World- leading
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YEARS 1840-2015
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World- leading
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175 17 Financial Statements for the year ended July 2015
University of Winchester, a private charitable company limited by guarantee in England and Wales number 05969256. Registered office: Sparkford Road, Winchester, Hampshire, SO22 4NR.
UNIVERSITY OF WINCHESTER CONTENTS Page 2
Administrative Information
4
Directors’ Report
6
Strategic Report incorporating the Operational and Financial Review
23
Statement of Corporate Governance and Internal Control
27
Independent Auditors’ Report
29
Income and Expenditure Account
30
Statement of Total Recognised Gains & Losses
31
Balance Sheet
32
Cash Flow Statement
33
Statement of Principal Accounting Policies
36
Notes to the Financial Statements
Administrative Information Address:
University of Winchester Sparkford Road Winchester Hampshire SO22 4NR Telephone Facsimile Website
01962 841515 01962 842280 http://www.winchester.ac.uk
Registered number: 05969256 (England and Wales) Senior Officers and Advisors: Chancellor
Alan Titchmarsh
Chancellor Emeritus
Dame Mary Fagan
Vice-Chancellor
Professor Joy Carter
Deputy Vice-Chancellor
Professor Elizabeth Stuart
Deputy Vice-Chancellor
Professor Neil Marriott
Clerk to the Board of Governors
Mr Nigel Trethewy
Principal Bankers
Nat West Bank PLC 105 High Street Winchester Hampshire SO23 9AW
External auditors
RSM UK Audit LLP (formerly Baker Tilly UK Audit LLP) Davidson House Forbury Square Reading RG1 3EU
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
2 University of Winchester, Hampshire
Governors The following are current Governors (Directors) of the University or those who served during the year ended 31 July 2015 Diocesan Members Richard Denys Wilkinson (Chair) Winifred Anne Charlotte Harris (Vice-Chair) Mark Byford Alan Charles Lovell Tim Dakin, The Right Revd The Bishop of Winchester (ex-officio) Paul Moore David Stewart Walton David Williams, The Right Revd The Bishop of Basingstoke Jennifer Ruth Williamson Co-opted Members David Cook Simon Francis Eden Margaret Julia Newbigin Peter Martin North Jane Jessop Margaret Chin-Wolf Academic Governors Professor Joy Carter (ex-officio) Professor Elizabeth Bridget Stuart (ex-officio) Professor Neil Marriott (ex-officio) Yassein El Hakim Graham Ixer Paul Robert William Jackson Support Staff Governors Catherine Beck Lesley Black Patricia Mary Kernan
Appointed on
Resigned on
1 August 2014
1 August 2014 1 August 2014 31 July 2015
31 July 2015 31 July 2015 1 August 2014 1 August 2014
23 January 2015 1 August 2014
1 August 2015 31 July 2015
Former Student Governor Robert Stephen Baldwin John McKenna
1 August 2015
Student Governor Naomi Carter Savannah King
1 August 2014 1 August 2015
31 July 2015
31 July 2015
Clerk to the Governors / Company Secretary Nigel Trethewy 3 University of Winchester, Hampshire
Directors’ Report Every Director and member of the company is also an acting Governor of the University. For the purpose of these financial statements any reference to a Governor also refers to his / her role as a Director of the company. The Board of Governors is responsible for ensuring that proper books of account are kept, for appointing the auditors, approving the annual budget and financial statements and has overall responsibility for the University’s assets, property and estate. In discharging this responsibility the Board of Governors ensures that the accounting records disclose, with reasonable accuracy at any time, the financial position of the University to enable it to ensure that the consolidated financial statements are prepared in accordance with the Memorandum and Articles of Association, the Statement of Recommended Practice on Accounting in Further and Higher Education Institutions, the Companies Act and other relevant accounting standards. In addition, within the terms and conditions of the Financial Memorandum agreed between the Higher Education Funding Council for England (HEFCE) and the Board of Governors of the University, the Board of Governors, through its Accountable Officer, is required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the University and the surplus or deficit and cash flows for that year. In causing the financial statements to be prepared the Board of Governors ensures that Suitable accounting policies are selected and applied consistently Judgements and estimates are made that are reasonable and prudent Applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements Financial statements are prepared on the going concern basis unless it is inappropriate to presume that the University will continue in operation. The Board of Governors is satisfied that the University has adequate resources to continue in operation for the foreseeable future: for this reason the going concern basis continues to be adopted in the preparation of the financial statements. The Board of Governors has taken reasonable steps to •
ensure that funds from HEFCE and the National College for Teaching and Leadership (NCTL) are used only for the purposes for which they have been given and in accordance with the Financial Memorandum with the HEFCE and the Funding Agreement with the NCTL and any other conditions which the HEFCE or the NCTL may from time to time prescribe • ensure that there are appropriate financial and management controls in place to safeguard public funds and funds from other sources • safeguard the assets of the University and to prevent and detect fraud • secure the economical, efficient and effective management of the University’s resources and expenditure.
The Board of Governors meets at least three times a year and has several Committees, including a Standing Committee, a Human Resources Committee and an Audit Committee. All Committees are formally constituted with terms of reference and comprise mainly Governors, one of whom is the Chair.
4 University of Winchester, Hampshire
Strategic Report incorporating the Operational and Financial Review 1.
MISSION AND VALUES
The University of Winchester is a successful institution which is world-leading in valuesdriven 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: 'To educate, to advance knowledge and to serve the common good.' Our values: We value freedom, justice, truth, human rights and collective effort for the common good. The plans and actions of the University of Winchester are founded in these ideals together with the following values:
Intellectual Freedom Intellectual freedom and its appropriate expression are at the heart of our business.
Social Justice We seek to embody social justice and develop our students as effective and fulfilled global citizens. They will be prepared to challenge the status quo and will have the strength to stand up for what they believe to be true.
Diversity Diversity enriches our community, learning experience and global outlook.
Spirituality The University celebrates its Christian Foundation. We welcome people of all faiths and none. Together we seek to explore the mystery of life and grow in wisdom and love.
Individuals Matter The wellbeing of individuals is important, as are their opinions and views.
Creativity Permeability, agility and imagination are central to our thinking: we endeavour to act as a crucible for the generation and exchange of knowledge.
It is our ambition that no student will pass through our hands without gaining knowledge, without being challenged and without growing with us in wisdom and in love. 175 years of excellence: The University of Winchester is proud to celebrate 175 years since it was founded in 1840. The roots of the University of Winchester began when the Winchester Diocesan Training School was founded as a Church of England foundation, designed to provide training of elementary schoolmasters. 6 University of Winchester, Hampshire
The celebrations during the year included:
1.1
The instigation of a number of 175th Anniversary Studentships The refurbishment of the University Chapel Book launches An Alumni Honorary Graduation
Risk Management
Risk management is at the core of the University’s Governance. Each year the University produces a 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 University’s risk register is continually updated. The last revision was published in January 2015 and the top five risks identified in this register are as follows: 1. Student Recruitment - The University continues to look to the future to ensure that it is able to maximise its recruitment position from 2015 and beyond. This risk is at our forefront due to an ever competitive market and with a forecast decline in the demographic population of school leavers in the coming years. 2. Student Experience – We continue to conduct a final year student survey followed by meetings between final year cohorts and the Deans with the aim of addressing issues swiftly. Numerous campus wide initiatives have been incorporated as a consequence of this process. 3. Teacher Education – The University has implemented a number of initiatives to mitigate this risk including biding for consultancy and project links with schools where possible, re-validation of Initial Teacher Education (ITE) programmes to enhance student recruitment, offer innovative forms of partnership to schools and gather intelligence on tender opportunities. 4. Graduate Employability – The University has raised the awareness and importance of the Careers department and each Faculty has been tasked with graduate employability action plans and targets which are regularly reviewed. 5. IT Infrastructure – The University continues to invest in its IT support the student experience. Recent improvements SharePoint intranet, the development of high quality, IT learning spaces, substantial investment in multimedia loan facilities, and an extended wireless network service.
infrastructure to include a new enabled social equipment and
The Senior Management Team act as the Risk Management Group and meet regularly in order to ensure an up-to-date and live risk register. 1.2
Excellence and Continuous Improvement
Following the success of the UK Excellence Model Awards in 2014, the University has been shortlisted as a finalist for the British Quality Foundation Leadership Award. To continue and further develop the successful work already done in achieving finalist status for the UK Excellence Award the Continuous Improvement Unit (CIU) has been 7 University of Winchester, Hampshire
implementing key improvement opportunities to further enhance the University 2016 UK Excellence Model Award submission. The CIU Unit brings together colleagues from across the University, with both academic and professional services backgrounds. The unit ultimately aims to work across the University to remove inefficiencies in processes and eliminate wasted effort so resources can be focussed on making the University the best it can be. Having a dedicated team provides the extra resources, both in terms of time and expertise, to really drive change at all levels of the organisation. The CIU team have all completed Lean practitioner training. As well as working on process improvement projects the unit will also oversee and assist with other key projects and are currently project managing the installation of a new Customer Relationship Management (CRM) system. The CRM system will enable us to engage better with students on their Student Journey, from their first initial contact with the University through to when they become alumni. 2.
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:
2.1
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 workers on a nationally-accepted salary scale. The University has been accredited as a Living Wage Employer in 2015. Equality and Diversity
The University is committed to equality and supporting the diversity of our staff, students and local communities. 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. The University of Winchester is a Stonewall Diversity Champion and holds an Athena Swan institutional bronze award. A values-led institution, we delight in diversity and are committed to creating a safe and supportive working environment for all staff and students. The University welcomes applications from disabled people, and guarantees an interview to disabled applicants who meet the essential criteria for the post. Where an existing employee becomes disabled, every effort is made to ensure that employment with the University continues. The University’s policy is to provide training, career development and opportunities for promotion which are, as far as possible, identical to those for other employees. The University will implement any reasonable adjustments that could be made for staff or applicants with disabilities.
8 University of Winchester, Hampshire
2.3
Health and Safety
The University’s Health and Safety Policy outlines the roles and responsibilities of all employees, students, visitors, other employers, subcontractors and all others who may be affected by activities on its premises and elsewhere. Supporting the Health and Safety Policy are an increasing range of Policy, Procedure and Guidance documents which will continue the process of setting the standards the University requires from its staff and students. All University employees have legal duties under the Health and Safety at Work Act 1974; including taking reasonable care for their own health and safety and that of any other person who may be affected by their acts or omissions and not interfering with or misusing anything provided for health, safety or welfare. Employees are also responsible for making themselves familiar with, and conforming to, all University regulations and codes of practice and for reporting any accident, dangerous occurrence or hazard. Staff must ensure that students under their supervision conduct themselves in accordance with health and safety requirements. Some role holders have specific legal and other duties allocated to them and these are identified in the University’s Policy. Training, resources and information are provided to ensure that employees and others work and perform all tasks safely without risk to the health and safety of themselves and others. The University Policy is underpinned by the Health & Safety Strategic Plan which is an essential element of the health and safety improvement process and the development of the University’s health and safety culture. The key elements identified in this Plan and the University’s policies, codes of practice and guidelines are the level of improvements achieved and the University’s health and safety performance which are measurable through the processes of risk assessment, auditing and benchmarking. The Health and Safety Strategic Plan helps to ensure that the main requirements of the Corporate Manslaughter Act 2008 are implemented and reflected in the University’s commitment to and procedures for health and safety and the promotion of a health and safety culture throughout the organisation. The primary method for measuring the level of health and safety compliance achieved against identified objectives is reported annually as part of the University’s audit process. 2.4
Sustainable Development
The University considers sustainability to be of the utmost importance and has ‘Sustain’ as a strategic priority, putting institutional sustainability and global sustainability at the University’s heart. The University is keen to construct new buildings that are both efficient and long lasting. To this extent we consider incorporating BREEAM standards, where practical, to our existing buildings and future construction projects. The University has been working hard to reduce its carbon emissions and improve environmental performance year on year. Target reductions have been established for carbon emissions, energy and water consumption and carbon emissions have reduced by more than 40 per cent per square metre of the estate since 2006, recycling rates have increased to 70 per cent, dramatically reduced water consumption and the University buys only 100 per cent renewable energy. The University now has 3 renewable energy installations. Solar Photovoltaics have been installed on the Burma Road Student Village, St Alphege and Bower Buildings. The University has recently won a gold award in the Carbon Smart environment awareness scheme run by Winchester City Council. The University was one of the first to sign up to the Carbon Smart initiative, which was launched in 2012, and this is its third consecutive year of 9 University of Winchester, Hampshire
achieving a gold accreditation which is a prestigious endorsement of our carbon reduction achievements. The Brite Green ‘Carbon Target Progress Report’ published in September 2015 ranked the University 5th in the sector for its 40.06% reduction in carbon dioxide emissions since 2008. This independent study compares the change in emission intensity by floor space of Universities to determine the ranking, a further affirmation of the considerable progress the University is making in sustainability. The University has committed to reduce its water consumption by the end of 2015, from 2006/7 levels. It is doing so through a range of cost effective measures by putting in place a number of efficiency measures and leak identification processes. The Estates department has introduced a new standard specification document for construction and refurbishment which requires that water saving devices must be installed in all new buildings and refurbishments. A new monitoring and tracking system will allow for identification of leaks within buildings by checking the water consumption of a building at times when they are closed. The University continues its innovative carbon charging for staff and student permits. Our Green Travel Plan has set targets for a number of green initiatives to improve green modes of transport including electric vehicle charging points. Charging points and preferential parking bays 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 measures. Recycling rates at the University have continued to increase to almost 70% and now with no waste being sent to landfill. Biodiversity A joint project with the Student Union was launched in summer 2012 with the aim of increasing biodiversity on campus. Hampshire Wildlife Trust 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. Projects completed as a result of the BAP to date include;
Installation of bat and bird boxes in various locations on campus
Creation of a staff and student allotment at Holm Lodge
Creation of a wildlife pond at Holm Lodge
Creation of log pile habitats on campus
Butterfly garden at West Downs
Community Engagement The University supports a number of local community groups through the sponsorship of events and staff volunteering. The University operates an Employer Supported Volunteering Scheme (ESV) to encourage employees to support local and national charitable causes. 53 staff offered voluntary support under the ESV scheme and a further 29 staff undertook private volunteer work during the year. Section 2.5 Employee Involvement outlines some of the community engagement activities members of staff have supported during the year. The University is also proud to be supporting the introduction of a Hampshire Community Bank. The goal of the bank is to help create a strong and sustainable local economy in 10 University of Winchester, Hampshire
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 The University continues to support Winchester Action on Climate Change (WinACC) with annual funding and office space. The University Energy and Environment Manager is a member of the Board of Trustees of this charity. Procurement 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 Fayre member, has been awarded a number of accolades for its sustainable food including;
Sustainable Restaurant Association Accreditation (the only University in the country to achieve this)
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
The HEFCE Audit code of Practice requires 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. To this extent an annual report of ‘Best Value’ is presented to the Board of Governors by the Vice-Chancellor. 2.5
Employee Involvement
Staff Volunteering The University actively supports our staff to volunteer and get involved with community activities; one such way being through the provision of an Employer Supported Volunteering scheme (ESV). The purpose of the scheme is to encourage more staff to engage with volunteering/community activities by enabling them to do so during their working hours. Staff can participate in a one-off volunteering activity or give more hours to an already established volunteering role. They can partake in the scheme individually or as part of a team such as a departmental away-day. In the last year (2014/15) the ESV scheme enabled staff to support the following organisations: Abbeyfield Winchester Society (sheltered accommodation) – team project day Autism Hampshire – team project day Girl guiding and Scouts UK – activity leaders 11 University of Winchester, Hampshire
Hampshire Constabulary – road policing unit Link Ethiopia – literacy consultant Raleigh International – volunteer manager SGOSS – school governor at Wimborne Infant School Sir Harold Hillier Gardens – team project day
In addition to ESV volunteering staff are also involved with volunteering activities during nonwork time. Activities for the past year include:
Age UK Christmas meal – hosted at the university and run with staff volunteers
Hampshire Archives and Records Office – archive volunteer
Hampshire Constabulary – special constable volunteers
Employee Wellbeing and Engagement The University is placing a renewed emphasis on the wellbeing and engagement of its staff. In order to better understand the current situation in this regard, the University undertook a brief ‘Taking the Pulse & Wellbeing and Engagement’ servey. The survey was completed by 56% of staff and identified that the University has a highly committed team of staff, with 96% of respondents committed to the success of the University, 90% enjoying their job and 86% feeling motivated to give their best in their role. Communication, valuing staff, line management and work/life balance have been prioritised as areas for improvement moving forward. New initiatives are already being carried out in all these areas. 2.6
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. The overarching purpose of our Treasury Management Policy is to avoid risk rather than maximise return. Consequently the successful identification, monitoring and control of risk are the principal criterion by which the effectiveness of our treasury management activities are measured. The University’s 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 Standing Committee; the report includes a proposed Treasury Management Strategy for the forthcoming year. 3.
PUBLIC BENEFIT
As an exempt charity the University of Winchester must demonstrate that it has due regard to the Charity Commission’s guidance on public benefit and this is embedded in both our mission: To educate, to advance knowledge and to serve the common good 12 University of Winchester, Hampshire
and values: We value freedom, justice, truth, human rights and collective effort for the public good Our Board members are aware of their duties with regard to public benefit and are conversant with the Charity Commission guidance in this area. 3.1
Education
The University enables more than 6,900 students to enjoy the benefits of higher education. Our principal regulator is the Higher Education Funding Council for England (HEFCE) from whom we receive some block grant to fund teaching and research. As a result of changes to higher education funding our block grant for teaching will disappear in the coming years and we will be required to agree 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 ÂŁ1.5m in the form of non-repayable bursaries and scholarships. 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 follow: Our Faculty of Arts Over the academic year of 2014/15, the faculty has been engaged in an ambitious programme of validations and re-validations which has resulted in several new programmes being brought on-stream in the current academic year or significantly re-shaped in order to respond to shifts in the recruitment market. New programmes validated include BA Musical Theatre and BA Comedy: Performance and Production (both of which have recruited in the 2015/16 year) while we have completely re-designed our Media and Journalism Studies degrees to offer a comprehensive suite of Media & Communication programmes that have already started to increase student recruitment in this area of study. We are currently developing a BA Popular Music degree and initiating a number of developments in our English Language provision (including sandwich year options and integrated Masters) which are due to come on stream from 2016 entry onwards. Through these means, the Faculty has deliberately set out to improve both levels of application and recruitment while also relating programmes more closely to the employability agenda. The Faculty is keen to engage with the wider world, either through collaborative projects with international partners or encouraging students to broaden their global view through international projects and field trips. For example, the 2014/15 year has seen on-going international projects with partner institutions in Portugal and Sweden involving both staff and students (Music/Theatre/Landscape) and the Accelerator Project that has over 20 partners, both arts institutes and professional arts organisations. This year a group of American Studies students were invited to join a 'Civil Rights Pilgrimage' to Alabama, Mississippi and Arkansas organised by our exchange partners the University of Wisconsin at Eau Claire. This was in addition to the annual American Studies field trip. 2014/15 also saw the conclusion of the ZEPA 2 project that linked the Street Arts Degree with Universities, creation centres and festivals in Northern France. There are many other examples of international 13 University of Winchester, Hampshire
engagement that have recently taken place and more planned for the future – this is one way in which the Faculty seeks to meet the strategic aims of the University. Our Faculty of Business, Law and Sport The Department of Accounting and Investment added to its contributions in the field of accounting education research and also hosted a research methods workshop and conference for early career researchers in Accounting, partly funded by the British Accounting and Finance Association. Undergraduate programmes continued to recruit well and expanded further into the area of investment, complementing existing provision in the areas of accounting and finance. The Department initiated two new partnerships with ERASMUS members to provide additional opportunities for staff and student exchanges and for further internationalisation of the curriculum and research environment. The Department also commenced planning for new postgraduate and professional programmes to be validated in the following year. The Department of Applied Management Studies launched a degree apprenticeship programme, the BSc (Hons) Digital and Technology Solutions. The Business School has pioneered innovations in degree apprenticeships, delivering collaborative programmes with CGI for over six years. This wealth of experience enabled the Department to work with the Tech Partnership in developing a national framework for degree apprenticeships. We have achieved a gold standard award for our new programme and have partnered with Fujitsu and SMEs in the region including Quicksilva and Transactor Global Solutions. The Department of Global Issues and Responsible Management successfully revalidated our Doctorate of Business Administration (DBA) and recruited 10 students to a first cohort. In Learning and Teaching developments, Dr Roz Sunley successfully gained a National Teaching Fellowship. From a selection of significant research outputs for the Department, Professor Alan Murray published two books: Keith Skene and Alan Murray (2015), Sustainable Economics: Context, Challenges and Opportunities For the 21st Century Practitioner, Sheffield: Greenleaf. Michael Blowfield and Alan Murray, (2014) Corporate Responsibility. Oxford: Oxford University Press, 3rd Ed. The Department of Sport and Exercise continued to enhance its international reputation for research and consultancy in 2014/15. The department engaged in collaborative research with the North Hampshire NHS trust on enhancing stroke rehabilitation, exercise referral for primary and secondary care, and advances in surgeon-patient interactions. As well as this we have collaborations with the Andrew Simpson Sailing Foundation, Hampshire and Isle of Wight Sport, and Winchester Penguins. Consultancy activity through the Sport and Exercise Consultancy Unit (SECU) included work with a range of partners including: English Institute of Sport, Bristol Rugby Club, Saracens RFC, Union Cycliste Internationale (UCI), Portsmouth Football Club, Portsmouth City Council, Sports Coach UK and Newcastle Falcons RFC.
14 University of Winchester, Hampshire
Our Faculty of Education, Health and Social Care The Department for Teacher Development is a leading provider of high quality initial teacher training, and was awarded ‘outstanding’ status at the recent focussed monitoring inspection by Ofsted. The department has diversified its delivery of initial teacher training with the roll out of Primary School Direct provision and the validation of the Fareham and Gosport SCITT. The Department continues to provide CPD opportunities across Hampshire, Wiltshire, Portsmouth and Southampton for physical education and mathematics curriculum design. The department also continues to lead the Quality Through Leadership (QTL) consortium and works closely with Local Authorities and Teaching School Alliances to provide leadership development. The Department for Education Studies and Liberal Arts maintains a national reputation for excellence in academic studies in education. The department continues to recruit over 100 undergraduate students per year and has growing postgraduate provision. Its staff featured highly in the Education submission to REF 2014, with 60% of outputs judged to be either world-leading or internationally excellent, with 87% overall being of international quality or above. The Department for Interprofessional Studies offers a combination of academic study and vocational training at undergraduate and postgraduate level. The success of the ‘Step Up to Social Work’ Programme has inspired the development of an MSc Social Work programme at Winchester as well as the replication of the Step Up model nationally. The growing national reputation of the MA Medical Education has led to an invitation to provide off-site delivery for an additional NHS Trust. The success of the PG Dip Delivery of Primary Healthcare has been built upon with the validation of the MSc Delivery of Primary Healthcare, which continues in the context of outstanding relations with the local Deanery and the wider GP community. Our Faculty of Humanities and Social Sciences Staff in Archaeology have continued to run a high-profile research and training annual archaeological excavation just outside the City of Winchester at the site of the oldest known hospital on Magdalen Hill. The research was recently featured in a BBC2 programme ‘Digging for Britain’. Work is carried out with volunteers from local communities and visits are arranged to view the excavation. Colleagues in the departments of History and Archaeology promote the cultural development of the region through a seminar series open to the public and organised by the Wessex Centre for History and Archaeology. This also offers two conferences a year. We also run a seminar series on Comparative Medieval Cultures. We continue to work with Hyde 900, a cultural community group, to explore the final resting place of King Alfred the Great. Following the discovery of part of a pelvic bone most likely to be from Alfred the Great or his eldest son, Edward the Elder, a collaborative bid for further research fieldwork is under preparation. The History department runs a Modern History seminar series. In collaboration with the Holocaust Education Trust, colleagues arranged the visit of Steven Frank, holocaust survivor, who gave a talk and conducted a tree planting on the grounds of King Alfred’s Campus. An interdisciplinary project within the Faculty has brought together experts in Religious Studies, Archaeology and History to work on the creation of a Medieval Jewish Walk. In collaboration with Winchester City Tourism, a civic event was 15 University of Winchester, Hampshire
held in May with local members of the Jewish community, and this received mainstream media coverage. Through our work in the department of Theology Religion and Philosophy we support the training, advisory and collaborative work of numerous faith groups, community organisations and public sector bodies. These have included the Church in Wales, Church of England, Community of Protestant Churches in Europe, the Southampton Council of Faiths and the United Reformed Church. We have also worked with Greenbelt festivals and had a visible presence at their recent festival in August. Two centres with very different purposes, Animal Welfare and English Identity and Politics, have been established this year. Both have a strong external presence, and will build on local, regional and national links, including Compassion in World Farming and Southern Policy Centre. Directors of these centres are energetically organising a series of external events for the coming academic year. With the arrival of new staff linked to Policy and Social Policy we are developing new teaching and research activity, including a new BA in Philosophy, Politics and Economics. We have established a partnership link with the Social Market Foundation. Through the work in Applied Social Studies (Sociology, Criminology, Forensics and Geography), we continue to build relationships with external agencies and bodies, including the MOD Defence School of Policing and Guarding, Fareham, and Hampshire and Dorset Constabularies. The Crime and Justice Research Centre hosts regular lecture events on criminal justice which draw in a wide external audience, including a talk by Erwin Jones, convicted murderer and award winning journalist. New links with regional bodies are under development through the launch of a new undergraduate programme in Geography. We are proud of our academic research and maximise the benefits of research by advancing fundamental knowledge and contributing to better public policy, economic prosperity, social cohesion, international development, community identity and quality of life. 4.
THE ESTATE
Estates Strategy and Masterplan The Estates Masterplan was presented to the Board of Governors in March 2014. The document provided a strategic overview of the opportunities for redevelopment of the University Estate. The development of this document has allowed the production of a feasibility study for a large teaching and learning building on the West Downs Campus which will unlock the potential of the campus for future development. This has in turn led to further consideration of the Masterplan and the delivery of future phases. The University will be seeking final approval of phase 1 of the Masterplan, including the WD teaching and learning building, at its November 2015 Governors meeting. Facts and Figures The table below shows some benchmarking data from the 2013/14 Estates Management Statistics (EMS) report (the latest report available). The data indicates that the University is well served compared with the Cathedrals Group overall particularly in respect to residential provision. Academic (non-residential) space remains below the median of the group, 16 University of Winchester, Hampshire
however overall the Estate is in good condition compared to other institutions. Further investment in teaching and learning facilities as part of the first phase of Master Plan development will address the shortfalls in space per full time equivalent student. Recent investment in a new timetable system which was implemented in 2014/15 will provide data to overhaul the outmoded slotting timetable and lead to improved utilisation rates.
Winchester 13/14
Cathedrals Group Median 13/14
Non‐residential Gross Internal Area
34,010
42,996
M² Non Residential per student FTE
6.1
8.3
Utilisation rate teaching space
18%
28%
Functional suitability: % in Grade 1 and 2 non‐residential
100%
95%
Building condition Code A and B non‐ residential
100%
88%
Bed spaces / FTE student
0.26
0.12
Ratio
2014/15 Projects The largest project undertaken within the 2014/15 financial year is the renovation and extension of the Winton Chapel. This substantial refurbishment has been undertaken as a physical manifestation of the Universities 175th Anniversary. The project is due for completion at the end of October 2015. A project has also been delivered in the library to enhance the student experience through the provision of additional workspace, pc access and new student service desk for library and ITS. A number of small refurbishments have also been undertaken across the Estate. 5.
FINANCIAL REVIEW
2015 marks the University’s 175th anniversary, providing an opportunity to reflect on Winchester’s achievements and to look forward to a prosperous future ahead. The year has also seen the installation of a new Chancellor, Alan Titchmarsh MBE, and Winchester achieving a rank in the top 4 universities in England for overall satisfaction in the National Student Survey 2015. Sixteen courses received a 100% satisfaction score and the Student Union was ranked in the top 10 in the UK. The University achieved a strong outturn from the 2014 Research Excellence Framework (REF) review with 82% of our research being considered internationally recognised, of which 8% was also considered world-leading. The financial results of the University of Winchester for the year ended 31 July 2015 reflect a year of success with continuing sound financial strength and sustainability. The University achieved a surplus for the year to 31 July 2015 of £7.0m (10.9% of income). This compares to a surplus of £6.4m (11%) in 2013/14. In the volatile world of UK Higher Education these results reflect a consistently high achievement and a continued improvement in cash reserves to fund further investment in the estate.
17 University of Winchester, Hampshire
In addition to investment in our infrastructure, expenditure is also required to meet the University’s strategic aims. As a result, the University is developing substantial capital infrastructure plans and aims to generate sufficient surpluses on operations which, in spite of diminishing external capital funding, will allow for capital investment in facilities appropriate to a world-class, world leading University. 5.1
Income and Expenditure Account
The chart below plots the surplus achieved and surplus as a percentage of income over the last five years.
Surplus and surplus % of income £000's 8,000
7,040
7,000
6,444
6,000
10.0%
5,443 8.0%
5,000 4,000
12.0%
4,339 6.0%
3,319
3,000
4.0%
2,000 2.0%
1,000
0.0%
2011
2012 Surplus (£000's)
2013
2014
2015
Surplus percentage of income
Income Overall turnover increased by £6.3m to £64.9m; an increase of 10.7%. Funding body grants reflect funding from the Higher Education Funding Council for England (HEFCE) (£2.3m) and from the National College for Teaching & Leadership (NCTL) (£0.8m.) Income reduced from both HEFCE by (£2.8m) and NCTL by (£1.0m) reflecting the new funding regime which transfers funding from grants to tuition fees. In accordance with HEFCE guidance the University is accounting for the National Scholarship Programme (£260k) and its associated cost on the balance sheet; only the University’s committed matched funding is being recorded through the Income and Expenditure account (as a reduction of income.) Research funding from HEFCE was £633k (2013/14: £643k). Income from Tuition fees and education contracts has increased by £9.6m as a result of the introduction of the new funding regime reported above and as a reflection of the University’s growing popularity. The University again exceeded its intake target for the HEFCE student number control and met its target for NCTL contracts and recruited 284 ABB+ students outside of the student number controls. The analysis of Tuition fees and education contracts income between various types of students is presented as note 2 to the accounts. In accordance with the Statement of Recommended Practice: Accounting for Further and 18 University of Winchester, Hampshire
Higher Education 2007 fee waivers have been netted-off tuition fee income rather than shown as a cost. Research grants and contracts have reduced by £90k since 2013/14 primarily due to a reduction in the level of funding from the Arts and Humanities Research Council. Other income has increased by £511k. Note 4 to the accounts shows that just over 84% of our reported income under this heading related to catering, conferencing and accommodation rental income, which has increased by £573k on the previous year due to rental price increases and growth in the University managed rental property portfolio. Staff Costs The table below analyses staff costs by separately identifying the cost of redundancies and the FRS17 pension adjustment. Core staff costs increased by 9.7% although within this increase is a 9.3% increase in social security costs and 11.9% increase in pension costs (excluding the FRS17 LGPS adjustment).
14/15
13/14
(Increase)/ Decrease
£'000
£'000
£'000
Staff costs
31,440 28,650
Cost of redundancies FRS17 LGPS pension cost
110
4
(106)
(100)
20
120
31,450 28,674
(2,790)
(2,776)
Staff costs are our largest costs and maintaining these at reasonable levels is essential. 2014/15 is the fifth consecutive year that we have kept staff costs below 50% of our income.
Staff cost percentage of income; Staff FTE's 800
55.0%
700 600 500
51.0%
400 49.0%
300
Staff FTE's
Staff cost percentage
53.0%
200
47.0%
100 ‐
45.0% 2011
2012
2013
Staff Cost %
2014
2015
Staff FTE's 19 University of Winchester, Hampshire
Other operating expenses Operating expenses increased by £2.8m (13.9%) and note 8 to the accounts provides a further breakdown of this increase. Within this category bursaries and scholarships increased by 11.7% as the University increased its support for widening participation. The cost of residences, catering and conferences increased by £819k (19.2%) reflecting the associated increase in other income. A further £476k increase in estate maintenance and repairs cost was incurred partly due to the expensing of £144k of preliminary expenditure on the West Downs Estate development; an increase of £419k on software and related costs has resulted from the University’s investment in its IT systems including a new CRM (Customer Response Management) system, implementation of a new Finance system and other helpdesk and tender support applications. The costs associated with heat, light and power reduced by 7.4% reflecting the University’s continued improvements in energy efficiency throughout the campus. Interest payable reported in the income and expenditure account has decreased by £82k primarily due to the continued servicing of loan debt. 5.2
Balance Sheet
Fixed Assets Additions in the year are £3.0m (£3.7m 2013/14) which includes the completion of the Main Building senior management team office refurbishment (£812k). Assets in course of construction include a project to refurbish Winton Chapel (£743k) which is due to complete in the first half of 2015/16 at a further cost of £557k reported under capital commitments (note 26). The project is to renovate and extend the University’s Victorian Chapel to be one of the most visible expressions of the celebrations to commemorate the 175th anniversary. Originally built in 1880, and then extended in 1927, the Chapel in the centre of the University plays a vital role in University life for students, staff and members of the community. It is a centre of worship and discussion, open to people of all faiths and of none – it can be a place of quiet contemplation, those seeking support or a guiding hand when they need it most, as well as a place of joy and celebration. The Chapel is used for a number of different events and purposes – these include concerts by the Foundation Music choirs and ensembles, and being a war memorial for the two World Wars, it acts as a focal point for both reflection and remembrance. Debtors and prepayments Total debtors have increased by £237k (9.4%) in the year to £2.8m. The increase was primarily due to additional software licences, support and hosting prepayments following the University’s continued investment in back office and campus management systems. The increased use of off site hosting for applications software has also increased the IT software costs. Trade debtors have only increased by £7k (0.8%) in the year whilst total income has increased by 10.7% over the same period reflecting the University’s continued focus on debt management. Creditors Short term creditors have increased by £332k in the year, primarily due to an increase in accruals and deferred income. Payments to suppliers are typically made at the end of each calendar month following receipt of invoice. Therefore, on average, suppliers are paid by 45 days after receipt of 20 University of Winchester, Hampshire
invoice. Whilst trade creditors have increased by £228k in the year, this has been offset by accrued capital expenditure which has decreased by £295k over the same period. Creditors falling due after more than one year have decreased by £1.1m (12.1%). This was partly due to the completion of the Salix Revolving Green Fund (£151k decrease) but most notably due to the continued servicing of the loan debt which now stands at £8.7m (see note 19). Cash Net liquid assets as at 31 July 2015 were £22.5m, an improvement of £5.7m on the previous year. This improvement was largely due to a cash inflow from operating activities which increased by £0.5m to £9.8m coupled with a £0.7m reduction in capital expenditure. Debt servicing costs (capital plus interest) were £1.4m which represents 2.2% of turnover (2.7% 2013/14).
Cash Reserves
£'000 25,000
Borrowings
£'000 22,488
14,000 12,052 12,000
20,000 16,813 15,000
12,214
11,057
11,401 10,530 9,617
10,000
8,654
8,000
12,377
6,000
10,000
4,000 5,000 2,000 -
2011
2012
2013
2014
2015
2011
2012
2013
2014
The LGPS pension liability has increase by £1.4m to £11.7m (£10.3m 2013/14) as outlined in note 32(b). 6.
FUTURE OUTLOOK
In light of the ever changing funding and policy landscape in which we operate it was agreed that an annual review of our Strategic Plan would be appropriate. The revised plan for 20152020 was ratified by the Board of Governors on 4th March 2015. The strategic plan is formed around the three Strategic Priorities of Educate, Advance Knowledge and Sustain: Strategic Priority 1: Educate 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 21 University of Winchester, Hampshire
2015
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. The Custodian Trustee is the Winchester Diocesan Board of Finance and the provisions of Section 4(2) of the Public Trustees Act 1906 apply. Responsibilities of the Board of Governors The University’s Board of Governors comprises persons appointed under the University’s Memorandum and Articles of Association, the majority of who are independent of the University. There is provision for the appointment of co-opted members, members of academic and support staff and a student governor. The role of the Chair of the Board of Governors is separated from the University’s Chief Executive, the Vice-Chancellor. 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 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.
23 University of Winchester, Hampshire
Governors’ liability on winding up 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. The Standing Committee, subject to the Memorandum and Articles of Association, 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 Academic affairs Financial affairs Student affairs Estates and buildings matters including property transactions Such other matters as the Board of Governors may determine.
The Standing Committee is also 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 their approval or otherwise. Standing Committee agrees the agenda for meetings of the Board of Governors. The 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. 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 Financial Memorandum between the University and the HEFCE, the ViceChancellor 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.
24 University of Winchester, Hampshire
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 Memorandum and Articles of Association, and the Financial Memorandum with the HEFCE. The University complies with the CUC Code of Practice and refers to best practice guidance, including guidance from the British Universities Finance Directors Group.
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 2015 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 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 Vice-Chancellor receive an annual report from the Chair of the Audit Committee covering the business of the Committee over that year. The Board has delegated to the Audit Committee some of the responsibility for providing oversight of risk management. The 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 service level 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. A robust risk prioritisation methodology based on risk ranking and cost-benefit analysis has been established. An organisation-wide Risk Register, which is informed by HEFCE’s guidance ‘Risk Management: A Guide to good practice for higher education institutions’, is maintained. The Risk Register identifies those risks which might prevent the University from achieving its strategic priorities. This has been subject to a thorough review and the revised Risk Register with effect from 2014 is an up-to-date and ‘live’ register. A Risk Management Group, chaired by the Vice-Chancellor and comprising the Senior Management Team, meets at least three times a year to monitor and review risks. Risks are assigned to risk-owners and are moved up or down the Risk Register accordingly throughout the year. 25 University of Winchester, Hampshire
INDEPENDENT AUDITORS’ REPORT TO THE BOARD OF GOVERNORS OF UNIVERSITY OF WINCHESTER We have audited the financial statements of University of Winchester for the year ended 31 July 2015 which comprise the Income and Expenditure Account, Statement of Total Recognised Gains and Losses, the Balance Sheet, the Cash Flow Statement and the related notes. The financial framework that has been applied in their preparation is applicable law, United Kingdom Accounting Standards and the Statement of Recommended Practice: Accounting for Further and Higher Education (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the University’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act and section 124B of the Education Reform Act 1988. Our audit work has been undertaken so that we might state to the University’s members 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 University’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Governors and Auditors The Governors (who are also the directors for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland) and the Audit Code of Practice issued by the Higher Education Funding Council for England. Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit A description of the scope of an audit of financial statements is provided on the Financial Reporting Council (FRC) website at www.frc.org.uk/auditscopeukprivate. We also report to you whether income from funding bodies, grants and income for specific purposes and from other restricted funds administered by the University have been properly applied only for the purposes for which they were received and whether income has been applied in accordance with the Statues and, where appropriate, with the Financial memorandum with the Higher Education Funding Council for England. Opinion on financial statements In our opinion:
the financial statements give a true and fair view of the state of the University’s affairs as at 31 July 2015 and of the surplus of income over expenditure for the year then ended;
the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice and the Statement of Recommended Practice: Accounting for Further and Higher Education;
27 University of Winchester, Hampshire
UNIVERSITY OF WINCHESTER INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 JULY 2015
Note INCOME Funding body grants Tuition fees and education contracts Research grants and contracts Other income Endowment and investment income
1 2 3 4 5
Total Income EXPENDITURE Staff costs Depreciation of tangible fixed assets Other operating expenses Interest and other finance costs
6 7 8 9
Total Expenditure SURPLUS BEFORE TAX
2015 £ 3,643,860 47,517,184 523,650 13,041,258 149,656
7,465,581 37,869,484 614,019 12,529,913 115,356
64,875,608
58,594,353
31,450,441 3,102,361 22,731,145 552,642
28,673,973 2,887,094 19,954,376 634,568
57,836,589
52,150,011
7,039,019
6,444,342
Taxation
10
SURPLUS AFTER TAX
11
7,039,019
Transfer from accumulated income within endowments
22
728
SURPLUS FOR THE YEAR RETAINED IN RESERVES
2014 £
-
7,039,747
6,444,342 (104) 6,444,238
The income and expenditure of the University relate wholly to continuing operations. The notes on pages 36 to 54 form part of these financial statements.
NOTE OF HISTORICAL COST SURPLUSES AND DEFICITS FOR THE YEAR ENDED 31 JULY 2015 Note
2015 £ 7,039,019
2014 £ 6,444,342
23
220,095
220,095
7,259,114
6,664,437
Surplus on continuing operations before tax Difference between historical cost depreciation charge and the actual depreciation charge for the year calculated on the revalued amount HISTORICAL COST SURPLUS FOR THE YEAR
29 University of Winchester, Hampshire
UNIVERSITY OF WINCHESTER STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 JULY 2015
Note
Surplus on continuing operations after depreciation, disposal of assets and tax New endowments Actuarial loss in respect of pension scheme
22 32(b)
Total recognised gains in the year since last financial statement
2015 £
2014 £
7,039,019 10,220 (1,500,000)
6,444,342 1,823 (670,000)
5,549,239
5,776,165
Reconciliation Opening reserves and endowments
48,582,295
Total recognised gains for the year
5,549,239
Closing reserves and endowments
54,131,534
30 University of Winchester, Hampshire
UNIVERSITY OF WINCHESTER CASH FLOW STATEMENT FOR THE YEAR ENDED 31 JULY 2015
Note
2015 £
2014 £
9,812,244
9,348,852
Cash flow from operating activities
28
Returns on investments and servicing of finance
29
(438,368)
(501,362)
Capital expenditure
29
(2,727,063)
(3,495,844)
6,646,813
5,351,646 1,013,032
Cash inflow before financing Management of liquid resources
29
(4,000,033)
Financing
29
(962,368)
INCREASE IN CASH
30
1,684,412
(913,324)
5,451,354
32 University of Winchester, Hampshire
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES FOR THE YEAR ENDED 31 JULY 2015 Accounting Convention The financial statements have been prepared under the historical cost convention, modified by the revaluation of endowment asset investments and certain land and buildings in accordance with both the Statement of Recommended Practice: Accounting in Further and Higher Education and applicable accounting standards. They conform to guidance published in HEFCE 14/15 accounts direction. The financial statements have been prepared on a going concern basis. This is informed by the University’s future financial forecasts/plans and its healthy cash reserves. Basis of Consolidation The financial statements do not include those of the University’s three subsidiary companies, KAC Enterprises Limited, Winchester Business School Limited and Winchester Management School Limited, on the grounds that they have been dormant since incorporation. The financial statements do not include those of Winchester Student Union as it is an independent association in which the University has no financial interest and no control or significant influence over policy decisions. Recognition of Income Higher Education Funding Council for England and National College for Teaching and Leadership grants, tuition fees, research grants and other income are accounted for on an accruals basis. Income from endowments, not expended in accordance with the restrictions of the endowment, is transferred from the Income and Expenditure Account to endowments. Taxation Status The University is an exempt charity within the meaning of schedule 3 of the Charities Act 2011 (formerly schedule 2 of the Charities Act 1993), and, is considered to pass the tests set out in Paragraph 1 Schedule 6 to the Finance Act 2010 and therefore it 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 287 CTA2009 and sections 471 and 478-488 of the CTA2010 (formerly s505 ICTA 1988) or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied to exclusively charitable purposes. The University receives no similar exemption in respect of Value Added Tax. Irrecoverable VAT on inputs is included in the costs of such inputs. Any irrecoverable VAT allocated to tangible fixed assets is included in their cost. Maintenance of Premises Maintenance of premises has been charged to the Income and Expenditure Account as incurred. Operating Lease Costs Operating lease costs are charged to the Income and Expenditure Account in the period in which they are incurred. 33 University of Winchester, Hampshire
Liquid Resources Liquid resources comprise assets held as a readily disposable store of value but not available within 24 hours without penalty. They include term deposits, government securities and loan stock held as part of the University’s treasury management activities. Fixed Assets Land and buildings were re-valued as at 31 July 1996 at depreciated replacement cost. The valuation was carried out by King Sturge and Co in accordance with the Appraisal and Valuation Manual published by the Royal Institution of Chartered Surveyors. Buildings are depreciated over their remaining useful economic life as assessed by King Sturge and Co and range from two to seventy years. Subsequent additions are held at cost which in certain cases includes interest paid during construction on loans specifically taken out to finance the relevant assets. Freehold land is not depreciated. Tangible assets are stated at either historic cost or valuation. The University intends to continue using these carrying values for the foreseeable future. In accordance with the provisions of FRS15 (Tangible Fixed Assets), it does not intend periodically revaluing assets. Depreciation on fixed assets other than land and buildings is calculated to write off their cost in equal annual instalments over the following estimated useful lives: In the year of acquisition twelve months depreciation is charged to the Income & Expenditure Account. Major Refurbishments Fixtures & Fittings Equipment IT equipment Motor vehicles
10 years 10 years 5 years 3 years 5 years
Assets under construction are accounted for at cost, based on the value of architects’ certificates and other direct costs, incurred to 31 July. They are not depreciated until they are brought into use. Equipment costing less than £5,000 is written off in the year of acquisition. Grants Grants received for capital purposes are credited to deferred capital grant accounts and released to match the related depreciation charges. Grants received for revenue activities are released directly to the income and expenditure account to match with the associated expenditure. Grants due but not received are shown as other debtors. Impairment A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying amount of any fixed asset may not be recoverable. For assets depreciated over a period greater than 50 years an annual impairment review is carried out in line with the requirements of FRS 15 (Tangible Fixed Assets). Stocks Stocks are valued at the lower of cost and net realisable value.
34 University of Winchester, Hampshire
Investments Endowment asset investments are included in the Balance Sheet at market value. It is a true and fair over-ride of Companies Act balance sheet presentation to show them as a separate category in line with the SORP. Fixed asset investments that are not listed on a recognised stock exchange are carried at historical cost less any provision for impairment in their value. Pensions The University contributes to the Local Government Pension Scheme (LGPS), the Teachers’ Pension Scheme (TPS) and the University Superannuation Scheme (USS). All schemes are defined benefit schemes but the TPS and USS schemes are multi-employer schemes and it is not possible to identify the assets of the schemes, which are attributable to the University. In accordance with FRS 17 these schemes are accounted for on a defined contribution basis and contributions to the schemes are included as expenditure in the period in which they are payable. The University is able to identify its share of assets and liabilities of the LGPS and thus the University fully adopts FRS 17 ‘Retirement benefits’. Agency arrangements Funds the University receives and disburses as paying agent on behalf of a funding body or other body, where the University is exposed to minimal risk or enjoys minimal economic benefit related to the receipt and subsequent disbursements of the funds, are excluded from the income and expenditure of the University. Provisions Provisions are recognised when the University has a present legal or constructive obligation as a result of a past event, it is probable that a transfer of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Enhanced Pensions The actual cost of any enhanced on-going pension to a former member of staff is paid by the University annually. An estimate of the expected future cost of any enhancement to the ongoing pension of a former member of staff is charged in full to the University’s Income and Expenditure Account in the year that the member of staff retires. In subsequent years a charge is made to provisions in the Balance Sheet in line with the latest calculations.
35 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS
Note 1
Funding body grants
Recurrent grant from HEFCE Recurrent grant from NCTL Recurrent research grant Specific grants Deferred capital grants released in year (note 21)
Note 2
Tuition fees and education contracts
Full-time students Full-time students charged overseas fees Part-time fees Self financing courses
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 endowment assets (note 22) Income from short term investments
2014 £
2015 £ 1,684,735 807,840 633,092 47,408 470,785
4,421,463 1,861,255 643,160 66,908 472,795
3,643,860
7,465,581
2014 £
2015 £ 39,128,140 3,995,789 1,783,742 2,609,513
30,612,358 2,989,051 1,648,869 2,619,206
47,517,184
37,869,484
2014 £
2015 £
614,019
523,650
2014 £
2015 £ 10,986,962 327,928 1,726,368
10,413,913 400,102 1,715,898
13,041,258
12,529,913
2015 £
2014 £
151 149,505
104 115,252
149,656
115,356
36 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS
Note 6
Staff costs
2014 Number
2015 Number
The number of persons (including senior post-holders) employed by the University during the year, expressed as full-time equivalents, was: Academic Staff Administration Staff
The number of students taught by the University during the year, expressed as full-time equivalents, was:
Staff costs: Salaries Social security costs Pension costs (note 32e)
281 417
252 404
698
656
6,201 6,201
5,805 5,805
2015
2014
£ 26,103,705 2,000,973 3,345,763
£ 23,745,274 1,829,855 3,098,844
31,450,441
28,673,973
Salaries include redundancy payments of £110,189 (2014: £3,608) The staff costs above include directors' and senior post holders emoluments of £803,587 and employer's pension contributions of £68,365. Five of the seven directors benefit from employer's pension contributions to a defined benefit pension scheme. As stated in the Statement of Corporate Governance and Internal Control no member of the Board of Governors receives any remuneration for the work they do as members of that Board. 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 highest paid director is the Vice-Chancellor whose emoluments are (included above): 2014 £
2015 £ Vice-Chancellor's emoluments for the year Remuneration Total emoluments including pension costs
234,456 234,456
238,985 238,985
Emoluments of other higher paid staff, including employer's pension contributions:
£110,001 - £120,000 £120,001 - £130,000
Note 7
Depreciation of tangible fixed assets
2015 Number 1 1
2014 Number 2 -
2015 £
2014 £
The depreciation charge has been funded by: Deferred capital grants released (note 21) Revaluation reserve released (note 23) General income
470,785 220,095 2,411,481
472,795 220,095 2,194,204
3,102,361
2,887,094
37 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS
Note 8
Other operating expenses
Residences, catering and conferences operating expenses 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
Other operating expenses include: Auditors' remuneration External audit External auditors - other assurance services Internal audit Operating lease rentals - vehicles & photocopiers - land & buildings Loss on disposal of assets (see note 12)
Note 9
2014 £
2015 £
Interest and other finance costs
Loans not wholly repayable within five years Pension finance costs (note 32b)
5,092,878 1,502,355 1,120,681 1,542,883 1,082,274 1,123,188 270,000 259,817 10,737,069
4,273,395 1,402,869 1,047,530 1,381,850 1,168,694 1,371,830 262,950 334,338 8,710,920
22,731,145
19,954,376
2015 £
2014 £
28,980 3,666 34,986 120,960 3,091,453 142,618
28,200 3,570 24,900 138,509 2,880,792 -
2015 £
2014 £
552,642 552,642
604,568 30,000 634,568
Pension finance costs represents the interest charge on accrued pension liabilities offset by a credit equivalent to the long-term return on assets based on the market value of the defined benefit pension scheme assets at the start of the period.
Note 10
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 ended 31 July 2015.
Note 11
Surplus on continuing operations for the period
2014 £
2015 £
The surplus on continuing operations for the period is made up as follows: University's surplus for the period
7,039,019
6,444,342
38 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS
Note 12
Tangible assets Freehold Land and Buildings
Assets in Course of Construction
Major Refurbishments
Motor Vehicles
Equipment Furniture & Fittings
Total
£
£
£
£
£
£
Cost/Valuation At 1 August 2014 Valuation Cost
-
At 31 July 2015 Valuation Cost
-
-
-
-
29,438,556 42,921,673
539,245
10,694,082
189,272
9,542,678
29,438,556 63,886,950
-
2,011,851 (1,402,293)
558,332 1,294,137
106,168 -
305,131 108,156
2,981,482 -
Additions at cost Transferred Disposals and write offs Cost
-
-
29,438,556 42,921,673
(143,874)
1,004,929
-
-
(2,403)
(146,277)
12,546,551
295,440
9,953,562
29,438,556 66,722,155
8,113,187
28,175,692
Depreciation At 1 August 2014 Charge for year Eliminated on disposals At 31 July 2015
15,119,877
-
4,821,834
120,794
1,408,177 -
-
1,017,975 -
52,681 -
16,528,054
-
5,839,809
173,475
8,734,312
31,275,650
623,528 (2,403)
3,102,361 (2,403)
Net Book Value At 31 July 2015
55,832,175
1,004,929
6,706,742
121,965
1,219,250
64,885,061
At 1 August 2014
57,240,352
539,245
5,872,248
68,478
1,429,491
65,149,814
Land and buildings were revalued as at 31 July 1996 at depreciated replacement cost. The valuation was carried out by King Sturge and Co. in accordance with the Appraisal and Valuation Manual published by the Royal Institution of Chartered Surveyors. There were no exchequer funded assets in the year. Assets in the course of construction as at 31 July 2015 relate in the main to: Winton Chapel refurbishment Main Building replacement windows and building work
£743k £122k
Assets in the course of construction transferred in this year relate in the main to: Senior Management Team office upgrade Alwyn Hall upgrade Quality Office refurbishment
£812k £356k £166k
Assets in the course of contruction written off in this year relate to: West Downs Teaching Facility initial costs
£144k
39 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS
Note 13
Investments
At 31 July
2014 £
2015 £
56
6
At 31 July 2015 the University owned 100% of the issued share capital of KAC Enterprises Limited, Winchester Business School Limited and Winchester Management School Limited. All companies are registered in England. All companies were dormant throughout the year. During the year LeNSE Ltd was dissolved and the University investment value of £50 was written off.
Note 14
Note 15
Endowment asset investments
At 1 August 2014 Additions At 31 July 2015
20,915 9,492 30,407
Represented by: Bank balances Total endowment asset investments
30,407 30,407
Stocks
Reprographic supplies Cleaning materials IT consumables Catering stock
Note 16
2015 £
Debtors
2014 £
2015 £
7,850 2,837 4,324 27,103 42,114
8,643 2,883 1,881 30,495 43,902
2014 £
2015 £
Amounts falling due within one year Debtors Prepayments and accrued income
Note 17
975,118 1,778,701 2,753,819
967,754 1,548,623 2,516,377
Short term investments
Central Board of Finance Lloyds Fixed Rate Bonds
2015 £
2014 £
6,661 5,000,000 5,006,661
6,628 1,000,000 1,006,628
40 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 18
Creditors: amounts falling due within one year 2014 £
2015 £ Mortgages and unsecured loans Trade creditors Other creditors Accrued capital expenditure Social security and other taxation payable Accruals and deferred income
Note 19
937,766 1,139,273 430,702 303,095 753,958 3,610,962
962,370 911,322 495,276 598,224 657,286 3,218,893
7,175,756
6,843,371
Creditors: amounts falling due after more than one year 2013 £
2015 £ Mortgages and unsecured loans Burma Road Nursery deferred income Salix Revolving Green fund
7,716,452 336,000 -
8,654,216 352,000 150,799
Total
8,052,452
9,157,015
937,766 974,666 3,194,457 3,547,329
962,370 937,766 3,058,195 4,658,255
8,654,218
9,616,586
Mortgages and unsecured loans are repayable as follows: In one year or less Between one and two years Between two and five years In five years or more
Throughout the financial year the University had the following borrowing arrangements in place: 1. A £4.7m 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. £2.1m remains outstanding as at 31 July 2015. 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 rennovating a listed teaching facility. £2.5m remains outstanding as at 31 July 2015. 3. A £5.0m loan from Allied Irish Bank, amortising over 25 years from August 2006, at an interest rate of 6.25% (£2.6m) and 5.13% (£2.4m), specifically for the purpose of building the University Centre. £4m remains outstanding as at 31 July 2015. 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.
41 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 20
Note 21
Provisions for liabilities and charges
Pension enhancement (note 32b): At 1 August 2014 Utilised in year Charge to Income and Expenditure Account
£ 516,079 (45,576) 28,642
At 31 July 2015
499,145
Deferred capital grants £ At 1 August 2014 Cash receivable
538,072
Released to Income and Expenditure Account:Funding depreciation charge
(470,785)
Movement in grants received in advance
(568,543)
At 31 July 2015
Note 22
9,113,892
8,612,636
Endowments
At 1 August 2014
Restricted Total £ 20,915
Additions Income for year Expenditure for the year
10,220 151 (879)
At 31 July 2015
30,407
Representing: Benevolent funds Bursary funds Memorial funds Prize funds
14,101 2,106 13,964 236 30,407
42 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 23
Revaluation reserve £ 13,204,118
At 1 August 2014 Transfer from revaluation reserve to income and expenditure account reserve in respect of: Depreciation on revalued assets (note 7)
(220,095)
At 31 July 2015
Note 24
12,984,023
Income and Expenditure Reserve
Balance at 1 August 2014 Surplus before tax and exceptional items Release from revaluation reserve to fund depreciation on revalued assets Release from endowment reserves to fund endowment expenditure Actuarial loss on pension scheme liability
£ 35,357,262 7,039,019 220,095 728 (1,500,000)
Balance at 31 July 2015
41,117,104
Income and Expenditure reserve excluding pension liability Pension reserve Income and Expenditure reserve
Note 25
52,847,104 (11,730,000) 41,117,104
Lease commitments 2014 £
2015 £ Annual operating lease commitments on leases expiring: In one year or less Between two and five years Thereafter
Note 26
60,082 60,878 3,150,499
76,916 61,593 3,115,579
3,271,459
3,254,088
Capital commitments 2015 £ Commitments contracted at 31 July
1,822,016
Commitments contracted at 31 July include: Library refurbishments and upgrade Winton Chapel refurbishment and extension
£527,712 £556,921
43 University of Winchester, Hampshire
2014 £ 893,834
NOTES TO THE FINANCIAL STATEMENTS Note 27
Contingent liabilities and assets 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. A contingent liability exists in relation to the Universities Superannuation Scheme pension valuation recovery plan, since the company is an employer of members within the scheme. The contingent liability relates to the amount generated by past service of current members and the associated proportion of the deficit. Given that the scheme is a multi-employer scheme and the company is unable to identify its share of the underlying assets and liabilities, the contingent liability is not recognised as a provision on the balance sheet. The associated receivable from the scheme in respect of the reimbursement of the company's expenditure is similarly not recognised. 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. However whilst 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 £26,544 through until March 2022.
Note 28
Reconciliation of consolidated operating surplus to net cash from operating activities 2015 £
2014 £
Surplus before tax Depreciation Loss on disposal of fixed assets Deferred capital grants released to income Investment income Interest payable Increase in debtors Increase in stocks (Decrease) / Increase in creditors Decrease in provisions Pension cost less contributions payable
7,039,019 3,102,361 142,618 (470,785) (149,656) 552,642 (204,019) (1,788) (81,214) (16,934) (100,000)
6,444,342 2,887,094 (472,795) (115,356) 634,568 (285,375) (7,631) 254,402 (10,397) 20,000
Net cash inflow from operating activities
9,812,244
9,348,852
44 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 29
Gross cash flows
Returns on investments and servicing of finance Interest received Interest paid Income from investments
Capital expenditure Purchase of tangible fixed assets Receipts from sales of tangible fixed assets Deferred capital grants received Endowments received
Management of liquid resources Movement on short term investments
Financing Loan repayments New loans
Note 30
2015 £
2014 £
116,082 (554,601) 151
106,039 (607,505) 104
(438,368)
(501,362)
(3,276,611) 1,256 538,072 10,220
(3,686,919) 189,252 1,823
(2,727,063)
(3,495,844)
(4,000,033)
1,013,032
(4,000,033)
1,013,032
(962,368) -
(964,554) 51,230
(962,368)
(913,324)
2015 £
2014 £
Reconciliation in net cash flow to movement in net funds
Increase in cash in the period Loan repayments New loans Movement on short term investments Decrease in net debt Net funds at 1 August (b/fwd) Net funds at 31 July (c/fwd)
1,684,412 962,368 4,000,033 6,646,813
5,451,354 964,554 (51,230) (1,013,032) 5,351,646
7,217,704
1,866,058
13,864,517
7,217,704
45 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 31
Analysis of changes in net funds At 31 July 2014 £ Cash at bank and in hand Endowment assets
15,806,747 20,915 15,827,662
1,674,920 9,492 1,684,412
Current assets investments Debt due within 1 year Debt due after 1 year
1,006,628 (962,370) (8,654,216) (8,609,958)
4,000,033 962,368 4,962,401
7,217,704
6,646,813
Net funds
Note 32
Cash Flows £
Other Changes £ (937,764) 937,764 -
At 31 July 2015 £ 17,481,667 30,407 17,512,074 5,006,661 (937,766) (7,716,452) (3,647,557) 13,864,517
Pension schemes Retirement benefits for the employees of the University of Winchester are provided by four pension schemes. The two principal schemes are the Teachers' Pension Scheme for academic staff and the Hampshire County Council Pension Scheme for non-academic staff. All four schemes are independently administered.
The University's contributions for the year to all schemes can be summarised as: Scheme
Contribution rate
Teachers' Pension Scheme To 01/09/2015 From 01/09/2015
14.10% 16.48%
Hampshire County Council To 01/04/2015 From 01/04/2015
20.30% 20.80%
(15.6% for future service and 4.7% for past service) (15.6% for future service and 5.2% for past service)
Universities Superannuation Scheme To 31/07/2015 16.00% From 31/07/2015 16.00% Friends Life (Auto Enrolment Scheme - applies to earnings over £8,064 per anum from 1st April 2015) To 01/10/2017 1.00% From 01/10/2017 2.00% The aggregated pension charge for all schemes for the year was £3,345,763 (2014: £3,098,844): this included an amount in respect of enhanced pension entitlements to certain staff who took early retirement prior to August 1997. There are no outstanding pension contributions for the year ended 31st July 2015.
46 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 32(a) Teachers' Pension Scheme Introduction The Teachers' Pension Scheme (“TPS”) is a statutory, contributory, defined benefit scheme. The regulations under which the TPS operates are the Teachers' Pensions Regulations 2010 (as amended), and the Teachers’ Pensions Regulations 2014 (as amended). These regulations apply to teachers in schools and other educational establishments in England and Wales maintained by local authorities, to teachers in many independent and voluntary-aided schools, and to teachers and lecturers in establishments of further and higher education. Membership is automatic for full-time teachers and lecturers and from 1 January 2007 automatic too for teachers and lecturers in part-time employment following appointment or a change of contract. Teachers and lecturers are able to opt out of the TPS. Under the definitions set out in Financial Reporting Standard 17 Retirement Benefits, the TPS is a multi-employer pension scheme. The University is unable to identify its share of the underlying (notional) assets and liabilities of the scheme. Accordingly, the University has taken advantage of the exemption in FRS 17 and has accounted for its contributions to the scheme as if it were a defined contribution scheme. The University has set out below the information available on the scheme and the implications for the University in terms of the anticipated contribution rates. The Teachers' Pension Budgeting and Valuation Account Although teachers and lecturers are employed by various bodies, their retirement and other pension benefits, including annual increases payable under the Pensions (Increase) Acts are, as provided for in the Superannuation Act 1972, paid out of monies provided by Parliament. Under the unfunded TPS, teachers' contributions on a 'payas-you-go' basis, and employers' contributions, are credited to the Exchequer under arrangements governed by the above Act. The Teachers' Pensions Regulations require an annual account, the Teachers' Pension Budgeting and Valuation Account, to be kept of receipts and expenditure (including the cost of pensions’ increases). From 1 April 2001, the Account has been credited with a real rate of return (in excess of price increases and currently set at 3.0%), which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return. Valuation of the Teachers' Pension Scheme Not less than every four years the Government Actuary (“GA”), using normal actuarial principles, conducts a formal actuarial review of the TPS. The aim of the review is to specify the level of future contributions. The contribution rate paid into the TPS is assessed in two parts. First, a standard contribution rate (“SCR”) is determined. This is the contribution, expressed as a percentage of the salaries of teachers and lecturers in service or entering service during the period over which the contribution rate applies, which if it were paid over the entire active service of these teachers and lecturers would broadly defray the cost of benefits payable in respect of that service. Secondly, a supplementary contribution is payable if, as a result of the actuarial investigation, it is found that accumulated liabilities of the Account for benefits to past and present teachers, are not fully covered by standard contributions to be paid in future and by the notional fund built up from past contributions. The total contribution rate payable is the sum of the SCR and the supplementary contribution rate. The last valuation of the TPS related to the period 1 April 2004 - 31 March 2012. The GA's report of June 2014 revealed that the total liabilities of the Scheme (pensions currently in payment and the estimated cost of future benefits) amounted to £191.5 billion. The value of the assets (estimated future contributions together with the proceeds from the notional investments held at the valuation date) was £176.6 billion. The assumed rate of return is 3.0% in excess of prices. The rate of real earnings growth is assumed to be 2.75%. The assumed gross rate of return is 5.06%. As from 1 April 2015, and as part of the cost-sharing agreement between employers’ and teachers’ representatives, the SCR was assessed at 20.4%, and the supplementary contribution rate was assessed to be 5.6% (to balance assets and liabilities as required by the regulations within 15 years). This resulted in a total contribution rate of 26.0%, which translated into an average employee contribution rate of 9.6% and employer contribution rate of 16.4% payable. The cost-sharing agreement also introduced a 10.9% cap on employer contributions payable. It has been agreed that these revised contributions will be implemented from 1 September 2015. Scheme changes From 1 September 2015, the employer contribution rate will increase to 16.4%. From 1 April 2015, the TPS is being reformed, with a different benefit structure for a number of members. These changes have been allowed for in the contribution rate set out above.
47 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 32(b) Hampshire County Council Scheme The disclosures below relate to the funded liabilities within the Hampshire County Council Pension Fund (the "Fund") which is part of the Local Government Pension Scheme (the "LGPS"). The funded nature of the LGPS requires the University of Winchester and its employees to pay contributions into the Fund, calculated at a level intended to balance the pensions liabilities with investment assets. In accordance with Financial Reporting Standards disclosure of certain information concerning assets, liabilities, income and expenditure relating to pension schemes is required. Contributions for the year ending 31 July 2016 The Employer's regular contributions to the Fund for the year ending 31 July 2016 are estimated to be ÂŁ1.53M. Additional contributions may also become due in respect of any employer discretions to enhance members' benefits in the Fund over the next accouting period. Assumptions The latest actuarial valuation of the University of Winchester's liabilities took place as at 31 March 2013. Liabilities have been estimated by the independent qualified actuary on an acuarial basis using the projected unit credit method. The principal assumptions used by the actuary in updating the latest valuation of the Fund for FRS 17 purposes were:
Discount Rate RPI inflation CPI inflation Rate of increase to pensions in payment Rate of revaluation of pension accounts Rate of general increase in salaries
Principal actuarial assumptions 31 July 2015 31 July 2014 31 July 2013 (% pa) (% pa) (% pa) 3.6 4.1 4.5 3.2 3.2 3.6 2.1 2.2 2.7 2.1 2.2 2.7 2.1 2.2 n/a 3.6 3.7 4.6
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 resulting from these mortality assumptions are shown below.
Male Female
At 31 July 2015 Retiring today Retiring in 20 years 24.5 26.6 26.3 28.6
48 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Expected return on assets The approximate split of assets for the Fund as a whole (based on data supplied by the Fund Administering Authority) is shown in the table below. Also shown are the assumed rates of return adopted by the employer for the purposes of FRS17. Long-term rate of return expected at 31 July 2015 (% pa) *
Equities Property Government bonds Corporate bonds Cash Other ** Total
n/a n/a n/a n/a n/a n/a n/a
Long-term rate Long-term rate of return of return Asset split at expected at 31 Asset split at expected at 31 Asset split at July 2014 July 2013 31 July 2015 31 July 2014 31 July 2013 (%) (% pa) * (%) (% pa) * (%)
57.5 8.2 25.8 1.7 3.3 3.5 100.0
7.5 6.8 3.2 3.7 1.1 7.5 6.1
60.2 7.7 23.9 1.3 3.8 3.1 100.0
7.8 7.3 3.3 4.0 0.9 7.8 6.4
57.4 7.5 24.4 1.2 3.0 6.5 100.0
* The overall expected rate of return on Fund assets is a weighted average of the individual expected rates of return on each asset class, and is shown in the bottom row of the above table. Due to the adoption of FRS102, The University of Winchester will, from the next accounting period, no longer be required to recognise an expected return on assets item in the profit and loss charge. This item will be replaced with a net financing charge which is based on the discount rate assumption. Assumptions for the expected return on assets are therefore no longer required. ** Other holdings include hedge funds, currency holdings, asset allocation futures and other financial instruments. It is assumed that these investments will get a return in line with equities.
Reconciliation of funded status to balance sheet
Fair value of Fund assets Present value of liabilities Net pension liability
Value at 31 July 2015 (£M) 24.91 36.64 (11.73)
Value at 31 July 2014 (£M) 21.20 31.53 (10.33)
Value at 31 July 2013 (£M) 21.38 30.99 (9.61)
The split of the liabilities at the last valuation between the various categories of members is as follows: Active members 49% Deferred Pensioners 14% Pensioners 37% Analysis of Income and Expenditure charge
Current service cost Past service cost Interest cost Expected return on assets Curtailment costs Settlement cost Expense recognised
Year ending 31 July 2015 (£M) 1.33 0.00 1.32 (1.32) 0.00 0.00 1.33
Year ending 31 July 2014 (£M) 1.31 0.00 1.42 (1.39) 0.00 0.00 1.34
49 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Changes to the present value of liabilities during the year Year ending 31 July 2015 (£M) Opening present value of liabilities Current service cost Interest cost Contributions by participants Actuarial (gains) / losses on liabilities * Net benefits paid out # Past service cost Net increase in liabilities from disposals and acquisition Curtailments Settlements Closing present value of liabilities
Year ending 31 July 2014 (£M)
31.53 1.33 1.32 0.51 2.60 (0.65) 0.00 0.00 0.00 0.00 36.64
30.99 1.31 1.42 0.45 (2.02) (0.62) 0.00 0.00 0.00 0.00 31.53
* Includes changes to the actuarial assumptions. # Includes an approximate allowance for the expected cost of death in service lump sums. Changes to the fair value of assets during the year Year ending 31 July 2015 (£M) Opening fair value of assets Expected return on assets Actuarial gains/(losses) on assets Contributions by the University Contributions by participants Net benefits paid out # Net increase in assets from disposals and acquisitions Settlements Closing fair value of assets
Year ending 31 July 2014 (£M)
21.2 1.32 1.10 1.43 0.51 (0.65) 0.00 0.00 24.91
21.38 1.39 (2.69) 1.29 0.45 (0.62) 0.00 0.00 21.2
# Includes an approximate allowance for the expected cost of death in service lump sums. Actual return on assets
Expected return on assets Actuarial gain/(loss) on assets Actual return on assets
Year ending 31 July 2015 (£M) 1.32 1.10 2.42
Year ending 31 July 2014 (£M) 1.39 (2.69) (1.30)
Analysis of amount recognised in STRGL * Year ending 31 July 2015
Year ending 31 July 2014
(£M) (1.50) 0.00 (1.50)
(£M) (0.67) 0.00 (0.67)
Total actuarial gain/(loss) Change in Irrecoverable surplus Total gains / (losses) in STRGL * Statement of Total Recognised Gains and Losses
History of asset values, present value of liabilities and deficit
Fair value of assets Present value of liabilities (Deficit)
Year ending 31 July 2015 (£M)
Year ending 31 July 2014 (£M)
Year ending 31 July 2013 (£M)
Year ending 31 July 2012 (£M)
Year ending 31 July 2011 (£M)
24.91 36.64 (11.73)
21.2 31.53 (10.33)
21.38 30.99 (9.61)
17.61 28.34 (10.73)
15.97 23.55 (7.58)
50 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS History of experience gains and losses
Experience gains/(losses) on assets Experience gains/(losses) on liabilities #
Year ending 31 July 2015 (£M)
Year ending 31 July 2014 (£M)
Year ending 31 July 2013 (£M)
Year ending 31 July 2012 (£M)
Year ending 31 July 2011 (£M)
1.10 0.14
(2.69) 0.37
1.88 (0.01)
(0.43) (0.13)
1.30 (0.49)
# This item consists of gains/(losses) in respect of liability experience only and excludes any change in liabilities in respect of changes to the actuarial assumptions used. Estimated profit and loss charge in future periods Estimate of the Profit and Loss charge in future periods under FRS 102, based on the assumptions as at 31 July 2015. LGPS funded benefits
Current service cost Net interest cost Total
Period ending 31 July 2016 £M's 1.62 0.40 2.02
Period ending 31 July 2017 £M's 1.67 0.41 2.08
LGPS unfunded benefits
Net interest cost Total
Year ending 31 July 2016 0.00 0.00
Year ending 31 July 2017 0.00 0.00
Pension cost for the period ending 31 July 2016 Pension costs for the period ending 31 July 2016 will be reported under the revised accounting standard FRS 102, which changes the method for measuring costs in the profit and loss account. The main change will be to the measurement of the expected return on assets. This credit to the profit and loss account will no longer be based on the long term expected return assumptions but instead be based on a rate of return equal to the discount rate. As the discount rate assumption is generally lower than the long term expected returns, this credit will reduce, and the profit and loss charge will be expected to increase accordingly. In practice, the disclosure of the interest cost and expected return on assets will be combined into a single item called the Net interest on the net defined benefits liability. The pension cost shown in next period's accounts will be different to that shown above. It is not possible to give a reliable indication of the impact. Reasons why the pension costs may change include: - The assumptions to be used for the FRS 17 figures as at 31 July 2015 are not yet known (this will affect the estimated pension cost). Actual payroll being different to that used in the calculations particularly given that the revised benefit structure from 1 April 2014 is based on a different defenition of pensionable pay. We have used a payroll figure of £7,270,000 in our calculations. The difference in payroll will particularly affect the current service cost. Past service costs may not be zero (this cost is that resulting from benefit augmentations or early retirement of individual members before age 60 or on the grounds of efficiency); Curtailment / settlement events may occur (e.g. outsourcing exercises, redundancy exercisies or bulk transfers); Actual cash-flows over the next accounting periods may differ from those assumed (this will particularly affect the interest cost and expected return on assets - this effect is, however, monor compared to those above). Pension cost for the period ending 31 July 2017 The pension cost that will be shown for the period ending 31 July 2017 will differ from those quoted because of the same reasons as given for the year 1 projection, but also because: - The Fund return for the period to 31 July 2016 is not yet known (this will affect the estimated expected return on assets). - The assumptions to be used for the FRS 17 figures as at 31 July 2016 are not yet known (this will affect the estimated pension cost).
51 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Pension Enhancement The calculation of the cost of early retirement provisions charged to the Income and Expenditure Account in the year of retirement is based on the capital cost of providing enhanced pensions with allowances for future investment returns at 4% in excess of price inflation. An amount of £499,145 (2014: £516,079) is included in provisions for liabilities and charges representing the extent to which capital costs charged exceed actual payments made. The provision will be released against the cost to the University of enhanced pension entitlements over the estimated life expectancy of each relevant employee. Note 32(c) Universities Superannuation Scheme
The University participates in the University Superannuation Scheme (USS), a defined benefit scheme which is contracted out of the State Second Pension (S2P). The assets of the scheme are held in a separate fund administered by the trustee, Universities Superannuation Scheme Ltd. It is not possible to identify each institution’s share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS17 “Retirement Benefits”, the University accounts for the scheme as if it were a defined contribution scheme. As a result, the amount charged to the Income and Expenditure Account represents the contributions payable to the scheme in respect of the accounting period. The latest triennial actuarial valuation of the scheme was at 31 March 2014. At the 30 September 2015 the University had 40 active members. Note 32(d) The Higher Education Defined Contributions Scheme The University began participation in the Higher Education Defined Contributions Scheme (HEDCS) during the 2013/14 financial year. The University is legally required to enrol eligible workers into a qualyfying workplace pension scheme; this is known as Auto Enrolment. HEDCS is the University's means of meeting the requirement of Auto Enrolment.
Note 32(e) Total pension costs (Note 6) The total pension cost for the University was: Teachers' Pension Scheme - contributions paid Local Government Pension Scheme - Service cost Contributions to other pension schemes
2015 £ 1,638,458 1,330,000 377,305
2014 £ 1,473,152 1,310,000 315,692
Total pension cost
3,345,763
3,098,844
52 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 33
Related party transactions Due to the nature of the University's operations and the composition of the Board of Governors/Trustees (being drawn from local, public and private sector organisations) transactions with the following monetary value have taken place with organisations in which the Governors may have an interest. Related party transactions
Barton Peveril College Blue Apple Theatre Bracknell Forest Borough Council Business in the Community Chamber of Commerce & Industry Guild HE Hampshire Cultural Trust Kingston University Oxford Centre for Animal Ethics Oxford University Price Waterhouse Coopers QAA (Quality Assurance Agency) Reading College SEDA Executive Southampton City Council Sparsholt College Students' Union Trinity Winchester UCAS (Universities and Colleges Admissions Service) University of Warwick University of Sheffield University Vocational Awards Council Winchester Cathedral Winchester City Council Winchester College Winchester Action on Climate Change Yoke Dance Project Youth Options Total
2015 £ 3,188 563 17,851 6,298 1,458 2,421 548 271 8,609 8,420 2,235 262,544 364,321 -
2014 £ 1,425 1,295 3,900 3,416 25,189 546 36,138 13,390 450 3,080 12,131 257,941 280,355 40
20,798 400 5,211 1,385 275,267 11,285 2,925 1,070 2,868 999,936
124,814 10,140 400 1,370 9,733 135,211 2,231 923,195
Amounts due from / (to) related parties 2014 2015 £ £ (2,640) 63,578 65,158 (3,634) 73,154 (680) (467) 1,918 58,075
(108) (1,568) 273 136,909
All transactions are conducted at arms length and in accordance with the University's financial regulations and normal procurement procedures. ` The University has reviewed the guidance in HEFCE Accounts Directions for 2014/15 in relation to linked (paragraph 28) charities. There are no such transactions to disclose.
Note 34
Access to Learning Fund
Balance at 1 August Funding Council Grant Repayment of previous years unused grant Interest earned
Disbursed to students Administration charge Balance carried forward at 31 July
2014 £
2015 £ 2,992 2,992
40,165 130,256 (28,096) 313 142,638
(2,992)
(135,738) (3,908)
-
2,992
Funding Council hardship grants are no longer available and the University now makes hardship payments from its own funds.
53 University of Winchester, Hampshire
NOTES TO THE FINANCIAL STATEMENTS Note 35
National Scholarship Programme
Balance at 1 August Funding Council fund
2015 ÂŁ 57,000 260,000 317,000
2014 ÂŁ 402,000 402,000
Disbursed to students
(317,000)
(345,000)
Balance carried forward at 31 July
-
57,000
Funding Council funds are available solely for students: the University acts only as paying agent. The funds and related disbursements are therefore excluded from the Income and Expenditure Account. 2014/15 was the final year that the Funding Council provided funds for the NSP.
54 University of Winchester, Hampshire