endowment and Investment Income Income from short term investments Fair value gain on Investment Property Income from Investment Property Income from endowments
University of Winchester Financial Statements 2016/17
2017 £'000 49,010 4,355 1,624 2,373 57,362
2016 £'000 44,870 4,341 1,786 2,675 53,672
2017 £'000 2,145 772 475 3,392
2016 £'000 1,900 14 750 441 3,105
2017 £'000 494
2016 £'000 441
2017 £'000 11,597 230 1,671 13,498
2016 £'000 11,294 274 1,365 12,933
2017 £'000 189 51 6 246
2016 £'000 160 15 51 2 228
49 47
University of Winchester Financial Statements 2016/17
Notes to the Accounts 2017 £'000
2016 £'000
30,610 2,925 5,247 46 38,828
28,909 2,501 4,160 35,570
Basic salary Additional allowance Other benefits Total emoluments including pension costs
£ 215,520 38,793 6,976 261,289
£ 210,058 35,310 3,885 249,253
Social security costs Total compensation
33,230 294,519
32,500 281,753
2017 Number
2016 Number
£120,000 to £129,999 £130,000 to £139,999
1 1 2
1 1 2
Average staff numbers by major category : Academic Administration
Number 329 446 775
Number 298 444 742
The number of students taught in the year expressed as full-time equivalents was:
Number 6,250
Number 6,052
£'000 -
£'000 -
Note 6 Staff costs Staff Costs : Salaries Social security costs Other pension costs Apprenticeship levy Total Salaries include redundancy payments of £164,055 (2015/16: £112,505) The highest paid director is the Vice-Chancellor whose compensation is:
Remuneration of other higher paid staff, including employer's pension contributions:
Compensation for loss of office payable to a senior post-holder: Compensation payable recorded within staff costs Key management personnel Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the University and include the Vice-Chancellor, the First Deputy Vice-Chancellor, the Deputy Vice-Chancellor, the Assistant Vice-Chancellor and members of the Board of Governors who are also members of staff of the University. 2017 2016 The number of key management personnel
8
8
2017 £'000 917
2016 £'000 898
Staff costs includes compensation paid to key management personnel as follows:
Key management personnel compensation
The key management personnel compensation above includes directors' and senior post holders employer's pension contributions of £46,252 (2016: £65,657) and national insurance of £96,344 (2016: £87,789).
University of Winchester Financial Statements 2016/17 48
50
University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 7 Analysis of total expenditure by activity Residences, catering and conferences. Consumables Books and Periodicals Fellowships, bursaries, scholarships and prizes Heat, light,water and power Repairs and general maintenance Grants to Winchester Students Union Rentals Other expenses
Surplus before taxation is stated after charging: Auditor's remuneration: External auditors remuneration in respect of audit services External auditors remuneration in respect of non-audit services Internal Audit Impairment of fixed assets
Note 8 Interest and other finance costs Interest on bank loans Interest on finance leases Net interest on defined benefit scheme
2017 £'000 3,833 1,520 1,770 2,531 1,138 2,074 290 229 11,122 24,507
Restated 2016 £'000 3,721 1,385 1,306 1,981 1,107 1,307 292 300 12,621 24,020
2017 £'000
Restated 2016 £'000
39 11 13 -
40 10 29 1,016
2017 £'000
Restated 2016 £'000
442 886 413 1,741
497 1,053 403 1,953
Note 9 Taxation The University is an exempt charity and as such is not subject to corporation tax on its charitable activities. The University has reviewed its non-charitable trading activities and has determined that there is no corporation tax liability for the year ending 31 July 2017.
University of Winchester Financial Statements 2016/17
51 49
University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 10 Intangible assets Software
2017
2016
Cost Opening balance at 1 August Additions in the year
£'000 468 468
£'000 468 468
Amortisation Opening balance at 1 August Amortisation charge for the year
£'000 388 22 410
£'000 311 77 388
58
80
Net book value at 31 July
The amortisation charge for 2016-17 has been included in the "Other Operating Expenses" line of the Statement of Comprehensive Income.
Note 11 Fixed Assets Restated Freehold Leasehold Land and Land and Buildings Buildings £'000 £'000
Restated Total
£'000
£'000
£'000
27,468 27,468
315 83 398
3,245 427 64 3,736
1,401 3,186 (1,538) 3,049
179,179 4,659 183,838
7,061 3,684 10,745
5,660 485 6,145
213 54 267
2,207 475 2,682
-
15,141 4,698 19,839
138,442
21,323
131
1,054
3,049
163,999
139,689
21,808
102
1,038
1,401
164,038
146,750 963 1,474 149,187
Depreciation At 1 August 2016 Charge for the year Disposals At 31 July 2017 Net book value At 31 July 2017
University of Winchester Financial Statements 2016/17 50
Equipment, Assets in the Furniture Course of and Fittings Construction
£'000
Cost and valuation At 1 August 2016 Additions Transfers Impairment Disposals At 31 July 2017
At 31 July 2016
Motor Vehicles
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 11 Fixed Assets (continued) The net book value of Leasehold Land and Buildings includes an amount of £21,323k (2016: £21,808k restated) in respect of assets held under finance leases The University's freehold land and buildings were revalued as at 31st July 2014 by Alder King LLP. The valuations were prepared in accordance with the RICS Valuation - Professional Standard December 2014 ('Red Book'), FRS102 and the SORP for Further and Higher Education. The University took the transitional provision under FRS102 section 35 to elect to use fair value as deemed cost. The valuation of each part of University of Winchester was on the following bases of value and assumptions: - Owner-occupied property - to Fair Value ('FV') assuming that the property would be sold as part of the continuing business. - Specialised property - to FV using the depreciated replacement cost ('DRC') approach and assuming that continuing business.
Note 12 Investments and Investment Property The University holds three classes of investments as follows: 12a)
Subsidiary undertakings At 31 July 2017 the University held 100% of the share capital of KAC Enterprises Limited, Winchester Business School Limited and Winchester Management School Limited. All companies are registered in England and were dormant throughout 2016/17.
12b)
Investments Hampshire Community Bank
12c)
Investment Property Opening balance Additions to investment property in the year Fair value (loss) / gain on Investment Property Closing balance Total Investments and Investment Property
Note 13 Stocks Reprographic supplies Cleaning materials IT consumables Catering stock
University of Winchester Financial Statements 2016/17
2017 £'000 100 100
2016 £'000 100 100
2017 £'000 485 83 (10) 558
2016 £'000 470 15 485
658
585
2017 £'000 10 2 2 23 37
2016 £'000 12 2 2 29 45
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 14 Trade and other receivables Amounts falling due within one year: Debtors Prepayments and accrued income
Note 15 Current Investments Investments
Investments comprise: Nationwide 95 Day Saver Nationwide 12 Month Fixed Account LLoyds Fixed Rate Bonds
Note 16 Cash and cash equivalents Cash and cash equivalents
2017 £'000
Restated 2016 £'000
1,502 1,752 3,254
1,162 1,549 2,711
2017 £'000 12,534 12,534
2016 £'000 15,003 15,003
2017 £'000
2016 £'000
5,034 7,500 12,534
5,003 5,000 5,000 15,003
2017 £'000 21,766 21,766
2016 £'000 13,579 13,579
2017 £'000 1,006 263 371 991 914 5,345 34 318 9,242
Restated 2016 £'000 949 252 563 827 6,168 33 313 9,105
Note 17 Creditors : amounts falling due within one year
Mortgages and unsecured loans Obligations under finance lease Trade payables Other Payables Social security and other taxation payable Accruals and deferred income Loans repayable to Funding Council Deferred income - Government capital grants
University of Winchester Financial Statements 2016/17 52
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 18 Creditors : amounts falling due after more than one year
Mortgages and unsecured loans Obligations under finance lease Funding Council loan Deferred Capital Grants
2017 £'000 5,723 24,615 54 9,234 39,626
Restated 2016 £'000 6,729 24,879 60 8,187 39,855
2017 £'000 1,065 2,005 2,653 5,723
2016 £'000 1,006 2,843 2,880 6,729
Maturity of debt (a)
Mortgages and unsecured loans are repayable as follows: Due between one and two years Due between two and five years Due in five years or more Due after more than one year
Throughout the financial year the University had the following borrowing arrangements in place: 1. A £4.7 million loan from Allied Irish Bank, amortising over 25 years from January 1996, at a 6.43% rate of interest, specifically for the purpose of building student accommodation. £1.356 million remains outstanding at 31 July 2017. 2. A £5.9m loan from Allied Irish Bank, amortising over 19 years from March 2002, at a 6.30% rate of interest, specifically for the purpose of renovating a listed teaching facility. £1.689m remains outstanding as at 31 July 2017. 3. A £5.0m loan from Allied Irish Bank, amortising over 25 years from August 2006, at an interest rate of 6.25% (£2.7m) and 5.13% (£2.3m), specifically for the purpose of building the University Centre. £3.684m remains outstanding as at 31 July 2017. Mortgages represent loans at fixed rates which are repayable by instalments in the period to 2031 and are secured on part of the University's freehold property. (b)
Finance leases The finance lease obligations that the University is committed to are as follows:
Between one and two years Between two and five years In five years or more
Restated 2016 £'000 251 1,122 23,757 25,130
2017 £'000 263 1,170 23,445 24,878
The University has agreed a lease for a block of accommodation and the lease arrangement has been classified as a finance lease.
University of Winchester Financial Statements 2016/17
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University of Winchester Financial Statements 2016/17
Notes to the Accounts
Note 19 Provisions for liabilities
LGPS Scheme £'000
USS Scheme £'000
Enhanced Pensions £'000
Total £'000
17,430 1,200 (2,280) 16,350
534 (24) 510
429 (64) 27 392
18,393 1,136 (2,277) 17,252
At 31 July 2016 Utilised in year Charge to Income and Expenditure Account At 31 July 2017
USS deficit The obligation to fund the past deficit on the Universities 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. Enhanced Pension Provision The enhanced pension provision relates to the cost of staff that have already left the University employ from which the University cannot reasonably withdraw at the balance sheet date. This provision has been recalculated in accordance guidance issued by the funding bodies. The principal assumptions for this calculation are: 2017 2016 Price inflation 6.32% 5.15%
Note 20 Lease obligations Payable during the year Future minimum lease payments due: Payable not later than 1 year Later than 1 year and not later than 5 years Later than 5 years Total lease payments due
2017 £'000
Restated 2016 £'000
1,895
1,846
1,889 5,604 34,708 42,201
1,808 5,545 36,573 43,926
2017 £'000
2016 £'000
1,137
1,036
Note 21 Capital commitments
Commitments contracted for
University of Winchester Financial Statements 2016/17 54
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 22 Contingent liabilities The incorporation of the University in 2008/09 triggered certain provisions of the Occupational Pension Schemes (Employer Debt) Regulations 2005 relating to the unincorporated University's membership of the Universities Superannuation Scheme (USS). The Regulations require that the incorporation of the University be treated as a "Withdrawal Event", potentially causing the University's pension liability in respect of sixteen staff members of the scheme to crystallise. USS agreed with the University to enter into a "Withdrawal Arrangement" which allowed that settlement of the liability is deferred indefinitely, subject to a guarantee by the new incorporated University entity. The principal circumstances in which the liability may crystallise include (i) in the event that the USS is wound-up and (ii) in the event that the Pension Regulator of the USS require that the liability be paid. The University has a 40 year ‘Education Agreement’ with Shoei College in Japan for the provision of a two year certificate for 40 students. When the agreement was put in place in March 1982 Shoei lent the University £151,688 to build a teaching block on the University’s Medecroft site. The loan was secured by a legal charge on the property and the capital was due to be repaid over 40 years effective from 22nd March 1982 at £3,792 per annum. While the education agreement remains in place Shoei waives payments. Termination of the agreement will trigger the University to start annual capital repayments for the balance of the 40 year period; repayments for the period up to termination are written off. The University and Shoei have no plans to terminate the agreement but were either party to do so then the University would be liable for repayments totalling £22,752 through until March 2022.
Note 23 Events after the reporting period There are no matters to report.
Note 24 Defined Benefit Obligations The University's employees belong to two principal post-employment benefit plans: the Teachers’ Pension Scheme England and Wales (TPS) for academic and related staff; and the Hampshire County Council Pension Fund which is part of the Local Government Pension Scheme (LGPS) for non-teaching staff. Both are multi-employer defined-benefit plans.
Teachers’ Pension Scheme The Teachers' Pension Scheme (TPS) is a statutory, unfunded, defined benefit scheme, governed by the Teachers' Pensions Regulations 2010, and the Teachers’ Pension Scheme Regulations 2014. These regulations apply to teachers in schools and other educational establishments, including academies, in England and Wales that are maintained by local authorities. In addition, teachers in many independent and voluntary-aided schools and teachers and lecturers in some establishments of further and higher education may be eligible for membership. Membership is automatic for fulltime 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 Account Although members may be employed by various bodies, their retirement and other pension benefits are set out in regulations made under the Superannuation Act (1972) and Public Service Pensions Act (2013) and are paid by public funds provided by Parliament. The TPS is an unfunded scheme and members contribute on a ’pay as you go‘ basis – these contributions, along with those made by employers, are credited to the Exchequer under arrangements governed by the above Act. The Teachers' Pensions Regulations 2010 require an annual account, the Teachers' Pension Budgeting and Valuation Account, to be kept of receipts and expenditure (including the cost of pension increases). From 1 April 2001, the Account has been credited with a real rate of return, which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return.
University of Winchester Financial Statements 2016/17
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Teachers’ Pension Scheme (continued) Valuation of the Teachers’ Pension Scheme The latest actuarial review of the TPS was carried out as at 31 March 2012 and in accordance with The Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014. The valuation report was published by the Department for Education (the Department) on 9 June 2014. The key results of the valuation are: -
New employer contribution rates were set at 16.48% of pensionable pay (including administration fees of 0.08%); total scheme liabilities for service to the effective date of £191.5 billion, and notional assets of £176.6 billion, giving a notional past service deficit of £15.0 billion; an employer cost cap of 10.9% of pensionable pay.
The new employer contribution rate for the TPS was implemented in September 2015. A full copy of the valuation report and supporting documentation can be found on the Teachers’ Pension Scheme website at the following location: https://www.teacherspensions.co.uk/news/employers/2014/06/publication-of-the-valuation-report.aspx Scheme Changes Following the Hutton report in March 2011 and the subsequent consultations with trade unions and other representative bodies on reform of the TPS, the Department published a Proposed Final Agreement, setting out the design for a reformed TPS to be implemented from 1 April 2015. The key provisions of the reformed scheme include: a pension based on career average earnings; an accrual rate of 1/57th; and a Normal Pension Age equal to State Pension Age, but with options to enable members to retire earlier or later than their Normal Pension Age. Importantly, pension benefits built up before 1 April 2015 will be fully protected. The pension costs paid to TPS in the year amounted to £2.30m (2016: £2.12m) FRS 102 (28) Under the definitions set out in FRS 102 (28.11), the TPS is a multi-employer pension plan. The University is unable to identify its share of the underlying assets and liabilities of the plan. Accordingly, the University has taken advantage of the exemption in FRS 102 and has accounted for its contributions to the scheme as if it were a defined-contribution plan. The University has set out above the information available on the plan and the implications for the University in terms of the anticipated contribution rates. Local Government Pension Scheme The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by Hampshire County Council. The total contributions made for the year ended 31 July 2017 were £2.38m of which employer’s contributions totalled £1.8m and employees’ contributions totalled £0.58m. The agreed contribution rates for future years are 17.5% for employers and range from 5.5% to 12.5% for employees, depending on salary.
University of Winchester Financial Statements 2016/17 56
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Local Government Pension Scheme (continued) Principal Actuarial Assumptions The following information is based upon a full actuarial valuation of the fund at 31 March 2016 updated to 31 July 2017 by a qualified independent actuary.
Discount Rate RPI inflation CPI inflation Rate of increase to pensions in payment Pension accounts revaluation rate Rate of general increase in salaries
Principal actuarial assumptions 31 July 2017 31 July 2016 31 July 2015 31 July 2014 (% pa) (% pa) (% pa) (% pa) 2.6 2.4 3.6 4.1 3.1 2.9 3.2 3.2 2.0 1.8 2.1 2.2 2.0 1.8 2.1 2.2 2.0 1.8 2.1 2.2 3.5 3.3 3.6 3.7
Mortality assumptions The mortality assumptions are based on the recent actual mortality experience of members within the Fund and allow for expected future mortality improvements. Sample life expectancies at age 65 resulting from these mortality assumptions are shown below. 2017 2016 Retiring today Male 24.0 24.6 Female 27.0 26.7 Retiring in 20 years Male Female
26.0 29.3
26.4 28.7
Asset Allocation
Equities Property Government bonds Corporate bonds Cash Other
Value at 31 July 2017 61.2% 6.5% 24.8% 1.1% 3.0% 3.4% 100.0%
Value at 31 July 2016 56.7% 7.4% 26.3% 1.8% 5.2% 2.6% 100.0%
The amount included in the balance sheet in respect of the defined benefit pension plan is as follows: 2017 2016 ÂŁ'000 ÂŁ'000 Fair value of plan assets 34,210 29,850 Present value of plan liabilities (50,560) (47,280) Net pensions liability (note 19) (16,350) (17,430)
University of Winchester Financial Statements 2016/17
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Local Government Pension Scheme (continued) Amounts recognised in the Statement of Comprehensive Income in respect of the Plan are as follows:
Amounts included in staff costs Current service cost Interest on net defined benefit liability Total Amounts recognised in Other Comprehensive Income Asset gains arising during the period Liability(losses) arising during the period Amount recognised in Other Comprehensive Income
2017 £'000 2,600 400 3,000
2016 £'000 1,720 390 2,110
2017 £'000 1,520 760 2,280
2016 £'000 2,320 (7,520) (5,200)
The split of the liabilities at the last valuation between the various categories of members is as follows: Active members 52% Deferred Pensioners 14% Pensioners 34% Changes in the present value of defined benefit obligations Defined benefit obligations at start of period Current service cost Interest expense on defined benefit obligation Contributions by participants Actuarial (gains) / losses on liabilities Net benefits paid out Past service cost Net increase in liabilities from disposals and acquisitions Curtailments and settlements Defined benefit obligations at end of period Changes to the fair value of assets Opening fair value of assets Interest income on assets Re-measurement gains on assets Employer contributions Contributions by participants Net benefits paid out Fair value of plan assets at end of period Actual return on assets Interest income on assets Gain on assets
2017 £'million 47.28 2.60 1.14 0.58 (0.76) (0.28) 50.56
2016 £'million 36.64 1.72 1.32 0.54 7.52 (0.46) 47.28
2017 £'million 29.85 0.74 1.52 1.80 0.58 (0.28) 34.21
2016 £'million 24.91 0.93 2.32 1.61 0.54 (0.46) 29.85
2017 £'million 0.74 1.52 2.26
2016 £'million 0.93 2.32 3.25
Reconciliation of funded status to balance sheet
Fair value of assets Present value of (liabilities) (Liability) recognised on the balance sheet
University of Winchester Financial Statements 2016/17 58
Year ending Year ending 31 July 2017 31 July 2016 £'million £'million 34.21 29.85 (47.28) (50.56) (16.35) (17.43)
Year ending 31 July 2015 £'million 24.91 (36.64) (11.73)
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 25 Financial instruments The University has chosen to adopt Sections 11 and 12 of FRS 102 in full in respect of financial instruments. Financial assets and liabilities Financial assets and financial liabilities are recognised when the University becomes a party to the contractual provisions of the instrument. Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations rather than the financial instrument's legal form. All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets measured at fair value through the profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless arrangement constitutes a financing transaction. A financial asset or financial liability that is payable or receivable in one year is measured at the undiscounted amount expected to be received or paid net of impairment, unless it is a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
The financial instruments may be analysed as follows:
Financial assets that are debt instruments measured at amortised cost Financial liabilities measured at amortised cost
Restated 2016 ÂŁ'000 29,844 (36,124)
2017 ÂŁ'000 35,902 (35,391)
Financial assets measured at amortised cost comprise cash and cash equivalents, investments and receivables. Financial liabilities measured at amortised cost comprise mortgages, unsecured loans, finance leases, trade payables, accruals and other payables.
University of Winchester Financial Statements 2016/17
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 26 Related party Transactions Due to the nature of the University’s operations and the composition of the Board of Governors 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 Board of Governors may have an interest. A register of Governors’ interests is maintained by the University. All transactions involving organisations in which a member of the Board may have an interest are conducted at arms length and in accordance with the University’s Financial Regulations and usual procurement procedures. The following transactions have been identified for disclosure in relation to those organisations related to senior executive staff and members of the Board of Governors:
Name of organisation
Nature of interest
Higher Education Funding Council (HEFCE)
Our Deputy Vice Chancellor acts as a Governor on the Audit Committee of the council Our Chair of Governors acts as Chair of Trustees for the Hampshire Cultural Trust trust Prince's Mead School Trust A University Governor acts as a Governor on the Board of the School Quality Assurance Agency Our Vice Chancellor acts as a Governor on the agency's (QAA) Board Winchester Action on The University supports WinACC through provision of Climate Change (WinACC) office accommodation. Winchester Cathedral Trust Our Chair of Governors acts as a Trustee for the trust Winchester Diocesan Board Three of the Univeristy's Governors are employed by the of Finance Winchester Diocesan Board in senior posts. The Student Governor is also a member of the Winchester Student Union. The Union receives a block grant from the University, which is calculated annually Payments according to a methodology agreed between the University and the Union. All other transactions between the two parties are conducted on a commercial basis. Receipts Universities and Colleges Our Vice Chancellor acts as a Governor on the agency's Admissions Service (UCAS) Board
(Income)/ expenditure £'000
(Debtor)/ creditor £'000
(2,145)
-
41
-
108
24
40
-
20
-
22
-
27
-
620
-
(229)
-
426
-
Winchester Student Union
The University has reviewed the guidance in HEFCE Accounts Directions for 2016/17 in relation to linked (paragraph 28) charities. There are no such transactions to disclose. As stated in the Statement of Corporate Governance and Internal Control no member of the Board of Governors received any remuneration/ waived payments from the University for the work they do as members of that Board during the year (2016:nill). However, Governors do receive compensation for travel costs. Members of the Board of Governors who are also members of staff of the University receive remuneration in their capacity as members of staff. The total expenses paid to or on behalf of members of the Board of Governors was £1,081 (2016:£609). This represents travel and subsistence expenses incurred in attending Board of Governors meetings, other committee meetings and events undertaken in connection with their official capacity.
University of Winchester Financial Statements 2016/17 60
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University of Winchester Financial Statements 2016/17
Notes to the Accounts Note 27 Prior Year Adjustment During the year, the University reviewed the accounting treatment of the Burma Road lease. Based on an assessment of the lease against the relevant criteria within FRS102 the University had reclassified the lease from a finance lease to an operating lease. The accounting change has no impact on cash or future cash flows, but changes the values that form part of the expenditure in the year, and the future liabililities which arise from the lease. The impact on the Statement of Comprehensive Income (SOCI) and Statement of Financial Position (SOFP) are shown below. The first table shows (extracts of) the SOCI and the second shows the (extracts of) the SOFP and reserves. Statement of Comprehensive Income 2016 Restated
Effect of Adjustment
2016
£'000
£'000
£'000
53,672 3,105 441 12,933 228 70,379
-
53,672 3,105 441 12,933 228 70,379
35,570 24,020 5,073 1,953 66,616
1,666 (1,048) (1,166) (548)
35,570 22,354 6,121 3,119 67,164
3,763
548
3,215
-
-
-
3,763
548
3,215
-
-
-
3,763
548
3,215
Actuarial loss in respect of pension schemes
(5,200)
-
(5,200)
Total
(1,437)
548
(1,985)
Represented by: Endowment Comprehensive Income for the year Unrestricted comprehensive income for the year
2 (1,439)
548
2 (1,987)
(1,437)
548
(1,985)
Income Tuition fees and education Funding body grants Research grants and contracts Other income Endowment and Investment Total income Expenditure Staff costs Other operating expenses Depreciation Interest and other finance costs Total expenditure Surplus before Gain on investment property Surplus before Taxation Surplus for the year
University of Winchester Financial Statements 2016/17
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University of Winchester Financial Statements 2016/17 Notes to the Accounts Note 27 Prior Year Adjustment (continued) Balance Sheet at 31 July 2017 2016 Restated
Effect of Adjustment
2016
£'000
£'000
£'000
80 164,038 585
(23,057) -
80 187,095 585
164,703
(23,057)
187,760
45 2,711 15,003 13,579 31,338
75 75
45 2,636 15,003 13,579 31,263
Less: Creditors: amounts falling due within one year
(9,105)
486
(9,591)
Net current
22,233
561
21,672
Total assets less current liabilities
186,936
(22,496)
209,432
Creditors: amounts falling due after more than one year
(39,855)
24,174
(64,029)
Provisions Pension provisions
(18,393)
-
(18,393)
Total net assets
128,688
1,678
127,010
32
-
32
Unrestricted Reserves Income and expenditure account Revaluation reserve Total Unrestricted Reserves
38,258 90,398 128,656
1,678 1,678
36,580 90,398 126,978
Total Reserves
128,688
1,678
127,010
Non-current Intangible assets Tangible fixed assets Investment Property and Investments
Current assets Stock Trade and other receivables Investments Cash and cash equivalents
Restricted Reserves Income and expenditure - endowment reserve
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University of Winchester Financial Statements 2016/17
ADMINISTRATIVE INFORMATION Registered Office: University of Winchester Sparkford Road Winchester Hampshire SO22 4NR Telephone:
01962 841515
Facsimile:
01962 842280
Website:
http://www.winchester.ac.uk
The University of Winchester is a private charitable company limited by guarantee in England and Wales. Registered number: 05969256 (England and Wales) Senior Officers and Advisors: Chancellor Chancellor Emeritus Vice-Chancellor First Deputy Vice-Chancellor Deputy Vice-Chancellor Assistant Vice-Chancellor Clerk to the Board of Governors
Alan Titchmarsh Dame Mary Fagan Professor Joy Carter Professor Elizabeth Stuart Professor Neil Marriott Colette Fletcher Nigel Trethewy
Principal Bankers Nat West Bank PLC 105 High Street Winchester Hampshire SO23 9AW External auditors KPMG LLP Gateway House Tollgate Chandler’s Ford, Eastleigh Hampshire SO53 3TG Internal auditors Southern Internal Audit Partnership Corporate Services Hampshire County Council The Castle Winchester SO23 8UB Lawyers Blake Morgan New Kings Court Tollgate Chandlers Ford Eastleigh SO53 3LG
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University of Winchester, a private charitable company limited by guarantee in England and Wales number 05969256. Registered office: Sparkford Road, Winchester, Hampshire, SO224NR.