Financial Statements 2007-08 FINAL

8/13/2019 Financial Statements 2007-08 FINAL

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UNIVERSITY OF WALES INSTITUTE, CARDIFF

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JULY 2008


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CONTENTS

Report of the Board of Governors 1

Responsibilities of the Board of Governors 4

Corporate Governance Statement 5

Governors & Directorate 8

Independent Auditors Report 9

Statement of Principal Accounting Policies 11

Consolidated Income & Expenditure Account 14

Consolidated Statement of Total Recognised Gains & Losses 15

Balance Sheets 16

Consolidated Cash Flow Statement 17

Notes to the Financial Statements 18


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1


REPORT OF THE BOARD OF GOVERNORS

OPERATING & FINANCIAL REVIEW

Scope of the Financial Statements

These financial statements cover the year ended 31 July 2008 and represent the sixteenth Annual Report of

UWIC following incorporation in 1992. These accounts are consolidated accounts with the main activity ofUWIC consolidated with its subsidiary companies, UWIC Company Limited and Cardiff Institute Residences

Company Limited (CIRCL).

Principal Activities

The principal activity of UWIC is the provision of higher education from campuses in Cardiff and increasingly

through franchising elsewhere in the UK and overseas. UWICs portfolio extends across undergraduate,

post graduate and research activities and is complemented by training, consultancy and other commercial

spin offs which are provided to local, national and international organisations. UWIC also provides

conferencing and residential services and sports and restaurant facilities for students and external users.

Many of these commercial activities are carried out through UWIC's subsidiary companies, which gift the

taxable profits back to UWIC under the Gift Aid scheme.

Financial & Investment Strategy

UWIC has an established financial strategy for 2006 to 2011. This strategy has the objective of ensuring

financial stability for the institution and enabling investment for the future development of UWIC. In particular

the institution has established an Estates Strategy which will require 54 Million to be invested into the

estate over the next 10 years. Borrowing has been secured to fund approximately half of this investment

through 30 year term loans from two separate banking sources. The balance of the investment will be

funded via the generation of modest annual surpluses.

The Strategy sets minimum targets for the generation of surpluses and requires the achievement of

minimum key liquidity measures year on year. These targets have all been exceeded in these results.

Investment in UWICs infrastructure during the year amounted to 5,138K (2007: 5,992K) into buildings

and equipment. This will climb to 15M and 20M in the next two years with significant buildings works

commencing at Cyncoed & Llandaff campuses, the latter facilitating the transfer of the Management School

to enable the closure of the Colchester Avenue campus.

Results for the Year

UWICs turnover now exceeds 70.5Million (2007: 65.1Million) It has produced an historic cost surplus of

1.7Million (2.4%) (2007: 2.4M) and an operating surplus of 1Million (2007: 1.7M). UWIC has achieved

an historic cost surplus in every year since incorporation and has again exceeded its KPI set at 1.5% in the

Financial Strategy.

Considerable growth in salaries and pay costs has been experienced by the sector in recent years as a

result of the implementation of a new pay framework and the rising cost of pensions. However the pay costs

have marginally fallen this year as a proportion of total costs to 63.05% (2006: 63.26%).

Reliance upon Government funding has considerably fallen in the year, and will continue to fall next year,

with the introduction of higher student fees. HEFCW Grants as proportion of income is now at 41.8% (2007

49.9%) albeit that approximately 4M of student fees was effectively paid by the Welsh Assembly

Government through their protection of Welsh domiciled students from the top up fees charged.


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REPORT OF THE BOARD OF GOVERNORS (continued)

OPERATING & FINANCIAL REVIEW (con tinued)

At the year-end the Income and Expenditure account reserves before pension liabilities stood at 25.4M

(2007: 23.1M) reflecting another good return from the year. However, the Pension Liability Provision,

established under FRS17, rose to the same level of 25.4M (2007: 18.7M) fully absorbing those available

reserves. In the previous year the assessed liability fell which reflects the sensitivity of this provision to theparticularly volatile financial markets currently being experienced. The Income & Expenditure reserves are,

of course, historic and therefore already generated whereas the provision for pension liability looks forward

to what might be required. The FRS17 Provision only reflects the Cardiff & Vale of Glamorgan Pension

Fund, which provides pensions to the administrative staff of UWIC but similar pension shortfalls are being

experienced by USS, the pension provider for half of the academic staff in the sector. UWICs academic

staff are predominately covered by TPS, an unfunded government scheme, the contributions to which tend

to follow those set by USS. Contributions to all the schemes have been rising to counter funding deficits and

it is expected that this will continue into the future until the actuarial valuations are seen to come back into

surplus. UWIC can therefore expect the overhead costs of staff to continue to grow over the medium term.

Change in Accounting Policy for Land & Buildings

UWIC has altered its accounting policy to bring it into line with the rest of the Welsh HE sector. Previously

UWIC had re-valued its land & buildings on a regular basis and reflected these valuations in the statutory

accounts. The effect of this policy was to inflate the asset value and the net worth on the balance sheet butto increase the depreciation charge in the Income & Expenditure Account and depress the Operating

surplus. The Operating surplus is the main KPI used to compare the performance of Universities across the

UK and therefore, under the previous policy, UWICs annual performance was being undervalued. This

change has corrected that measure to ensure that UWICs Operating Surplus has been calculated in a

comparable way with most other institutions.

The change, however, has a detrimental effect on the published Balance Sheet reducing the fixed asset

value by 61m from the previous years value of 141m. The Land & Buildings values have now been

frozen at cost or 1997 valuations in respect of inherited assets, which is broadly what other Welsh HEIs

have applied. The change mainly affects the land valuation which had escalated significantly since that time.

The real net worth of UWIC remains largely unaltered from that published previously (122m) and the

market value of the assets remains well in excess of that shown on the balance sheet.

Liquidity & Cash

UWICs Financial Strategy contains 2 key KPIs to ensure the financial health of the institution. These require

a minimum working capital of 5M and a minimum current ratio of 1.25 with a longer term target of 2. Albeit

benefiting from the first draw downs of the term loans of 8M, these measures have been easily achieved

with a year end cash & investments balance of 21M (2007: 12M) and a current ratio of 2 (2007: 1.45).

UWIC has an extremely prudent investment policy and does not use an agent to invest its cash. This

restricts investments to a named set of banks and building societies located in the UK & Ireland.

Consequently UWIC has, so far, been shielded from the risks and effects of the current credit crunch.

Similarly the two new agreements for term loans are with main stream banks. The first tranches of these

loans were drawn down at the year end and amounted to 8M which will not be repayable until 2018. This

has lifted UWICs borrowings to 13.7M (2007: 5.8M).


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The Financial Outlook

Welsh Higher Education remains under funded in comparison to England by more than 70M annually. This

is roughly equivalent to the fee subsidy provided by the Welsh Assembly government to Welsh domiciledstudents. Despite a recent report, commissioned by the Assembly on the subject of student fees which

identified that this subsidy was unsustainable particularly if fees rise in the future, there are, as yet, no signs

that the discrepancy will be addressed. In fact, on the contrary, recent settlements for the sector have been

below inflation and the gap has widened. Initial budget estimates for 2008/09 suggests a further real

reduction in grant levels. As the UK enters a recession it is likely that government funding will become

tighter and UWIC can therefore expect that its income from HEFCW and the NHS will be constrained

accordingly. UWIC has already extended its student numbers beyond the level funded by HEFCW and,

unless the student fee significantly increases in the future growth in home and EU numbers will be minimal.

UWIC has historically sought to broaden its income base through the development of commercial activities

in the UK & internationally, by attracting overseas students to study at UWIC and, more recently, by

franchising courses to organisations providing higher education to Non EU residents. Whilst the former has

currently reached a plateau of contribution and will find the market more difficult in the coming years,

initiatives continue to be developed, including a focus upon continuing professional development (CPD)

provision which it is hoped will provide a new volume market for UWIC. Growth in Overseas students hasbeen spectacular over the past 10 years growing from less than 1M in fees to in excess of 6M this year.

However, competition has increased significantly in this market and HE provision within some of the

countries from which UWIC draws its students is improving. Nevertheless UWIC has a number of niche

markets of its own and expects to continue to punch above its weight. Franchising courses to further extend

UWICs overseas student numbers is a relatively recent activity which brings in circa 0.5M p.a. currently. A

number of opportunities exist to extend this activity, which UWIC is exploring with the aim of targeting a

significant increase in both students and income.

Overall opportunities do exist to improve income generation in UWIC and, longer term, the funding gap with

England is expected to be addressed. In the short term, however, it is likely that maintaining a surplus will

be challenging and revenue budgets will have to be contained and efficiencies found. UWIC hopes to

achieve Research Degree Awarding Powers during the new year and this, together with the development of

the estate should improve the saleability of UWIC and help attract new students and clients. UWIC will

continue to strive to expand markets and generate new income to support its core activities.

Membership of the Board of Governors

The membership of the Board for the year 1 August 2007 to 31 July 2008 is set out on Page 7 of this report.

Aud itors

The external auditors for the year were PricewaterhouseCoopers LLP. The internal auditors for the year

were Bentley Jennison.


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Equality of Opportunity

UWIC aims to work beyond compliance in equality legislation, and is committed to integrating the principlesof equality into all our activities. In 2008, a Single Equality Scheme has been agreed and implemented,

covering the equality strands of Race, Gender and Disability. Guidelines have been developed in other

equality strands, including religion/belief, age, sexual orientation and gender reassignment. A Welsh

Language Scheme is in place.

UWIC is very active in widening access to education, and in providing an inclusive approach to learning and

teaching. The Disability Service supports the increasing number of disabled students accessing courses at

UWIC.

UWIC has a diverse community of staff and students, and is working to further develop its inclusive campus.

Health and Safety at Work

The health, safety and wellbeing of staff and students is recognised as being essential to the success ofUWIC. UWICs Health & Safety Committee has been established to consider all relevant aspects of health,

safety and welfare. The committee receives regular monitoring reports of periodic audits of schools/units

health & safety management arrangements and of initiatives and/or issues emanating from school/unit

health & safety meetings. Additionally the committee disseminates updates on legislation and guidance on

good practice and monitors accident levels and staff absence. The minutes of the committee are presented

to the Human Resources Committee and health & safety reports also feature at UWICs Audit and Risk

Management Committees. An Annual Health & Safety Report is provided to the Board of Governors to

enable its statutory obligation to ensure compliance with health & safety legislation to be exercised.

UWIC has continued to improve its provisions under the terms of the equality legislation. In particular,extensive work has been undertaken in relation to increasing widening participation, a formal Race Policyand Action Plan has been agreed and implemented, and further improvements have been made to theestate to facilitate access for disabled students and staff. Several new lifts have been installed and rampsand paving areas improved.

Dealing with these future challenges can only be achieved through the continuing work and support of

UWICs staff and the Board of Governors wish to thank them all for their efforts and commitment to UWIC

throughout the year.

Signed

Chairman of the Board of Governors


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RESPONSIBILITIES OF THE BOARD OF GOVERNORS

In accordance with the Education Reform Act 1988 the Board of Governors of University of Wales Institute,

Cardiff (UWIC) is responsible for the administration and management of the affairs of UWIC and is required

to present audited financial statements for each financial year.

The Board of Governors is responsible for keeping proper accounting records which disclose with

reasonable accuracy at any time the financial position of UWIC and to enable it to ensure that the financial

statements are prepared in accordance with the Statement of Recommended Practice (SORP): Accounting

for Further and Higher Education Institutions (effective from 1 August 2007) and in accordance with

applicable Accounting Standards. In addition, within the terms and conditions of the Financial Memorandum

agreed between the Higher Education Funding Council for Wales and the Board of Governors of UWIC, the

Board of Governors, through its designated office holder, is required to prepare financial statements for

each financial year which give a true and fair view of the state of affairs of UWIC and of the surplus or

deficit, total recognised gains or losses and cash flows for that year.

In preparing these financial statements, the Board of Governors has ensured 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 UWIC will continue in operation.

The Board of Governors has taken reasonable steps to:

- ensure that funds from the Higher Education Funding Council for Wales are used only for the

purposes for which they have been given and in accordance with the Financial Memorandum with

the Funding Council and any other conditions which the Funding Council 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 UWIC and prevent and detect fraud;

- secure the economical, efficient and effective management of UWIC resources and expenditure.

The maintenance and integrity of UWICs website is the responsibility of the Board of Governors. The work

carried out by the external auditors does not involve consideration of these matters and, accordingly, the

auditors accept no responsibility for any changes that may have occurred to the Annual Report and

Financial Statements since they were originally presented on the website.


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CORPORATE GOVERNANCE STATEMENT

UWIC is committed to exhibiting best practice in all aspects of corporate governance. This summary

describes the manner in which UWIC has applied the principles set out in Section 1 of the Combined Code

on Corporate Governance issued by the London Stock Exchange in June 1998. Its purpose is to help the

reader of the accounts to understand how the principles have been applied.

UWIC's Governing Body is responsible for UWIC's system of internal control and for reviewing its

effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve

business objectives and can only provide reasonable and not absolute assurance against material

misstatement or loss.

The Governing Body is of the view that there is an ongoing process for identifying, evaluating and managing

UWIC's significant risks that has been in place for the period of the accounts. The Governing Body regularly

reviews this process which accords with the internal control guidance for directors on the Combined Code

as deemed appropriate for higher education.

UWIC's Governing Body meets at least three times a year and has several committees, including a Finance

and Estates Committee, a Strategic Planning Committee, a Nominations Committee, a Remuneration

Committee, a Human Resources Committee, and an Audit Committee. All of these Committees are formally

constituted with terms of reference and are comprised mainly of lay members of the Governing Body, one of

whom is the Chair.

During 2007/08, to enhance the quality and extent of UWICs dialogue with the wider community, the Boardof Governors established a Stakeholder Forum to provide a focus and direction for all UWICs ongoingstakeholder interactions. The Forum, which first met in March 2008, has no formal governance role orresponsibilities.

The Finance and Estates Committee recommends to the Governing Body UWIC's annual revenue and

capital budgets and monitors performance in relation to the approved budgets.

The Nominations Committee consider nominations for vacancies in the Governing Body membership under

the relevant statute.

The Remuneration Committee determines the remuneration of the most senior staff, including the Vice

Chancellor.

The Audit Committee meets four times a year, with UWIC's internal auditors and where appropriate,

external auditors in attendance. The Committee includes two independent members from the Public and

Private Sector, not members of the Governing Body, who provide a wider externality to its deliberations. The

Committee considers detailed reports together with recommendations for the improvement of UWIC's

systems of internal control and management's responses and implementation plans. It also receives and

considers reports from the Welsh Funding Councils as they affect UWIC's business and monitors adherence

to the regulatory requirements. Whilst senior officers attend meetings of the Audit Committee as necessary,

they are not members of the Committee and prior to each meeting the Committee meets with UWIC's

Internal Auditors on their own for independent discussions.

The Vice Chancellor & Principals Board has an established Risk Management Committee with

responsibility for embedding risk management within the institution, providing training and maintaining an

overview of the key high level institutional risks. The Vice Chancellor and Principals Board receives reports

setting out key performance indicators and identifying risks and considers control issues that relate. The

Audit Committee receives regular Risk Management reports and these help inform the future direction of theinternal audit rolling programme. The Vice Chancellor & Principals Board also receive regular reports from

UWICs internal and external auditors that include recommendations for improvement. The Audit

Committees role in this area is to provide a high level review of the arrangements for internal financial

control. The Governing Bodys agenda includes a regular item for the consideration of risk and control and


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GOVERNORS DATE OF APPOINTMENT

Mr J W Owen CB (Chairman) 7 June 2005

Mr R J Anning 1 August 2004

Mr R D Blair CBE 1 August 2004

Mr T E Boswell MP 1 August 2007

Professor A J Chapman 1 September 1998 (ex officio)

Prof H R Evans CBE 1 August 2004

Mrs Z Harcombe 1 January 2006

Mr J D Jones 1 August 2002 (retired 31.07.08)

Mr S Mathur 1 August 2007

Mr A Painter 1 August 2007

Mr A N Piper 1 August 2006

Dr G N J Port 1 August 2007

Mr D C W Preece 1 August 2000

Ms L D Quinn MBE 1 August 2002 (retired 31.07.08)

Mr N B Roberts 1 August 2005

Mr D I Rosser 1 August 2005

Mr P Sefton 4 June 2007 (resigned 31.07.08)

Dr R G Smith 1 August 2007

Mr E C Thomas 1 August 2007

Mr J D Wildsmith 1 August 2005

Mr W P Wilkins CBE 1 August 2006

CLERK TO THE GOVERNORS

Mr R D G Walters Clerk to the Governors

VICE CHANCELLOR & PRINCIPALS BOARD

Professor A J Chapman Vice-Chancellor & Principal

Mrs P M Ackroyd Director of OperationsProfessor R Brown Pro Vice-Chancellor (Research)Mrs J Hare Pro Vice-Chancellor (Learning & Teaching)

Mr R Moremon Director of Marketing & Communications

Mr M J Warren Director of Finance


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Independent auditors report to the Board of Governors of Universi ty of Wales Institu te, Cardiff

We have audited the financial statements which comprise the income and expenditure account, the balance

sheet, the cash flow statement, the statement of total recognised gains and losses and the related notes

which have been prepared under the historical cost convention (as modified by the revaluation of tangiblefixed assets) and the accounting policies set out in the statement of principal accounting policies.

Respective responsibi lities of t he Board of Governors and auditors

The Board of Governors responsibility for preparing the financial statements in accordance with the

Accounts Direction issued by the Higher Education Funding Council for Wales, the Statement of

Recommended Practice Accounting for Further and Higher Education Institutions, applicable United

Kingdom law and accounting standards is set out in the Statement of Responsibilities of the Board of

Governors.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory

requirements, and International Standards on Auditing (UK and Ireland). This report, including the opinion,

has been prepared for and only for the Board of Governors of the University in accordance with the

Universitys Articles of Government and section 124B of the Education Reform Act 1988 and for no other

purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to anyother person to whom this report is shown or in to whose hands it may come save where expressly agreed

by our prior consent in writing.

We report to you our opinion as to whether the financial statements give a true and fair view and are

properly prepared in accordance with the Accounts Direction issued by the Higher Education Funding

Council for Wales and the Statement of Recommended Practice - Accounting for Further and Higher

Education Institutions. We also report to you whether in our opinion, in all material respects, monies

expended out of Higher Education Funding Council for Wales grants and other funds from whatever sources

administered by the Institution for specific purposes have been properly applied and, if appropriate,

managed in compliance with all relevant legislation and whether in our opinion, in all material respects,

income has been applied in accordance with the financial memorandum with the Higher Education Funding

Council for Wales.

We also report to you if, in our opinion, the report of the Board of Governors is not consistent with thefinancial statements, if the Institution has not kept proper accounting records, the accounting records do not

agree with the financial statements or if we have not received all the information and explanations we

require for our audit.

We read the other information contained in the Financial Statements and consider the implications for our

report if we become aware of any apparent misstatements or material inconsistencies with the financial

statements. The other information comprises only: the Report of the Board of Governors, the Corporate

Governance Statement and the Statement of Responsibilities of the Board of Governors.

We also review the statement of internal control included as part of the Corporate Governance Statement

and comment if the statement is inconsistent with our knowledge of the University and group. We are not

required to consider whether the statement of internal control covers all risks and controls, or to form an

opinion on the effectiveness of the Universitys corporate governance procedures or its risk and control

procedures.


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STATEMENT OF PRINCIPAL ACCOUNTING POLICIES

1 Basis of Preparation

These financial statements have been prepared in accordance with the statement of recommended practice

(SORP): Accounting for Further and Higher Education Institutions, the Accounts Direction issued by the

Higher Education Funding Council for Wales and applicable Accounting Standards in the United Kingdom.The principal accounting policies have been applied consistently except as where described otherwise and

are set out below.

2 Basis of Accounting

The financial statements have been prepared under the historical cost convention as modified to include the

revaluation of certain tangible fixed assets.

3 Basis of Consolidation

The consolidated financial statements include UWIC and its wholly owned subsidiary undertakings, UWIC

Company Ltd and Cardiff Institute Residences Company Ltd. Intra-group sales and profits are eliminated

fully on consolidation. In accordance with FRS2, the activities of UWICs student union have not been

consolidated because UWIC does not control those activities.

4 Recognition of Income

Income from research grants and other services rendered is included to the extent of the completion of the

contract or service concerned. This is generally equivalent to the sum of the relevant expenditure incurred

during the year and any related contributions towards overhead costs. All income from short-term deposits

is credited to the income and expenditure account in the period in which it is earned.

Recurrent grants from the Welsh Funding Councils are recognised in the period in which they are

receivable. Non-recurrent grants from the Welsh Funding Councils or other bodies received in respect of the

acquisition or construction of fixed assets are treated as deferred capital grants and amortised in line with

depreciation over the life of the related assets.

5 Foreign Currency Translation

Transactions denominated in foreign currencies are recorded at the rate of exchange ruling at the dates ofthe transactions. Monetary assets and liabilities are translated into sterling either at year end rates or,

where there are related forward foreign exchange contracts, at contract rates. The resulting exchange

differences are dealt with in the determination of income and expenditure for the financial year.

6 Pension Schemes

The two principal pension schemes for UWIC's staff are the Cardiff and Vale of Glamorgan Fund (CVGPF)

and the Teachers' Pension Scheme (TPS). The schemes are funded, defined benefit and are contracted out

of the Second State Pension.

The CVGPF is valued every three years by a professionally qualified actuary using the projected unit

method, the rate of contribution payable being determined by the Administering Authority on the advice of

the actuary.

The TPS is subject to an actuarial valuation every five years by the Government Actuarial Department usingthe age entry method. The rate of contribution for the TPS is determined by the Teachers' Pension Agency

on the advice of the actuary.


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In respect of the CVGPF, the net asset or liability recognised in the balance sheet represents the present

value of the pension schemes liabilities less the fair value of the schemes assets.


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Statement of Principal Accoun ting Policies (continued)

6 Pension Schemes (continued)

Pension scheme assets are measured using market values. Pension scheme liabilities are measured using

a project unit method and discounted at the current rate of return on a high quality corporate bond of

equivalent term and currency to the liability. The difference between these amounts represent UWICsshare of the surplus or deficit of the CVGPF as estimated by the actuary to the CVGPF.

The increase in the present value of UWICs share of the liabilities of the CVGPF expected to arise from

employee service in the period is charged to staff costs. The expected return on UWICs share of the

assets of the CVGPF and the increase during the period in the present value of UWICs share of the

liabilities of the CVGPF arising from the passage of time are included in interest payable. Actuarial gains

and losses are recognised in the statement of total recognised gains and losses.

It is not possible to identify UWICs share of the underlying assets and liabilities of the TPS. Therefore, as

permitted by FRS17, the TPS is accounted for as a defined contribution scheme with contributions accruing

being charged to staff costs during the year.

7 Tangible Fixed Assets

(a) Land and Buildings

During the year UWIC changed its accounting policy in accordance with FRS18 in relation to the revaluation

of its land and buildings to one considered more appropriate and consistent with the majority of other

institutions in the sector. Land and buildings are now stated at cost except for certain assets inherited from

the Local Education Authority, where the 1997 valuation has been used as a proxy for cost. No further

valuation of these assets will be made in the future. Freehold land is not depreciated. Freehold buildings

are depreciated over their expected useful economic life to UWIC.

Where land and buildings are acquired with the aid of specific grants they are capitalised and depreciated

as above. The related grants are credited to a deferred capital grant account and released to the income

and expenditure account over the expected useful economic life of the related asset on a basis consistent

with the depreciation policy.

Finance costs, which are directly attributable to the construction of land and buildings, are capitalised as

part of the cost of those assets.

A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the

carrying amount of the fixed asset may not be recoverable.

Buildings 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.

(b) Equipment

Equipment costing less than 5,000 per individual item is written off to the income and expenditure account

in the year of acquisition. All other equipment is capitalised at cost. Capitalised equipment is depreciated

on a straight-line basis over its useful economic life of between 3 and 10 years.

Where equipment is acquired with the aid of specific grants it is capitalised and depreciated in accordance

with the above policy, with the related grant being credited to a deferred capital grant account and releasedto the income and expenditure account over the useful economic life of the related equipment.


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Statement of Principal Accoun ting Policies (continued)

8 Leased assets

Costs in respect of operating leases are charged on a straight-line basis over the lease term.

Leasing arrangements that transfer to UWIC substantially all the benefits and risks of ownership of an asset

are treated as if the asset had been purchased outright. The assets are included in fixed assets and thecapital element of the leasing commitment is shown as an obligation under finance leases. The lease

rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce

the outstanding obligations and the interest element is charged to the income and expenditure account in

proportion to the reducing capital element outstanding. Assets held under finance leases are depreciated

over the shorter of the lease term or the useful economic lives of equivalent owned assets.

9 Stocks

Stocks are stated at the lower of cost or net realisable value.

10 Taxation

No provision for taxation, deferred or otherwise, is provided in these accounts in respect of UWIC. As an

exempt charity, by virtue of Clause 64, Schedule 12 of the Education Reform Act 1988, UWIC is not liable to

Corporation Tax or Capital Gains Tax in respect of its charitable activities.

UWIC receives no similar exemption in respect of Value Added Tax.

No charge for taxation has been included in respect of the Subsidiary Companies' activities since the entire

taxable profit of these companies is transferred to UWIC under the Gift Aid scheme.

11 Short term investments

Short term investments include sums on short-term deposits with recognised banks and building societies.

12 Provisions

Provisions are recognised when UWIC 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.


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Consolidated income and expenditure account

For the year ended 31 July 2008

Year Ended Year Ended

31 July 2008 31 July 2007

Restated

Note 000 000

INCOMEFunding council grants 1 29,510 32,296

Tuition fees and education contracts 2 24,877 17,130

Research grants and contracts 3 1,564 1,602

Other operating income 4 13,919 13,518

Endowment and investment income 5 727 639

Total income 70,597 65,185

EXPENDITUREStaff costs 6 43,901 40,145

Other operating expenses 8 22,319 19,993

Depreciation 13 2,397 2,152

Interest payable 9 1,004 1,169

Total expenditure 69,621 63,459

Surplus on continuing operations after

depreciation of fixed assets at valuation 976 1,726

Consolidated statement of historical cost surpluses

and deficits


Difference between historical cost depreciation and the

actual charge for the year calculated on the revalued

Amount 20 694 694

Historical cost surplus for the year 1,670 2,420

The income and expenditure account is in respect of continuing activities.


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Consolidated statement of total recognised gains and losses



31 July 2008 31 July 2007

Restated

Note 000 000

Surplus on continuing operations after depreciation of fixed

assets at valuation 976

1,726

Actuarial (loss)/gain on pension obligations 28 (6,029) 3,794

Total recogn ised (loss)/gain relating to the year (5,053) 5,520

Prior year adjustment (60,726)

Total recognised losses since last annual report (65,779)

Reconciliation of movement in reserves

Opening reserves as previously stated 108,060 102,929

Prior year adjustment (60,726) (61,115)

47,334 41,814

Total recognised (loss)/gain for the year (5,053) 5,520

Closing reserves 42,281 47,334


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Balance sheets as at 31 July 2008

Group UWIC Group UWIC

2008 2008 2007 2007

Restated RestatedNote 000 000 000 000

Fixed AssetsTangible assets 13 83,542 77,977 80,801 75,154

Current AssetsStocks 14 137 44 155 29

Debtors: Due within one year 15 2,199 2,221 2,575 3,060

Due after one year 15 4,000 31 4,031

Short term investments 14,500 14,500 7,250 7,250

Cash at bank and in hand 6,580 6,447 4,850 4,294

23,416 27,212 14,861 18,664

CreditorsAmounts falling due within

one year 16 (11,607) (10,935) (10,256) (9,677)

Net Current Assets 11,809 16,277 4,605 8,987

Total assets less cur rentLiabilities 95,351 94,254 85,406 84,141

CreditorsAmounts falling due after more

than one year 17 (13,525) (11,891) (5,705) (4,042)

Net Assets excluding Pension

Liability 81,826 82,363 79,701 80,099

Pension Liability 28 (25,370) (25,370) (18,710) (18,710)

NET ASSETS INCLUDING

PENSION LIABILITY 56,456 56,993 60,991 61,389

Deferred capital grants 19 14,175 14,175 13,657 13,657

ReservesRevaluation reserves 20 42,291 41,640 42,985 42,326

Income and expenditure account 21

Reserve before pension liabilities 25,360 26,548 23,059 24,116

Reserve for pension liabilities (25,370) (25,370) (18,710) (18,710)

Total reserves 42,281 42,818 47,334 47,732

TOTAL 56,456 56,993 60,991 61,389

The Financial Statements on pages 14 to 34 were approved by the Board of Governors on 9 December

2008 and signed on its behalf by

.

John Wyn Owen (Chairman) Prof. A J Chapman (Vice-Chancellor & Principal)


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Consolidated cash flow s tatement


Year ended Year ended

Note 31 July 2008 31 July 2007

000 000

Cash inflow from operating activities 22 4,875 4,877

Returns on investments and servicing of finance 23 288 168

Capital expenditure and financial investment 24 (4,016) (4,431)

Management of liquid resources 25 (7,250) 250

Financing 26 7,833 (496)

Increase in cash in the year 1,730 368

Reconciliation of net cash flow to movementin net funds

Increase in cash in the year 1,730 368

Increase/(decrease) in short term deposits 7,250 (250)

Net cash (inflow)/outflow from financing (7,833) 496

Movement in net funds in the year 27 1,147 614

Net funds at 1 August 6,227 5,613

Net funds at 31 July 27 7,374 6,227


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Notes to the financial statements

1 Funding Counci l Grants Year ended 31 July 2008 Year ended

HEFCW FEFCW TOTAL 31 July 2007

000 000 000 000

Recurrent grant 25,109 512 25,621 24,988Research grant 1,291 1,291 1,242

Specific grants 2,082 2,082 5,826

Deferred capital grants released

in year:

Buildings / Equipment (note 19) 516 516 240

28,998 512 29,510 32,296

2 Tuition Fees and Education Grants Year ended Year ended

31 July 2008 31 July 2007

000 000

Welsh Assembly Government NHS contract 2,546 2,349

Full-time students 14,879 7,769

Full-time students charged overseas fees 6,188 5,846Part-time fees 1,264 1,166

24,877 17,130

3 Research Grants and Contracts Year ended Year ended

31 July 2008 31 July 2007

000 000

Grants and contracts 1,564 1,602

1,564 1,602

4 Other Operating Income Year ended Year ended

31 July 2008 31 July 2007

000 000

Residences, catering and conferences 4,777 4,295

Other income 9,053 9,134

Deferred capital grant released (note 19) 89 89

13,919 13,518

5 Endowment and Investment Income Year ended Year ended

31 July 2008 31 July 2007

000 000

Income from short term investments 727 639


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Notes to the financial statements (continued)

6 Staff Costs

The average weekly number of persons (including senior post-holders) employed by UWIC during

the period, expressed as full time equivalents


31 July 2008 31 July 2007

Number Number

Academic 461 454

Technicians 50 55

Administrative, Support & Projects 503 514

Ancillary 140 130

1,154 1,153

Staff costs for the above persons Year ended Year ended

31 July 2008 31 July 2007

000 000

Wages and salaries 35,804 33,322

Social security costs 2,853 2,649

Other pension costs (note 28) 5,244 4,174

Total 43,901 40,145

The number of senior post-holders, excluding the vice-chancellor & principal, who received

emoluments in the following ranges was:


31 July 2008 31 July 2007

Number Number

100,001 to 110,000 2 3

110,001 to 120,000 3 2

120,001 to 130,000 1 -

6 5


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Notes to the financial statements (conti nued)

7 Emoluments of the Vice-Chancellor & Princ ipal Year ended Year ended

31 July 2008 31 July 2007

Salary 167,741 159,753

Benefits in kind 15,479 12,867

183,220 172,620

The emoluments of the Vice-Chancellor & Principal are shown excluding employers pension

contributions. The Universitys pension contributions in respect of the Vice-Chancellor &

Principal amounted to 23,484 (2007: 22,365).

8 Other Operating Expenses Year ended Year ended

31 July 2008 31 July 2007

000 000

Residences, catering and conference operating expenses 2,067 1,900Consumables and laboratory expenditure 1,667 1,801

Books and periodicals 1,200 1,004

Heat, light, water and power 933 961

Estates repairs/maintenance and projects 1,732 1,249

Grants to UWIC student union 522 482

Rent & rates 131 111

External auditors remuneration: UWIC 25 22

: Subsidiaries 3 3

: Other services 10 9

Internal audit fees 48 58

Other expenses 13,981 12,393

22,319 19,993

9 Interest Payable Note


31 July 2008 31 Jul y 2007

000 000

On bank loans, overdrafts and other loans: 444 459

Net expense on pension scheme assets & liabilities 28 560 710

1,004 1,169


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10 Surplus on Continuing Operations for the year

The surplus on continuing operations for the year is Year ended Year endedmade up as follows 31 July 2008 31 July 2007

000 000

UWICs surplus for the year 564 1,367

Surplus generated by subsidiary undertakings and

Transferred to UWIC by way of Gift Aid 412 359

Total 976 1,726

11 Analys is of 2007/2008 Expenditure by Acti vity

Other Year ended Year ended

Staff Operating Interest 31 July 2008 31 July 2007

Costs Depn Expenses Payable Total Total

000 000 000 000 000 000

Academic Departments 25,379 391 6,753 - 32,523 29,631

Academic Services 4,857 16 2,053 - 6,926 6,344

Research Grants & Contracts 837 - 753 - 1,590 1,345

Administration & Central Services 8,003 1,624 6,434 560 16,621 14,698

Residence/Catering/Conferences 1,364 245 2,067 128 3,804 3,546

Premises 2,280 - 3,664 - 5,944 5,473

Other Expenses 1,181 121 595 316 2,213 2,422

Total Expenditure 43,901 2,397 22,319 1,004 69,621 63,459

12 Investments

UWIC holds 100% of the issued share capital in the following Companies which are both registered in

England and Wales:

Name of undertaking Principal activity

UWIC Company Limited Short courses and commercial activities

Cardiff Institute Residences Company Limited Leasing of assets

In addition, an 11% interest is held in Welsh Networking Limited, a company providing high bandwidth

networking facilities to education institutions in Wales.

Deleted: 2,152

Deleted: 19,993

Deleted: 1,169


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13 Tangible Fixed Assets (Group)Assets

Freehold Under

Land Buildings Constructio

n

Equipment Total

000 000 000 000 000

Cost or valuationAt 1 August 2007

previously stated

63,628 76,193 591 9,561 149,973

Prior year adjustment (41,503) (14,390) - - (55,893)

At 1 August 2007 as

restated

22,125 61,803 591 9,561 94,080

Additions - 297 3,182 1,659 5,138

At 31 July 2008 22,125 62,100 3,773 11,220 99,218

DepreciationAt 1 August 2007

previously stated

- 3,188 - 5,258 8,446

Prior year adjustment - 4,832 - - 4,832

At 1 August 2007 asrestated

- 8,020 - 5,258 13,278

Charge for the year - 1,291 - 1,106 2,397

At 31 July 2008 - 9,311 - 6,365 15,676

Net book value

At 31 Ju ly 2008 22,125 52,789 3,773 4,855 83,542

Net book value

At 1 August 2007 22,125 53,783 591 4,302 80,801

Inherited/Revalued 21,255 21,382 - - 42,637

Financed by capital grant - 12,366 - 895 13,261

Other 870 19,041 3,773 3,960 27,644

Net book value

At 31 Ju ly 2008 22,125 52,789 3,773 4,855 83,542


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13 Tangible Fixed Assets (UWIC)

Assets

Freehold Under

Land Buildings Construction

Equipment Total

000 000 000 000 000

Cost or valuation

At 1 August 2007

previously stated

60,869 68,332 591 9,118 138,910

Prior year adjustment (39,520) (11,490) - - (51,010)

At 1 August 2007 as

restated

21,349 56,842 591 9,118 87,900

Additions - 297 3,182 1,616 5,095

At 31 July 2008 21,349 57,139 3,773 10,734 92,995

Depreciation

At 1 August 2007

previously stated

- 2,966 - 4,926 7,892

Prior year adjustment - 4,854 - - 4,854At 1 August 2007 as

restated

- 7,820 - 4,926 12,746

Charge for the year - 1,221 - 1,051 2,272

At 31 July 2008 - 9,041 - 5,977 15,018

Net book value

At 31 July 2008 21,349 48,098 3,773 4,757 77,977

Net book value

At 31 July 2007 21,349 49,022 591 4,192 75,154

Inherited 21,079 20,906 - - 41,985

Financed by capital grant - 12,366 - 894 13,260

Other 270 14,826 3,773 3,863 22,732

Net book value

at 31 July 2008 21,349 48,098 3,773 4,757 77,977

a) During the year, UWIC changed its accounting policy in accordance with FRS18 in relation to

the valuation of its land and buildings. Land and buildings are now stated at cost except for

certain assets inherited from the Local Education Authority. A valuation of these assets was

undertaken as at 31 July 1997 by Cooke & Arkwright, Chartered Surveyors, with this figure

being used as a proxy for cost. The assets were valued in accordance with the RICS appraisal

and valuation manual. The basis of the valuation was depreciated replacement cost.


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14 Stocks


2008 2008 2007 2007

000 000 000 000

Computer/reprographics 18 18 11 11

Catering & other 80 26 68 18

Work in progress 39 - 76 -

137 44 155 29

15 Debtors


2008 2008 2007 2007

000 000 000 000

Amounts falling due within one year:

Debtors 1,816 1,478 1,935 1,374Amounts owed by subsidiary undertakings - 379 - 1,181

Prepayments & accrued income 383 364 640 505

2,199 2,221 2,575 3,060

Amounts falling due after one year:

Amounts owed by other bodies - - 31 31

Amounts owed by subsidiary undertakings - 4,000 - 4,000

- 4,000 31 4,031

16 Creditors Amounts falling due with in one year


2008 2008 2007 2007000 000 000 000

Bank loans 180 151 167 140

Payments received in advance 3,614 3,424 2,909 2,639

Trade creditors 2,743 2,597 2,586 2,480

Social security & other taxation 1,028 963 990 905

Accruals 2,574 2,522 2,541 2,472

Other 1,468 1,278 1,063 1,041

11,607 10,935 10,256 9,677


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17 Creditors Amounts falling due after more than one year


2008 2008 2007 2007000 000 000 000

Bank loans 13,525 11,891 5,705 4,042

13,525 11,891 5,705 4,042

18 Borrowings


2008 2008 2007 2007

000 000 000 000

a) Unsecured loansRepayable as follows:

In five years or more 8,000 8,000 - -Total 8,000 8,000 - -

b) Secured l oansRepayable as follows:

In one year or less 181 151 167 140

Between one and two years 194 162 181 151

Between two and five years 679 568 629 526

In five years or more 4,652 3,161 4,895 3,365

Total 5,706 4,042 5,872 4,182

Total 13,706 12,042 5,872 4,182

c) UWIC entered into two unsecured loan agreements during July 2008, for loans of 12m and

13m respectively. The first tranche of 8m (4m each loan) was drawn down on 31 July 2008.

Further tranches of 9m and 8m will be drawn down in July 2009 and July 2010. Both loans

are at a fixed rate of interest of 5.1% repayable over 30 years, with no repayment of principal

during the first 10 years.

d) UWIC has two bank loans secured by legal mortgages over freehold land and buildings: A loan

of 1.8m (1,633k outstanding at 31 July 2008), is secured by freehold land and buildings at the

Cyncoed Campus. The loan is repayable on an annuity basis over 25 years. Interest is

payable on this loan at a fixed rate of 7.625% until July 2012 at which time UWIC will have the

option to either enter into a further fixed interest period or switch to variable lending rates linked

to LIBOR.

A loan of 5m is secured by freehold land and buildings at the Plas Gwyn Campus. At 31 July

2008, 4,042k of this loan was outstanding. The loan is repayable over 25 years (15 yearsremaining) on an annuity basis at a fixed rate of interest of 7.6925%.


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19 Deferred capital grants group and UWIC

Funding Other Grants Total

Council & Benefactions000 000 000 000 000

At 31 July 2007Buildings 6,655 6,172 12,827

Equipment 830 - 830

7,485 6,172 13,657

Cash ReceivedBuildings 349 - 349

Equipment 773 - 773

1,122 - 1,122

Released to Income and Expenditure

Buildings 89 89 178

Equipment 426 - 426

515 89 604

At 31 July 2008Buildings 6,915 6,083 12,998

Equipment 1,177 - 1,177

8,092 6,083 14,175

20 Revaluation Reserves

Provision

for

Enhanced Inherited ConsolidatedPensions Assets Total

000 000 000Revaluations

At 1 August 2007 previously stated (345) 106,226 105,881

Prior year adjustment - (55,893) (55,893)

At 1 August 2007 & 31 July 2008 (345) 50,333 49,988

Contributions to Depreciation

At 1 August 2007 previously stated - (1,087) (1,087)Prior year adjustment - (5,916) (5,916)

At 1 August 2007 as restated - (7,003) (7,003)

Released in the year - (694) (694)

At 31 July 2008 - (7,696) (7,696)

Net Revaluation Reserve

At 31 July 2008 (345) 42,637 42,291

At 31 July 2007 (345) 43,331 42,985

652k (2007 659k) of the revaluation reserve relates to assets owned by Cardiff Institute

Residences Company Limited giving rise to a net revaluation reserve for UWIC of 41,639k (2007

42,326k)


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21 Movement on General Reserves


2008 2008 2007 2007

000 000 000 000

At 1 August 2007 4,349 5,406 (1,865) (843)

Surplus on continuing operations

before transfer from revaluation reserve 976 1,114 1,726 1,768

Transfer from revaluation reserve 694 687 694 687

Pension items in STRGL (6,029) (6,029) 3,794 3,794

At 31 July 2008 (10) 1,178 4,349 5,406

Presented in the Balance Sheet as:

Reserve before pension liabilities 25,360 26,548 23,059 24,116

Reserve for pension liabilities (25,370) (25,370) (18,710) (18,710)

(10) 1,178 4,349 5,406

22 Reconcil iation of Surplus on Continuing Operations to Net Cash Inflow from Operating

Activi ties


31 July 2008 31 July 2007

Restated

000 000

Surplus before tax 976 1,726

Depreciation (Note 12) 2,397 2,152

Interest receivable (727) (639)

Interest payable 1,004 1,169

Difference between pension charge and cash contributions (489) (376)

Decrease in Stocks 18 19

Decrease/increase in Debtors 407 (242)

Increase in Creditors 1,893 1,397

Deferred Capital Grants released to income (Note 18) (604) (329)

Net cash Inflow from operating activities 4,875 4,877


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23 Returns on Investments and Servicing of Finance


31 July 2008 31 July 2007000 000

Interest received 732 637

Interest paid (444) (469)

Net cash inflow from returns on

investments and servicing of finance 288 168

24 Capital Expenditure and Financial Investment


31 July 2008 31 July 2007

000 000

Purchase of tangible fixed assets (5,138) (5,992)

Deferred capital grants received 1,122 1,561

Net cash outflow from

Capital expenditure and financial investment (4,016) (4,431)

25 Management of Liquid Resources


31 July 2008 31 July 2007

000 000

Redemption of investments 7,250 7,500

Purchase of investments (14,500) (7,250)

Net cash (outflow)/inflow from

Management of Liquid Resources (7,250) 250

26 Financing


31 July 2008 31 July 2007

000 000

Repayments of amounts borrowed (167) (496)

New borrowings 8,000 -

Net cash inflow/(outflow) from financing 7,833 (496)


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27 Analysis of Changes in Net Funds

At Cash f low s Non cash At

31 July 2007 Changes 31 July 2008

000 000 000 000

Cash in hand, and at bank 4,850 1,730 - 6,580Short term deposits 7,250 7,250 14,500

Debt due within one year (167) 167 (181) (181)Debt due after one year (5,706) (8,000) 181 (13,525)

6,227 1,147 - 7,374

28 Pension Obligations

The pension schemes for UWICs staff are the Cardiff & Vale of Glamorgan Pension Fund

(CVGPF) (principally administration and support staff); the Teachers Pension Scheme (TPS)

(principally academic staff); the Universities Superannuation Scheme (USS) (a mixture of

administrative and academic staff).

The contributions payable to the scheme were :-


31 July 2008 31 July 2007

000 000

Cost of TPS 2,259 2,003

Cost for CVGPF 2,421 2,185

Cost for USS 245 121

4,925 4,309

The current service costs recognised within UWICs historic cost surplus for the year were :-


31 July 2008 31 July 2007

000 000

Cost of TPS 2,259 2,003

Cost for CVGPF 2,180 2,050

Cost for USS 245 121

4,684 4,174


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Pension Obligations (continued)

Cardiff & Vale of Glamorgan Pension Fund ( CVGPF)

CVGPF is a local government superannuation scheme which meets the definition of a defined

benefits scheme. The most recent full actuarial valuation was carried out as at 31 March 2007, andhas been updated by independent actuaries to the Cardiff & Vale of Glamorgan Pension Fund to

take account of the requirements of FRS 17 in order to assess the liabilities of the Fund as at 31

July 2008.

The principal assumptions used for the purposes of FRS17 are as follows :-

31 July 2008 31 July 2007 31 July 2006

Discount rate 6.5% pa 5.7% pa 5.1% pa

Rate of long-term increase in salaries 5.3% pa 4.8% pa 4.6% pa

Rate of increase to pensions in payment 3.8% pa 3.3% pa 3.1% pa

Rate of increase in deferred pensions 3.8% pa 3.3% pa 3.1% pa

Rate of inflation 3.8% pa 3.3% pa 3.1% pa

The expected rate of return on assets, the market value of assets and the FRS17 scheme liabilitiesat 31 July are :-

Value and

long term

rate of return

at 31 July

2008

Value and

long term

rate of return

at 31 July

2007

Value and

long term

rate of return

at 31 July

2006

000 000 000

Equities 7.8% 21,847 7.9% 23,397 7.4% 18,908

Bonds 6.0% 5,825 5.5% 4,323 4.9% 4,086

Property 6.8% 1,638 6.9% 1,991 6.4% 1,534

Other 5.9% 1,680 6.0% 849 4.7% 402

Total market value of assets 30,990 30,560 24,930

Present value of scheme

liabilities

(52,150) (45,340) (43,160)

UWICs share of deficit in

the scheme

(21,160) (14,780) (18,230)

Unfunded pension liabilities (4,210) (3,930) (3,950)

Provision as at 31 July (25,370) (18,710) (22,180)

The unfunded pension liabilities relate to additional benefits due to pensioners as a result of

enhancements made to their benefits on early retirement. The balances in relation to these unfunded

liabilities are shown separately overleaf.

31 July 2008 31 July 2007 31 Jul y 2006

Assumed life expectancy at 65 years- retiring today male/(female) 20.3 (24.1)

- retiring in 20 years male/(female) 22.2 (25.3)


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28 Pension Obligations (continued)

Analysi s of amounts charged to the income and expenditure account

31 July 2008 31 July 2007

000 000

Funded Unfunded Funded Unfunded

Operating

- current service cost 2,180 - 2,050 -

- past service cost 560 - - -

Net expense 2,740 - 2,050 -

Finance

- expected return on assets (2,310) - (1,740) -

- interest on pension liabilities 2,650 220 2,260 190

Net expense 340 220 520 190

Analysis of amount recogni sed in the statement of t otal recogni sed gains and losses

31 July 2008 31 July 2007

000 000

Funded Unfunde

d

Funded Un funded

Actual return less expected return on assets (4,040) - 1,650 -

Actuarial (losses)/gains on liabilities (1,669) (320) 2,184 (40)

(5,709) (320) 3,834 (40)

Changes to plan assets fair values

2008 2007

000 000

Funded Funded

Opening value 30,560 24,860

Expected return on assets 2,310 1,740Actual less expected return (4,040) 1,650

Employer contributions 2,430 2,180

Member contributions 830 780

Benefits paid (1,100) (730)

Closing value 30,990 30,480

Changes to present value of liability

2008 2007

000 000

Funded Unfunde

d

Funded Unfunded

Opening value 45,340 3,930 43,160 3,950

Current service cost 2,180 - 2,050 -

Past service cost 560 - - -

Interest on liabilities 2,650 220 2,260 190Member contributions 830 - 780 -

Benefits paid (1,100) (260) (730) (250)

Actuarial losses 1,690 320 (2,180) 40

Closing value 52,150 4,210 45,340 3,930


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Notes to the financial statements (continued

28 Pension Obligations (continued)

The actuarial gain/(loss) can be further analysed as follows: 31 July 2008 31 July 2007

000 000CVGPF Funded & Unfunded

Actual return less expected return on assets (4,040) 1,650

% of scheme assets (13.0%) 5.4%

Experience gains and losses of pension liabilities (2,229) (80)

% of scheme liabilities (3.9%) (0.2%)

Total amount recognised in STRGL (6,029) 3,794

% of scheme liabilities (10.7%) (7.7%)

Teachers Pension Scheme (TPS)

The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit schemewith over 200 member institutions. All members pay the same contributory rate, currently 14.1%.

The last valuation of the TPS was at 31 March 2004. The assumptions and other data which havehad the most significant impact on the contribution level are as follows:

Investment return per annum 6.5%Salary increases per annum 4.5%Market value of assets 163,240 millionDeficit at date of valuation 3,260 millionProportion of members accrued benefitscovered by actuarial value of assets 98%

Universities Superannuation Scheme

UWIC participates in the Universities Superannuation Scheme, a defined benefit scheme which is

externally funded and contracted out of the State Earnings-Related Pension Scheme. The assets

of the scheme are held in a separate trustee-administered fund. It is not possible to identify each

institutions share of the underlying assets and liabilities of the scheme and hence contributions tothe scheme are accounted for as if it were a defined contribution scheme. The cost recognised

within the surplus/deficit for the year in the Income & Expenditure account is equal to the

contributions payable to the scheme for the year.

The latest actuarial valuation of the scheme was at 31 march 2005. The assumptions which have

the most significant effect on the result of the valuation are those relating to the rate of return on

investments (i.e. the valuation rate of interest) and the rates of increase in salary and pensions. In

relation to the past service liabilities, the financial assumptions were derived from market yields

prevailing at the valuation date. It was assumed that the valuation rate of interest would be 4.5%

per annum, salary increases would be 3.9% per annum and pensions would increase by 2.9% per

annum. In relation to the future service liabilities, it was assumed that the valuation rate of interest

would be 6.2% per annum, salary increases would be 3.9% per annum and pensions would

increase by 2.9% per annum. The valuation was carried out using the projected unit method.

At the valuation date, the market value of the assets of the scheme was 21,740 million and thevalue of the past service liabilities was 28,308 million, leaving a deficit of 6,568 million. The

assets therefore were sufficient to cover 77% of the benefits which had accrued to members after

allowing for expected future increases in earnings.

The contribution rate payable by the institution was 14% of pensionable salaries and is to remain at


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the same level pending a review. Surpluses or deficits which arise at future valuations may impact

on UWICs future contribution commitment.



Creditor Balances

UWICs creditor balances as at 31 July 2008 for each scheme are as follows:-


31 July 2008 31 Jul y 2007

000 000

TPS 280 253

CVGPF 279 256

USS 40 22

599 531

29 Capital Commitments

Group and

UWIC

Group and

UWIC2008 2007

000 000

Commitments contracted at 31 July 7,750 900

Authorised but not contracted at 31 July 22,095 4,950

29,845 5,850

30 Access Funds


31 July 2008 31 Jul y 2007

000 000

Funds at 1 August 13 17

Funding Council grants 577 443

Interest earned 7 7

597 467

Disbursed to students (588) (454)

Balance unspent at 31 July 9 13

Funding council grants are available solely for students; UWIC acts only as a paying agent. The

grants and related disbursements are therefore excluded from the Income and Expenditure

Account.

31 Related party transactions

Due to the nature of the Universitys operation and the composition of the Board of Governors

(being drawn from public and private sector organisations) it is inevitable that transactions will

take place with organisations in which a member of the Board of Governors may have an interest.

All transactions involving organisations in which a member of the Board of Governors may have

an interest are conducted at arms length and in accordance with the Universitys financial


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regulations and normal procurement procedures. No transactions require disclosure under

Financial Reporting Standard No 8: Related Party Disclosures.



32 Financial commitments

At 31 July 2008 the group had annual commitments under non-cancellable operating leases for

assets other than land and buildings expiring as follows:-

2008 2007

000 000

Within one year 104 28

Within two to five years 28 98

137 126

Financial Statements 2007-08 FINAL

Documents

Transcript of Financial Statements 2007-08 FINAL