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University of Cumbria
Consolidated Financial Statements For the Year Ended 31 July 2012
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Contents
Page
Operating and Financial Review 3
Corporate Governance and Internal Control 28
Responsibilities of the Board of Directors of the University of Cumbria 32
Independent Auditor’s Report 34
Statement of Principal Accounting Policies 36
Consolidated Income and Expenditure Account 40
Statement of Group Historical Costs Surpluses and Deficits 41
Statement of Group Total Recognised Gains and Losses 42
University and Consolidated Balance Sheet 43
Consolidated Cash Flow Statement 44
Notes to the Consolidated Financial Statements 45
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Operating and Financial Review
1) Foreword by the Chair of the Board, Stephen Henwood
The year 2011/12 was another significant one for the University of Cumbria. During this year an updated Corporate Strategy was approved and the university again performed strongly achieving excellent recruitment, another healthy financial surplus and improved results in the National Student Survey. The achievements in 2011/12, building as they do on those of the previous year, provide a strong platform on which the university will look to build in the coming years in a challenging and changing marketplace.
The new Vice Chancellor, Professor Peter Strike, oversaw the process to refresh the Corporate Strategy, and to produce an associated business annual operating plan which reflected the continuing significant developments and changes facing the higher education sector. These included:
• the introduction of the new fee regime
• changes to the student number controls
• the move towards a liberalisation of the student market with the introduction of “Core Plus Margin”
• the movement of students achieving AAB+ from the core HEFCE student contract to the “free market”
• the introduction of the School Direct policy in teacher education.
The University Board of Directors through its strategic, financial and academic planning has recognised the challenges facing the sector – and particularly how they have directly affected the University of Cumbria. They have been characterised by increasing uncertainty in the policy and funding environment, with major policy changes planned or being implemented, often with little lead time or clear guidance.
Together these and other changes have created a new and unknown student recruitment market and have made planning and forecasting ever more challenging. The university has continued and will continue in 2012/13 to review the implications and address the likely impact of these changes as it seeks to ensure its offer is demand driven and student focused. The university recognises that there will be both opportunities and challenges arising from these changes and will look to build on its strong reputation and develop areas of niche provision across the HEFCE, TA and NHS portfolio, seeking to capitalise upon its potential.
In the year ahead the university will be undertaking a detailed review of the implications of the changing external landscape for its strategy and future direction. The changed financial and policy landscape will necessitate even more focus on income diversification and cost reduction to ensure the university has a sustainable business model which enables it to deliver its mission and vision.
Yet the university remains committed to its mission and vision and to being a strong and respected university serving the needs of its region and beyond. The University Board of Directors has therefore in its plans and risk assessments made prudent planning assumptions including financial planning. It is also supporting strategic investments in business-critical areas, including key academic areas such as business and sustainable engineering, as well as in marketing and recruitment and enhancing the international office. The development and implementation of a new estates investment programme has been a key priority in 2011/12 to support the improvement of the quality and utilisation of the estate in support of enhancing the student experience and improving sustainability.
The university and the University of Cumbria Students’ Union work closely in partnership in support of the development of the university and to enhance the student experience for all our students. This year saw the University Board and the Students’ Union launch an initiative aimed at strengthening further the important partnership between the Union and the University by signing a relationship agreement, one of ten recommended actions in the CUC’s Good Governance Guide in support of strong governance. The agreement forms the basis of a strong and sustainable governance relationship between the union and the university and reflects the continuing strong commitment to working in genuine partnership with the student body. The aim is to ensure that the university remains focused on enhancing the quality of the academic offer and the student experience and that students – rightly, given the new fee regime – are able to contribute actively to shaping and informing the ongoing development of the university.
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This year the university took great pleasure in awarded Honorary Degrees to the following:
• Stephen Borthwick, in recognition of his outstanding contribution to the world of rugby union football;
• David Gould, in recognition of his outstanding contribution to the campaign for peace and community cohesion;
• John Myers, in recognition of his outstanding contribution to the radio industry;
• Anne Pierson, in recognition of her outstanding contribution to the arts and creative writing;
• Professor Shirley Reveley, in recognition of her outstanding contribution to nursing and the establishment of the nurse practitioner programme and service;
• Paul Rose, in recognition of his outstanding contribution to the understanding of the natural world, the challenges of scientific research and his broadcasting work;
• Professor Graham Upton, in recognition of his outstanding contribution to higher education and to the University of Cumbria.
The university remains committed to its mission and vision and to being a strong and respected university serving the needs of its region and beyond. The achievements in 2011/12, building on those of the previous year, provide a strong platform on which the university will look to build in the coming years in a challenging and changing marketplace.
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2) Principal Officers of the University and Board Directors
2.1) Chancellor
The Most Revd and Right Hon Dr John Sentamu, Archbishop of York
2.2) Vice Chancellor
Prof Peter Strike
2.3) Chair of the Board of Directors
Mr Stephen Henwood (3, 4, 5, 6)
2.4) Members of the Board of Directors
The Very Revd Mark Boyling (2)
Euan Cartwright (3, 4, 5, 6)*
Prof Linda Challis (4, 5)
Dr Hilary Crowe (4)
Dr Stephen Curl (3)
Prof Trevor Curnow (7)
Mr John Dell (3)
Mr Geoff Donnelly (3)
Mrs Claire Hensman (1, 5, 6)
Mr Brian Hetherington (1)
Mr Grant Hopkins (8)
Mr Stuart Hyde (2)
Mr Ian Johnson (1) Lord Roger Liddle (4)
The Right Revd James Newcome, Bishop of Carlisle (5)
Mrs Liz Nicholls (4)
Mr Mark Renwick-Smith (1)
Mr Bill Sang (3)
Prof Peter Strike (2, 3, 4, 5, 6)
Barbara Stephens (2, 6)*
2.5) Associate Directors
David Allen (3)
David Atkinson (3)
Jeanette Brown (1)
Paul Pharaoh (1)
2.6) University Board committees:
1. Audit Committee 2. Employment Policy Committee 3. Finance and Resources Committee 4. Strategy and Planning Committee 5. Nominations Committee 6. Remuneration Committee 7. Member of University Staff 8. Student Director
* term of office ended 31 July 2012
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2.7) Members of the Senior Management Team
Prof Peter Strike (Chair) (Vice Chancellor)
Prof Liz Beaty (Pro Vice Chancellor Academic Enterprise and External Relations)
Prof Sandra Jowett (Pro Vice Chancellor Academic)
Mr Neil Harris (Registrar and Secretary)
Mrs Kate Mclaughlin-Flynn (Director of Finance)
Mr Mike Berry (Director of Estates and IT)
Mrs Janet Whitworth (Director of HR)
The Revd Canon Prof Robert Hannaford (Executive Dean, Faculty of Arts, Business and Science)
Prof Sam Twiselton (Executive Dean, Faculty of Education)
Dr Robin Talbot (Executive Dean, Faculty of Health and Wellbeing)
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3) Vice-Chancellor’s Introduction
Last year was another important year in the development of the University of Cumbria – a year in which the university performed strongly with some excellent financial and academic achievements. We can be particularly proud that the university successfully supported 3,335 new graduates through their studies and into the workplace.
A strong financial surplus was delivered in 2011/12, in line with the planned budget; recruitment for 2011/12 was at record high levels, and applications received during the year for 2012/13 entry also stood up well. We anticipate, however, that conversion of these applications may prove challenging, with the introduction of the new student fee regime in 2012/13.
Widening participation continued to be an important priority and our agreement with the Office of Fair Access (OFFA) was approved and refined. Approval of the agreement is a key step in gaining approval for our fee regime, and also for our bursaries, scholarships and fee-waivers to support less well-off students. The University of Cumbria is among the most effective in the sector in providing support for those students in greatest need.
The financial plan that had been put in place for 2011/12 provided a solid platform for investment in some of our key business areas, including marketing, recruitment and enhancement of the international office; improvements in these areas were considered essential if we were to be successful in the increasingly competitive and challenging student recruitment market. As part of our longer-term strategy for continuous improvement in teaching and learning facilities, we have also been able to make a significant investment in IT equipment for students and staff.
The development and implementation of a new estates strategy was also a priority, to improve the quality and utilisation of the assets in our ownership, to enhance the student experience and to improve the sustainability of the institution. The implementation of this strategy will see significant investment at our campuses in Carlisle, Lancaster and Ambleside, and a disengagement with the campus at Newton Rigg that is now owned by Askham Bryan College. For the Ambleside campus, a masterplan has been developed detailing our vision for the site over the next five years, and extensive consultation has been conducted with stakeholders and the local community in order to inform them of the university’s plans. This work will continue throughout each subsequent phase of the project.
There are still many challenges ahead, with the changes in the student fee regime, the cap on student numbers, and the major changes taking place in teacher education. However, the university is well placed to meet these challenges. With a clear corporate strategy in place, we aim to continue to provide high-quality and accessible HE to the region, and to ensure its sustainability and success in the longer term. We have developed an annual operating plan (AOP) based on the long-term goals of the corporate strategy; it has been developed through a series of Senior Management Team workshops and will inform our work this year and, with further development in scope and sophistication, in future years.
One of the key factors in the university’s recent performance has been the strong working partnership with the University of Cumbria Students’ Union. Together we have striven to meet the needs of all our students, and to this end we have developed a new student charter, setting out clearly our expectations of behaviour and responsibility on both sides of the staff/student relationship.
I would wish to acknowledge the support of our staff, not only in their work to develop the charter but also in their dedication to the institution through difficult times. The university’s progress over the last few years would not have been possible without the continued dedication of our staff, who have resolutely maintained their commitment to the university and, despite significant financial challenges and major changes, have remained focused on the core business. As a result, our students continue to deliver great achievements that build our national and international reputation.
With such good foundations in place, and working together, I am confident that the University of Cumbria will continue to thrive while at the same time maintaining the student experience and the high quality of our academic programmes and continuing to meet the needs of the communities that we serve. We can look forward with genuine enthusiasm to the challenges of the years ahead.
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4) The University
4.1) Overview
The University of Cumbria was established in 2007 through an amalgamation of St Martin’s College, Cumbria Institute of the Arts and the Cumbrian assets of the University of Central Lancashire. Its primary focus is to assist the people in the north west region to gain new skills, along with new hopes and aspirations. It is serving a region where HE opportunities had been limited for many people.
As such, first and foremost, the University of Cumbria is an academic institution with an ethos of total commitment to encouraging, supporting and nurturing learners, to enable them to fulfil their potential and make a full and creative contribution to society. Its academic portfolio has a strong professional and vocational emphasis with a large teacher-education and health-related provision. It works closely with bodies at local level, largely through schools, colleges and workplaces, helping to ensure that their communities are thriving and enterprising. It also seeks to offer learning opportunities that fit with people’s lifestyles, delivered at a time and in a mode convenient to the student.
A significant employer in Cumbria and north Lancashire, the university has approximately 1,050 staff and approximately 11,700 students, approximately 50 per cent of whom are from Cumbria and Lancashire.
The university is a member of Million+ and Universities UK.
4.2) Organisation
The university’s work is grounded in four themes:
• Sustainability: building a sustainable future for Cumbria and our communities locally, nationally and internationally;
• Creativity: fostering creativity, promoting innovation and celebrating new ways of thinking;
• Employability: experienced in producing professional graduates who are in demand from employers and prepared for the challenges of a rewarding future; and
• Enterprise: committed to our region and to driving economic growth and social responsibility.
Responsibility for these areas is infused throughout the strategic portfolios of the Senior Management Team.
The institution is divided into three faculties, each led by an executive dean:
• Arts, Business and Science
• Education
• Health and Wellbeing.
Each faculty contains a number of quality groups; academic units led and managed by a head. The associate deans of each faculty are responsible variously for quality, enterprise, partnerships, or research.
The institution is supported in its operations by 10 professional services:
• Academic Quality and Standards
• Centre for the Development and Enhancement of Professional Practice
• External Relations (Marketing and Recruitment/Partnership and Development)
• Facilities Management
• Finance
• Human Resources
• Information Technology Service
• Library and Student Services
• Student and Management Information Service
• Vice Chancellor’s Office
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4.3) Quality and Standards
As well as reviewing and enhancing its internal quality assurance framework, the university continues to make progress on the action plans created in response to recent QAA Institutional Audit and Ofsted visits. In the most recent QAA Audit in 2011 the university secured the best possible outcome of “broad confidence”, while in the most recent Ofsted inspection of teacher education, in 2011, the university achieved an outcome of “good with outstanding features”. Significant progress has been made since the last inspection and the university is working hard to ensure that this is recognised in its next Ofsted inspection, which, under the new framework, could take place at any time. The Faculty of Education has also made good progress in addressing the outcomes of the 2011 Newly Qualified Teacher (NQT) survey and exit surveys conducted by the faculty since the national survey results are encouraging, demonstrating a significant improvement. Action to improve further will continue in the coming academic year.
The Faculty of Health and Wellbeing has had a number of visits from professional accrediting bodies this year with successful approval events for MSc Medical Imaging, BSc (Hons) Nursing, Non-Medical Prescribing at Masters and undergraduate levels, and our mentorship programmes. The faculty has also undertaken a number of successful audit visits from the Health Care Professions Council for MSc Occupational Therapy (Pre-registration Accelerated), MSc Physiotherapy (Pre-registration Accelerated), BSc (Hons) Physiotherapy, BSc (Hons) Occupational Therapy (full- time/part-time), BSc (Hons) Diagnostic Radiography and Non-Medical Prescribing at Masters and undergraduate levels, all of which demonstrate the faculty’s commitment to quality educational provision in healthcare.
The faculty has worked hard in collaboration with University Hospitals of Morecambe Bay NHS Foundation Trust to respond to areas for improvement in a recent NMC audit conducted by Mott MacDonald. This hard work has paid off with a positive outcome in a follow-up visit by the auditors in late 2011/12.
4.4) Key University Stats
In 2011/12 the university enrolled 10,709 students, of whom 8,936 were undergraduate students and 1,773 were postgraduate or PGCE students. In total, the university had a student population which equated to 7,839.7 Full Time Equivalent (FTE); these were split between 6,783 FTEs of full-time students and 1,054 FTE of part-time students.
The proportion of students is roughly equal across the three faculties at undergraduate level with the Faculty of Education having a significant majority of postgraduate students (including PGCE). The university is working hard to increase its postgraduate provision, with steps taken during 2011/12 to strengthen and extend existing postgraduate partnership provision in the Faculty of Arts, Business and Science, in particular through the relaunch of the Business School.
The university has a dispersed teaching model with a number of campuses and sites across the region and in London. Over three-quarters of our undergraduate students are based on our Lancaster and Carlisle campuses. At postgraduate level this distribution includes a quarter of students based at Newton Rigg College, Penrith. The university faces a challenge during 2012/13 when we aim to relocate most of our students from the Newton Rigg College site to our other campuses for the 2013/14 academic year and work has been progressed during 2011/12 to begin planning for these moves.
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3%
48%
1%
29%
11%8%
University of Cumbria UG enrolments by campus 2011/12
TowerHamletsLancaster
Ambleside
Fusehill
BramptonRoadNewton Rigg
2%
37%
20%
11%
30%
Age distribution of University of Cumbria students 2011/12
Under 18
18 to 20
21 to 24
25 to 29
30+
Female69%
Male31%
University of Cumbria enrolments by gender 2011/12
7%
65%
2%
25%
1%
University of Cumbria PG enrolments by campus 2011/12
TowerHamletsLancaster
Ambleside
Fusehill
Newton Rigg
Cumbria19%
Lancashire23%
Other UK51%
European Community
4%
Other Overseas
3%
University of Cumbria applicant origin 2011/12
The university has established itself as being of and for the communities in which it sits and draws nearly half (46 per cent) of its applicants from Lancashire and Cumbria. The majority of our students are from the UK but the university has ambitions to increase its international market, taking care to ensure that this remains to the benefit of its student and local communities.
The student profile for the university is predominantly under 30 and female, which is reflective of the institution’s portfolio, of which around two-thirds is in teaching and healthcare, historically predominantly female careers.
The university recognises that its performance in student satisfaction and retention places us below our competitors and has activities in place to improve in these areas. Much work has been undertaken during 2011/12 to improve our performance in the National Student Survey (NSS) categories and improve our students’ satisfaction. The results from the NSS 2012 survey show that this work has been fruitful, with improvements across the board.
Our overall satisfaction rate was 77 per cent in 2012, an improvement of two percentage points over the 75 per cent recorded in 2011. The largest increases in percentage satisfaction over last year’s scores are in Organisation and Management (+5) and Learning Resources (+5). Looking specifically at Organisation and Management and Learning Resources, these are areas that have previously been identified as particularly problematic for the university when compared to the overall scores for the sector. Although the university’s performance has improved in all areas, it is still performing less well than sector benchmarks in a number of the NSS areas and concerted action to improve performance across all areas of the NSS will continue to be a priority in 2012/13.
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Student Satisfaction (NSS 2012)
The university is working hard to improve its performance in retention, developing and implementing a Retention Strategy in 2011/12 and embedding and extending the work of the Recruitment and Retention Management Group. A cross-institution group of academic and professional service colleagues whose remit is to monitor and manage recruitment and retention activity, the group identifies and manages attrition trends through using management information (including from the NSS) to design and deliver effective interventions and course design.
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5) Charity status and public benefit statement
5.1) Public Benefit Statement
The University of Cumbria is a company limited by guarantee and an exempt charity under the terms of the Charities Act 1993. The Directors of the University Board are the trustees of the Charity. As such in setting and reviewing its objectives and activities, the university’s Board of Directors has had due regard to the Charity Commission’s guidance on the reporting of public benefit and its supplementary public benefit guidance on the advancement of education.
5.2) Charitable Objects
The overall aim of the university is the advancement of education in the UK through the undertaking of educational and research activities. The objects of the university set out in its Memorandum of Association make specific provisions for the advancement of learning and knowledge by teaching and research and for enabling students to obtain the advantages of university education The University, through its updated Corporate Strategy 2012–2017, articulates its vision and mission as:
i) Our Mission:
Is to provide and promote excellent and accessible higher education which enhances the lives of individuals and fosters the development of the communities to which we belong. In so doing, the university will embrace four guiding themes: sustainability, creativity, employability and enterprise.
ii) Our Vision:
We will be a dynamic, creative and entrepreneurial university, rooted in our region, with strong and sustainable national and international connections. We will be a larger university than in 2012, more sustainable and more resilient. Our work will be focused on the professions and be both business- relevant and research-informed.
• Our students will be contributors to a vibrant academic community committed to excellence in
learning and teaching underpinned by research and enterprise, which equips them for employment, individual fulfilment and lifelong learning.
• Our staff will be innovative, enterprising and professionally outstanding individuals, focused on enabling our students and other university partners to realise their ambitions, and to drive the continuing success of the university.
• Our university will be the first choice for students, employers, professional bodies, civic organisations and other partners and will engage with them creatively and effectively to meet their needs.
• Our communities will be shaped by the demonstrable impact we and our graduates have on their
intellectual, social, cultural and economic development.
5.3) Beneficiaries
The students of the University of Cumbria are the primary beneficiaries and are directly engaged in learning or research. However, beneficiaries also include employers and businesses, particularly in the health, schools education and public service sectors, as well as schoolchildren who have the opportunity to attend educational events organised by the university; the general public are also able to attend various educational activities in the university such as exhibitions. The development of the University of Cumbria has provided the county and region with a range of HE learning opportunities that were formerly not widely available or easily accessible to previous generations of local people and businesses and employers.
5.4) Fulfilment of the Charitable Objects
The following sections give examples of how the delivery of the university’s objectives contribute to the public benefit, including engagement with businesses and the community, working with partners including charities, health services and schools, contributing to the local economy and supporting enterprise.
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i) Teaching
• The university continued the cycle of course review, focusing on ensuring courses more effectively respond to the demands of the market and needs of employers.
• The university reviewed and revised its academic planning framework, establishing a more robust central decision-making forum on the future of academic developments across the institution.
• The university can report some significant individual achievements from its students during
2011/12. These include:
o An MA Contemporary Arts graduate was awarded the prestigious Silver Award in the Craft
& Design Selected Makers Awards 2012. o A Games Design graduate has worked on several movies, including Total Recall, The
Chronicles of Narnia: The Voyage of the Dawn Trader, Star Wars Episode 1 3D version, Mirror Mirror: The Untold Adventures of Snow White, Wrath of the Titans, Men in Black III and Dredd.
o A Film and TV graduate has achieved international recognition as a locations manager working on the films War Horse and Clash of the Titans 2.
o A BA and MA Contemporary Fine Arts graduate had work selected for the Young Artist of the Year.
o An MA Fine Art graduate has had work on show at the Imperial War Museum resulting from his work as a war artist with the British troops in Helmand Province.
o A third-year Wildlife and Media student had some film that was developed for the RSPB shown on the BBC Autumnwatch programme.
o A BA Film and TV Production graduate was selected to film a UN-funded project in northern Rwanda.
o A Learning Disabilities Nursing student won the Fiona Laws Innovation in Practice Award o The work of eight third-year students has been added to the Historical Association
website as examples of creative good practice in History teaching. o A third-year Secondary Qualified Teacher Status (QTS) PE student was selected to
play netball for England in a tour of Australia and New Zealand during October 2011.
ii) Access/Widening Participation
Widening participation (WP) sits firmly at the heart of the university’s mission and vision, and a key concern continues to be how best to address low participation in higher education in Cumbria and the other communities the university serves, as well as supporting access and widening participation for other disadvantaged groups and individuals. The university is pleased to note that early statistical evidence for 2011/12 suggests that:
the university continues to recruit over 96 per cent of its young full-time, undergraduate students from state schools or colleges.
since formation in 2007, the university has seen an overall increase in the proportion of young full-time, undergraduate entrants from low-participation neighbourhoods, with minor fluctuations year on year.
over one-third of the university’s young full-time undergraduate entrants come from low socioeconomic classes.
the university continues to broadly maintain or improve its performance in relation to disability, gender, ethnicity and mature students. Early indications for 2011/12 suggest improvement, including significant progress on disability, ethnicity and mature students. However, due to unique recruitment patterns in 2011/12, the university is keen to see these in the context of future performance to see if this is sustained.
in 2011/12 over 60 per cent of the university’s full-time, undergraduate and postgraduate ITT students liable for paying full fees received bursaries or scholarships as a result of meeting WP criteria.
in 2011/12 the university spent in excess of £3.1m of its additional fee income on OFFA countable
expenditure (bursaries, scholarships, additional outreach etc.), with bursaries and scholarships
accounting for £2.8m. In addition to this the university also spent over £1.5m on other WP activity.
Since 2007, the university’s student profile has broadened to include recruitment from a wider range of schools, including increased recruitment from non-WP schools. The current strategic plan strengthens the university’s firm commitment to accessible higher education, in terms of widening participation, flexible and distributed learning, and a course portfolio which meets the needs of the wider region. Recognising its
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Pe
rce
nta
ge
Pe
rce
nta
ge
UoC Benchmark Location adjusted benchmark
regional commitment and responsibilities to an area with significant pockets of low participation and low educational aspiration, the university aims to ensure that as many people as possible benefit from the transformational opportunities provided by higher education. The university also recognises that its learning community is enriched by the diversity of students in terms of mode of study, gender, ethnicity, social and geographical background, and previous educational experience.
The university has considered its performance against Higher Education Statistics Agency (HESA) benchmarks and a range of other indicators. The University of Cumbria consistently performs well across benchmarks for entrants from lower socioeconomic groups and low-participation neighbourhoods. In the light of past performance, the university sets stretching targets for attracting additional students from some other underrepresented groups with the aim of continuing good performance. Self-assessment has informed further development on targets for the university in future access agreements and plans for widening participation.
Figure 1: Percentage of young full-time first-degree entrants from state schools or colleges. Error bars are ± one standard deviation.
Figure 2: Percentage of young full-time first-degree entrants from lower socioeconomic classes (NS- SEC 4-7). Error bars are ± one standard deviation.
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0 2007/08 2008/09 2009/10 2010/11
UoC Benchmark Location adjusted benchmark
Figure 3: Percentage of young full-time first-degree entrants from low-participation neighbourhoods. Error bars are ± one standard deviation.
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0 2007/08 2008/09 2009/10 2010/11
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iii) Research
Noteworthy initiatives in 2011/12 include the following:
• An Arts Council funded arts project in Copeland exploring the relationships between art and energy.
• A member of the Faculty of Health and Wellbeing staff has been awarded funding from the Rosemere Trust for her research on cancer survivorship.
• HE Academy funding has been awarded for a project to evaluate the implementation of collaborative student-practitioner research partnerships as a new educational approach to research methods.
• The Faculty of Health and Wellbeing has won a competitive tender to deliver a staff development programme on Resilience and Change with Cumbria County Council.
• A joint collaboration with other North West Universities on paired placements in ICT.
• Dr Barry Hymer has been appointed as the Osiris Chair in Educational Psychology. Dr Hymer is a leading educationalist in the fields of philosophy for children, motivation and pupil talent management.
• Teacher Education Assessment Network (TEAN) completed the series ‘Teacher Education
Futures’ across the UK with the comparative results of the events held in England, Northern Ireland, Scotland and Wales presented at the UCET conference and appearing as an abridged form in Research Intelligence, a British Educational Research Association (BERA) news publication.
iv) Wider Community
Noteworthy initiatives in 2011/12 include:
• The signing of a strategic relationship agreement between the university and the Students’ Union.
• Applied Science students passed on their scientific expertise to children from eight local primary schools (c. 200 children) in a series of workshops in February 2012 at Energus, West Cumbria.
• The Faculty of Health and Wellbeing is working with local hospices developing programmes for staff working with patients with dementia.
• Four BA Physical Education students organised and carried out a fundraising sports day for school students across Carlisle in April 2012 in which 150 students from five schools participated. The event focused on increasing knowledge of healthy eating and exercise.
• A Senior Lecturer in Community and Public Health has been awarded the title Queen’s Nurse in recognition of the contribution she has made to community nursing throughout her career.
• A successful bid as part of national project with six other universities and various arts/health-based collaborators to investigate the connection between arts based projects and their collective role in promoting health and wellbeing, employment prospects and economic growth.
• University of Cumbria lecturer and “outdoor philosopher”, Dr Kate Rawles, celebrated the publication of her book about her 4,553-mile cycle ride from Texas to Alaska in 2006. The Carbon Cycle: Crossing the Great Divide was launched at an event hosted by the Lake District National Park at Brockhole on the shores of Windermere on Thursday 19 July 2012.
• Funding has been secured to look at the use of Stilwell (the university’s virtual world learning
environment), webcasting and other new media in supporting the community, agencies and statutory bodies to tackle public health issues.
• Sports students are working with Carlisle Leisure Ltd to deliver sporting projects in the area. • Second-year students were selected to deliver Sport England “Sportivate” projects in and around
Carlisle. • Seven Sports and Exercise Science students were involved in a StreetGames pilot, a six-
week youth inclusion project. • Coaching and Sport Development students undertook outreach with Morecambe Ladies football
team providing fitness testing for team members.
v) Fees and Funding
During 2011/12 the university had to consider its tuition fee levels, and whether it would strategically place itself with a lower average net tuition fee in order to access the additional “margin” student numbers made available by HEFCE. The University Board considered the issues and concluded that the
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university would bid for marginal numbers. Therefore the university set fees at a level to secure an average net tuition fee of less than £7,500 for 2012/13 and was allocated 160 marginal numbers.
The university recognised that the marketplace in which it is operating is constantly changing and the context for HE from 2012/13 is very much an unknown.
The University of Cumbria Fee for OFFA eligible full-time undergraduate students on Honours programmes from 2012/13 will be £8,400. However, as transitional support to students entering these awards in 2012/13 a universal fee waiver of £550 will be awarded, resulting in a net fee of £7,850.
The University of Cumbria Fee for OFFA eligible full-time undergraduate students on Foundation Degree programmes from 2012/13 will be £6,500. However, as transitional support to students entering these awards in 2012/13 a universal fee waiver of £500 will be awarded, resulting in a net fee of £6,000 for the duration of their programme.
Fees will be subject to the annual inflationary increase announced by the government from 2013/14 onwards. The university will meet its obligations under the NSP for 2012/13 and for these students a fee waiver of £2,000 will be applied to their first-year fee.
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6) Operations review
Our Corporate Themes identified in the Corporate Strategy establish the profile and reputation of the University of Cumbria by reflecting our key strengths and our unique “Cumbria Experience”. Our themes give us direction, inform our academic provision and define our approach to student support. They are the guiding principles that underpin everything we do at the university, and create the shape of the university that we will become.
6.1) Sustainability
Our university is building a sustainable future for Cumbria and our communities locally, nationally and internationally. Sustainability informs the content of a broad range of the Cumbria academic portfolio and influences institutional thinking and practice.
i) Estate
We aim to operate our estate to the highest standards of energy management and have made great strides towards this goal. For example, we have already achieved a 10 per cent reduction in carbon emissions from energy and fuel use, but not resting on these laurels we have drafted a University Board approved revised carbon management plan outlining our aims to achieve a 45 per cent reduced in carbon emissions by 2020. We have also approved revised environmental, energy and waste management policies and will implement a new waste service contract from December 2012 with the aim of increasing recycling rates to at least 90 per cent by the end of 2013/14 and have implemented a number of energy saving projects saving approximately 100 tonnes of carbon per year. In addition we will be running targeted campaigns covering energy awareness and waste reduction.
ii) Practice
We extend these principles to our working lives, having recently been nominated for a Green Gown Award for our work in reducing our carbon emissions as a result of our successful transport policy and the initiatives to encourage staff to find alternative transport solutions to using their own cars. For example, we have instigated a successful pool car scheme at our Carlisle campus and negotiated a deal with Virgin Trains to incentivise staff to travel by rail in the first instance.
Sustainability in our working practices translates into our operating practices too. We have worked hard to ensure that our business practices are sustainable, which is increasingly important in an increasingly challenging HE environment. We have revised and augmented our business planning, financial planning and performance management frameworks to ensure that they serve us effectively and aid strategic decision-making.
iii) West Coast
For the university sustainability also means being at the forefront of national activities in sustainable engineering, working with partners on the west coast of Cumbria to address issues of low-carbon energy generation. In 2011 we successfully recruited to our Sustainable Engineering degree, delivered in partnership with GEN II at the Energus Campus at Workington and have been part of a successful bid for the formation of a University Technical College on the west coast to drive further the ambitions for a west coast renaissance centred on sustainable engineering. The university is also in early negotiations with Furness College to extend the reach of our sustainable engineering delivery to the Furness peninsula and works closely with the Dalton Institute to ensure a joined-up approach to delivering the west coast ambition.
Our engineering lecturers are also raising aspirations through mentoring sixth-form students, and our recently published Employability Strategy aims to address the need for education and skills development among both our young people and our working population. We also seek to address the societal challenges of our time, addressing the issues raised by the changing age profile of our populations, and the economic and health consequences of these changes, through projects such as Greenfingers 2, Sportivate and StreetGames UK, and the recently established Cumbrian Centre for Health Enhancement and Technology (CaCHET).
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iv) International
The University Corporate Strategy and International Plan set out our ambitions to develop our provision and reputation in the international HE marketplace and we have made great strides towards these goals during 2011/12. The university implemented a new International Office structure with the appointment of a head of international development, two international development officers, each with an overseas recruitment role, two international officers with responsibility for conversion, pre-arrival, welcome week and student support, and the international administrator.
The restructured International Office has worked hard during 2011/12 in improving the infrastructure, systems and processes in place for the support and development of our international business. This has included developing new pre-arrival information, and improving the welcome week activities and programme of social activities at Lancaster and Carlisle to assist in integrating international students and developing new processes for agent recruitment. It has also involved establishing systems, procedures and staff development that will ensure UK Border Agency (UKBA) compliance. Working with other services across the institution the International Office has also helped to define roles and responsibilities, has worked on developing the knowledge of staff regarding UKBA compliance and has contributed to the development of new policy and processes. Furthermore, we have developed the 2012 offer, produced new marketing materials and travelled extensively throughout Asia and the USA to promote the university, develop new partnerships, and develop and train a network of agents to assist in recruitment.
This year the university created the Centre for English Language Learning and Teaching (CELLT), developed language support provision, won a new contract with the Hong Kong Institute of Education (a semester abroad for teacher trainees), developed a new pre-sessional programme and saw CELLT welcome its first visiting scholar, from Xi’an International Studies University in China.
The university already has a successful venture with Robert Kennedy College (RKC) in Zurich, which started in September 2010, with RKC offering a new MBA in Leadership and Sustainability developed in collaboration with the university. The partnership has proved to be extremely successful, with students from over 110 countries and over 700 students enrolled since the programme began and a cohort of more than 500 for 2012/13. The programme was shortlisted for an Insider International Trade Award in the International Education category at the end of 2011.
The programme includes a week-long residential at the university’s Ambleside campus, and students who have completed the residential have been enthusiastic about the experience. It is estimated that each residential will provide approximately £15,000 income to local businesses.
v) Staff Development
Our commitment to sustainability is evident closer to home too. To complement the renewed in-house Leadership and Management Framework and Development Programme, the university has invested in a parallel fast-track development route for those identified as future senior leaders. The Sustainable Leadership Programme (SLP) combines one-to-one coaching, leadership forums and action learning approaches to support participants as they work on corporate projects directly linked to the university’s strategic aims. The initial cohort of 10 participants has been selected to represent the diverse approaches and backgrounds required of senior leadership in the current context. The SLP combines well-developed in-house provision to emphasise the university’s commitment to professional development, talent-management and succession planning.
6.2) Creativity
Creativity is an important part of our history through our long heritage of arts provision, and is fundamental to our future success throughout the university. The university fosters creativity, promotes innovation and celebrates new ways of thinking.
i) Delivery models
The innovative and forward thinking of our Faculty of Education has placed us well in responding to significant changes that are being applied to teacher education, a substantial tranche of our portfolio and income. We already had well-established school consortia-based initial teacher training (SCITT) and partnership arrangements in place, an integral part of the revised government policy for the future of teacher education, and our reputation and experience in school-based provision has attracted the attention of schools nationally with many expressions of interest in forming partnerships with us.
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ii) Academic activity
Creativity adds value to both our academic and non-academic activity and is celebrated through the Vice Chancellor’s Excellence Awards. Awards are given in individual and team categories for Innovation and Enterprise, Research and Learning and Teaching. Some notable winners during 2011/12 were:
• Karen Shaw (LISS), Sebastian Meer (LISS), Sarah Ruston (CDEPP), Simon Allen (CDEPP) and
Shehnaz Patel (Faculty of Arts, Business and Science) for their work as a collaborative team in the creation of learning resources for prospective university students prior to registration via our VLE Blackboard site. The aim is to support aspiring HE students’ academic integration into HE-level study with the university through use of sustainable educational activities and reusable learning materials. This supports their transition by managing their expectations, and has a positive impact on retention and personal success.
• the Unite with Business team (Faculty of Arts, Business and Science) for their work in offering
small to medium-sized enterprises (SMEs) a free support programme to increase business innovation, performance and productivity. This business support is provided by university graduates and final-year students through placements or internships. As such, this provides opportunities for students or graduates to develop their careers and utilise their skills and abilities as well as forging strong partnerships with our regional businesses.
• Dr Ian Convery, Faculty of ABS for his ongoing commitment to encourage and engage in novel
collaborations, sharing of research practice and his excellent track record in publication and dissemination activities.
• Mark Christie (Faculty of Health and Wellbeing) for his work in enabling students to enhance
their employability profiles in addition to inspiring academic achievement.
• Adrian Copping (Faculty of Education) for his work which seeks, through the use of innovative
approaches, to bring together and develop cohesive ties between campus and school-based learning. His teaching is designed to foster creative thinking and problem-solving in preparation for managing uncertain and complex issues in a highly strained political education climate, and effectively developing transferable skills to increase student understanding and employability.
• Karen Lockney (Faculty of Education) for her work in developing action research projects in a
partnership school which encourages students to develop their identities as research practitioners, part of a community of practice which includes both university and school staff. The work raises the profile of future employability for the students as it strengthens their identity as outstanding teachers contributing to curriculum development from the outset.
iii) Communication technology
The university seeks to lead in the use of new communication technologies, which allow us to operate effectively across the whole of our region, often in conjunction with other key educational and employer partners. For example we use video-enabled teaching to link students across geographically dispersed sites within one learning environment (for example our Social Work students have engaged in a live video link with the University of Southern Illinois Edwardsville, USA to compare social work issues in the USA) and have used video links to enable teacher education students to witness live classroom teaching in schools. Video-enabled teaching also allows lecture capture, providing valuable sustainable resources for students to access throughout their learning journey, and provides additional and flexible delivery methods. The Faculty of Education has developed a Cumbria Teacher webpage, which provides valuable resources for newly qualified teachers, supporting them in their workplace, while the Stilwell virtual learning environment provides a virtual district in a fictitious city where students on the Advanced Nurse Practitioner and Paramedic courses can practise their craft. Stilwell is also being developed for use in collaboration with various external providers for CPD purposes.
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6.3) Employability
Our university is experienced in producing professional graduates, in demand from employers and prepared for the challenges of a rewarding future. Employability is fundamental to our academic courses and the success of our graduates.
The university already has a strong reputation for employability in its teacher education and healthcare provision. We are now extending that reputation through the work of the Institute of Policing and Criminal Justice Studies and the partnership between the University of Cumbria and Cumbria Constabulary, which continues to go from strength to strength. This year has seen closer collaboration than ever with the development of Stilwell, the university’s virtual world learning environment for the benefit of serving police officers and policing students at the University of Cumbria. Staff in the Faculty of Health and Wellbeing worked with colleagues in the Cumbria Constabulary Occupational Health service to integrate the Constabulary’s established Trauma Risk Management with Stilwell to devise a script for a series of episodes that explore everyday scenarios that police officers could encounter in Cumbria. In addition, November 2011 saw the first cohort of serving officers graduate from FdSc Policing Studies, one of only two such degree programmes available in England. Finally, a new development from the Faculty of Health and Wellbeing with the Defence Medical Service to train combat medical technicians has been shortlisted for a THE award in 2012 in the Outstanding Employer Engagement category.
A project managed by the University of Cumbria has supported over 800 people in the North West region to gain qualifications in sport, outdoor activities and fitness. “Get qualified NW” accessed European Social Fund money from the Learning and Skills Council (now the Skills Funding Agency) and focused on improving current training opportunities for the sport and active leisure workforce in the region. The project ran from November 2009 until August 2011 and received over 1,000 applications. Club volunteers, as well as those in paid employment, could apply and training was organised in a wide range of sports as well as outdoor activities such as mountaineering and canoeing. It also included qualifications in gym and fitness instructing, personal training, nutrition and weight management. Funding of approximately £60,000 has been secured as part of a legacy and sustainability plan for GQNW and the Lottery-funded Sport Workforce Development programme to develop the capacity to deliver the “Student Workforce Teams Project” within Sport, thus maximising the university’s employability and enterprise agendas.
The university encourages and engages in a number of other activities designed to integrate employability within the student experience including volunteering activities, community support projects and opportunities to study abroad. The university is, for example, one of a small number of Northern institutions which have entered into a mentoring arrangement with the BBC for its journalism students, has a Students’ Union actively involved with volunteering projects in the community and has a number of programmes which offer study abroad through Erasmus and Leonardo funding.
6.4) Enterprise
Our university is enterprising and dynamic, committed to our region and to driving economic growth and social responsibility. The university values enterprise both as business development, and as an attitude, encouraging imaginative and practical solutions to current challenges.
Enterprise is very much a nascent theme within the university, but despite its emergent nature there are several activities of note. Each faculty has worked hard over several years to develop an enterprising outlook, be it the Faculty of ABS with its successful Knowledge Transfer partnerships (KTP) with Carlisle Leisure Ltd, which helped them to develop an environmentally focused sustainable business strategy and identify savings in energy use and the redefining and redevelopment of the Business School to include a Business Interaction Centre at Carlisle; the Faculty of Education, which has mentored training in Forces Schools, won the licence to deliver Modular School Leadership programmes on behalf of the National College for School Leadership, and been invited to host workshops and seminars and to showcase its CPD portfolio at the annual Council of British International Schools (CoBIS) conference in Prague in February 2012; or the Faculty of Health and Wellbeing, which has developed its Stilwell virtual world learning environment for a number of external agencies, supporting continuing professional development across a range of disciplines, and its six-month KTP with Cumbria Constabulary to enhance and improve the Constabulary’s occupational health service and respond to the rapidly changing needs of the police force.
The university is also responding centrally to its enterprise theme with a collaboration facilitated by the British Council. Staff at Karakoram International University, Pakistan are being mentored by a team from
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the University of Cumbria to enable them to develop enterprise and knowledge exchange strategies in their country, and have launched a range of practical training courses in equality, diversity and inclusion aimed at helping employers and education providers understand legislation and implement best practice.
Many more activities are in the pipeline and the university is rightly pleased with the progress made to date and its potential for the future development of enterprise activity which is of benefit to it and to the communities in which it works.
6.5) Resources
i) People
The new Vice Chancellor, Professor Peter Strike, took up his post on 1 August 2011, following a one-month transition with his predecessor, Professor Graham Upton, interim Vice Chancellor.
During the year a number of appointments were made to key posts including Director of Finance, Interim Pro VC (Planning and Performance), Director of IT, Head of International Office as well as key professorial appointments in Sustainable Engineering and in the Business School.
In December 2011 the University of Cumbria was successfully re-accredited with the nationally recognised Investors in People (IiP) Standard, highlighting its care for staff and business development. The university was also awarded the additional Bronze Award, which focuses on leadership and management, as part of its IiP re-accreditation process. More than 130 members of staff from across the university’s campuses were interviewed about their experiences of working there as part of the week-long assessment.
Following the shortlisting of the University of Cumbria in the THE Leadership and Management Team of the year in 2011, the HR Service was shortlisted and was runner up in the THE HR Team of the Year in 2012.
The university has established the annual Vice Chancellor’s Awards covering a range of areas, which have received a number of excellent nominations and highlighted some innovative and exciting practice by staff across the university. The university has also revised its Reward and Recognition Policy to encourage further development of and innovation from its staff and to enable the recognition such contributions deserve.
The university has also developed a new Student Charter which sets the standard for expectations from the university, our staff and our students and which was published in August 2012.
ii) Estates
The completion of a revised Estate Strategy in 2011 enabled the university to define a Board-approved five year Estates Investment Programme (EIP). This first phase of the EIP, comprising three initial project types (Ambleside redevelopment, Library Upgrades (Carlisle and Lancaster) and Lancaster new build swing space) was specifically designed to address issues such as “right sizing” the core estate, improving the quality and providing facilities better capable of supporting the university’s new Academic Plan. In addition it addressed key estate performance issues specifically defined in the HEFCE Capital Investment Framework 2 (CIF2) process with the objective of returning the university to estate sector norms by 2015/16 to 2016/17.
The Board and Finance and Resources Committee (FRC) approved the creation of an Estates Investment Programme Board (EIPB) to oversee the development and implementation of individual projects forming the development programme through specific project boards (PB).
The EIPB is currently overseeing the preparation of an Ambleside Business Case proposal to go to the Board in November 2012, initially to support the university’s decant from Newton Rigg in two phases completing in 2014. The EIPB has also approved the funding for the first-stage briefing process for the library improvement projects in Carlisle and Lancaster. The projected future activity of the EIPB will increasingly focus on improved space efficiency, timetabling and space management to respond to the fact that the University’s business is increasingly being delivered off its traditional core campuses as
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an alternative strategy to further new-build capital works.
In 2011/12 the university, working with the developer Border Construction Ltd (BCL), has delivered the first of two phases (249 bed spaces) of BREEAM outstanding student accommodation in Carlisle. This accommodation, which is anticipated to be award-winning for its environmental credentials, is fully occupied. The university is working with the developer to review the potential for a further second phase (249 bed spaces) of accommodation.
On the environmental\sustainability front, the university has signed up to the EcoCampus environmental management programme with the aim of achieving the Bronze level award in Autumn 2012.
iii) Information Communication Technology
The year 2011/12 has seen a number of significant developments within the IT Services department and in the provision and development of the university’s IT infrastructure for both staff and students. As well as undergoing a staffing restructure, the IT Service has undertaken to contribute to and implement new capital planning processes, and has developed new institutional policy on the purchase and use of IT products and services, including the development of the Corporate Systems Strategic Plan.
Key strategic projects aimed at improving performance and strengthening strategic decision-making, such as the implementation of Key Information Sets (KIS) and the development of new customer relationship management, management information, space allocation and paperless admissions systems have been undertaken These projects will continue to develop over the forthcoming academic year and beyond, meaning a significant long-term commitment by the IT Service and the university to the enhancement of the use of IT systems and services into the future.
In addition to this strategic support, a number of other major projects have been undertaken, including the transition of IT elements in the transfer of provision of Further Education to Carlisle College and Askham Bryan College, a major equipment replacement project, the rollout of Windows 7 and Office 2010 across the university, an overhaul of the IT Service website and intranet, the development and piloting of video-enabled teaching, a major telephony upgrade, the development and piloting of computers for mobile workers, the standardisation of classroom IT and media equipment, and support for the establishment of a new course enquiry centre.
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7) Financial review
The university’s financial results for 2011/12 demonstrate our ability to successfully respond to changes in funding, policy and the wider external environment in order to continue to invest in our resources and students as we deliver our vision. The university has again performed strongly against its budget forecast in 2011/12. Despite a decrease in income from 2010/11 following the divestment from Further Education provision, the university has been able to report an increased operating surplus before exceptional items of £7.6m (9.7 per cent of turnover). This has enabled investment of £3.1m in its infrastructure, more than doubling the level of prior year expenditure on the key IT assets and systems that are so crucial to the experience of our students and staff.
2012 2011 £m £m
Income 78.2 86.3 Expenditure including taxation (70.6) (79.6)
Operating surplus 7.6 6.6
Exceptional item: Impairment of 0 0
Newton Rigg assets
Exceptional item: Restructuring (1.0) 2.7
Exceptional item: Profit on sale of fixed assets
0 0.1
Surplus / (deficit) for the year 6.6 9.4
This is the second successive year that the university has reported a surplus which is ahead of budget. This both reflects the decisive action that was taken in previous years to control costs and to strategically realign our focus onto Higher Education and the continued efforts to increase revenues and to ensure that value for money is delivered.
As the sector continues to face a period of unprecedented change, this experience of prudent financial planning will be crucial. Like other institutions, the university faces both challenges and opportunities from continued changes in government policy; in particular those related to tuition fees and the delivery model for teacher training. The university approaches these issues with far healthier cash reserves than in previous financial years, with the cash balance standing at £14.2m (£10.1m for university use and £4.1m earmarked for the Energy Coast Campus programme) but also with the focus on improving liquidity.
7.1) Income
Income decreased by nearly £9m with the most significant change from 2010/11 arising from the divestment of Further Education provision which has reduced income by £4m with an offsetting reduction in expenditure.
The university recruited strongly to its HEFCE, NHS and TA courses in 2011/12. This has led to an increase of £1.4m (4 per cent) in tuition fees compared to 2010/11 and a resultant increase in income from student residences compared to original forecast. Funding body grants reduced due primarily to a reduction in the unit of funding from HEFCE and the TA and lower releases of deferred capital grants due to assets reaching the end of their useful economic lives.
The university has clear plans to grow its income in a range of areas and to diversify the sources of this revenue. Although “other” income reduced in 2011/12, strategies are in place to ensure that this ambition is realised.
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7.2) Expenditure
Expenditure has reduced by £9.1m, from £79.7m to £70.6m compared to 2010/11 partly due to several one-off items, such as those related to the refinancing of our loans, and partly due to reduced operating costs arising from the transfer of Further Education provision. Staff costs reduced by about £3.4m (including restructure costs), and represented 53 per cent of income, better than the university’s financial strategy. This was delivered through continued control of recruitment, but also allowing for investment in key posts including in the Senior Management Team.
Other operating costs also reduced in line with the Further Education Transfer.
Interest and Finance costs reduced significantly, reflecting the fact that 2010/11 included loan break costs of £2.8m, and reduced finance costs associated with the new loan arrangements which began at the end of 2010/11.
7.3) Balance Sheet
The increased strength of the balance sheet is demonstrated by the fact that discretionary reserves as a percentage of total income improved from 14.2 per cent to 26.0 per cent in 2011/12. Further, total net assets, excluding the pension liability, have increased by £5.1m.
The work performed on cost reduction and strategic realignment in previous years has helped result in this healthier balance sheet but the university has ambitions to continue to strengthen its financial position. There is a clear focus on cash-flow and working capital movements at both Board and management levels of the organisation and this is even more crucial as the timing and quantum of key funding streams alters during 2012/13. The university holds funds on behalf of the Energy Coast campus board. During the year, £2.3m of this cash was spent by the fund's board, which explains the overall decrease in the cash balance which is reported in the accounts. If this expenditure is excluded, the cash available for university activities increased in year by £0.4m to £10.1m.
In a period where significant capital grants are not readily accessible, the university has developed a financial plan which will result in transformative work to its estate which will be funded through its surpluses either directly or through the repayment of borrowing. The strength of our balance sheet, continued delivery of a surplus as planned in 2012/13 and effective cash management will be crucial to our achievement of this ambition.
The most significant move on the balance sheet was the £5.8m increase in the Local Government Pension Scheme deficit. The deficit is predicated upon actuarial assumptions, including the discount rate, inflation rate, mortality assumptions and equity values. The level of balance sheet surplus/deficit going forward is subject to fluctuations and may vary widely each year, and the university has experienced both increases and decrease in the deficit in previous years.
The large increase this year is primarily due to lower than anticipated bond yields and an increase in life expectancies. The increase in the deficit to £29m has no immediate effect on cash or expenditure although the university has anticipated its effect on its contributions in its long-term financial planning.
i) Capital Projects
The University did not carry out any significant capital projects in 2011/12, but has invested £3.1m of capital expenditure in its existing estate, infrastructure and equipment during 2011/12. This represents a significant increase in expenditure compared to 2010/11 and includes £1.1m invested in replacing outdated computers at the expiry of the lease for these assets. The Estates Strategy, which considers significant capital investment projects, has continued to be developed, with significant planning under way in respect of the first project related to the university’s Ambleside campus
ii) Financial sustainability
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The university’s business activities, together with the factors likely to affect its future development, performance and position are set out in this Operating and Financial Review alongside the financial position of the university and its cash flows, liquidity position and borrowing.
The university has considerable financial resources together with contracts with a number of customers and suppliers. As a consequence, the directors believe that the university is well placed to manage its business risks successfully despite changes in funding policy and the current uncertain economic outlook. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
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8) Risk Management
The university sees the strategic management of risk as an integral element within its decision-making processes and culture, supporting effective planning and evaluation of its activities. Effective risk management includes encouraging innovation and the successful management of change. Risk management is accepted as a creative component of management generally, not an “add-on”. The university seeks to promote the development of a risk management culture in all sectors of the institution, through the acceptance by all staff of their shared responsibility for the good organisation of the institution.
The regular management and reporting on progress against strategic objectives and risks aids in the quarterly re-evaluation of strategic risk by informing updates to risk improvement plans. It creates a “cascade” of risk management in which identified activities are mapped against the next highest level, demonstrating an upward flow of mitigating controls from operational to strategic.
As activities progress and risks are improved at the lower level so they enable risks to be managed at the next highest level: for example management of project risks ensures the risks to the delivery of the university’s Annual Operating Plan are mitigated. An increase in a project risk flags a potential increase to the associated operating plan risk, and so on up the hierarchy.
Annual Operating Plan Projects are aligned to strategic risks as identified controls within risk improvement plans. If an operating plan risk increases, this flags a potential impact in the efficacy of the control at the strategic risk level and thus impacts on the net risk score for that strategic risk.
8.1) Strategic Risks
The university has identified strategic risks in eight key theme areas:
1. Mission AOP and quality – We need to continue to implement the objectives towards the achievement of our mission through the delivery of our annual operating plan and the enhancement of our reputation for quality.
2. Implementation mechanisms Alignment of resource and objectives – the alignment of resource with objectives is increasingly important in the changing funding environment to ensure that resources are used and funds spent in the most effective way towards the delivery of our objectives.
3. Change management and cultural change Engaging UoC community in change – we need to continue to engage our communities in the development and delivery of change so that our strategic needs are fulfilled.
4. Processes and systems Designing effective business processes and securing stable organisational structures – we need to be sure that our systems are effective and efficient, making best use of our resources while delivering on our objectives.
5. Student experience Improving the student experience and scoring position, and retaining students – we need to ensure that students remain at the centre of the higher education environment which is in flux, endeavouring to enhance the student experience and protect our student community.
6. Academic product Meeting recruitment targets, planning for Research Degree Awarding Powers (RDAP) and developing academic enterprise – we need to position ourselves as a forerunner in the sector, meeting our recruitment targets and developing our academic enterprise to protect and extend our income streams and improve our reputation and opportunities through the award of RDAP.
7. External funding and policy environment
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Responding to policy and funding changes – in the changing funding and policy environment we need to be flexible and responsive to change through the use of robust business intelligence and management information.
8. Physical, human and ICT resources Implementing an estate and IT strategy and securing a skilled and motivated workforce – we need to bring our estate and IT into the future and develop a workforce with the right skills and the motivation to compete effectively within our peer group in an environment which will become increasingly competitive.
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9) Corporate Governance and Internal Control
The following statement is provided to enable readers of the accounts and the Operating and Financial Review of the university to obtain a better understanding of the governance and legal structure of the institution.
9.1) Constitution and Structure of Corporate Governance
The university is a company limited by guarantee and is an exempt charity. The incorporated university’s structure of governance is as laid out in its Memorandum and Articles of Association, as revised and implemented on 1 August 2007. The Memorandum and Articles of Association require the university to have a Board of Directors and an Academic Board, each with clearly defined functions and responsibilities, to oversee and manage its activities.
The University Board of Directors, which meets at least six times each year, has ultimate responsibility for the matters including finance, property and staffing of the university. It is specifically required to determine the educational character and mission of the university and to set its strategic direction. One of the Board’s most important responsibilities is the appointment of the Vice Chancellor and the Board was pleased, after a thorough selection process, to have been able to appoint Professor Peter Strike as Vice Chancellor from 1 August 2011.
The university’s Board of Directors comprises persons who are appointed in accordance with its Memorandum of Association. The current Chair is Mr Stephen Henwood and the Vice Chair until 31 July 2012 was Mr Euan Cartwright. Dr Steve Curl became the new Vice Chair from 1 August 2012, with a second Vice Chair, Dr Hilary Crowe, being appointed at same time. The composition of the University Board is 21, independent directors forming the majority. The membership includes the Vice Chancellor and via open elections a staff director and a student director. No members of the Board receive any reimbursement, other than travel costs, for the work that they do for it.
Subject to the overall responsibility of the University Board, the Academic Board has oversight of the academic affairs of the university and draws its members from staff and students of the university. It is concerned with general issues relating to the teaching, professional and research work of the institution.
The university is committed to exhibiting best practice in all aspects of corporate governance. This summary describes the manner in which the university conducts its business. Its Board of Directors acts in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership) and with the guidance to institutions of higher education which has been provided by the Committee of University Chairmen in its Guide for Members of Governing Bodies of Universities and Colleges in England, Wales and Northern Ireland. The University has adopted the CUC Code of Practice. As part of this commitment, the Board has adopted a statement of primary responsibilities which is publicised on the University’s web pages at http://www.cumbria.ac.uk/AboutUs/Services/VCO/LegalStatusAndStatutoryInformation.aspx. The Board also applies the principles set out in the combined CUC Code on Corporate Governance as revised in 2009.
The university’s Board of Directors met six times in 2011/12. It was supported in its work by a number of subcommittees, including the Finance and Resources Committee, the Strategy and Planning Committee, the Audit Committee, the Nominations Committee, the Remuneration Committee and the Employment Policy Committee. All of these committees are formally constituted with terms of reference. They are composed of directors of the University Board, other than staff or student directors, one of whom is the chair. The Audit Committee has two additional associate directors, with appropriate expertise, who are not members of the University Board.
The Finance and Resources Committee has responsibility for advising and recommending to the Board on financial, estates and IT capital matters. It recommends to the University Board the university’s annual revenue and capital budgets and monitors performance in relation to the approved budgets and overall performance against the strategic plan.
The Strategy and Planning Committee has responsibility for advising the Board on strategy and planning in the medium to longer term.
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The Employment Policy Committee inter alia considers and recommends to the University Board on matters of Human Resource strategy and policy and monitors performance in relation to the approved HR strategy. It also considers and recommends to the University Board on matters in respect of Health and Safety strategy and policy and Equality, Diversity and Inclusivity strategy and policy.
The Nominations Committee considers nominations for appointment to the Board and its subcommittees. The Nominations Committee met during 2011/12 to oversee a public search and recruitment exercise which led to the Board approving the appointment of one new director, plus the appointment of an associate director to the Employment Policy Committee.
The Remuneration Committee determines the remuneration and conditions of service of the most senior staff, including the Vice Chancellor. It met on two occasions in 2011/12.
The Audit Committee met four times during the year, with the university’s external and internal auditors in attendance. The university’s internal and external auditors attend and report to the Audit Committee on the systems of internal control and management’s responses and implementation plans. It also receives and considers reports from the Funding Councils as they affects the university’s business and monitors adherence to the regulatory requirements. Among its responsibilities it provides an opinion on the adequacy of the management and quality assurance of data submitted to HESA (Higher Education Statistical Agency). While senior executives attend meetings of the Audit Committee as necessary, they are not members of the Committee and the Committee also meets the internal and external auditors on their own for independent discussions.
The university maintains a Register of Interests of Directors of the University Board and University Management Team members which may be consulted by arrangement with the Secretary to the University Board.
The University Board has considered and approved a Public Disclosure Policy and an Anti Fraud Policy, both of which can be found at www.cumbria.ac.uk.
9.2) Payments to Trustees
No trustee received any remuneration or waived payments from the group during the year. The total expenses paid to or on behalf of trustees was £11,490 (2010/11: £7,384). This relates to travel and subsistence expenses incurred in their official capacity in attending Board Meetings, Board Committees and meetings related to their roles as trustees.
The Board includes university staff who are paid as employees but who receive no supplementary payment for trusteeship. There were no payments in the year to any Board Director for services provided to the university.
9.3) Linked Charities
The university has reviewed its relationship with its subsidiary, associated or linked charitable entities in order to determine whether those entities are linked charities according to paragraph (w) under Schedule 2 of the Charities Act 1993 and therefore within HEFCE's remit as principal regulator. This review identified that the Swales Trust is a linked charity as defined by the Act. The Swales Trust awarded scholarships to University of Cumbria students engaged in agriculture or forestry-related studies until the transfer of Further Education at the end of 2010/11.
9.4) Internal Control
The university’s Board of Directors has overall responsibility for maintaining and reviewing the effectiveness of a sound system of internal control which supports the achievement of policies, aims and objectives, while safeguarding the public and other funds and assets for which they are responsible.
30
The system is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore provide only reasonable and not absolute assurance of effectiveness.
The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of policies, aims and objectives, to evaluate the likelihood of those risks being realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place at the University of Cumbria for the year ended 31 July 2012 and up to the date of approval of the annual report and accounts.
The University Board of Directors has in place the following processes for maintaining and reviewing the effectiveness of the system of internal control:
• The Board meets at regular intervals to consider the plans and strategic direction of the university.
• The Board receives regular reports from the chairman of the Audit Committee concerning internal control, in the light of regular reports from the internal auditors, and from managers on the steps they are taking to manage risks in their areas of responsibility.
• The Audit Committee receives regular reports from the Internal Auditors, which include an independent opinion on the adequacy of the effectiveness of the university’s system of internal control together with recommendations for improvement.
• The Audit Committee provides oversight of the risk management policy and risk register process and requires regular reports from the university management on how risk is being managed including progress on key priorities.
• The Board has delegated day-to-day responsibility for the maintenance of a sound system of internal control to the Vice Chancellor and through him the university’s Senior Management Team. This system supports achievement of the university’s policies, aims and objectives, while safeguarding the public funds and assets for which the Board is responsible. Any material weaknesses or breakdowns in internal control must be reported to the University Board.
• The Audit Committee has agreed with the external providers of the internal audit function appropriate audit planning arrangements and also audit methodology and approach, so that the audit function conforms to the latest professional standards reflecting the adoption of risk management.
• The internal audit function reports to the Audit Committee and, for management purposes, to the Registrar and Secretary.
The University Board has ensured that its meeting calendar and agenda enable risk management and internal control to be considered on a regular basis during the year, including consideration and approval of a revised Risk Management Policy and an updated risk management and risk register process, so that a full risk and control assessment could be undertaken before reporting on the year ended 31 July 2012.
9.5) Disclosure of information to auditors
The University Board of Directors who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which the university’s auditors are unaware; and each director has taken all the steps that he or she ought to have taken to be aware of any relevant audit information and establish that the university’s auditors are aware of that information.
9.6) Employees
The university’s policy is to consult and discuss with employees, through joint negotiating and consultative committee meetings, matters likely to affect employees’ interests.
The university has a legal duty to promote equality of opportunity in relation to gender, race and disability and the university actively seeks to prevent discrimination on the grounds of race, gender, disability, religion or belief, age and sexual orientation and any other reasons not relevant to a person’s ability to work. The University holds Positive About Disabled People status, which guarantees an interview to disabled applicants who meet the minimum essential criteria for a job vacancy. Reasonable adjustments
31
are made to enable disabled staff to work and impact assessments are carried out, taking account of the different equality strands.
9.7) Conclusion
The university is entering a period in which publicly funded income is continuing to reduce and in which the HE policy environment is going through significant change. The university has continued to strengthen and improve its financial, management and governance processes and these will help to ensure that the university is able to respond effectively to the risks and opportunities it is presented with during 2012/13 and beyond.
32
Responsibilities of the Board of Directors of the University of
Cumbria
In accordance with the Education Reform Act 1988 and the Memorandum and Articles of Association and Articles of Government, the Board of Directors is responsible for the administration and management of the affairs of the University of Cumbria and is required to present audited financial statements for each financial year. This also includes ensuring the operation of an effective system of internal control.
The Board of Directors is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the University and enable it to ensure that the financial statements are prepared in accordance with the revised Instrument and Articles of Government, the Audit Code of Practice issued by the Higher Education Funding Council for England, the Statement of Recommended Practice on Accounting in Higher and Further Education Institutions, and other relevant accounting standards. In addition, within the terms and conditions of a Financial Memorandum agreed between the Higher Education Funding Council for England and the Board of Directors of the University of Cumbria and in accordance with Company Law, the University Board of Directors, through its designated office holder (the Vice Chancellor), is required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the university and of the surplus or deficit and cash flows for that year.
In the preparation of the financial statements the University Board of Directors 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; and
• financial statements are prepared on the going concern basis unless it is inappropriate to
presume that the university will continue in operation. The Board of Directors is satisfied that the university has adequate resources to continue for the foreseeable future: for this reason the going concern basis continues to be adopted in the preparation of the financial statements.
The University Board of Directors has taken reasonable steps to:
• ensure that funds from the Higher Education Funding Council and the Training and Development
Agency for Schools/Teaching Agency are used only for the purposes for which they have been given and in accordance with the Financial Memorandum with the Funding Council and the Funding Memorandum with the Agency and any other conditions which the Funding Council or Agency may from time to time prescribe;
• ensure that there are appropriate financial and management controls in place to safeguard public funds and funds from other sources;
• safeguard the assets of the University of Cumbria and to prevent and detect fraud; and
• secure the economical, efficient and effective management of the university’s resources and expenditure.
The key elements of the university’s system of internal financial control, which are designed to discharge the responsibilities set out above, include the following:
• a clear definition of the responsibilities and delegated authority of Heads of Academic
and Professional Services;
• a comprehensive medium- and short-term planning process, supplemented by detailed annual income, expenditure, capital and cash flow budgets;
• regular review of academic and financial performance and regular reviews of financial results including variance reporting and updates of forecast outturns;
• clearly defined and formalised requirements for approval and control of expenditure, with
investment decisions involving capital or revenue expenditure being subject to formal detailed appraisal and review according to approved levels set by the University Board of Directors;
• financial regulations detailing financial controls and procedures, approved by the Audit Committee in consultation with the Finance and Resources Committee.
33
• a professional internal audit team whose annual programme is approved by the Audit Committee and endorsed by the University Board of Directors and whose head provides the Board with a report on internal audit activity within the university and an independent opinion on the adequacy and effectiveness of the university’s system of internal control, including financial control, together with recommendations for improvement.
By Order of the University Board
.. ................................. MR STEPHEN HENWOOD – CHAIRMAN OF THE BOARD OF DIRECTORS
.. ...
PROF PETER STRIKE – VICE CHANCELLOR AND CHIEF EXECUTIVE
Date: 27 November 2012
34
Independent Auditor’s Report to the Board of Directors and the Members of the University of Cumbria
We have audited the Group and parent University financial statements of the University of Cumbria for the year ended 31 July 2012 which comprise the Consolidated Income and Expenditure Account, the Consolidated and University Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated Statement of Total Recognised Gains and Losses and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Board of Directors, and to the company’s members, in accordance with paragraph 13(2) of the University's Articles of Government and section 124B of the Education Reform Act 1988 and to the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Board of Directors and to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Board of Directors and the company’s members, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Board of Directors and auditor
As explained more fully in the Statement of Responsibilities set out on page 32, the Board of Directors (and the Directors of the company for the purposes of company law) is responsible for the preparation of financial statements which give a true and fair view. Our responsibility is to audit, and express an opinion, on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those auditing standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Group’s and the parent University’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board of Directors; and the overall presentation of the financial statements.
Opinion on financial statements In our opinion the financial statements:
• give a true and fair view of the state of the affairs of the Group and parent University as at 31 July 2012 and of the Group's income and expenditure, recognised gains and losses and cash flows for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the Statement of Recommended Practice: Accounting for Further and Higher Education and the Companies Act 2006.
Opinion on other matters prescribed in the HEFCE Audit Code of Practice issued under the Further and Higher Education Act 1992
In our opinion, in all material respects:
• funds from whatever source administered by the Group and the University for specific purposes have been applied to those purposes; and
• funds provided by HEFCE have been applied in accordance with the Financial Memorandum and any other terms and conditions attached to them.
35
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Operating and Financial Review and Report of the Board of Directors for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matter where the HEFCE Audit Code of Practice issued under the Further and Higher Education Act 1992 requires us to report to you if, in our opinion:
• the statement of internal control (included as part of the Report of the Board of Directors) is inconsistent with our knowledge of the Group and the parent University.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent University, or returns adequate for our audit have not been received from branches not visited by us; or
• the parent University financial statements are not in agreement with the accounting records and returns;
• certain disclosures of directors' remuneration specified by law are not made;
• we have not received all the information and explanations we require for our audit.
Trevor Rees (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants St James’ Square Manchester M2 6DS
Date:
36
Statement of Principal Accounting Policies
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below.
Basis of Preparation
These financial statements have been prepared in accordance with the Statement of Recommended Practice: Accounting for Further and Higher Education 2007 (the SORP) and in accordance with applicable Accounting Standards. They conform to guidance published by the Higher Education Funding Council for England.
Basis of Accounting
The financial statements are prepared in accordance with the historical cost convention modified by the revaluation of certain fixed assets.
Basis of Consolidation
The consolidated financial statements include the University and its subsidiary undertakings for the financial year to 31 July 2012. The financial statements of the Students' Union are not consolidated as it is a separate entity over which the University does not have control or significant influence.
Recognition of Income
Income from research grants, contracts 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.
Income from specific endowments and donations is included to the extent of the relevant expenditure incurred during the year, together with any related contributions towards overhead costs.
Recurrent grants from the Funding Councils are recognised in the period to which they relate.
Income from tuition fees is recognised in the period for which it is received and includes all fees payable by students or their sponsors.
Non-recurrent grants from Funding Council 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 assets.
Pension Schemes
Retirement benefits for employees of the University of Cumbria are provided by defined benefit schemes which are funded by contributions from the University and employees. Payments are made to the Teachers’ Pension Scheme (TPS) for academic staff and to the Local Government Pension Scheme (LGPS) for support staff. These are both independently administered schemes. The TPS is administered by the Government and the LGPS is administered by Lancashire Pension Service.
The assets of the LGPS are measured using closing market values. LGPS liabilities are measured using the projected 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 increase in the present value of the liabilities of the scheme expected to arise from employee service in the period is charged to the operating surplus. The expected return on the scheme’s assets and the increase during the period in the present value of the scheme’s liabilities, arising from the passage of time, are included in pension finance costs. Actuarial gains and losses are recognised in the statement of total recognised gains and losses.
38
Tangible Fixed Assets
a) Land and Buildings
Land and Buildings are stated at valuation. Valuations take place every five years with an interim valuation in the third year after a full valuation.
Buildings are depreciated over their expected lives of 50 years. Land is not depreciated.
Assets under construction are not depreciated.
Refurbishments are depreciated over their expected useful lives, up to a maximum of 20 years.
b) Furniture and Equipment
Furniture and equipment, excluding computers, costing less than £2,000 (including any irrecoverable VAT) per individual item or group of related items, is written off to the income and expenditure account in the year of acquisition. All other furniture and equipment is capitalised at cost and is depreciated over the asset’s expected useful life, up to a maximum of fifteen years.
c) Computer Equipment
Computer equipment, costing less than £2,000 (including any irrecoverable VAT) per individual item or group of related items, is written off to the income and expenditure account in the year of acquisition. All other computer equipment is capitalised at cost and is depreciated over the asset’s useful life, up to a maximum of ten years.
d) Capital Grants
Where assets are acquired or constructed with the aid of specific grants, they are capitalised and depreciated as above. The related grants are treated as deferred capital grants and released to the income and expenditure account over the expected useful life of the assets.
e) Impairments
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.
f) Repairs and Maintenance
Expenditure to ensure that a tangible fixed asset maintains its previously recognised standard of performance is recognised in the income and expenditure account in the period it is incurred.
Leased Assets
Costs in respect of operating leases are charged on a straight line basis over the lease term.
Leasing agreements which transfer to the university substantially all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright and are capitalised at their fair value at the inception of the lease and depreciated over the shorter of the lease term or the useful economic lives of equivalently owned assets. The capital element outstanding is shown as obligations under finance leases.
The finance charges are allocated over the period of the lease in proportion to the capital element outstanding. Where finance lease payments are funded in full from funding council capital equipment grants, the associated assets are designated as grant-funded assets.
39
Provisions
Provisions are recognised when the university has a present legal or constructive obligation where, 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.
Stock
Stocks are valued at the lower of cost or net realisable value.
Taxation Status
The university is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable company for UK corporation tax purposes. Accordingly, the university is potentially exempt from taxation in respect of income or capital gains received within categories covered by Chapter 3 Part 11 Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes. Subsidiary companies are liable to corporation tax.
The university is partially exempt in respect of Value Added Tax, so that it can only recover a minor element of VAT charged on its inputs. Irrecoverable VAT on inputs is included in the costs of such inputs and added to the cost of tangible fixed assets as appropriate, where the inputs themselves are tangible fixed assets by nature.
The university’s subsidiary companies are subject to corporation tax and VAT in the same way as any commercial organisation.
Investments
Listed investments held as fixed assets or endowment assets are stated at market value. Current asset investments, which may include listed investments, are stated at the lower of their cost and net realisable value.
Agency Arrangements
Funds the university receives and disburses as paying agent on behalf of a funding body or other body, are excluded from the income and expenditure statement where the university is exposed to minimal risk or enjoys minimal economic benefit related to the transaction.
UNIVERSITY OF CUMBRIA
40
CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT
FOR THE YEAR ENDED 31 JULY 2012
Income
Notes 2011/12
£'000
2010/11
£'000
Funding body grants 1 32,972 40,666
Tuition fees and education contracts 2 32,457 31,135
Research grants and contracts 3 692 247
Other income 4 11,964 14,141
Endowment and investment income 5 71 61
Total income 78,156 86,250
Expenditure
Staff costs 6 40,229 43,763
Other operating expenses 25,585 27,026
Depreciation 10 3,269 3,811
Impairments 10 186 435
Interest and other finance costs 7 1,290 4,649
Total expenditure 70,559 79,684
Surplus after depreciation of tangible fixed assets and before
tax 7,597 6,566
Taxation 0 0
Surplus before exceptional items 7,597 6,566
Exceptional items: continuing and discontinued operations
Impairment of Newton Rigg assets 9 0 0
Restructuring - staffing costs 9 (1,028) (827)
Restructuring - cost of onerous leases 9 0 (2,150)
Restructuring - release of deferred income 9 0 5,640
Profit on sale of fixed assets 9 0 161
Surplus for the year retained within general reserves 6,569 9,390
Income and expenditure in 2011/12 arises from continuing operations. See Note 31 for details of the
discontinued operations which are included in the 2010/11 Income and Expenditure Account.
UNIVERSITY OF CUMBRIA
41
STATEMENT OF GROUP HISTORICAL COSTS SURPLUSES AND DEFICITS
FOR THE YEAR ENDED 31 JULY 2012
Notes 2011/12
£'000
2010/11
£'000
Surplus on continuing operations before taxation 6,569 9,390
Difference between historical cost depreciation and the actual
charge for the year calculated on the revalued amount 20 258 275
Historical cost surplus for the year before taxation 6,827 9,665
Historical cost surplus for the year after taxation 6,827 9,665
UNIVERSITY OF CUMBRIA
42
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 JULY 2012
Notes 2011/12
£'000
2010/11
£'000
Surplus on continuing operations after depreciation of
assets, disposal of assets and tax
6,569
9,390
Unrealised surplus on revaluation of fixed assets and investments
0
500
New endowments
19
20
13
Expenditure of endowments
19
(18)
(27)
Actuarial gain / (loss) in respect of pension scheme
30
(4,427)
718
Actuarial gain / (loss) in respect of enhanced pension provision
(47)
24
Gain on valuation of shares
20
0
5
Reconciliation
Opening reserves and endowments 3,167 (7,456)
Total recognised gains for the year
2,097
10,623
Closing reserves and endowments 5,264 3,167
UNIVERSITY OF CUMBRIA
BALANCE SHEET
AS AT 31 JULY 2012
2011/12 2010/11
Notes
Consolidated
£'000
University
£'000
Consolidated
£'000
University
£'000
Fixed assets Tangible assets 10 65,994 65,994 66,314 66,314
Investments 11 0 195 0 230
65,994 66,189 66,314 66,544
Endowment assets
12
124
124
122
122
Current assets
Investments 11 0 0 19 0
Stocks 13 26 26 44 44
Debtors 14 2,398 2,441 2,533 3,211
Cash at bank and in hand 14,198 14,146 16,117 15,764
16,622 16,613 18,713 19,019
Less creditors: amounts falling due within one year
15
(13,764)
(14,010)
(16,839)
(17,426)
Net current assets 2,858 2,603 1,874 1,593
Total assets less current liabilities
68,976
68,916
68,310
68,259
Less creditors: amounts falling due after more than one year
16
(12,525)
(12,525)
(16,364)
(16,364)
Less: provisions for liabilities
17
(2,358)
(2,358)
(2,937)
(2,937)
Total net assets excluding pension liability 54,093 54,033 49,009 48,958
Net pension liability
30
(29,025)
(29,025)
(23,243)
(23,243)
Total net assets including pension liability 25,068 25,008 25,766 25,715
Deferred capital grants
18
19,780
19,780
22,599
22,599
Endowments
19 Expendable 9 9 9 9
Permanent 115 115 113 113
124 124 122 122
Reserves 20 Income and expenditure account excluding pension reserve 20,445 20,392 12,262 12,242
Pension reserve (29,025) (29,025) (23,243) (23,243)
Income and expenditure account including pension reserve (8,580) (8,633) (10,981) (11,001)
Revaluation reserve
13,744
13,737
14,026
13,995
Total funds 25,068 25,008 25,766 25,715
The financial statements were approved by the University Board on 27 November 2012 and were signed on its behalf on that date by:
Stephen Henwood, Chairman of the Board of Directors
Professor Peter Strike, Vice Chancellor
42
UNIVERSITY OF CUMBRIA
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 JULY 2012
Notes 2011/12
£'000
2010/11
£'000
Net cash inflow from operating activities 21 2,932 8,745
Returns on investments and servicing of finance 22 (314) (810)
Capital expenditure and financial investment 23 (3,133) (1,829)
Financing 24 (1,402) (591)
Increase / (decrease) in cash in the year (1,917) 5,515
Reconciliation of net cash flow to movement in debt
Increase / (decrease) in cash in the year (1,917) 5,515
Change in debt 24 1,402 591
Non-cash change in debt 25 2 0
Change in net debt (513) 6,106
Net funds / (debt) at 1 August 25 1,575 (4,531)
Net funds / (debt) at 31 July 25 1,062 1,575
43
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
Notes 2011/12
£'000
2010/11
£'000
Recurrent grant
Higher Education Funding Council (HEFCE) 15,197 17,335
15,197 17,335
Skills Funding Agency (SFA) / Learning Skills Council (LSC)
109
4,183
Training and Development Agency (TDA) / Teaching Agency (TA) 12,577 13,216
Specific grants HEFCE 2,394 2,589
TDA / TA - Subject Knowledge Enhancement 183 377
Deferred capital grants released in year Buildings 18 456 556
Equipment 18 2,056 2,410
32,972 40,666
2 Tuition fees and education contracts
Full-time home and EU students
19,657
17,580
Full-time international students 718 538
Part-time students 1,158 1,992
21,533 20,110
Education contracts (NHS)
10,924
11,025
32,457 31,135
3 Research grants and contracts
Research councils and charities
692
247
692 247
4 Other income
Residences
3,281
3,140 Catering 1,325 1,655
Conferences 250 345
Release from deferred capital grants 18 307 409
Release of Energy Coast Campus funding 29 646 940
Other income 6,155 7,652
11,964 14,141
5 Endowment and investment income
Income from short term investments
71
61
71 61
1 Funding body grants
44
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
45
Notes 2011/12
£'000
2010/11
£'000
6 Staff costs
Salaries 32,995 36,153
Social security costs 2,596 2,738
Employer's pension contributions 4,152 4,315
FRS 17 adjustment 30 486 557
Total 40,229 43,763
Average staff numbers by major category
2011/12
Number
2010/11
Number
Academic departments 381 439
Support services 620 690
1,001 1,129
The numbers disclosed above relate to full-time equivalents
Restructuring costs
Costs associated with major restructuring that took place in year
2011/12
£'000
2010/11
£'000
including voluntary severance payments and related pension costs. 1,028 827
Annual emoluments of the Vice-chancellor
2011/12
£
2010/11
£
Salary 170,075 258,938
Benefits 0 0
170,075 258,938
Pension contributions 23,991 0
194,066 258,938
Annual remuneration of higher paid staff (other than the Vice-Chancellor), excluding employer's pension
contributions, was within the ranges set out below
2011/12
Number
2010/11
Number
£100,000 to £109,999 2 3
£110,000 to £119,999 2 0
£120,000 to £129,999 0 0
£130,000 to £139,999 0 0
£140,000 to £149,999 1 0
£150,000 to £159,999 0 0
£160,000 to £169,999 1 0
£170,000 to £179,999 0 0
£180,000 to £189,999 0 0
£190,000 to £199,999 0 0
£200,000 to £209,999 0 0
£220,000 to £229,999 0 0
£230,000 to £239,999 0 0
£240,000 to £249,999 0 1
6 4
The table above discloses payments made to an interim provider for the services of the Interim Director of
Finance (until March 2012) and the Interim Head of IT Services (until May 2012).
The table above includes the remuneration of the Director of Finance who joined part-way through the year but
who would have received remuneration in these bands in a full year.
46
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
Notes 2011/12
£'000
2010/11
£'000
7 Interest and other finance costs
Loans repaid in year 0 724
Loans not wholly repayable within five years 379 154
FRS 17 Adjustment: Net interest on pension liabilities - LGPS 30 869 929
FRS 17 Adjustment: Net interest on pension liabilities - pension provision 17 42 45
Loan break costs 0 2,797
1,290 4,649
8 Analysis of total expenditure by activity
Academic departments and services 39,651 45,852
Administration and central services 22,133 25,843
Premises 6,495 6,286
Residences, catering and conferences 2,476 3,007
Impairments 186 435
Others 646 1,238
71,587 82,661
Other operating expenses include:
External auditors' remuneration in respect of audit services
45
52
External auditors' remuneration in respect of non-audit services 51 57
In year operating lease rentals
Land and buildings
1,624
869
Other 259 432
The operating lease payments above include £620k of expenditure which was provided for and charged to the
Income and Expenditure Account in 2010/11. See Note 17 for further details.
Trustees
No trustee received any remuneration or waived payments from the group during the year. The total expenses paid to
or on behalf of trustees was £11,490 (2010/11: £7,384). This relates to travel and subsistence expenses incurred in
their official capacity in attending Board Meetings, Board Committees and meetings related to their roles as trustees.
9 Exceptional items
Restructuring - staffing costs 6 1,028 (827)
Restructuring - cost of onerous leases 17 0 (2,150)
Restructuring - release of deferred income 31 0 5,640
Profit on sale of fixed assets 0 161
Loan break costs 0 (2,797)
1,028 27
For more details of the exceptional items, please see the notes that are referenced above.
47
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
10 Tangible assets
Consolidated
Freehold Land
and Buildings
£'000
Furniture and
Equipment
£'000
Motor Vehicles
£'000
Computers
£'000
Total
£'000
Cost and valuation
At 1 August 2011 62,701 8,515 81 9,394 80,691
Additions - at cost 614 644 0 1,877 3,135
Gain on revaluation 0 0 0 0 0
Impairments (212) 0 0 0 (212)
Disposals 0 (250) 0 (317) (567)
At 31 July 2012 63,103 8,909 81 10,954 83,047
Depreciation
At 1 August 2011 1,064 5,179 76 8,058 14,377
Charge for the year 1,131 1,163 5 970 3,269
Written back on revaluation (26) 0 0 0 (26)
Disposals 0 (250) 0 (317) (567)
At 31 July 2012 2,169 6,092 81 8,711 17,053
Net book value
At 31 July 2012
60,934
2,817
0
2,243
65,994
At 31 July 2011
61,637
3,336
5
1,336
66,314
University
Cost and valuation At 1 August 2011 62,701 8,266 81 9,394 80,442
Additions - at cost 614 644 0 1,877 3,135
Gain on revaluation 0 0 0 0 0
Impairments (212) 0 0 0 (212)
Disposals 0 0 0 (317) (317)
At 31 July 2012 63,103 8,910 81 10,954 83,048
Depreciation
At 1 August 2011 1,064 4,930 76 8,058 14,128
Charge for the year 1,131 1,163 5 970 3,269
Written back on revaluation (26) 0 0 0 (26)
Disposals 0 0 0 (317) (317)
At 31 July 2012 2,169 6,093 81 8,711 17,054
Net book value
At 31 July 2012
60,934
2,817
0
2,243
65,994
At 31 July 2011
61,637
3,336
5
1,336
66,314
Revaluation of land and buildings was carried out by CB Richard Ellis Limited on 31 July 2010. The valuer was qualified for the
purpose of the valuation in accordance with RICS Appraisal and Valuation Standards. The valuation was carried out on the basis of
depreciation replacement cost for specialised properties and existing use value for non-specialised properties.
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
10 Tangible assets (continued)
The University carried out an impairment review at 31 July 2012 and identified that the value of one of its buildings had reduced by £0.2m in year. This
loss has been recorded as a cost in the Income and Expenditure Account.
All assets shown in the balance sheet are included at historical cost value, with exception of Freehold Land and Buildings, which are shown at revalued
amounts.
Under the terms of establishment of the University, the Church of England retains an interest in the former freehold properties of St Martin's College.
11 Investments
2011/12 2010/11
Notes
Consolidated
£'000
University
£'000
Consolidated
£'000
University
£'000
Subsidiary companies
32
0
195
0
230
Other investments:
Genus PLC and National Milk Records PLC
0
0
19
0
0 195 19 230
12 Endowment assets (consolidated and university)
2011/12
£'000
2010/11
£'000
Balance at 1 August 122 136
New endowments invested 20 13
Decrease in cash balances held for endowment funds (18) (27)
Balance at 31 July 124 122
48
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
49
26 26 44 44
2011/12 2010/11
Consolidated University Consolidated University
£'000 £'000 £'000 £'000
13 Stock
Stocks of goods for resale
14 Debtors
Amounts falling due within one year:
Debtors 1,042 1,042 1,315 1,315
Prepayments and accrued income 1,356 1,352 1,218 1,136
Amounts due from subsidiary companies 0 47 0 760
2,398 2,441 2,533 3,211
15 Creditors: amounts falling due within one year
Loans 1,408 1,408 1,402 1,402
Obligations under finance leases 0 0 2 2
Trade creditors 2,157 2,155 3,710 3,710
Amounts due to subsidiary companies 0 248 0 596
Social security and other taxation payable 1,115 1,115 917 917
Accruals and Deferred Income 9,084 9,084 10,808 10,799
13,764 14,010 16,839 17,426
16 Creditors: amounts falling due after more than one year
Loans 11,852 11,852 13,260 13,260
Obligations under finance leases 0 0 0 0
Accruals and Deferred Income 673 673 3,104 3,104
12,525 12,525 16,364 16,364
The details of the University's loans are as follows:
Lender
Amount
Outstanding
31 July 2012
£'000 Term Interest rate Security
Barclays Bank plc 7,680 2036 3.29% until
31/07/14
Fixed charge
over halls of
residence at
Brampton Road
campus
Cumbria County Council 461 Indefinite
(reducing
balance)
4.52% -
variable
Unsecured
Barclays Bank plc 891 2020 10.74% - fixed Fixed charge
over halls of
residence at
Brampton Road
campus
HEFCE - SDF loan for major restructuring costs 4,000 2016 0.00% Unsecured
HEFCE / Salix 228 Indefinite 0.00% Unsecured
13,260
50
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
17 Provisions for liabilities
Consolidated and University
Onerous
Leases
£'000
Enhanced
Pensions
£'000
Other
£000
Total
£'000
At 1 August 2011 2,150 787 0 2,937
Arising in year 0 0 15 15
Utilised in year (620) (62) 0 (682)
Transfer from / to the Income and Expenditure Account 0 88 0 88
At 31 July 2012 1,530 813 15 2,358
The university provided £2.2m in 2010/11 in respect of the future costs which are related to several property leases it holds.
This provision has been made under FRS 12 due to the fact that these future costs are unavoidable and represent an onerous
obligation to the university in that no economic benefit will be derived from these payments.
The enhanced pension provision relates to liabilities to former staff from which the university cannot reasonably withdraw at
the balance sheet date. In calculating the provision for enhanced pension costs under Financial Reporting Standard 17,
Retirement Benefits, an interest rate of 3.89% (2010/11: 5.36%) and a net interest rate of 2.50% (2010/11: 2.75%) have been
assumed.
18 Deferred capital grants
Consolidated and University
Funding
Council
£'000
Other Grants
£'000
Total
£'000
At 1 August 2011
Buildings 17,213 1,225 18,438
Equipment 3,172 989 4,161
Total 20,385 2,214 22,599
Cash receivable
Buildings 0 0 0
Equipment 0 0 0
Total 0 0 0
Released to income and expenditure account
Buildings (notes 1 and 4) 456 31 487
Equipment (notes 1 and 4) 2,056 276 2,332
Total 2,512 307 2,819
At 31 July 2012
Buildings 16,757 1,194 17,951
Equipment 1,116 713 1,829
Total 17,873 1,907 19,780
UNIVERSITY OF CUMBRIA
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
19 Endowments (consolidated and university)
Unrestricted
Permanent
£'000
Restricted
Permanent
£'000
Total
Permanent
£'000
Restricted
Expendable
£'000
2012
Total
£'000
2011
Total
£'000
Balances at 1 August 2011
Accumulated income 0 113 113 9 122 136
Changes during the year
New endowments 0 20 20 0 20 13
Expenditure 0 (18) (18) 0 (18) (27)
Balances at 31 July 2012 0 115 115 9 124 122
20 Reserves
Year ended 31 July 2012
Income and expenditure reserve
Notes Consolidated
£'000
University
£'000
At 1 August 2011 12,262 12,242
Surplus retained for the year 6,569 6,584
Transfer from revaluation reserve 271 258
Actuarial loss on Local Government Pension Scheme 30 (4,427) (4,427)
Actuarial loss on enhanced pension provision 17 (47) (47)
Pension scheme charge to general reserves 5,782 5,782
Disposal of subsidiary company 35 0
At 31 July 2012 20,445 20,392
Pension reserve
At 1 August 2011 (23,243) (23,243)
Actuarial loss on Local Government Pension Scheme (4,427) (4,427)
Charge to income and expenditure account (1,355) (1,355)
At 31 July 2012 (29,025) (29,025)
Revaluation reserve
At 1 August 2011 14,026 13,995
Gains on revaluation 0 0
Loss on disposal of shares held by Newton Rigg Enterprises Limited (11) 0
Transfer from revaluation reserve to general reserve in respect of:
Depreciation charged on revalued assets (258) (258)
Release of revaluation surpluses on fixed asset disposals (13) 0
At 31 July 2012 13,744 13,737
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
Notes 2011/12
£'000
2010/11
£'000
21 Reconciliation of surplus before tax to net cash flow from operating activities
Surplus after depreciation of tangible fixed assets at valuation and before tax 7,597 6,566
Restructuring - staffing costs (exceptional item in Income and Expenditure account) 9 (1,028) (827)
Restructuring - onerous leases (exceptional item in Income and Expenditure account) 9 0 (2,150)
Restructuring - release of deferred income (exceptional item in Income and Expenditure account) 9 0 5,640
Profit on sale of fixed assets (exceptional item in Income and Expenditure account) 9 0 161
Depreciation 10 3,269 3,811
Impairments 10 186 435
Deferred capital grants released to income 18 (2,819) (3,375)
Pension costs less contributions payable 30 1,308 1,510
Investment income 5 (71) (61)
Interest payable 7 379 878
(Increase) / decrease in stocks 13 18 252
(Increase) / decrease in debtors and prepayments 14 163 991
Increase / (decrease) in creditors and accruals 15 (5,534) (7,197)
Increase / (decrease) in provisions 17 (579) 2,111
Loss on disposal of subsidiary company 35 0
Loss on disposal of shares held by subsidiary company 8 0
Net cash inflow / (outflow) from operating activities 2,932 8,745
22 Returns on investments and servicing of finance
Other interest received 43 46
Interest paid (357) (856)
(314) (810)
23 Capital expenditure and financial investment
New endowment funds received 19 20 13
Endowment funds expended 19 (18) (27)
Payments made to acquire fixed assets 10 (3,135) (1,815)
Deferred capital grants received 18 0 0
Net cash inflow / (outflow) for capital expenditure and financial investment (3,133) (1,829)
24 Financing
New financing acquired - Barclays refinancing loan 0 8,000
Repayments of amounts borrowed (1,402) (8,588)
Capital element of finance lease rental payments 0 (3)
(1,402) (591)
52
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
25 Analysis of changes in net debt
Notes
At 1 August
2011
£'000
Cash Flows
£'000
Non-cash
Changes
£'000
At 31 July
2012
£'000
Endowment assets
12
122
2
0
124
Cash at bank and in hand 16,117 (1,919) 0 14,198
16,239 (1,917) 0 14,322
Debts due within one year
(1,402)
0
(6)
(1,408)
Debts due after one year (13,260) 1,402 6 (11,852)
Finance lease (2) 0 2 0
1,575 (515) 2 1,062
53
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
54
2011/12 2010/11
26 Capital Commitments
Consolidated
and University
£'000
Consolidated
and University
£'000
Provision has not been made for the following capital
commitments at 31 July 2012:
Commitments contracted for: 552 627
552 627
27 Amounts disbursed as agent (consolidated and
institution)
2011/12 2010/11
£'000 £'000
HEFCE - Access to Learning Fund
Excess of income over expenditure at 1 August 17 25
Funding council grants 203 214
Interest earned 3 2
Grants paid (213) (224)
Excess of income over expenditure at 31 July 10 17
TDA - Training Bursaries
Excess of income over expenditure at 1 August 286 (391)
Funding council grants 1,664 5,170
Returned to Funding Council (286) 0
Grants paid (1,604) (4,493)
Excess of income over expenditure at 31 July 60 286
LSC - Residential and Hardship Funds
Excess of income over expenditure at 1 August 73 24
Funding council grants 0 293
Returned to Funding Council (73) 0
Interest earned 0 0
Grants paid 0 (244)
Excess of income over expenditure at 31 July 0 73
NHS - Health visitor bursaries
Excess of income over expenditure at 1 August 0 0
Funding council grants 100 0
Interest earned 0 0
Grants paid (57) 0
Excess of income over expenditure at 31 July 43 0
Funding council grants are available solely to assist students: the university acts solely as paying
agent. The grants and related disbursements are therefore excluded from the Income and Expenditure
account.
As lead partner in the ESF Graduate Employability Project, the university made payments of £0.9m
(2011: £0.3m) as paying agent to partner institutions.
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
55
28 Disclosure of related party transactions
Due to the nature of the university's operations and the composition of the Board of Directors, being drawn from local
public and private sector organisations, it is inevitable that transactions will take place with organisations in which a
member of the Board may have an interest. All transactions involving organisations in which a member of the Board may
have an interest are conducted at arm’s length and in accordance with the university’s financial regulations. No transactions
in 2011/12 were identified which should be disclosed under Financial Reporting Standard 8 “Related Party Disclosures”.
The Group has taken advantage of the exemption set out in FRS 8 and has not disclosed intra-group transactions.
The Chairman of the Board of Directors is also the Chairman of the Nuclear Decommissioning Authority from which the university has received funding as outlined in Note 29.
29 Energy Coast Campus Funding
The Nuclear Decommissioning Authority (NDA) has provided £10m of funding in previous years for a programme that is
being delivered at the Energy Coast Campus. The funding is recorded on the Balance Sheet within Accruals and
Deferred Income in Note 16. When university expenditure is incurred on projects approved by the Programme Board, a
matching amount of income is released to the Income and Expenditure Account from these funds. During 2011/12,
£1.4m was paid to other parties for their delivery of projects; this was not recognised in the Income and Expenditure
Account.
At 31 July 2012, £4.4m of the funding has been recorded within the Accruals and Deferred Income balance in Note 16.
Of the £10m funding received from the NDA, £4.1m remains unspent and this amount is recorded with the Cash at Bank
and in Hand figure on the Balance Sheet. The difference between the Accruals and Deferred Income and the unspent
cash balances relates to timing differences between cash payments that have been made and the recognition of the
related expenditure in the Income and Expenditure Account.
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
30 Pension schemes
The two principal pension schemes for the university's staff are the Teachers' Pensions Scheme England and Wales
(TPS) and the Local Government Pension Scheme (LGPS).
The total pension cost for the university and its subsidiaries was:
2011/12
£'000
2010/11
£'000
TPS contributions paid 2,317 2,550
LGPS contributions paid (including severance related costs) 1,835 2,279
Total pension cost 4,152 4,829
Teachers' pension scheme
TPS is valued by the Government Actuary. Contributions are paid by the university at the rate specified. The Scheme is
unfunded and contributions are made to the Exchequer. The payments from the Scheme are made from funds voted by
Parliament. The contribution rate payable by the employer is 14.1% of pensionable salaries.
Under the definitions set out in Financial Reporting Standard 17 "Retirement benefits" (FRS17), the TPS is a multi-
employer defined benefit scheme. The university is unable to identify its share of the underlying assets and liabilities of
the scheme. Accordingly, the university has taken advantage of the exemption in FRS17 and has accounted for the
contributions as though it were a defined contribution scheme.
Local Government Pension Scheme
LGPS is valued every three years by professionally qualified independent actuaries, using the projected unit method, the
rates of contribution payable being determined by the trustees on the advice of the actuaries. In the intervening years,
the LGPS actuary reviews the progress of the LGPS scheme.
The actuary has indicated that the resources of the scheme are likely, in the normal course of events, to meet the
liabilities as they fall due, at the level specified by LGPS Regulations. The contribution payable to Lancashire Pension
Services by the employer is 14 per cent.
Under the definitions set out in FRS17, the LGPS is a multi-employer defined benefit pension scheme and the actuary of
the scheme has identified the university's share of its assets and liabilities as at 31 July 2012.
The pension scheme assets are held in a separate trustee-administered fund to meet long-term pension liabilities to past
and present employees. The trustees of the fund are required to act in the best interests of the fund's beneficiaries. The
appointment of trustees to the fund is determined by the scheme's trust documentation. The trustees are responsible for
setting the investment strategy of the scheme after consultation with professional advisers.
56
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
30 Pension schemes (continued)
Local Government Pension Scheme (continued)
The material assumptions used by the LGPS actuary for FRS17 at 31 July 2012 were:
2011/12
2010/11
(%) (%)
Price increases (CPI)
2.2%
2.9%
Salary increases 4.2% 4.9%
Pension increases 2.2% 2.9%
Discount rate 4.5% 5.3%
The current mortality assumptions include sufficient allowance for future improvements in mortality rates. The assumed
life expectations on retirement at age 65 are:
2011/12
(Years)
2010/11
(Years)
Retiring today
Males 22.00 21.60
Females 24.70 24.20
Retiring in twenty years
Males 23.80 23.00
Females 26.60 25.80
57
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
30 Pension schemes (continued)
Local Government Pension Scheme (continued)
58
The assets in the LGPS scheme and the expected rates of return were:
2011/12 2010/11 2009/10
Long-term Fund value Long-term Fund value Long-term Fund value
return £'000 return £'000 return £'000
Equities 7.00% 33,940 7.00% 30,925 7.50% 22,623
Bonds - Government 2.50% 2,652 3.90% 2,494 4.20% 3,016
Bonds - Other 3.40% 9,387 4.90% 6,983 5.10% 5,656
Property 6.00% 4,773 6.00% 4,489 6.50% 3,016
Cash 0.50% 2,121 0.50% 1,496 0.50% 1,131
Other 7.00% 159 7.50% 3,492 7.50% 2,262
53,032 49,879 37,704
The following amounts at 31 July 2012 were measured in accordance with the requirements of FRS17:
Analysis of the amount shown in the balance sheet
2011/12
£'000
2010/11
£'000
The University's estimated asset share 53,032 49,879
Present value of the University's scheme liabilities (82,057) (73,122)
Deficit in the scheme - net pension liability (29,025) (23,243)
Analysis of the amount charged to staff costs within operating surplus
Current service cost (2,428) (2,624)
Past service cost 0 (188)
Settlements and curtailments 0 (24)
Total operating charge (2,428) (2,836)
Analysis of the amount that is credited to other finance income / (charged to
interest payable)
Expected return on pension scheme assets 3,068 2,422
Interest on pension scheme liabilities (3,937) (3,351)
Net return / (charge) (869) (929)
Analysis of the amount that would be recognised in the statement of total
recognised gains and losses (STRGL)
Actual return less expected return on pension scheme assets (1,733) 8,588
Changes in assumptions underlying the present value of scheme liabilities (2,694) (7,870)
Actuarial gain / (loss) recognised in STRGL (4,427) 718
Movement in deficit in the year
Deficit in scheme at beginning of year (23,243) (22,475)
Movement in the year:
Current service costs (2,428) (2,624)
Employer Contributions 1,942 2,279
Past service costs 0 (188)
Net return on assets (869) (929)
Impact of settlements and curtailments 0 (24)
Actuarial gain / (loss) (4,427) 718
Deficit in scheme at end of year (29,025) (23,243)
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
30 Pension schemes (continued)
Local Government Pension Scheme (continued)
59
Analysis of the movement in the present value of the scheme liabilities
2011/12
£'000
2010/11
£'000
At beginning of the year 73,122 60,179
Current service cost 2,428 2,624
Interest cost 3,937 3,351
Contributions by scheme participants 873 918
Actuarial gains and losses 2,694 7,870
Benefits/transfers paid (997) (2,032)
Past service cost 0 188
Business combinations 0 0
Curtailments 0 24
Settlements 0 0
At end of the year 82,057 73,122
Analysis of the movement in the market value of the scheme assets
At beginning of the year 49,879 37,704
Expected rate of return on scheme assets 3,068 2,422
Actuarial gains and losses (1,733) 8,588
Contribution by the employer 1,942 2,279
Contributions by scheme participants 873 918
Benefits paid (997) (2,032)
Business combinations 0 0
Settlements 0 0
At end of the year 53,032 49,879
History of experience gains and losses
Cumulative
2011/12
£'000
2010/11
£'000
2009/10
£'000
Difference between the expected and
actual return on scheme assets:
Amount (£'000) 1,733 8,588 2,765
Percentage of scheme assets 3.3% 17.2% 7.3%
Experience gains / (losses) on
scheme liabilities
Amount (£'000) 0 (6,405) 0
Percentage of present value of
scheme liabilities 0.0% 8.8% 0.0%
Total amount recognised in statement
of total recognised gains and losses:
Amount (£'000) 4,427 (718) 2,620
Percentage of present value of
scheme liabilities 5.4% 1.0% 4.4%
Defined benefit scheme assets do not include any of the University's own financial instruments, or any property
occupied by the university.
The estimate for the contribution for the defined benefit scheme for the year to 31 July 2013 is £1,828,000
UNIVERSITY OF CUMBRIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
31 Transfer of Further Education provision
The comparatives from 2010/11 include transactions related to the transfer of Further Education
provision at the Brampton Road and Newton Rigg campuses to Carlisle College and Askham Bryan
College respectively on 31 July 2011. This transfer gave rise to exceptional items in Note 9 including
the £5.6m release of deferred income to the Income and Expenditure Account which was related to the
assets at the Newton Rigg campus. Full details of these comparative figures are provided in Note 31 in
the 2010/11 financial statements.
32 Subsidiary undertakings
The University owns 100 per cent of the share capital of the four subsidiary companies listed below.
None of the companies were traded during 2011/12.
Companies
Newton Rigg Enterprises Ltd
UOC Trading Ltd
Moorbury Ltd
Sunnyglen Ltd
33 Connected charitable institutions
The university has reviewed its relationship with its subsidiary, associated or linked charitable entities
in order to determine whether those entities are linked charities according to paragraph (w) under
Schedule 2 of the Charities Act 1993 and therefore within HEFCE's remit as principal regulator. This
review identified that the Swales Trust is a linked charity as defined by the Act. The Swales Trust
awarded scholarships to University of Cumbria students engaged in agriculture or forestry related
studies until the transfer of Further Education at the end of 2010/11.
60