Reports and Financial Statements 1
Contents
Page
Composition and Membership of the Council 2
Composition and Membership of the Audit Committee and Senior Management Team; and Financial Advisors 3
Statement of Responsibilities of the Council 4
Report of the Warden 6
Independent Auditors’ Report 16
Income and Expenditure Account 19
Statement of Corporate Governance and Internal Control 14
Note of Historical Cost Surpluses and Deficits 19
Statement of Total Recognised Gains and Losses 20
Balance Sheet 21
Cash Flow Statement 22
Notes to the Accounts 23
2 Reports and Financial Statements
Council, Audit Committee,
Senior Management Team and
COMPOSITION AND MEMBERSHIP OF THE COUNCIL 2008-09
Chair MrChristopherJonas
Ex officiomembers:
•Warden: ProfessorGeoffreyCrossick
•DeputyWarden: ProfessorSimonMcVeigh
•Pro-Wardens: DrPhilipBroadhead ProfessorJanePowell
•ClerktotheGoldsmiths’Company: MrDickMelly
•PresidentoftheStudents’Union. MsJessTratt
Elected members:
•threemembersoftheAcademicBoard: ProfessorAlanDownie DrRichardGrayson ProfessorCarriePaechter
•onememberoftheSeniorAcademicStaff: DrGarethStanton
•onememberoftheNon-AcademicStaff,bythat MrPádraigO’Connor staffinaccordancewithproceduresprescribed bytheOrdinances:
•onestudent[UnionChair]: MrManojKerai
External appointed members:
•14persons,notbeingmembersofstaff MrMarkBaillacheorstudentswhoshallberepresentativeof MrJackBarneseducational,economic,social,cultural, DrDavidBarrettcharitable,communityandotherinterests DrVirginiaBrookerelevanttotheworkoftheCollege: MsAltheaEfunshile
LadyGoodhart TheEarlofHarrowby MrKennethMay MrsAlysonMcGarrigle BaronessMorrisofYardley MsMaryStacey MsColleenToomey 2vacancies
Additional member:
•atthediscretionoftheCouncil,onefurther vacancypersonwhomayormaynotbeamemberofstafforastudent:
Financial Advisors 2008-09
Reports and Financial Statements 3
COMPOSITION AND MEMBERSHIP OF THE AUDIT COMMITTEE 2008-09
Chair:anindependentmemberof MrJackBarnesCouncilappointedbyCouncil:
ThreemembersofCouncilappointedbyCouncil: DrVirginiaBrooke LadyGoodhart vacancy
TwomembersappointedbyCouncil: TheEarlofHarrowby(SpringandSummertermsonly)
vacancy
Uptotwoco-optedmembers: 2vacancies
Secretary: MissRosemaryHarrison
COMPOSITION AND MEMBERSHIP OF THE SENIOR MANAgEMENT TEAM 2008-09
Chair:Warden: ProfessorGeoffreyCrossick
DeputyWarden: ProfessorSimonMcVeigh
Pro-Wardens: DrPhilipBroadhead ProfessorJanePowell
RegistrarandSecretary: MrHughJones
DirectorofFinance: MrBarryDouglasto30November2008 MrBarryBenjamin(InterimDirector)
from15December2008to24May2009 MsSallyTownsendfrom25May2009
Secretary:Administrator(Warden’sOffice): MsReevaCharles
AUDITORS BANkERSDeloitteLLP NationalWestminsterBankPLCCharteredAccountantsandRegisteredAuditors 65PeckhamHighStreetStAlbans,UK LondonSE155RZ
Reports and Financial Statements 5
InaccordancewiththeCharterandrelatedStatutes,CouncilisresponsiblefortheadministrationandmanagementoftheCollege’saffairs,includingensuringaneffectivesystemofinternalcontrol,andisrequiredtopresentauditedFinancialStatementsforeachfinancialyear.Councilisresponsibleforkeepingproperaccountingrecordswhichdisclosewithreasonableaccuracy,atanytime,thefinancialpositionoftheCollegeandenableittoensurethattheFinancialStatementsarepreparedinaccordancewiththeCharterandStatutes,theStatementofRecommendedPractice:AccountingforFurtherandHigherEducationandotherrelevantaccountingstandards.Inaddition,withinthetermsandconditionsoftheFinancialMemorandumagreedwithHEFCE,theCouncil,through
itsdesignatedOfficeHolder1 ,isrequiredtoprepareFinancialStatementsforeachfinancialyearwhichgiveatrueandfairviewoftheCollege’sstateofaffairs,andofthesurplusordeficitandcashflowsforthatyear.
IncausingtheFinancialStatementstobeprepared,theCouncilhastoensurethat:
•suitableaccountingpoliciesareselectedandappliedconsistently;
•judgementsandestimatesaremadethatarereasonableandprudent;
•applicableaccountingstandardshavebeenfollowed;
and
•FinancialStatementsarepreparedonthegoingconcernbasisunlessitisinappropriatetopresumethattheCollegewillcontinueinoperation.
Councilissatisfiedthatithasadequateresourcestocontinueinoperationfortheforeseeablefuture:forthisreasonthegoingconcernbasiscontinuestobeadoptedinthepreparationoftheFinancialStatements.
TheCouncilhastakenreasonablesteps,includingreceiptofadvicefromitsFinanceandResourcesCommitteeontheallocationofresourcesandgeneralfinancialmanagement,andfromitsAuditCommitteewhichhasawideindependentremitoveritsaffairs,to:
•ensurethatfundsfromHEFCEareusedonlyforthepurposesforwhichtheyhavebeengivenandinaccordancewiththeFinancialMemorandumwithHEFCEandanyotherconditionswhichthatFundingCouncilmayfromtimetotimeprescribe,andsimilarlywithregardtofundingagreementswiththeTeacherDevelopmentAgency(whichisresponsibleforthefundingofInitialTeacherEducation)andtheLearningSkillsCouncilfromwhichtheCollegereceivesasmallgrantforfurthereducationprovision;
•ensurethatthereareappropriatefinancialandmanagementcontrolsinplacetosafeguardpublicfundsandfundsfromothersources;
•safeguardtheassetsoftheCollegeandpreventanddetectfraud;
•securetheeconomical,efficientandeffectivemanagementoftheCollege’sresourcesandexpenditure.
ThekeyelementsoftheCollege’ssystemofinternalfinancialcontrol,whichisdesignedtodischargetheresponsibilitiessetoutabove,includethefollowing:
•acomprehensivemediumandshort-termplanningprocess,supplementedbydetailedannualincome,expenditure,capitalandcashflowbudgets;
•regularreviewsofkeyperformanceindicatorsandbusinessrisksandatleastthreetimesperyearreviewsoffinancialresultsinvolvingvariancereportingandupdatesofforecastout-turns;
•cleardefinitionsoftheresponsibilitiesof,andtheauthoritydelegatedto,HeadsofAcademicandAdministrativeDepartments,CentresandUnits;
•clearly-definedandformalisedrequirementsforapprovalandcontrolofexpenditure,withinvestmentdecisionsinvolvingcapitalorrevenueexpenditurebeingsubjecttoformaldetailedappraisalandreviewaccordingtoapprovedlevelssetbytheCouncil;
•FinancialRegulations,approvedbytheFinanceandResourcesCommitteeandCouncil,supportedbymoredetailedfinancialcontrolsandprocedurespublishedbytheFinanceDepartment,andspecialistpolicydocuments(eg.FraudPolicy)approvedbyCouncil,AuditCommitteeorFinanceandResourcesCommitteeasappropriate;
•aprofessionalInternalAuditteamwhoseannualprogrammeisapprovedbytheAuditCommitteeandendorsedbyCouncilandwhoseHeadprovidestheAuditCommitteewithareportontheinternalauditactivitywithintheCollegeandanOpinionontheadequacyandeffectivenessoftheCollege’ssystemofinternalcontrol,includinginternal financialcontrol.
Anysystemofinternalfinancialcontrolcan,however,onlyprovidereasonable,butnotabsolute,assuranceagainstmaterialmisstatementorloss.
1 InaccordancewiththeFinancialMemorandum,theCollegehastodesignateaprincipalOfficeHolder,acceptabletotheFundingCouncil, whoisrequiredto:
• satisfytheCollege’sCouncilthatallconditionsrelatingtotheuseoffundsprovidedbytheFundingCouncilarecompliedwith;
• advisetheCollege’sCouncilifatanytimeanyactionorpolicyunderconsiderationbyitappearstothedesignatedofficeholdertobeincompatiblewiththetermsoftheFinancialMemorandum.
ThedesignatedOfficeHolderisrequiredtoinformtheChiefOfficeroftheFundingCouncilinwritingshouldtheCollege’sCouncildecideneverthelesstoproceed.TheWardenoftheCollege,ProfessorGeoffreyCrossick,isitsdesignatedOfficeHolder
Reports and Financial Statements 7
Truetoourheritage,wecontinuetoofferopportunitiestomanytowhomauniversityeducationwouldotherwisebeinaccessible.OurlocationinadisadvantagedpartofLondonenablesustohelpraiseaspirationsamongsttalentedyounglocalpeopleandprovidethemwiththechancetostudyintheinternationalenvironmentofGoldsmiths.
Goldsmithshasconsistentlyperformedstronglyagainstgovernmenttargetsforparticipationfromunder-representedgroupsandlow-participationneighbourhoods.Currently40%ofourstudentscomefromhouseholdswithincomeslessthan£25,000.
ToachievethisdiversityweofferfoundationprogrammesleadingtoourBachelordegrees;weworkinpartnershipwithlocalschools,collegesandtheLondonBoroughofLewishamtoraiseaspirations;andwehosttheOpenBookproject,whichworkswiththosefromoffendingandaddictionbackgroundstoencouragethemtotakeupeducation,offeringthemongoingemotionalandpracticalsupportthroughouttheircourse.Ithasanoutstandingrecordinplacingex-offendersinhighereducation:over100studentsarecurrentlyregisteredontheproject,47ofthematGoldsmiths.
Staff and StudentsGoldsmithshasaround4,500full-timeequivalentundergraduatesandaround2,000full-timeequivalentpostgraduates,12%ofthemfromoutsidetheEuropeanUnion.TheCollegeemploysapproximately1,600staff,includingalmost600professionalacademics–manyofthemleadingresearchersintheirfield–inadditiontovisitingtutorsandsupportstaff.Itaimstobeattheforefrontofaccreditedstaffdevelopment,andarangeofopportunitiesisopentoallstaff.Newacademicstafftakepartinanin-houseprogrammetodevelopteachingskillsandenhancethelearningexperience.
Goldsmithscurrentlyoffersabroadrangeofundergraduate,postgraduateandcontinuing&professionaldevelopmentcourses.Theserangefromtheartsandhumanitiesincludingart,design,drama,history,Englishandcomparativeliteratures,mediaandcommunications,music,visualcultures;thesocialandbehaviouralsciences–anthropology,politics,sociologyandpsychology;computing;andeducation,withinterdisciplinaryworkacrossallareas.Theunifyingfactorsspanningthisrangeofdiversesubjectsarealiberalandcreativeapproachtoteachingandlearning,withtheemphasisonfreedomofthoughtandexpressionalongsidehighandrigorousstandards,andaresearch-ledteachingethos.Aboveall,weaimtomaximisethebenefitsthatourrelativelysmallsizebrings,creatingastimulatingbutsupportiveatmosphere,inwhichstudentsknoweachother,andareknownbytheirtutors.
INTRODUCTION TheFinancialStatementscomprisetheresultsofGoldsmiths’College,UniversityofLondonalsoknownbythebrandname“Goldsmiths,UniversityofLondon”.
TheCollegehasonesubsidiarycompany, PureGoldsmithsLtd,whichdidnottradeinthefinancialyear.
MISSION AND VALUESGoldsmithsisaresearch-intensiveinstitutionwithadistinctiveacademicprofile,acommitmenttothequalityofthelearningexperiencethatweofferourstudents,andaninfluencethatisbothglobalandlocal.
Goldsmiths’Missionistoofferatransformativeexperience,generatingknowledgeandstimulatingself-discoverythroughcreative,radicalandintellectuallyrigorousthinkingandpractice.
InpursuingthisMission,wearecommittedtoasetofcorevaluesthatincludeachievingacademicexcellence,embracingcomplexity,encouragingradicalthinking,andcreatingchangelocallyandglobally.
ThecombinedeffectofourMissionandValuesisaninstitutionthatproduceshigh-qualityresearchandresearch-ledteachingthatisverydistinctive.
OPERATIONSGoldsmithsisauniqueinstitutionwithaglobalreputationforitsinnovativeandchallengingworkinthecreativeandperformingarts,humanitiesandsocialsciences.Notwithstandingourinternationalreachtoday,weremainproudofouroriginsin1891asaTechnicalandRecreativeInstitutetoeducatetheworkingclassofSouth-EastLondon,andourSouthLondonrootshelpshapeourcharactertoday.AsSirSteveBullock,MayorofLewisham,hassaid,“GoldsmithsisknittedintothefabricofLewisham”.
Thesuccessofouralumniinartiswelldocumented–eg,thesixwinnersoftheTurnerPrizewhohavestudiedhere–butwemakeequallystrongcontributionstomanyotherareas,forexample,throughourinternationally-recognisedDepartmentofMediaandCommunications;ourDepartmentofSociologywhoseresearchplacesittopintheUK;ourDepartmentofProfessionalandCommunityEducationwhichisaUKleaderinprofessionaldevelopmentandwideningparticipation;andourDepartmentofComputingwhosestrikingworkontheboundariesofcomputingandthecreativeandperformingartshasexcitedtheinterestofbusinessandculturalorganisationsalike.
TheacademicsuccessofGoldsmithsstemsfromauniquephilosophywhichiscreative,radicalandintellectuallyrigorous,alliedtoastudentbodywhosebreadthanddiversityhelpsnourishthecreativityoftheinstitution.TheriseofGoldsmithsoverthelasttwentyyearstoitscurrentpositionasoneofthecountry’sleadingresearch-intensiveuniversitiesisremarkable.IntherecentofficialassessmentofresearchinallUKuniversities,Goldsmithscameninthinthecountryfortheproportionofitsresearchthatreceivedtheveryhighestfourstargradeof‘world-leading’.Oursuccesshoweverhasbroughtwithitconsequenceswithwhichwestruggle,aboveallanageingcampusthathasfailedtokeeppacewithGoldsmiths’excitinggrowth.
8 Reports and Financial Statements
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Wehaveexperiencedasteadygrowthinstudentnumbersoverthepastasillustratedinthechartbelow:
Goldsmiths student FTE
Overthefiveyearperiod,wehaveseenstudentnumbersincreaseby12%.
Ourgraduationceremoniesareauniqueblendoftradition,ceremony,informalityandwarmcelebration.In2008-09around1,200studentsgraduatedatfiveceremoniesheldintheGreatHalloftheRichardHoggartBuilding.
Overallacademicperformanceissummarisedinthefollowingchart:
Undergraduate students successfully completing degree by classification 2008-09
WearekeentoimprovethestudentexperiencebyworkingcloselywiththeStudents’Unionandcanvassingtheviewsofstudentsdirectly.Duringtheyearinquestion,studentsweregiventheopportunitytocommentviatheNationalStudentSurvey(NSS)andtheInternationalStudentBarometersurvey.ThefeedbackfrombothsurveyshashadadirectinfluenceonCollegedecision-makingandhasledtotheenhancementofthestudentsupportprovided.
Student achievementsStudentachievementsincludethefollowing:
In the medals at the International Radio FestivalAnnScantlebury(MARadio2007-2008)wasawardedaSilverMedalatthisyear’sInternationalRadioFestivalofNewYorkforherfinalproductionradiodrama–anoriginalscriptwhichshedirectedandproducedherself.
Her15minutecontemporarymysteryachievedoneofthehighestawardsgivenbytheFestival.TheawardsareofaworldprofessionalstandardandherworkwasrankedinthesamefieldattheBBC,leadingindependentsandotherinternationalbroadcasters.
Glastonbury successLauraBettinson,2009PopularMusicStudiesgraduate,performedatthisyear’sGlastonburyFestivalontheBBCIntroducingStageunderherperformingpersonaDimblebyandCapper.TippedbyBBCRadio1’sHuwStevens,sheperformedalongsideSimonWheeler(nowgoingintohisthirdyearofPopularMusicStudiesatGoldsmiths)andfellowgraduateSamBeste.
Students bring the WI to campusGoldsmithsstudentsIndiaVolkersandKateHutchinsfoundthemselvesflungintothemedialimelightwhentheyputplansinmotiontoestablishabranchoftheWomen’sInstituteatGoldsmiths–thefirstbranchatauniversity.
ThestorywascoveredintheEveningStandard,LondonLite,theMetro,theDailyMailandTheTimes,aswellasthestudentsfeaturingonITV’sGMTVandtheBBC’sOneShow.Indiatoldthepress:“Iwantedtoformagroupwherepeoplecouldgettogetheranddocreativethings.”
Students design routers of the futureDesignstudentswerefeaturedonmultipleinternetnewssitesandblogsafterworkingwiththecountry’slargesthomebroadbandprovider,TalkTalk,todesignanewgenerationoffuturisticrouters.Theyexploredwhatthe‘RoutersoftheFuture’mightlooklikeandhowtheycouldtakeprideofplaceinourhouseholds.
TalkTalkaskedGoldsmithstoconsiderfourfactors:signalstrength,homestyle,energyefficiencyand,finally,pureenjoyment.MarkSchmidfromTalkTalksaid:“WorkingwiththedesignspecialistsatGoldsmiths,wewantedtotransformthehumblerouterintosomethingthatpeoplewouldwanttoshoutabout.WiththeveryfirstRoutersoftheFuturecollection,ourvisionofmakingtherouteranintegralpartofourcustomers’lifestylesandinteriorscomestolife.”
Literary accoladeTomMcMullan(BAEnglish)haswonfirstplaceintheTheLiteraryEncyclopedia’sEmoryElliottMemorialPrize2009.Hiswinningessaywastitled‘WithreferencetoThe OutsiderbyAlbertCamus,discussJean-FrancoisLyotard’sdefinitionof(post)modernistliteratureinrelationtothequestionoftheunpresentable’.
Goldsmiths/BAA Expo Award at Terminal 570studentsfromalllevelsanddisciplines,in28teams,putideasforwardforinnovativeinstallationsforTerminal5,culminatinginthecommissionoftwoartworksforDepartures.SevenoftheseteamswereinvitedtodeveloptheirconceptsandpresentationswithsupportfromBAA,Goldsmiths,world-leadingdesignandcommunicationagencyImagination,andcutting-edgeartorganizationaf2012.TheprojectwasshortlistedforaTimesHigherEducationAward.
Thirdclasshonours
First classhonours
Lower secondclass honours
Upper secondclass honours
Reports and Financial Statements 9
RESEARCHGoldsmithsisamemberofthe1994Group,comprisingnineteeninternationally-renowned,research-intensiveuniversities,whichwasestablishedtopromoteexcellenceinresearchandteaching,toenhancestudentandstaffexperiencewithinthememberuniversities,andtohelpsettheagendaforhighereducation.
During2008-09thenationalResearchAssessmentExercise(RAE)evaluatedthequalityoftheresearchoutputofacademicstaffatalluniversities.TheoutcomeisimportantbothforourreputationandfortheleveloffutureHEFCEQRfundingthatwereceiveforresearch.Reflectingourstatusasaresearch-intensiveuniversity,ahighproportionofoureligibleacademicstaffwereentered.
GoldsmithscontinuedtheupwardstrajectoryobservedoverconsecutiveRAEs,movingfrom40thto33rdpositionnationallyintermsofthemostwidelyusedglobalindicators;itcameanimpressive9thintermsofthepercentageofresearchjudgedtobeofthehighest‘world-leading’grade.Reflectingtheirimprovedperformance,severaldepartmentssawincreasesintheirQRfundingthoughthiswasoffsetbyreductionsforothersasaresultlargelyofarelativedecreasenationallyintheproportionoftotalfundingallocatedtoarts,humanitiesandsocialsciencesubjects.Recent grant successes include:
•InDesign,aprestigious£1.7mAdvancedGrantfromtheEuropeanResearchCounciltoProfessorBillGaver.Theproject,‘ThirdWaveHumanComputerInteraction’,integratesdesign-ledresearchmethodswithembeddedandubiquitoustechnologiestocreateprototypeproducts.
•InDrama,a£440KawardfromtheArtsandHumanitiesResearchCouncil(AHRC)toProfessorRobertGordonfora3-yearproject,‘BeyondtheLinearNarrative’.BasedinthePinterCentre,itinvestigateslinksbetweeninter-culturalandpoliticalchangeandtheemergenceofnon-linearandfracturednarrativeincontemporaryartforms.
•InVisualCultures,a£330KAHRCprojectcalled‘PerformanceMatters’ledbyDrGavinButt.Thisbringstogetherartists,curatorsandacademicsfromGoldsmiths,RoehamptonUniversity,andtheLiveArtDevelopmentAgencytoinvestigatetheculturalvalueofperformance.
•InEducationalStudies,anawardof£640KfromtheEconomicandSocialResearchCouncil(ESRC)toProfessorEveGregory,HeadoftheCentreforLanguage,CultureandLearning.Thisproject,‘Becomingliteratethroughfaith’investigateshowchildrenlearnlanguageandliteracyindifferentfaithcommunitiesinLondon.
•InProfessionalandCommunityEducation,anESRCawardof£340KtoProfessorMarjorieMayo,HeadoftheCentreforLifelongLearningandCommunityEngagement,tosupportherteam’skeypartnerroleintheUKResearchClusterforActiveLearningforActiveCitizenship.Thiscollaborativeresearchprogrammeaimstobuildresearchskillsandcapacityrelatingtoactivecitizenshipandcommunityempowerment.
•InPsychology,anESRCawardofover£500KtoProfessorJulesDavidoff,DirectoroftheCentreforCognition,ComputationandCulture,fora3-yearstudyofperceptualprocessingintheremoteHimbatribeinNamibia.
ENTERPRISE AND kNOwLEDgE TRANSFERDuring2008-9theBusinessDevelopmentOfficehasbeenadjustingtoshiftsinfunding,astheCentresforKnowledgeExchangewinddown,andwerelyonHEIFformulafundingandCollegesupport.OurHEIFallocationfor2009-10willriseby29%to£322,000(buildingontheincreasein2007-08of66%),leavingGoldsmithsinastrongpositiontocontinuetodevelopenterpriseandknowledgetransferactivities,andwehavecarefullyhusbandedadditionalresourcestoallocatethisyear.Wehavestrengthenedstaffingfurthertodevelopresearchcollaborations,andhaveseenapplicationsforKnowledgeTransferPartnershipsriseasaresult.In2009-10wewilllooktobuildonsuccessesinthisarea,aswellasinengagementwithResearchCouncilsandtheTechnologyStrategyBoard.
TheCollege’ssubjectmix,withitsemphasisonthecreativeandperformingarts,media,thehumanitiesandsocialsciencesmeansthatourbusinessengagementiscurrentlygearedtowardssmallandmedium-sizedenterprise.Wearenonethelessdevelopingaframeworkforidentifyingandmanagingstrategicpartnershipswithlong-termcollaborativeresearchpartners,regardlessofsize.WewillincreasetheuseofourInternalInvestmentFund,toexpandourcollaborativeandcontractresearchactivity.Wecontinuetomakeuseofpre-commercialfundsandrelationshipswithventurecapitalistsintheHEIF4period.
DEVELOPMENT ACTIVITy During2008-09,theDevelopmentandAlumniOfficehasmadeanumberofimportantadvances.Relationshipswithseveralpotentialmajordonorshavebeenestablishedanditishopedthatthesewillleadtosignificantsupportintheyearstocome.PlanshavealsobeenmadefortheCollege’sfirstalumnitelephonefundraisingcampaigninOctober2009,whiletendersweresoughtfortheCollege’sfirstrelationshipfundraisingdatabaseandthisiscurrentlybeingimplemented.OvertimetheseandotherinitiativeswillleadtosustainablefundraisingincomefortheCollege.Wewelcomethegovernment’smatchfundinginitiativewhichwillprovideadditionalincentivesforthoseinterestedinsupportinguniversities.
RISk MANAgEMENTTheCollege’sriskmanagementprocessaimstohelpCouncilMembersandstafftoconsiderrisk,itsprobabilityandimpact,andthecontrolsinplaceformanagementandmitigationpurposesinaconsistentmanner.Undertheguidanceofourinternalauditors,theKingstonCityGroup,andourPlanningOfficewehaveoverhauledandimprovedourriskmanagementprocess,settingupanewRiskManagementsub-committeewhichwillhaveresponsibilityforembeddingriskmanagementprocesseswithintheCollege,developingriskpolicy;monitoringdepartmentalriskregistersandfeedingtheseintotheCollege’sriskregisterasappropriateforoverallreviewandconsiderationbySMT.TheriskregisterwillthenbediscussedatAuditCommitteeandalsoatCouncil,Goldsmiths’governingbody.
10 Reports and Financial Statements
Alongsidethisworktoimprovetheprocessofriskmanagement,wewillbedevelopinganenhancedreportingformatwhichwillbeusedacrosstheCollege,togetherwithtraininginriskmanagementforthoseresponsibleinacademicandsupportdepartments.Thisframeworkwillprovidearobustandcomprehensivesystemofriskmanagement,toenableCounciltocontinuetofulfilitsresponsibilitiestotheFundingCouncilunderthetermsoftheFinancialMemorandum.
ThefollowingrisksarecurrentlyrankedhighestbyGoldsmithsSeniorManagementTeam.
Financial SustainabilityThecurrentfinancialenvironmentthattheCollegeisoperatingwithin,hasanumberofsignificantfinancialchallengeswhichincludelikelyreductionsinpublicfunding,theneedtoworktowardsanddeliversustainablesurpluses,andtheneedtoestablishandeffectivelymaintainthelong-termcapitalprogramme.Weneedtohaveafinancialpositionthatenablesustoinvest,tomaintainthequalityofourworkandtooperatesuccessfullyindifficulttimes.Ourfinancialstrategyfocusesonanumberofkeyelements:increasingincomeandreducingoverallandunitcosts;improvingtheefficiencyofouroperationanddevelopingacapitalplanwhichenablesustoinvestintheestatewithoutfinanciallyover-committingourselves.
Pressure on Research IncomeTheoverallreductiononfundingforresearchcoupledwiththeGovernmentfocusonSTEMsubjects(whichdisadvantagesGoldsmithsbecauseofoursubjectmix)hasputpressureonourabilitytogenerateresearchincome.ResearchisafundamentalpartoftheCollege’smission,andwemustthereforeensurethatmembersofacademicstaffhavetimeandresourcestoconductresearchoftheveryhighestquality.ItisalsoasignificantelementofpublicincomeandreductionswouldhaveasignificantimpactontheCollege.Wearetakingactiontomitigatetheimpactofchangesintheresearchfundingenvironment,byrevisingtheresourceallocationmodeltoimproveincentivestodepartmentstogainexternalresearchfunding(whereverpossibleonafulleconomiccostbasis),andwewillinvestfurtherwhenpossibleinResearchOfficecapability.
AdmissionsWeneedtoensurethatweattractstudentsofthequalityandattributestosustainandenhancetheCollege’sacademicmissionandprofile,withabalanceacrossdepartmentsandprogrammesandlevelsandthatwealsomeetouradmissionstargets.Thestrategicre-organisationoftheRegistrycreatesamarketingdepartmentgivingusabetterstrategicfocustoattractandrecruitgoodstudents.Thereisacontinuedfocusoninternationalstudentrecruitment;marketingplansforeachdepartment’sprogrammesarebeingdevelopedandwecontinuewithourreviewofprogrammeportfolio.
Organisational delivery and supportAsarelativelysmallinstitution,wemustmakethebestofourresources.Thismeansthatwecannotaffordtobeinefficientorineffectiveinhowwesupportouracademicactivities.Weareinvestingininformationsystemstoensurethatweareabletooperatesmoothlyandeffectively,andtoensurethatwehavegoodandreliablemanagementinformation.WehaveputinplacebetterstaffdevelopmentsupportandarefocusingonmanagementandleadershipwithintheCollege.Wehavesignificantlyimprovedtheorganisationandqualityofthesupportdepartments,butfurtherstrengtheningisneeded.
Learning and TeachingThequalityofstudents’learningisattheheartoftheCollege’smission.Wearedeterminedtomaintainitatahighlevel.Additionally,students’satisfactionwiththeirtimeatGoldsmithsimpactsontheirwillingnesstoratetheCollegehighlyandalsoontheirpropensitytorecommendittoothers.Bothofthesehavesignificantreputationalconsequences.Weareinvestinginsupportforacademicpracticeandforthelearninginfrastructure,forexampleinvestinginthelibrary(intermsofprint,digitalandonlinematerials,aswellasthephysicallearningenvironment).
Reputational RiskOurreputationandbrandarestrong,andcontributetoourabilitytosucceed.WeneedtoensurethatwecontinuetodevelopexternalrelationshipswhichsecuretheCollege’spositionwithawidernetworkofstakeholders,suchaslocalgovernmentandcommunitylinks;fundingbodies;Government;culturalorganisations;andpotentialdonors.Seniorstaff,inparticular,looktodevelopexternalcontacts.Wehaveaneffectiveandproactivecommunicationsteamwhoworkhardtomanageanddevelopourbrandandtoensurethatwetellastrongstory.
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FINANCIAL HIgHLIgHTS
Summary Outturn statement 2008-09
2008-09 2007-08 Change £’000 £’000 %
Income 75,149 71,862 4.6%
Staff 47,083 42,735 10.2%Non-staff 26,134 26,360 (0.9)%
Expenditure 73,217 69,095 6.0%
Operating surplus/(deficit) 1,932 2,767 (30.2)%
Historical cost surplus 2,726 3,557 (23.4)%
SURPLUS Thehistoriccostsurplushasremainedstrongat£2.7m(from£3.6min2007-08).Thisrepresentsawelcomeboosttoourreservesparticularlyinthelightofthelikelyfuturechallenges.Thesurplusfor2008-09confirmstheimprovedperformanceandthedeliveryofourfinancialobjectives,asnotedinthe2007-08accounts.Goldsmithsaimstoachievesurplusesofatleast3%ofturnoverperannum.Goldsmithswillreinvestthesesurplusesinitsinfrastructureinordertocontinuallyimprovethefacilitiesforitsstudents,staffandvisitorstothecampus.
INCOME Incomein2008-09hasincreasedby£3.3m[4.6%]over2007-08.
Goldsmithsincomeismadeupasfollows:
Income 2008-09
FUNDINg COUNCIL gRANTSGoldsmithsreceivesgrantsfromtheHigherEducationFundingCouncilforEngland(HEFCE),theTeacherDevelopmentAgency(TDA)andtheLearningandSkillsCouncil.However,HEFCEgrantsaccountforover85%ofthetotalfundingcouncilgrants.TheHEFCEgrantforresearchaccountsforoveronethirdofthetotalmainstreamgrantreflectingtheCollege’sresearch-intensivecharacter.Overall,fundingcouncilgrantsroseby2.8%comparedto2007-08.
TUITION FEES
Analysed Fee Income
Total tuition fee income growth over the past five years:
Tuitionfeeshaverisenby13%againstthepreviousyearto£27.9min2008-09.95%ofthegrowthinoverallfeeincomeisaccountedforbytheincreaseinfull-timehomeandEUfeeincomewhichispartiallyexplainedbythethirdyearofthevariablefeeregime.
£’000 15,484 16,523 20,932 24,597 27,878
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11.5%
Funding bodygrants 43.8%
Home studentfees 25.8%
InterestandEndowment
Income0.8%
Residences7.7%
Research7.4%
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’sRESEARCHInthepast,partlyasaconsequenceofitssubjectmix,Goldsmiths’incomefromresearchgrantsandcontractshasbeenarelativelylowproportionofoverallturnover.However,followingthelaunchofanewstrategyandadecisionbytheSeniorManagementTeamin2004-05toplaceagreateremphasisonsecuringadditionalgrantincome,Goldsmithshasgeneratedsignificantincreasesinresearchincome.2008-09hasshownadropofresearchincomeof8%.Thisdrophasresultedfromverychallengingconditionswherebyfundingforscience,technologyandengineering,mathematicsandmedicinehavebeenprioritised.ThishaseffectivelyreducedfundingavailableforartsandhumanitiesinstitutionssuchasGoldsmiths.
Detailsofourperformanceoverthelast5yearsareinthechartbelow.
Research Income - 5 Years to 31.7.2009
ThegrowthofresearchgrantandcontractincomehasbeenpartofastrategytodiversifyourincomestreamsandreduceGoldsmiths’relianceonfundingfromHEFCE.Theintroductionoffundingbasedontheprinciplesof‘fullEconomicCosting’(fEC)hasimmediatelyimprovedthefundingavailablefromresearchcouncilandgovernmentgrants,andhasenabledusbettertocostourothergrantsandcontracts;itislikelytohaveapositiveinfluencemoregenerallyinthelongerterm.ThereceiptoffECgrantshascontributed,andwillcontinuetocontribute, toimprovementsintheCollege’slong-termfinancialsustainability.
OTHER OPERATINg INCOMEOtheroperatingincomeremainedbroadlyconstantat£8m.IncomefromourResidences,CateringandConferencesoperationsrosebyaround5%takingthetotalto£5.7m.‘Otherincome’decreasedby£222kresultinginatotalof£1.4m.
INVESTMENT INCOME INCLUDINg ENDOwMENTSCashbalanceshaveremainedhealthyallyear.However,lowerinterestrateshaveresultedinadecreaseinearningsof40%to£564k.
EXPENDITUREStaff costs Goldsmiths’long-termsuccessisverydependentonitsabilitytomaintainitsinvestmentintheexcellentstaffrequiredtodeliver,andtosupportthedeliveryof,high-qualityteachingandresearch.
During2008-09staffcostsroseby10.2%to£47.1mandaccountedfor64%ofexpenditure.Itshouldbenotedthatanelementofthissignificantincrease(comparedtoinflation)resultedfromthere-gradingofpostsundertheHigherEducationRoleAnalysis(HERA).
Other Operating ExpenditureOtheroperatingexpenditurefellbyalmost4.3%.Thishasresultedfromcontinuedfocusongeneratingefficienciesinnon-paycostsandalsobecauseofthereductioninexpenditureonresearchgrantsandcontracts.Therelativelylowlevelofincreaseinnon-payexpenditurehascontributedtothemaintenanceoftheCollege’slevelsofsurplus.
BALANCE SHEETCapital expenditure Goldsmithsinvested£7.2minbuildingsandequipmentassetsduring2008-09.Themostsignificantitemofcapitalexpenditureisthenewcutting-edgebuildingwhichisbeingconstructedtohousetheDepartmentofMediaandCommunicationsandtheInstituteforCreativeandCulturalEntrepreneurshipatGoldsmiths.Thisproject,knownastheNewAcademicBuildingwillalsoprovidemuchneededfacilitiesforthewholeCollegeandaprestigiousvenueformajoreventsandwillreleasespaceforotherdepartmentstoexpand.TheoverallcostoftheNewAcademicBuildingisbudgetedatjustover£20m.Sitesetupisestimatedtofinishinsummer2010toensurethatthebuildingisreadyforthestartofthenewacademicyear.
ThenewbuildingwillbesituatedatthetopoftheCollegeGreen,replacingprevioustemporaryaccommodation.AsthenewcentrefortheDepartmentofMediaandCommunicationsandtheInstituteforCreativeandCulturalEntrepreneurshipitwillallowdifferentsectionsofthedepartment,currentlyscatteredacrossthecampus,tocentraliseintoasinglepurpose-builtspace.Thenewbuildingwillalsohousealargelecturetheatre,meetingspacesandacaféwithoutsideseating.EndowmentsGoldsmithsendowmentsareinvestedinbondsandinapooledequityfundtoearnincometocontributetoacademicpostsetc.andtoenablethecapitalvalueofthefundtogrowovertime.In2008-09however,duetopoorstockmarketperformancethefundhad anegativereturnof£13kovertheyear.
PensionsAsignificantaspectoftheFinancialStatementsisa£6.4mincreaseintheFRS17(RetirementBenefits)pensiondeficitoftheLondonPensionFundAuthority(LPFA)pensionschemeofwhichtheUniversity’sadministrativeandsupportstaffaremembers.Thisincreaseddeficitarisesfromnegativeinvestmentreturnsfortheyear(consistentwiththeunder-performingequitymarkets)whiletheschemesliabilitiesrelatingtoGoldsmithsincreasedby20%.Thelatterreflectsanincreaseinthepresentvalueofthescheme’sliabilitiesasaresultofalowerdiscountrate.Thedeteriorationinthepensiondeficitcontributestoadecreaseinnetassets(afterthepensionliability)with
Reports and Financial Statements 13
100
80
60
40
20
0
27
2006-07
14
58
91
2004-05 2005-06 2007-08
85
2008-09
Da
ys
netassetsat31July2009of£47.2m(2008:£52.3m).Itcanalsobeseenthattheincomeandexpenditurereserveshowsadeficitat31July2009afterthepensionreserveisincludedof£0.6m(2008:£2.9msurplus).However,netassetsremainstrongoverall.
CashAfteralowpointin2004-05,Goldsmiths’cashbalanceshaveremainedhealthy.Netcashinflowsfromoperatingactivitiesremainedstrongintheyearat£7.2m(2008:£6.9m)andnetdebtincreasedto£2.1m(2008:£1.8m).Externalborrowingsof£8.8mare12%ofincome(2007-08£8.4m,12%ofincome).Wearecurrentlyfinalisingaloanof£10mtopartfinancetheconstructionoftheNewAcademicBuilding,alongsidethefundingprovidedbyHEFCE.
Thechartbelowshowstheamountofcashheldattheyearendexpressedintermsofnumberofdaysofexpenditure.
Cash & short-term investments/Total expenditure (days)
OurFinancialStrategyincludesatargetminimumcashbalanceof40daysofexpenditureandthetableshowsthatithasbeencomfortablyexceededinthepastthreeyears.
OUTLOOkGoldsmithswillcontinuetoprovideresearch,research-ledteaching,knowledgetransferandengagementwiththelocal,nationalandinternationalcommunities.Itwillbeinnovativeandcreativeinitsapproach.Incommonwithotheruniversities,however,weareoperatinginanincreasinglydifficultandchallengingenvironment.IndicationsarethattherewillbepressureonfundingforallpublicorganisationsandthehighereducationsectorismodellingtheimpactofvaryinglevelsofHEFCEcuts.
Expenditurehasalsobeensubjecttoupwardpressure,asnationally-negotiatedpayincreaseshaveinthepastthreeyearsincreasedsalaryratesbywellaheadofgeneralinflation.Therisingcostsofpensionsandhighinflationaryincreasestonon-payitemssuchasenergyalsoputpressureonoverallfinances.Additionallythechangesingovernmentpolicytowardsfundingforstudentswithequivalentorlowerlevelqualifications,hasincreasedthestrainonourfinances.
Wearecurrentlyrevisingourstrategiesinthecontextofincreasingpressureonpublicfunding.Wearecontinuingourdrivetoincreasenetincomewhilemaintainingcontrolonexpenditure,generatingnecessaryefficiencysavings.Wehavealsoundertakenanumberofchangestoouradministrativeandoperationalstructurestoenablecostreductionstoberealised.WeremainconfidentthatthestrategicandoperationalmeasuresthatwearetakingwillensurethatwecanrespondtothechallengesandgeneratethesurplusesnecessaryforGoldsmiths’futuresustainabilityandsuccess.
TheCouncilhasareasonableexpectationthattheCollegehasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Thustheycontinuetoadoptthegoingconcernbasisofaccountinginpreparingthefinancialstatements.
CONCLUSIONGoldsmithsaimstogrowitsactivitiesoverthemedium-term.TheSeniorManagementTeam,guidedbytheStrategyforGoldsmithsandtheFinancialStrategy,willcontinuetoinvestinitsstaffandfacilitiestoensureimprovedoverallfinancialandacademicperformanceinthemedium-termwhilstmaintainingtheessentialcharacteristicsthatmakeGoldsmithsaleadingandverydistinctiveUKhighereducationinstitution.
TheCollegereliesheavilyuponallofitsstafftorealiseitsobjectives,andIwouldliketotakethisopportunitytorecordmythankstothemallfortheirsupportandendeavouroverthepastyear.SpecialthanksareduetoourindependentmembersofCouncil,whoseadviceandsupporthavebeeninvaluableduringthisperiodofchange.
ProfessorGeoffreyCrossickWarden
Reports and Financial Statements 15
Council,theGoverningBodyoftheCollege,hasresponsibilityformaintainingasoundsystemofinternalcontrolthatsupportstheachievementofitsstrategicaims,whilstsafeguardingthepublicandotherfundsandassetsforwhichitisresponsible.ItdoesthisinaccordancewiththeresponsibilitiesassignedtotheGoverningBodyintheCollege’sStatutesandtheFinancialMemorandumwithHEFCE,andtakingintoaccountgoodpracticeguidancepublishedforuniversitiesandforthepublicsectorgenerally.Thesystemofinternalcontrolisdesignedtomanageratherthaneliminatetheriskoffailuretoachievestrategicaims;itcanthereforeonlyprovidereasonableandnotabsoluteassuranceofeffectiveness.Thesystemisbasedonanongoingprocessdesignedtoidentifytheprincipalriskstotheachievementofpolicies,aimsandobjectives,toevaluatethenatureandextentofthoserisksandtomanagethemefficiently,effectivelyandeconomically.Thisprocesshasbeeninplacefortheyearended31July2009anduptothedateofapprovaloftheFinancialStatements,andaccordswithHEFCEguidance.Councilhasresponsibilityforreviewingtheeffectivenessofthesystemofinternalcontrolandhasestablishedthefollowingprocesses:
•Meetingsatleastthreetimesperyeartoconsider
theplansandstrategicdirectionoftheinstitution;2
•thereceiptofAuditCommitteeMinutes,detailingtheCommittee’soversightofinternalcontrolprocedures,includingreceiptofregularreportsfromtheHeadofInternalAudit;
•thereceiptofreportsfrommanagersconcerningprogressonkeyprojects,includingriskmanagement;
•continuinginitiativestodevelopamorerobustapproachtothemanagementofrisk,mostrecentlythroughtheEffectivenessReviewofCouncil2008-09,tobefollowedupbyanewstructureofriskmanagementarrangementsin2009-10;
•oversightbyAuditCommitteeofissuesrelatedtodataquality;
•asystemofkeyperformanceindicatorsregularlyreviewedbyCouncil;
and
•aConflictsofInterestsPolicywhichdealswiththedeclarationandhandlingofalltypesofconflict,andapublishedregisterofinterests.
OntherecommendationoftheExternalAuditors,AuditCommitteeandCouncilrevisedtheConflictsofInterestsPolicywitheffectfrom1September2009,toensureasufficientlyrigorousapproachtorelatedpartytransactions.
Council’songoingreviewoftheeffectivenessofthesystemofinternalcontrolisinformedbytheinternalauditunit,whichoperatestostandardsdefinedintheHEFCEAuditCodeofPracticeandwhichhasbeenreviewedforeffectivenessbytheHEFCEAuditService.TheinternalauditorssubmitregularreportswhichincludetheHeadofInternalAudit’sindependentOpinionontheadequacyandeffectivenessoftheCollege’ssystemofinternalcontrol,withrecommendationsforimprovement.Itshouldbenotedthatthesereportsareinformedbytheknowledgeandexpertisetheinternalauditorsgainfromtheirworkinotherinstitutions.
Councilisalsoinformedabouttheeffectivenessofthesystemofinternalcontrolbytheworkoftheexecutivemanagerswithintheinstitution,whohaveresponsibilityforthedevelopmentandmaintenanceoftheinternalcontrolframework,andbycommentsmadebytheexternalauditorsintheirmanagementletterandotherreports.
Councilconductsquinquennialreviewsofitsowneffectivenessandcompletedsuchareviewduring2008-09,takingintoaccountbothinternalprioritiesandrecognisedsectoralgoodpracticeguidelines.Thereviewidentifiedanumberofareasforminorenhancementintheconductofbusiness,butnomajordefects.ItgaveparticularattentiontoreviewingtheCollege’scompliancewiththeCUCCodeofPracticeonGovernance.MorespecificareasofgovernanceidentifiedforfuturedetailedreviewweretheStatementofPrimaryResponsibilities,keyperformanceindicators,stakeholdermanagement,riskmanagement,andtheeffectivenessoftherelationshipbetweenCouncilandAcademicBoard.Inaddition,inthelightoftheEffectivenessReviewCouncilmodifieditspreviousposition(December2006)concerningtheCUCrecommendationforfourmeetingsperyear:CouncilhasnowagreedthatafourthmeetingshouldbeheldinthoseyearswherethebusinessoftheCollegegivesaclearrationaleforthis,andthefirstsuchmeetingwasheldinOctober2009.
2 DuringitsDecember2006reviewofcompliancewithCUCCodeofPractice,CouncilgaveexplicitconsiderationtotheCUCCoderecommendation(clause4)toholdfourmeetingsayear.ItconcludedthatinthelightofthesizeandoverallpatternofbusinessoftheCollege,thecurrentconventionofholdingthreemeetingsayearwasnormallysufficient.However,oneoftheoutcomesofthe2008-09EffectivenessReviewofCouncilwasthedecisionthatadditionalmeetingsofCouncil(includingduring2009-10)shouldbeheldasnecessarytodiscussparticularstrategicissuesoutsidethescheduleofroutinebusiness
16 Reports and Financial Statements
Independent auditors’ report
to the Council of Goldsmiths,
University of London
Reports and Financial Statements 17
WehaveauditedtheFinancialStatementsofGoldsmiths,UniversityofLondon(the“College”)fortheyearended31July2009whichcomprisetheIncomeandExpenditureAccount,theStatementofTotalRecognisedGainsandLosses,theNoteofHistoricalCostSurplusesandDeficits,theCollegeBalanceSheet,theCashFlowStatementandtherelatednotes1to38.TheseFinancialStatementshavebeenpreparedundertheaccountingpoliciessetouttherein.
ThisreportismadesolelytotheCounciloftheCollege,asabody,inaccordancewiththeFinancialMemorandumdatedJune2008.OurauditworkhasbeenundertakensothatwemightstatetotheCouncilthosematterswearerequiredtostatetotheminanauditors’reportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCouncilandtheCouncil’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.
RESPECTIVE RESPONSIBILITIES OF THE COUNCIL
AND AUDITORSTheCouncil’sresponsibilitiesforthepreparingtheAnnualReportandtheFinancialStatementsinaccordancewiththeCollege’sstatute,theStatementofRecommendedPracticeonAccountingforFurtherandHigherEducationandotherapplicablelawandUnitedKingdomaccountingstandards(UnitedKingdomGenerallyAcceptedAccountingPractice)aresetoutinthestatementoftheCouncil’sresponsibilities.
OurresponsibilityistoaudittheFinancialStatementsinaccordancewithrelevantlegalandregulatoryrequirementsandInternationalStandardsonAuditing(UKandIreland).
WereporttoyououropinionastowhethertheFinancialStatementsgiveatrueandfairviewandhavebeenproperlypreparedinaccordancewiththeStatementofRecommendedPracticeonAccountingforFurtherandHigherEducation.Wealsoreportwhetherincomefromfundingbodies,grantsandincomeforspecificpurposesandfromotherrestrictedfundsadministeredbytheCollegehavebeenproperlyappliedonlyforthepurposesforwhichtheywerereceivedandwhetherincomehasbeenappliedinaccordancewiththeStatutesand,whereappropriate,withtheFinancialMemorandumwiththeHigherEducationFundingCouncilforEngland,theTrainingandDevelopmentAgencyforSchoolsandtheLearningandSkillsCouncil.
Wealsoreportif,inouropinion,theinformationgivenintheCouncil’sreportisnotconsistentwiththeFinancialStatements,iftheCollegehasnotkeptadequateaccountingrecords,theaccountingrecordsdonotagreewiththeFinancialStatementsorifwehavenotreceivedalltheinformationandexplanationswerequireforouraudit.
WereadtheotherinformationcontainedintheCouncil’sReport,includingtheCorporateGovernanceStatementandconsiderwhetheritisconsistentwiththeauditedFinancialStatements.WeconsidertheimplicationsforourreportifwebecomeawareofanyapparentmisstatementsormaterialinconsistencieswiththeFinancialStatements.OurresponsibilitiesdonotextendtoanyfurtherinformationoutsidetheAnnualReport.
Wearenotrequiredtoconsiderwhetherthestatementofinternalcontrol(includedaspartoftheCorporateGovernanceStatement)coversallrisksandcontrols,ortoformanopinionontheeffectivenessoftheCollege’scorporategovernanceproceduresoritsriskandcontrolprocedures.
BASIS OF OPINIONWeconductedourauditinaccordancewithInternationalStandardsonAuditing(UKandIreland)issuedbytheAuditingPracticesBoardandtheAuditCodeofPracticeissuedbytheHigherEducationFundingCouncilforEngland.Anauditincludesexamination,onatestbasis,ofevidencerelevanttotheamountsanddisclosuresintheFinancialStatements.ItalsoincludesanassessmentofthesignificantestimatesandjudgementsmadebytheCouncilinthepreparationoftheFinancialStatementsandofwhethertheaccountingpoliciesareappropriatetotheCollege’scircumstances,consistentlyappliedandadequatelydisclosed.
WeplannedandperformedourauditsoastoobtainalltheinformationandexplanationswhichweconsiderednecessaryinordertoprovideuswithsufficientevidencetogivereasonableassurancethattheFinancialStatementsarefreefrommaterialmisstatement,whethercausedbyfraudorotherirregularityorerror.Informingouropinion,wealsoevaluatedtheoveralladequacyofthepresentationofinformationintheFinancialStatements.
OPINIONInouropinion:(a)theFinancialStatementsgiveatrueandfairview
ofthestateofaffairsoftheCollegeasat31July2009andofthesurplusoftheCollegefortheyearthenended;
(b)theFinancialStatementshavebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPracticeandtheStatementofRecommendedPracticeonAccountingforFurtherandHigherEducationInstitutions;
(c)inallmaterialrespectsincomefromHigherEducationFundingCouncilforEngland,theTrainingandDevelopmentAgencyforSchools,theLearningandSkillsCouncil,grantsandincomeforspecificpurposesandfromotherrestrictedfundsadministeredbytheCollegehavebeenappliedonlyforthepurposesforwhichtheywerereceived;
and
(d)inallmaterialrespectsincomehasbeenappliedinaccordancewiththeCollege’sstatutesand,whereappropriate,withtheFinancialMemorandum,datedJune2008withtheHigherEducationFundingCouncilforEngland,thefundingagreementwiththeTrainingandDevelopmentAgencyforSchoolsandthefundingagreementwiththeLearningandSkillsCouncil.
Deloitte LLPCharteredAccountantsandStatutoryAuditorsStAlbans,UK
Reports and Financial Statements 19
Income and Expenditure Accountfor the year ended 31 July 2009
Note 2009 2008 £’000 £’000
INCOME
Fundingbodygrants 2 32,906 32,024Tuitionfeesandsupportgrants 3 28,040 24,708Researchgrantsandcontracts 4 5,582 6,039Otheroperatingincome 5 7,987 8,073Endowmentandinvestmentincome 6 634 1,018
Total Income 75,149 71,862
EXPENDITURE
Staffcosts 7 47,083 42,735Otheroperatingexpenses 9 20,318 20,907Depreciationoftangiblefixedassets 12 3,952 3,919Interestandotherfinancecosts 10 1,864 1,534
Total Expenditure 73,217 69,095
Surplus on continuing operations after depreciation
of tangible fixed assets at valuation and before taxation 1,932 2,767
Taxation 11 - -
Surplus after depreciation of tangible fixed assets
at valuation and taxation 1,932 2,767
Transfer(to)/fromaccumulatedincomewithinspecificendowments (12) 4
Surplus for the year retained within general reserves 1,920 2,771
Note of Historical Cost Surpluses and Deficitsfor the year ended 31 July 2009
Note 2009 2008 £’000 £’000
Surplus on continuing operations after depreciation
of tangible fixed assets at valuation and taxation 1,932 2,767
Differencebetweenhistoricalcostdepreciationcharge
andtheactualdepreciationchargefortheyear
calculatedontherevaluedamount 22 794 790
Historical cost surplus for the period after taxation 2,726 3,557
NoneoftheCollege’smajoractivitieswereacquiredordiscontinuedduringtheabovefinancialyears
Statement of Total Recognised Gains and Lossesfor the year ended 31 July 2009
Note 2009 2008 £’000 £’000
Surplusoncontinuingoperationsafterdepreciation
oftangiblefixedassetsatvaluationandtax 1,932 2,767
Depreciationofendowmentassetinvestment 20 (13) (46)
Newendowmentfund 20 188 483
Actuariallossrecognisedinpensionscheme 31 (6,202) (1,981)
Total recognised (losses)/gains relating to the year (4,095) 1,223
Reconciliation
Openingreservesandendowments 30,309 29,086
Totalrecognised(losses)/gainsfortheyear (4,095) 1,223
Closing reserves and endowments 26,214 30,309
20 Reports and Financial Statements
Balance Sheetas at 31 July 2009
Note 2009 2008 £’000 £’000
Fixed Assets
Tangibleassets 12 75,003 71,797Investments 13 28 28 75,031 71,825
Endowment Assets 14 1,978 1,791
Current Assets
Stock 34 36Debtors 15 4,430 5,191Investments - 8,467Cashatbankandinhand 15,993 7,760 20,457 21,454Less:Creditors-amountsfallingduewithinoneyear 16 (14,900) (14,623)
Net current assets 5,557 6,831
Total assets less current liabilities 82,566 80,447
Less:Creditors-amountsfallingdueaftermorethanoneyear 17 (18,835) (18,695)Less:Provisionsforliabilities 18 (1,381) (699)
Total net assets excluding pension liability 62,350 61,053Netpensionliability 31 (15,104) (8,725)
TOTAL NET ASSETS INCLUDING PENSION LIABILITY 47,246 52,328
Represented by:
Deferred capital grants 19 21,032 22,020
Endowments
Expendable 20 230 72Permanent 20 1,748 1,719 1,978 1,791Reserves
IncomeandExpenditureAccountexcludingpensionreserve 14,522 11,631Pensionreserve (15,104) (8,725)IncomeandExpenditureAccountincludingpensionreserve 21 (582) 2,906
Revaluationreserve 22 24,818 25,611 24,236 28,517 TOTAL FUNDS 47,246 52,328
SignedandapprovedonbehalfofCouncilby:
MrMarkBaillache ProfessorGeoffreyCrossick
ChairofFinanceandResourcesCommittee Warden
Date: Reports and Financial Statements 21
22 Reports and Financial Statements
Cash Flow Statementfor the year ended 31 July 2009
Note 2009 2008 £’000 £’000
Netcashinflowfromoperatingactivities 25 7,154 6,901
Returnsoninvestmentsandservicingoffinance 26 (754) (493)
Capitalexpenditureandfinancialinvestment 27 (6,646) 941
Managementofliquidresources 28 8,467 (2,357)
Financing 29 211 (274)
Increase in cash in the period 8,432 4,718
Reconciliation of net cash flow to movement in net debt
Increaseincashintheperiod 8,432 4,718
(Decrease)/Increaseinliquidresources (8,467) 2,357
(Increase)/Decreaseinloans (211) 274
Change in net debt (246) 7,349
Openingnetdebtat1August (1,874) (9,223)
Closing netdebtat 31 July (2,120) (1,874)
Reports and Financial Statements 23
Notes to the Accounts for the year ended 31 July 2009
1. PRINCIPAL ACCOUNTING POLICIES
BASIS OF PREPARATION ThesefinancialstatementshavebeenpreparedinaccordancewiththeStatementofRecommendedPractice
(SORP):AccountingforFurtherandHigherEducation2007andinaccordancewithapplicableaccounting
standards.Thefinancialstatementsarepreparedinaccordancewiththehistoricalcostconventionmodifiedby
therevaluationofcertainfixedassets.
BASIS OF CONSOLIDATIONTheFinancialStatementsdonotincludethoseoftheStudents’UnionbecausetheCollegedoesnotcontrolthose
activities.TheCollege’ssubsidiary,PureGoldsmithsLtd,hasnotyetbeguntotradeandsonoconsolidationisrequired.
INCOME RECOgNITIONFundingcouncilblockgrantsareaccountedforintheperiodtowhichtheyrelate.
Feeincomeisstatedgrossandcreditedtotheincomeandexpenditureaccountovertheperiodinwhich
studentsarestudying.Wheretheamountofthetuitionfeeisreduced,byadiscountforpromptpayment,income
receivableisshownnetofthediscount.Bursariesandscholarshipsareaccountedforgrossasexpenditureand
notdeductedfromincome.
Recurrentincomefromgrants,contractsandotherservicesrenderedareaccountedforonanaccrualsbasisand
includedtotheextentofthecompletionofthecontractorserviceconcerned;anypaymentsreceivedinadvance
ofsuchperformancearerecognisedonthebalancesheetasliabilities.
Non-recurrentgrantsreceivedinrespectoftheacquisitionorconstructionoffixedassetsaretreatedasdeferred
capitalgrants.Suchgrantsarecreditedtodeferredcapitalgrantsandanannualtransfermadetotheincomeand
expenditureaccountovertheusefuleconomiclifeoftheasset,atthesamerateasthedepreciationchargeon
theassetforwhichthegrantwasawarded.Incomefromthesaleofgoodsorservicesiscreditedtotheincome
andexpenditureaccountwhenthegoodsorservicesaresuppliedtotheexternalcustomersorthetermsofthe
contracthavebeensatisfied.
Increasesordecreasesinvaluearisingontherevaluationordisposalofendowmentassetsietheappreciation
ordepreciationofendowmentassets,isaddedtoorsubtractedfromthefundsconcernedandaccountedfor
throughthebalancesheetbydebitingorcreditingtheendowmentasset,creditingordebitingtheendowment
fundandisreportedinthestatementoftotalrecognisedgainsandlosses.
Donationswithrestrictionsarerecognisedwhenrelevantconditionshavebeenmet;inmanycasesrecognitionis
directlyrelatedtoexpenditureincurredonspecificpurposes.Donationswhicharetoberetainedforthebenefit
oftheCollegearerecognisedinthestatementoftotalrecognisedgainsandlossesandinendowments;other
donationsarerecognisedbyinclusionasotherincomeintheincomeandexpenditureaccount.
Endowmentandinvestmentincomeiscreditedtotheincomeandexpenditureaccountonareceivablebasis.
Incomefromrestrictedendowmentsnotexpendedinaccordancewiththerestrictionsoftheendowment,is
transferredfromtheincomeandexpenditureaccounttorestrictedendowments.Anyrealisedgainsorlossesfrom
dealingintherelatedassetsareretainedwithintheendowmentinthebalancesheet.
Anyincreaseinvaluearisingontherevaluationoffixedassetinvestmentsiscarriedasacredittotherevaluation
reserve,viathestatementoftotalrecognisedgainsandlosses;adiminutioninvalueischargedtotheincomeand
expenditureaccountasadebit,totheextentthatitisnotcoveredbyapreviousrevaluationsurplus.
AgENCy ARRANgEMENTSFundstheinstitutionreceivesanddisbursesaspayingagentonbehalfofafundingbodyareexcludedfrom
theincomeandexpenditureoftheinstitutionwheretheinstitutionisexposedtominimalriskorenjoysminimal
economicbenefitrelatedtothetransaction.
LEASES AND HIRE PURCHASE CONTRACTSCostsinrespectofoperatingleasesarechargedonastraight-linebasisovertheleaseterm.Financeleases,
whichsubstantiallytransferallthebenefitsandrisksofownershipofanassettotheCollege,aretreatedasifthe
assethadbeenpurchasedoutright.Theassetsareincludedinfixedassetsandthecapitalelementsoftheleasing
commitmentsareshownasobligationsunderfinanceleases.Theleaserentalsaretreatedasconsistingofcapital
andinterestelements.Thecapitalelementisappliedinordertoreduceoutstandingobligationsandtheinterest
elementischargedtotheincomeandexpenditureaccountinproportiontothereducingcapitalelement
outstanding.Assetsheldunderfinanceleasesaredepreciatedovertheleaseterm.
24 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
TAXATIONTheCollegeisaneducationalcharityincorporatedunderaRoyalChartergrantedon1January1990.Itisanexempt
charitywithinthemeaningofSchedule2oftheCharitiesAct1993andassuchisacharitywithinthemeaningof
Section506(1)oftheIncomeandCorporationTaxesAct1988(ICTA1988).Accordingly,theCollegeispotentially
exemptfromtaxationinrespectofincomeorgainsreceivedwithincategoriescoveredbySection505ofICTA1988
orSection256oftheTaxationofChargeableGainsAct1992,totheextentthatsuchincomeorgainsareappliedto
exclusivelycharitablepurposes.TheCollegereceivesnosimilarexemptioninrespectofValueAddedTax.
Inregardtoincomefromresearchandconsultancyandfromnon-studentlettingsandassociatedincome,the
CollegehasappliedtheInlandRevenueguidelinesandhasconsideredthatthelevelofactivityineachofthose
areasdoesnotconstituteatradeandsowillnotgiverisetoachargetotax.Accordingly,noprovisionhasbeen
madeintheAccountsfortaxation.
TANgIBLE FIXED ASSETS InaccordancewiththetransitionalarrangementsofFRS15,alllandandbuildingsexistingat31July1993and
revaluedat31July1994byFrankDurrantWestmoreandReeves,CharteredSurveyors,willberetainedatthose
valuesascost.PropertiesusedforeducationalandhostelpurposeshavebeenvaluedontheDepreciated
ReplacementCostbasisandresidentialpropertiesonthebasisofOpenMarketValueForExistingUse.
Subsequentadditionssince1994arestatedatcost.
Allplantandequipmentbelowaninitialcostof£15,000perindividualitemorgroupofrelateditemshavebeen
expensedintheyearofacquisition.Plantandequipmentcosting£15,000andoverarecapitalisedandwrittenoff
overtheirusefullivesasindicatedinthedepreciationtablebelow.
Wherefixedassetsareacquiredwiththeaidofspecificgrants,theyarecapitalisedanddepreciatedaccordingto
thecategoriesinwhichtheyfall.Therelatedgrantsaretreatedasdeferredcapitalgrantsandreleasedtoincome
overtheirexpectedusefullives.Fixedassetsinthecourseofconstructionarenotdepreciateduntiltheiryear
ofcompletion.
Depreciationisprovidedoncostorvaluationonastraight-linebasissoastowriteofftheassetsovertheir
estimatedusefullives.Theratesofdepreciationusedareasfollows:
Land and Buildings Per Fixtures, Fittings Per Annum and Equipment AnnumFreehold
Land NIL Librarystacks 10%
Buildings(long-term) 2.5% Administrativecomputersystems 20%
Buildings(short-termrefurbishments) 10% Otherplantandequipment 33.33%
Buildings(long-termrefurbishments) 5%
Leasehold
Assetheldunderfinancelease 4%
Worksofartandothervaluableartefactsarenotcapitalisedbecausetheyarenotofmaterialvalue.TheCollege
hasnoheritageassets.
REPAIRS AND MAINTENANCEExpendituretoensurethatatangiblefixedassetmaintainsitspreviouslyrecognisedstandardofperformance
isrecognisedintheincomeandexpenditureaccountintheperioditisincurred.TheCollegehasaplanned
maintenanceprogramme,whichisreviewedonanannualbasis.
INVESTMENTSFixedAssetInvestmentsandEndowmentAssetInvestmentsareshownatmarketvaluewhereknown.Endowment
andrestrictedfundsheldontemporarydepositoronshort-termmoneymarketformpartoftheliquidfunds.
Thesefundsareshownascapitalcontributedplusnetaccumulatedinterest.
STOCkStockisstatedattheloweroftheircostandnetrealisablevalue.Wherenecessary,provisionismadefor
obsolete,slow-movinganddefectivestocks.
Reports and Financial Statements 25
Notes to the Accounts for the year ended 31 July 2009
CASH FLOwS AND LIQUID RESOURCESCashflowscompriseincreasesordecreasesincash.Cashincludescashinhand,cashatbank,anddeposits
repayableondemand.Depositsarerepayableondemandiftheyareavailablewithin24hourswithoutpenalty.
Nootherinvestments,howeverliquid,areincludedascash.Liquidresourcescompriseassetsheldasreadily
disposablestoreofvalue.Theyincludetermdeposits,governmentsecuritiesandloanstockheldaspartofthe
College’streasurymanagementactivities.
FOREIgN CURRENCy TRANSLATIONSAssetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedattheratesofexchangerulingattheend
ofthefinancialyear,withallresultingexchangedifferencesbeingtakentotheincomeandexpenditureaccountin
theperiodinwhichtheyarise.
ACCOUNTINg FOR CHARITABLE DONATIONSUnrestricted donationsCharitabledonationsarerecognisedintheaccountswhenthecharitabledonationhasbeenreceivedorif,before
receipt,thereissufficientevidencetoprovidethenecessarycertaintythatthedonationwillbereceivedandthe
valueoftheincomingresourcescanbemeasuredwithsufficientreliability.
Endowment fundsWherecharitabledonationsaretoberetainedforthebenefitoftheCollegeasspecifiedbytheDonors,theseare
accountedforasendowments.Therearethreemaintypes:
1. Unrestrictedpermanentendowments-thedonorhasspecifiedthatthefundistobepermanentlyinvestedto
generateanincomestreamforthegeneralbenefitoftheCollege;
2.Restrictedexpendableendowments-thedonorhasspecifiedaparticularobjectiveotherthanthepurchaseor
constructionoftangiblefixedassets,andtheCollegecanconvertthedonatedsumintoincome;
3.Restrictedpermanentendowments-thedonorhasspecifiedthatthefundistobepermanentlyinvestedto
generateanincomestreamtobeappliedtoaparticularobjective.
PENSIONSThetwopensionschemesinwhichtheCollegeparticipatesaretheUniversitiesSuperannuationScheme(USS)
foracademicandacademic-relatedstaffandtheLondonPensionFundAuthority(LPFA)forotheradministrative,
technical,clericalandmanualstaff.Bothschemesaredefinedbenefitschemeswhichareexternallyfundedand
contractedoutoftheStateSecondPension(S2P).
Theliabilitiesarevaluedeverythreeyearsbyactuariesusingtheprojectedunitmethod,theratesofcontribution
payablebeingdeterminedbythetrusteesontheadviceoftheactuaries.Intheinterveningyearsactuariesreview
theprogressoftheschemes.Pensioncostsareassessedinaccordancewithadviceoftheactuaries,basedonthe
latestactuarialvaluationsoftheschemes.
TheCollegeaccountsforpensionschemecostsinaccordancewithFRS17‘RetirementBenefits’.UnderFRS17
thenetpensionfundassetorliabilityfortheLPFAschemeisdisclosedontheBalanceSheetandthemovement
onthescheme’snetassets/liabilitiesintheyearisreflectedpartlythroughtheIncomeandExpenditureAccount
(totheextenttheyrelatetocurrentservicecostsandtheexpectedreturnonschemeassetslessinterestcharges
onschemeliabilities)andpartlythroughtheStatementofTotalRecognisedGainsandLosses(totheextentthey
relatetochangesintheactuarialassumptions).
TheCollegeisunabletoidentifyitsshareoftheunderlyingassetsandliabilitiesintheUSSschemeona
consistentandreasonablebasisandthereforeasrequiredbyFRS17‘RetirementBenefits’,accountsfor
theschemeasifitwereadefinedcontributionscheme.Asaresult,theamountchargedtotheIncomeand
Expenditureaccountrepresentsthecontributionspayabletotheschemeinrespectoftheaccountingperiod.
Theannualemployers’pensioncontributionsbornebytheCollegeareincludedinsalarycostschargedtothe
variousheadsofexpenditure.FurtherdetailsoftheschemesaregiveninNote31totheAccounts.Costsrelating
toprematureretirement,restructuringandunfundedpensionsaretreatedasadditionalsalarycosts.
PROVISIONSProvisionsarerecognisedinthefinancialstatementswhentheCollegehasapresentobligation
(legalorconstructive)asaresultofapastevent,itisprobablethatatransferofeconomicbenefitswillbe
requiredtosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.
Notes to the Accounts for the year ended 31 July 2009
2009 2008 £’000 £’000
2. FUNDING BODY GRANTS Recurrent grants
HigherEducationFundingCouncil 26,695 25,339TeacherDevelopmentAgency 3,362 3,405LearningandSkillsCouncil 198 280
Specific grants
HigherEducationFundingCouncil 1,157 952TeacherDevelopmentAgency 194 512LearningandSkillsCouncil - 2
Deferred capital grants released in year
Buildings(note19) 1,010 1,046Equipment(note19) 290 488
32,906 32,024
3. TUITION FEES AND SUPPORT GRANTS Full-timeHomeandEUstudentfees 16,969 13,897Internationalstudentfees 8,714 8,518Part-timestudentfees 1,846 1,819Shortcoursefees 349 363Researchtrainingsupportgrants 162 111
28,040 24,708
FeesfundedthroughtheUnitedStatesFamilyEducationLoanProgramme
amountedto£821kandrepresented3.21%oftotalfull-timefees.
4. RESEARCH GRANTS AND CONTRACTS ResearchCouncils 2,643 2,771UK-basedcharities 785 1,511Othergrantsandcontracts 2,154 1,757
5,582 6,039
26 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
2009 2008 £’000 £’000
5. OTHER OPERATING INCOME
Residences,CateringandConferences 5,787 5,527Otherservicesrendered 802 926Otherincome 1,398 1,620
7,987 8,073
6. ENDOWMENT AND INVESTMENT INCOMEIncomefromexpendableendowments(note20) 11 1Incomefrompermanentendowments(note20) 59 70Otherinterestreceivable 564 947
634 1,018
7. STAFF COSTS
Theaverageweeklynumberofpersons(includingseniorpost-holders)
employedbytheCollegeduringtheperiod,expressedasfull-time
equivalents,was:
Number Number
Teachingandresearch 454 456
Administrative 353 362Other 117 123
924 941 £’000 £’000
Salariesandwages 38,334 34,801Socialsecuritycosts 3,447 2,962Otherpensioncosts(note31) 4,768 4,376Restructuringcosts 534 596
47,083 42,735
Academicdepartments 28,495 25,124Academicservices 2,924 2,854Researchgrantsandcontracts 2,990 3,077Residences,CateringandConferences 688 681Premises 2,454 2,281Administration 8,085 6,846Generaleducational 699 688Otherservicesrendered 527 458Other 221 726
47,083 42,735
Reports and Financial Statements 27
Notes to the Accounts for the year ended 31 July 2009 2009 2008 £’000 £’000
8. REMUNERATION OF DIRECTORS
AND HIGHER PAID EMPLOYEES
TheemolumentsoftheWarden’spostwere: Remuneration 212 194USSpensioncontributions(paidatthesameratesasforotheracademicstaff) 30 26
242 220Remunerationofotherhigherpaidstaff,excludingemployer’s Number Number
pensioncontributions,fallinthefollowingband:
£100,000-£109,999 1 1
9. OTHER OPERATING EXPENSES £’000 £’000
Academicdepartments 3,019 3,192Academicservices 1,564 1,264Researchgrantsandcontracts 1,276 1,766Residences,CateringandConferences 3,043 3,131Premises 4,498 4,900Administration 3,606 3,433Generaleducational 3,204 2,871Otherservicesrendered 108 350
Total 20,318 20,907
Otheroperatingexpensesinclude:
Externalauditors’remunerationinrespectoftheauditoftheFinancialStatements 47 47Externalauditors’remunerationinrespectofotherauditservices 7 7Externalauditors’remunerationinrespectofnon-auditservices(tax) 26 5Internalauditors’remunerationinrespectofauditservices 79 83Operatingleases(property) 612 590
10. INTEREST AND OTHER FINANCE COSTS Loansnotwhollyrepayablewithinfiveyears 413 525Financeleases 975 986NetinterestonLPFApensionschemeliabilities(note31) 476 23
1,864 1,534
11. TAXATION ThecharitablestatusoftheCollegeandtheapplicationoftheInlandRevenueguidelinestoitsother
quasi-commercialactivitiesdonotrendertheCollegeliabletoCorporationTax.Accordinglynoprovision
hasbeenmadefortaxation.
28 Reports and Financial Statements
Reports and Financial Statements 29
Notes to the Accounts for the year ended 31 July 2009
12. TANGIBLE ASSETS
Land & Buildings Fixtures Assets in Total Freehold Assets held Fittings & course of under finance Equipment construction leases £’000 £’000 £’000 £’000 £’000
Valuation/cost
At1August2008
Valuation 44,350 - - - 44,350Cost 44,055 10,404 5,855 1,256 61,570
Additionsatcost 1,028 - 447 5,683 7,158Transfers 228 - 26 (254) -Disposals (869) - - - (869)
At 31 July 2009
Valuation 44,350 - - - 44,350 Cost 44,442 10,404 6,328 6,685 67,859
Total 88,792 10,404 6,328 6,685 112,209
Depreciation
At1August2008 24,519 4,577 5,027 - 34,123Chargeforyear 2,883 417 652 - 3,952Disposals (869) - - - (869)
At 31 July 2009 26,533 4,994 5,679 - 37,206
Net book value
At 31 July 2009 62,259 5,410 649 6,685 75,003
At 1 August 2008 63,886 5,827 828 1,256 71,797
AvaluationoftheCollege’slandandbuildingswasmadein1994anddetailsofthemethodofvaluationwiththe
nameandqualificationsofthevalueraregiveninAccountingPolicies(note1).Thehistoriccostoftheproperties
valuedin1994is£7,587k.
2009 2008 £’000 £’000
13. INVESTMENTS Investmentsareshownatcostandrepresent27,782ordinaryshares,fullypaid,
inCVCPPropertiesplcand240£1sharesini2MediaLtd. 28 28
TheCollegehasonesubsidiarycompany,PureGoldsmithsLtd.Thiscompany
wasdormantat31July2009andatthatdatehadissuedsharecapitalofone
ordinaryshareat£1.
30 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
2009 2008 £’000 £’000
14. ENDOWMENT ASSET INVESTMENTS Balanceat1August 1,791 1,358Additions 200 479Depreciationinmarketvalue (13) (46)
Balanceat31July 1,978 1,791
Representedby:
UKEquities 861 873Cashbalances 1,117 918
1,978 1,791
15. DEBTORS Amountsfallingduewithinoneyear
Studentdebtors 1,031 1,656Otherdebtors 1,462 2,132Prepaymentsandaccruedincome 1,893 1,391
4,386 5,179Otherdebtors-amountsfallingdueaftermorethanoneyear 44 12
4,430 5,191
16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Mortgagesandunsecuredloans 168 153Obligationsunderfinanceleases(note23) 227 171Tradecreditors 6,105 4,437Socialsecurityandothertaxationpayable 1,110 1,013Accrualsanddeferredincome 7,290 8,849
14,900 14,623
17. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Unsecuredloansandmortgagesecuredonresidentialproperty 8,611 8,237Obligationsunderfinanceleases(note23) 10,224 10,458
18,835 18,695
A25yearmortgagetakenoutinMarch1996withCapitalBankplc(partoftheBankofScotland)onRaymont
HallwasrepaidinJune2009.Theaveragerateofinterestpaidintheyearwas5%.
A30yearloanfromLloydsTSBplcwastakenoutinDecember2006atafixedinterestrateof4.995%forthe
acquisitionofthefreeholdsofSurreyHouseandChestermanHouse.Afurtheradvanceof£2,150kwasmadein
June2009topartfinancetheconstructionoftheNewAcademicBuilding.Thetermoftheloanis28yearswith
interestchargeableat0.2%abovebaserate.
ThesefacilitieshavebeenprovidedunsecuredsubjecttotheCollegeprovidinganegativepledgeoverallassets.
30 Reports and Financial Statements
Reports and Financial Statements 31
Notes to the Accounts for the year ended 31 July 2009
2009 2008 £’000 £’000
18. PROVISIONS FOR LIABILITIES Staff pensions and re-grading
At1August 699 255Utilisedinyear (97) (101)ChargedtotheIncomeandExpenditureAccount 779 545
At31July 1,381 699
Theprovisionismainlyforprobableclaimsunderthenewpayframeworkagreementand
hasbeencalculatedusingtheaveragesettlementpercentageforstaffwhohavealreadybeen
paidarrears.Thisprovisionhasbeenincreasedtotakeaccountofthecostoftransferring
hourlypaidstafftofractionalposts.Weexpectthemajorityoftheexpendituretobe
incurredinthenexttwoyears.
19. DEFERRED CAPITAL GRANTS FROM FUNDING COUNCILS At 1 August:
Buildings 21,537 16,271Equipment 483 640 Total 22,020 16,911
Cash received:
Buildings 312 6,312Equipment - 331Total 312 6,643
Released to Income and Expenditure Account:
Buildingsdepreciation(note2) 1,010 1,046Equipmentdepreciation(note2) 290 488Total 1,300 1,534
At 31 July:
Buildings 20,839 21,537Equipment 193 483Total 21,032 22,020
32 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
2009 2008 Restricted Restricted Restricted Restricted Expendable Permanent Total Total £000 £000 £000 £000
20. ENDOWMENTS
At1August
Capital 72 1,669 1,741 1,344Accumulatedincome - 50 50 14 72 1,719 1,791 1,358Incomeforyear(note6) 11 59 70 71Expenditure (34) (24) (58) (75)Newfunds 181 7 188 483Decreaseinmarketvalueofinvestments - (13) (13) (46)
At 31 July 230 1,748 1,978 1,791
Represented by:
Capital 1,880 1,740Accumulatedincome 98 51
1,978 1,791
2009 2008
£’000 £’000
21. INCOME AND EXPENDITURE ACCOUNT
Balanceat1August 2,906 1,326Releasesfromrevaluationreserve(note22) 794 790Surplusafterdepreciationofassetsatvaluationandtax 1,920 2,771ActuariallossonLPFApensionscheme(note31) (6,202) (1,981)
(582) 2,906
22. REVALUATION RESERVE
Landandbuildingsat1August 25,612 26,401Contributionstodepreciation(note21) (794) (790)
As at 31 July 24,818 25,611
Reports and Financial Statements 33
Notes to the Accounts for the year ended 31 July 2009
2009 2008 £’000 £’000
23. LEASE OBLIGATIONS
Obligationsunderfinanceleasesfalldueasfollows:
Betweentwoandfiveyears 1,599 1,306Overfiveyears 8,625 9,152
Theanalysisfor2008hasbeenamendedforconsistencywiththe2009analysis
Totaloveroneyear(note17) 10,224 10,458Withinoneyear(note16) 227 171
Total 10,451 10,629
Operatingleasecommitmentsfortheforthcoming
financialyearareasfollows:
Landandbuildings-leasesexpiringafter5years 627 612
627 612
24. CAPITAL COMMITMENTS
Commitmentscontractedasat31July 17,763 125Authorisedbutnotcontractedasat31July 3,666 19,676(TobepartiallyfundedbyHEFCEcapitalgrantof£9.1m)
21,429 19,801
25. RECONCILIATION OF OPERATING SURPLUS TO
NET CASH FROM OPERATIONS
Surplusfortheyear 1,920 2,771Pensioncostslesscontributionspayable 177 153Depreciation 3,952 3,919Contributiontodepreciationfromcapitalgrants (1,300) (1,534)Investmentincome (634) (1,018)Loaninterestpaid 1,388 1,511Decreaseinstock 2 46Decrease/(increase)indebtors 761 (1,041)Increaseincreditors 206 1,650Increaseinprovisions 682 444
Net cash inflow from operations 7,154 6,901
34 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
2009 2008 £’000 £’000
26. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Incomefromendowmentsandspecificfunds(note6) 70 71Otherinterestreceivable(note6) 564 947Interestpaid(note10) (1,388) (1,511)
(754) (493)
27. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS Paymentstoacquiretangiblefixedassets (7,158) (6,006)Deferredcapitalgrantsreceived(note19) 312 6,643Endowmentandspecificfundadditionsandincome 200 304
(6,646) 941
28. MANAGEMENT OF LIqUID RESOURCES Paymentsfrom/(to)shorttermdeposits 8,467 (2,357)
8,467 (2,357)
29. FINANCING Newloanandexistingloanredemptions 382 (153)Capitalelementoffinanceleasecapital (171) (121)
211 (274)
At 1 August Cash Other At 31 July 2008 Flow Changes 2009 £’000 £’000 £’000 £’000
30. ANALYSIS OF CHANGES IN NET DEBT Cashatbankandinhand
EndowmentAssetInvestment 918 199 - 1,117 Other 7,760 8,233 - 15,993CurrentAssetInvestments 8,467 (8,467) - -
Debtsduewithinoneyear (324) 324 (395) (395)Debtsdueaftermorethanoneyear (18,695) (535) 395 (18,835)
(1,874) (246) - (2,120)
Reports and Financial Statements 35
Notes to the Accounts for the year ended 31 July 2009
31. PENSION SCHEMES ThetwoprincipalpensionschemesfortheCollege’sstaffaretheUniversitiesSuperannuationScheme(USS)and
theLondonPensionFundAuthority(LPFA).Theassetsoftheschemesareheldinseparatetrustee-administered
funds.Theschemesaredefinedbenefitschemeswhichareexternallyfundedandarevaluedeverythreeyearsby
actuariesusingtheprojectedunitmethod,theratesofcontributionpayablebeingdeterminedbythetrusteeson
theadviceoftheactuaries.
University Superannuation SchemeTheCollegeparticipatesintheUniversitiesSuperannuationScheme(USS),adefinedbenefitsschemewhich
iscontractedoutoftheStateSecondPension(S2P).Theassetsoftheschemeareheldinaseparatefund
administeredbythetrustee,UniversitiesSuperannuationSchemeLtd.USShasover130,000activemembersand
theCollegehas675activemembersparticipatinginthescheme.
Theappointmentofdirectorstotheboardofthetrusteesisdeterminedbythecompany’sArticlesofAssociation.
FourofthedirectorsareappointedbyUniversitiesUK;threeareappointedbytheUniversityandCollegeUnion,
ofwhomatleastonemustbeaUSSpensionermember;oneisappointedbytheHigherEducationFunding
Councils;andaminimumoftwoandamaximumoffourareco-opteddirectorsappointedbytheboard.Under
theschemetrustdeedandrules,theemployercontributionrateisdeterminedbythetrustee,actingon
actuarialadvice.
Becauseofthemutualnatureofthescheme,theCollegeisunabletoidentifyitsshareoftheunderlying
assetsandliabilitiesoftheschemeonaconsistentandreasonablebasisandtherefore,asrequiredbyFRS
17‘Retirementbenefits’,accountsfortheschemeasifitwereadefinedcontributionscheme.Asaresult,the
amountchargedtotheincomeandexpenditureaccountrepresentsthecontributionspayabletotheschemein
respectoftheaccountingperiod.
Thelatestactuarialvaluationoftheschemewasat31March2008.ThiswasthefirstvaluationforUSSunderthe
newscheme-specificfundingregimeintroducedbythePensionsAct2004,whichrequiresschemestoadopta
statutoryfundingobjective,whichistohavesufficientandappropriateassetstocovertheirtechnicalprovisions.
Thevaluationwascarriedoutusingtheprojectedunitmethod.Theassumptionswhichhavethemostsignificant
effectontheresultofthevaluationarethoserelatingtotherateofreturnoninvestments(ie,thevaluation
rateofinterest),theratesofincreaseinsalaryandpensionsandtheassumedratesofmortality.Thefinancial
assumptionswerederivedfrommarketyieldsprevailingatthevaluationdate.An‘inflationriskpremium’
adjustmentwasalsoincludedbydeducting0.3%fromthemarket-impliedinflationonaccountofthehistorically
highlevelofinflationimpliedbygovernmentbonds(particularlywhencomparedtotheBankofEngland’starget
of2%forCPIwhichcorrespondsbroadlyto2.75%forRPIperannum).
Tocalculatethetechnicalprovisions,itwasassumedthatthevaluationrateofinterestwouldbe6.4%perannum
(whichincludesanadditionalassumedinvestmentreturnovergiltsof2%perannum),salaryincreaseswould
be4.3%perannum(plusanadditionalallowanceforincreasesinsalariesduetoageandpromotionreflecting
historicSchemeexperience,withafurthercautionaryreserveontopforpastserviceliabilities)andpensions
wouldincreaseby3.3%perannum.
Standardmortalitytableswereusedasfollows:
Malemembers’mortality PA92MCYoBtables-rateddown1year
Femalemembers’mortality PA92MCYoBtables-Noagerating
UseofthesemortalitytablesreasonablyreflectstheactualUSSexperiencebutalsoprovidesanelementof
conservatismtoallowforfurthersmallimprovementsinmortalityrates.Theassumedlifeexpectationson
retirementatage65are:
Males(females)currentlyaged65 22.8(24.8)years
Males(females)currentlyaged45 24.0(25.9)years
36 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
31. PENSION SCHEMES (CONTINUED)
Atthevaluationdate,thevalueoftheassetsoftheschemewas£28,842.6millionandthevalueofthescheme’s
technicalprovisionswas£28,135.3millionindicatingasurplusof£707.3million.Theassetsthereforewere
sufficienttocover103%ofthebenefitswhichhadaccruedtomembersafterallowingforexpectedfuture
increasesinearnings.
Theactuaryalsovaluedtheschemeonanumberofotherbasesasatthevaluationdate.Onthescheme’s
historicgiltsbasis,usingavaluationrateofinterestinrespectofpastserviceliabilitiesof4.4%perannum(the
expectedreturnongilts)thefundinglevelwasapproximately71%.UnderthePensionProtectionFundregulations
introducedbythePensionsAct2004itwas107%funded;onabuy-outbasis(ie,assumingtheSchemehad
discontinuedonthevaluationdate)theassetswouldhavebeenapproximately79%oftheamountnecessary
tosecurealltheUSSbenefitswithaninsurancecompany;andusingtheFRS17formulaasifUSSwasasingle
employerscheme;usingaAAbonddiscountrateof6.5%perannumbasedonspotyields,theactuaryestimated
thatthefundinglevelat31March2008was104%.
Thetechnicalprovisionsrelateessentiallytothepastserviceliabilitiesandfundinglevels,butitisalsonecessary
toassesstheongoingcostofnewlyaccruingbenefits.Thecostoffutureaccrualwascalculatedusingthesame
assumptionsasthoseusedtocalculatethetechnicalprovisionsexceptthatthevaluationrateofinterestassumed
assetoutperformanceovergiltsof1.7%perannum(comparedto2%perannumforthetechnicalprovisions)
givingadiscountrateof6.1%perannum;alsotheallowanceforpromotionalsalaryincreasewasnotashigh.
Thereiscurrentlyuncertaintyinthesectorregardingpaygrowth.Analysishasshownveryvariablelevelsof
growthoverandabovegeneralpayincreasesinrecentyears,andthesalarygrowthassumptionbuiltintothe
costoffutureaccrualisbasedonmorestable,historic,salaryexperience.However,whencalculatingthepast
serviceliabilitiesofthescheme,acautionaryreservehasbeenincluded,inaddition,onaccountofthevariability
mentionedabove.
Theinstitutioncontributionraterequiredforfutureservicebenefitsaloneatthedateofthevaluationwas16%
ofpensionablesalariesbutthetrusteecompany,ontheadviceoftheactuary,agreedtoincreasetheCollege
contributionrateto16%ofpensionablesalariesfrom1October2009.
Since31March2008globalinvestmentmarketshavecontinuedtofallandat31March2009theactuaryhas
estimatedthatthefundinglevelunderthenewschemespecificfundingregimehadfallenfrom103%to74%.
Thisestimateisbasedonthefundinglevelat31March2008,adjustedtoreflectthefund’sactualinvestment
performanceovertheyearandchangesinmarketconditions(marketconditionsaffectboththevaluationrateof
interestandalsotheinflationassumptionwhichinturnimpactsonthesalaryandpensionincreaseassumptions).
OntheFRS17basis,usingaAAbonddiscountrateof7.1%perannumbasedonspotyields,theactuaryestimated
thatthefundinglevelat31March2009was86%.Anestimateofthefundinglevelmeasuredonabuy-outbasisat
thatdatewasapproximately46%.
SurplusesordeficitswhichariseatfuturevaluationsmayimpactontheCollege’sfuturecontribution
commitment.Adeficitmayrequireadditionalfundingintheformofhighercontributionrequirements,where
asurpluscould,perhaps,beusedtosimilarlyreducecontributionrequirements.Thesensitivitiesregardingthe
principalassumptionsusedtomeasuretheschemeliabilitiesaresetoutbelow:
Reports and Financial Statements 37
Notes to the Accounts for the year ended 31 July 2009
31. PENSION SCHEMES (CONTINUED)
Assumption Change in Assumption Impact on scheme liabilitiesValuationrateofinterest Increase/decreaseby0.5% Decrease/increaseby£2.2billion
Rateofpensionincreases Increase/decreaseby0.5% Increase/decreaseby£1.5billion
Rateofsalarygrowth Increase/decreaseby0.5% Increase/decreaseby£0.7billion
Rateofmortality Moreprudentassumption Increaseby£1.6billion
(movetolongcohortfuture
improvementsfromthemedium
cohortadoptedatthevaluation)
USSisa‘lastmanstanding’schemesothatintheeventoftheinsolvencyofanyoftheparticipatingemployers
inUSS,theamountofanypensionfundingshortfall(whichcannototherwiseberecovered)inrespectofthat
employerwillbespreadacrosstheremainingparticipantemployersandreflectedinthenextactuarialvaluation
ofthescheme.
Thetrusteebelievesthatoverthelong-termequityinvestmentandinvestmentinselectedalternativeasset
classeswillprovidesuperiorreturnstootherinvestmentclasses.Themanagementstructureandtargetssetare
designedtogivethefundabiastowardsequitiesthroughportfoliosthatarediversifiedbothgeographicallyand
bysector.Thetrusteerecognisesthatitwouldbepossibletoselectinvestmentsproducingincomeflowsbroadly
similartotheestimatedliabilitycashflows.However,inordertomeetthelong-termfundingobjectivewithina
levelofcontributionsthatitconsiderstheemployerswouldbewillingtomake,thetrusteehasagreedtotakeon
adegreeofinvestmentriskrelativetotheliabilities.Thistakingofinvestmentriskseekstotargetagreaterreturn
thanthematchingassetswouldprovidewhilstmaintainingaprudentapproachtomeetingthefund’sliabilities.
Beforedecidingtotakeinvestmentriskrelativetotheliabilities,thetrusteereceivesadvicefromitsinvestment
consultantandtheschemeactuary,andconsiderstheviewsoftheemployers.Thestrongpositivecashflowof
theschememeansthatitisnotnecessarytorealiseinvestmentstomeetliabilities.Thetrusteebelievesthatthis,
togetherwiththeongoingflowofnewentrantsintotheschemeandthestrengthofcovenantoftheemployers
enablesittotakealong-termviewofitsinvestments.Short-termvolatilityofreturnscanbetoleratedandneed
notfeedthroughdirectlytothecontributionrate.Theactuaryhasconfirmedthatthescheme’scashflowislike
toremainpositiveforthenexttenyearsormore.
Thenextformaltriennialactuarialvaluationisdueasat31March2011.Thecontributionratewillbereviewedas
partofeachvaluationandmaybereviewedmorefrequently.
ThetotalpensioncostfortheCollegewas£3,679k(2008:£3,200k).Thisincludes£459k(2008:£410k)
outstandingcontributionsatthebalancesheetdate.ThecontributionratepayablebytheCollegeintheyearto
31July2009was14%ofpensionablesalaries.
London Pension Fund Superannuation Scheme TheLondonPensionFundSuperannuationSchemeisvaluedeverythreeyearsbyaprofessionallyqualified
independentactuaryusingtheprojectedunitcreditmethod,therateofcontributionpayablebeingdetermined
bytheactuary.Thelatestformalvaluationofthefundwasat31March2007,withthenextformalvaluation
dueasat31March2010.InaccordancewithFinancialReportingStandard(‘FRS’)17,theactuarialvaluationat
31July2008hasbeenreviewedandupdatedasat31July2009basedupontheannualfinancialassumptions
shownbelow:
Theassumedlifeexpectationsfromage65are:
Males Females Retiringtoday 19.6years 22.5yearsRetiringin20years 20.7years 23.6years
2009 2008 Priceincreases 3.6% 3.8%Salaryincreases 5.1% 5.3%Pensionincreases 3.6% 3.8%Discountrate 6.0% 6.7%
38 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
31. PENSION SCHEMES (CONTINUED)
Theemployer’spensionfundassetsandexpectedrateof
returnasat31Julyareasfollows:
Expected rate Fair value as at: of return
2009 2008 2009 2008
% per % per £’000 £’000
annum annum
Equities 7.5% 7.6% 13,503 11,8651TargetReturnPortfolio 6.2% 6.3% 2,039 3,979AlternativeAssets 6.7% 6.8% 2,910 4,515Cash 3.0% 4.8% 1,346 (78)
Total (weighted average) 6.9% 7.2% Total 19,798 20,281
ThefollowingresultsweremeasuredinaccordancewiththerequirementsofFRS17,basedontheassumptions
summarisedabove.
Present value of Fair value of Net liability defined benefit scheme assets recognised in obligation the balance sheet
2009 2008 2009 2008 2009 2008
£’000 £’000 £’000 £’000 £’000 £’000
Opening (29,006) (28,742) 20,281 22,151 (8,725) (6,591)Currentservicecost (1,089) (854) - - (1,089) (854)Interestcost (1,962) (1,680) - - (1,962) (1,680)Contributionsbymembers (471) (337) 471 337 - -Actuarialgain/(loss) (3,385) 1,856 (2,817) (3,837) (6,202) (1,981)Pastservicecost - (288) - - - (288)Impactofsettlementsandcurtailments - (34) - - - (34)Contributionsbyemployer - - 1,388 1,022 1,388 1,022Contributions-unfundedbenefits (24) - 24 24 - 24Expectedreturnonassets - - 1,486 1,657 1,486 1,657Estimatedunfundedbenefitspaid 24 24 (24) (24) - -Estimatedbenefitspaid 1,011 1,049 (1,011) (1,049) - -
Closing defined benefit obligation (34,902) (29,006) 19,798 20,281 (15,104) (8,725)
Reports and Financial Statements 39
Notes to the Accounts for the year ended 31 July 2009 2009 2008 £’000 £’000
31. PENSION SCHEMES (CONTINUED)
Analysis of the amount charged to staff costs within the operating surplus
Currentservicecost 1,089 854Pastservicecost - 288Curtailmentsandsettlements - 34
Total operating charge 1,089 1,176
Analysis of the amount that is charged to interest payable
Expectedreturnonpensionschemeassets 1,486 1,657Interestonpensionschemeliabilities (1,962) (1,680)
Net charge (476) (23)
2009 2008 2007 2006 2005
£’000 £’000 £’000 £’000 £’000Amount recognised in Statement of
Total Recognised Gains and Losses (STRGL)Cumulativeactuarialgains/(losses)at1August 566 2,547 (564) (351) (38)Actuarial(losses)/gainsrecognisedinSTRGL (6,202) (1,981) 3,111 (213) (313)
Cumulative actuarial gains/(losses) at 31 July (5,636) 566 2,547 (564) (351)
TheCollege’scontributionfornon-academicstaffasapercentageofpensionablesalarieswas19.8%fromApril
2008.Thepensionchargefortheyearto31July2009was£1,089k,(2008:£1,176k).
2009 2008 £’000 £’000
32. HARDSHIP FUNDS Balanceat1August 33 38HEFCEgrantreceived 206 273Interestearned 3 6Disbursedtostudentsandadministration (226) (284)
Underspent at 31 July 16 33
33. TDA TRAINING BURSARIES
Balanceat1August 186 415Grantreceived 2,797 3,173Paymentstotrainees (2,905) (3,402)
Underspent at 31 July 78 186
40 Reports and Financial Statements
Notes to the Accounts for the year ended 31 July 2009
2009 2008 £’000 £’000
34. TDA SECONDARY SHORTAGE SUBJECT SCHEME Balanceat1August 3 -Grantrepaid (3) 30Paymentstotrainees - (27)
Underspent at 31 July - 3
Fundingbodygrantsshowninnotes32-34areavailablesolelyforstudents,theCollegeactsonlyas
apayingagent.ThegrantsandrelateddisbursementsarethereforeexcludedfromtheIncomeand
ExpenditureAccount.Thebalanceat31JulyisincludedinCreditors.
35. TDA MINORITY ETHNIC RECRUITMENT (MAINSTREAM) Balanceat1August 18 16Grantreceived 13 19Expenditure (19) (17)
Underspent at 31 July 12 18
36. TDA MINORITY ETHNIC RECRUITMENT (EBITT) Balanceat1August 17 -Grantreceived - 18Expenditure (13) (1)
Underspent at 31 July 4 17
37. STUDENT ASSOCIATE SCHEME Balanceat1August 68 54Grantreceived 70 89Expenditure (81) (75)
Underspent at 31 July 57 68
38. RELATED PARTY TRANSACTIONS DuetothenatureoftheCollege’soperationsandthecompositionoftheCouncil(beingdrawnfromlocalpublicandprivate
sectororganisations)itispossiblethattransactionstakeplacewithorganisationsinwhichamemberofCounciloramemberof
staffmayhaveaninterest.TherearenotransactionsofwhichtheCollegeisawarebutanysuchtransactionsthatmayarisewould
beconductedatarm’slengthandinaccordancewiththeCollege’sConflictsofInterestPolicy.
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