university of reading · 2018-10-05 · henley business school’s full-time mba was ranked 1st in...

LIMITLESS POTENTIAL | LIMITLESS AMBITION | LIMITLESS IMPACT

FINANCIAL STATEMENTS2015–2016THE UNIVERSITY OF READING

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FINANCIAL STATEMENTS | 2015–16

CONTENTS 3 President’s foreword

4-5 The Council

6-7 OfficersoftheUniversity

8-18 Strategic report

19-21 Statementonpublicbenefit

22-27 Governancestatement

28 Report of the Remuneration Committee

29-30 Independent auditor’s report to the Council of the

UniversityofReading

31 Statementofcomprehensiveincome

32 Statementofchangesinreserves

33 Balance sheet

34 Statementofcashflows

35-41 Statement of principal accounting policies

42-63 Notestothefinancialstatements

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PRESIDENT’S FOREWORDPaul PrestonIamhonouredtohavenowtakenoverasPresidentofCouncil,theUniversity’sgoverning

body,inthisour90thanniversaryyear.Itisagoodopportunitytoreflectupontheactivityof

theUniversityduringthishistoricperiodandalsotostarttolookforwardtoourcentenary;

wehavehadplentytocelebrate.

InSeptember2015wesawarecordundergraduateintakeandwehavereceivedanincreased

numberofapplicationsfor2016/17.Wehaveexperiencedveryhighstudentsatisfactionand

consolidatedourreputationforacademicandresearchexcellence,makingtheUniversityof

Readingaveryattractiveplacetoworkandstudyandcementingourplaceinthetop1%of

universitiesintheworld.

WehavelaidsolidgroundworkforourfutureambitionsthroughourEfficiency&

Effectivenessprogramme,whichhasdeliveredasignificantlevelofoperationalimprovement

andcostefficiency.Thiswillhelpustomakebetteruseofourresourcesandreduceourcost

base.

Wearenowwellequippedfinanciallytodeliverourongoingcapitalinvestmentprogramme

aimingtoredevelopthecampusfacilitiesforfuturestudents.The2026:TRANSFORM

programmeisdrivenbytheUniversity’sambitiontobecomealarger,vibrantandmore

sustainableinstitutionbyourcentenaryyear.TheChancellor’sBuildingisnearing

completion;theLibrary’sfour-yearrefurbishmenthasstarted;andseveralotherprojectsare

atvaryingstagesintheplanningprocess.NextyearwillseetheopeningofthenewThames

ValleySciencePark,anexcitingdevelopmentthatwillbenefitboththeUniversityandthe

localeconomy.

OurpositionasaglobalinstitutionhasbeenenhancedbytheformalopeningofUniversityof

ReadingMalaysiainFebruarythisyearandbyourstrengtheningpartnershipwiththeNanjing

UniversityofInformationScienceandTechnology(NUIST)inChina.Asaglobalinstitution

withadiversestaffandstudentbase,wearecontinuingtorespondasaninstitutiontoBrexit

anditsdevelopingconsequences.Ourcorevaluesremainunchanged,asdoesourbelief

inthebenefitsofglobalengagement.OurGlobalEngagementstrategysetsatargetfor

theoutwardmobilityofUK-basedstudents:by2026,weplanthatatleastonethirdofour

studentswillspendsometimeoverseasaspartoftheirdegree.

Iamkeenthatwecontinuetorefineourgovernanceandoperationalprocessestoensure

thattheyremainalignedtoourdevelopingstrategicaims.WeappointedfiveResearch

Deansduringtheyeartoensurethatwecanbetterfocusuponattractingincreasingly

importantresearchfunding;wehavecompletedtheimplementationofour2020Research

Plan;andwehavecontinuedtoembedourDiversityandInclusionactivities.Wehavealso

successfullylaunchedourmajorfundraisingcampaign,IMAGINE,andweremainindebtedto

ourmanydonorsandsupporters.

FinallyIwishtoacknowledgetheworkofmypredecessorChristopherFisherwho,aspast

PresidentofboththeStudent’sUnionandtheCouncil,hasleftalastinglegacy.Wearein

increasinglyhealthyshape,enablingustobetterrespondtothechallengesofthesectorand

toachieveourcentenaryambitions.

25November2016

Paul PrestonPresident of the Council

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THE COUNCILEx officio

TheVice-Chancellor1

TheDeputyVice-Chancellor

ThePro-Vice-Chancellors

DeanoftheHenleyBusinessSchool

Sixteen persons not being employees or registered students of the University appointed by the Council

MrT.Bartlam,BA,MA,FCA

MrT.Beardmore-Gray,MA,FCA3

MrK.Corrigan,BA,FCCA(from1August2016)

LordCrisp,KCB,MA

MrR.Dwyer,BSc,FCIPD(Vice-PresidentoftheCouncil)(until31December2015)

MrsP.Egan,BA,CBE(from1January2016)

DrP.A.Erskine,BA,HonLLD

MrR.E.R.Evans,BSc,FRICS(Vice-PresidentoftheCouncil)1,2

MrC.C.Fisher,BA,MPP(PresidentoftheCouncil)(until31July2016)

DameMoiraGibb,DBE,MA,DipSocAdmin,CQSW,HonDCL,HonDSc

MrS.Hawker,CB,MA,FIET(until31December2015)

MrsK.Owen,BA1

MrH.W.A.Palmer,QC,MA

DrP.R.Preston,BSc,PhD(PresidentoftheCouncil)1,4,5(from1August2016)

MrS.C.C.Pryce,BSc,ACA

DrB.Rawal,BSc,MBBS,MSc,FRCPath,FFPM(from1January2016)

MrS.P.Sherman,FCA1

MsS.L.Webber,BSc

MsS.M.Woodman,BA(Vice-PresidentoftheCouncil)1,6

The Deans of the Faculties (until 31 July 2016)

Dean of the Faculty of Arts, Humanities and Social Science

Dean of the Faculty of Life Sciences

Dean of the Faculty of Science

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1 Member of Remuneration Committee

2 Chair of Remuneration Committee

3 Chair of Audit Committee

4 Chair of Appointments & Governance Committee

5 Chair of Strategy and Finance Committee

6 Chair of Student Experience Committee

Two members of the Academic Staff of the Leadership Group elected from among their own number in such a manner and under such conditions as are prescribed by the Council for the election of members of the Academic Staff to the Senate (from 1 August 2016)

ProfessorL.T.Butler,BA,PhD,FHEA

ProfessorJ.R.Park,BSc,CertEd,PhD

One member of the Senate not being a registered student of the University appointed by the Senate

ProfessorS.F.Walker,BA,PhD,FDRS

One member of the Academic Staff of the University elected from among their own number in such a manner and under such conditions as are prescribed by the Council for the election of members of the Academic Staff to the Senate

DrO.B.Kennedy,BSc,MSc,PhD,FIFST

One member of the staff of the University not being a member of the Academic Staff elected in such a manner as the Council shall from time to time determine

MrsM.T.Martin,BA,MA,PGCE(until21April2016)

MsM.Hargreaves(from1August2016)

Two officers of the Students’ Union and two alternates as determined from time to time by the Council after consultation with the Students’ Union

MrB.Cooper(PresidentoftheStudents’Union)

MsP.Oppenheimer(WelfareOfficeroftheStudents’Union)

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OFFICERS OF THE UNIVERSITYChancellor

SirJohnMadejski,OBE,DL,HonDLitt(Reading)

Vice-Chancellor

SirDavidBell,KCB,MA,MEd,DipEd,PGCE,HonDUniv,HonEdD

Deputy Vice-Chancellor

ProfessorS.J.Mithen,BA,MSc,PhD,FSA,FSA(Scot),FBA

President of the Council

MrC.C.Fisher,BA,MPP(until31July2016)

DrP.R.Preston,BSc,PhD(from1August2016)

Vice-Presidents of the Council

MrR.Dwyer,BSc,FCIPD(until31December2015)

MrR.E.R.Evans,BSc,FRICS(from1January2016)

MsS.M.Woodman,BA

Pro-Vice-Chancellors

ProfessorG.Brooks,BPharm,PhD,MRPharmS,FAHA

MrV.Raimo,BA,MA

ProfessorR.VandeNoort,BA,Drs,PhD

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UniversityofReading| THE COUNCIL & OFFICERS

Deans of the Faculties (until 31 July 2016)

Arts, Humanities and Social Science

ProfessorM.J.Almond,DPhil,PhD

Henley Business School

ProfessorJ.L.G.Board,BA,PhD

Life Sciences

ProfessorR.H.Ellis,BSc,PhD,CBiol,FIBiol

Science

ProfessorB.Cosh,BSc,PGCE,PhD

Heads of Service

Chief Strategy Officer and University Secretary

DrR.J.Messer,BA,PhD

Chief Operating Officer

MrD.C.L.Savage,BA,FCCA

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STRATEGIC REPORTTheUniversityofReadinghasitsrootsinUniversityCollegeReadingwhichwasestablished

in1892.ItreceiveditsRoyalCharterin1926andhassincedevelopedintoaleadingforcein

Britishandinternationalhighereducation.Itisaglobaluniversitythatenjoysaworld-class

reputationforteaching,researchandenterprise.

Principal operationsResearchandteachingarecurrentlygroupedintoSchoolswhicharesituatedonthree

campusesintheUK.TheUniversityisveryactiveinternationallyandhasoperationsin

manycountriesincludingcampusesinMalaysiaandSouthAfrica.Ithasinexcessof

17,000studentsacrossabroadrangeofdisciplinesandattractshighqualitystudentsand

academicsfromaroundtheworld.

TheUniversity’skeyresourcesincludealmost4,200staff(3,300full-timeequivalent),

extensiveteachingspaceandlaboratories,accesstocuttingedgeresearch,astrong

reputationintheUKandagrowingreputationoverseas.

Objectives and strategiesTheUniversityofReadingisamongtheUK’stopuniversitiesandhasaproudhistoryof

innovationandsocialinfluencewhichstretchesbackovermanyyears.TheUniversityhas

developedandadoptedastrategywhichbuildsonitsstrengthsandenablesittostand

outasaforward-looking,confidentanddistinctiveuniversityinthisrapidlygrowingand

competitiveenvironment.

TheUniversity’svisionisthatitwillbeavibrant,thriving,sustainable,globalandbroad-based

institution,responsiveto,stimulatedbyandinformingchangesintheworldaroundit.Asa

result,itwillalsobecomesignificantlylargerintermsofstudents,globalreachandpresence.

ThestrategywhichithasdevelopedisdesignedtotransformthewaytheUniversityis

structured,theteachingandlearningprogrammesitoffersandtheresearchitundertakes,

andisdesignedtostrengthenthepositionoftheUniversityasitapproachesitscentenary

yearin2026.

UnderpinningtheUniversity’sstrategyarethefourfundamentalprinciplesofacademic

excellence,globalengagement,financialstrengthandathrivingcommunity.TheUniversity

aimstogeneratesustainablefinancialsurplusestofacilitaterenewalandinvestment.

Anumberofkeyperformanceindicators(KPIs)havebeendevelopedtomeasure

performanceagainstobjectivesinareasofprimeimportance.KPIsareinformedbyexternal

datawhichallowsperformancetobebenchmarkedagainsttherestofthesector.KPIs

arereviewedregularlyandresponsiveactiontakenwherenecessary.Thisreportcontains

informationontheUniversity’scurrentKPIs.

Development and performanceOver7,000studentscommencedundergraduateorpostgraduateprogrammesatReading

UKcampusesduringtheyear,andover9,700studentscommencedsomeformofstudy

withReadingbothintheUKandabroad.TheUniversitywasranked175thintheQSWorld

UniversityRankingsandwas28thamongstUKinstitutions.IntheTimesHigherEducation

WorldUniversityRankings,theUniversityconsolidateditstop200positionandwasranked

32ndamongstUKuniversities.

Readingalsoclimbedtwoplacestoberanked27thnationallyintheCompleteUniversity

Guide2017.TheguiderankeditsAgriculture&Forestry,Aural&OralSciencesandLand

andPropertyManagementsubjectareasasthebestintheUK.Intotal,eightsubjectareas

featuredintheirrespectivetop10s.

HenleyBusinessSchool’sFull-TimeMBAwasranked1stintheUKanditsExecutiveMBA

4thintheFinancialTimesandEconomistrankings.Bothprogrammeswererankedinthe

top40worldwide.UNIVERSITY

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UniversityofReading| STRATEGIC REPORT

Indevelopingastrategywhichissustainableinthelong-term,theUniversitycompletedits

detailedreviewoftheefficiencyandeffectivenessofallofitsadministrativeandsupport

functions.Some£36mwasinvestedoverthreeyearsinordertotransformtheUniversity’s

long-termefficiencyandeffectivenessandreduceitsday-to-dayoperatingcosts.Itis

anticipatedthattheUniversitywillsave£15mayearasaresult,enablingtheUniversityto

increaseinvestmentinfrontlineteaching,researchandsupportservices.

Thefindingsofthisreviewidentifiedasignificantlevelofimprovementsandcostefficiencies

whichcouldbeachievedandwhichwouldensurebettersupportforthefutureambitionsof

theUniversity.

Withinitsefficiencyandeffectivenessreview,theUniversitycompletedthebiggestever

reviewofitsprofessionalandadministrativeservices(PAS)coveringITservices,finance,

procurement,humanresources,technicalsupportforschoolsanddepartments,teaching

operationssupportandmarketingandcommunicationoperations.Thechangeswhich

followedasaresultledtoanumberofnewrolesforstaffwhilesomerolesbecame

redundant.TheUniversityconsultedwidelyonthechangesandcommunicatedthemtoall

staffandofferedsupporttothoseaffected.Around200membersofstafflefttheUniversity

underavoluntaryredundancyscheme.

TheUniversityisinvestingover£200millionoverthenextfiveyearsonupgradingexisting

facilitiesandcreatingnewonestoprovidethebestteaching,learningandresearch

opportunitiesforitsstaffandstudents.The2026:TRANSFORMprogrammeisasignificant

commitmenttowardsrealisingitsvision.

TheUniversityofReadingMalaysia(UoRM)wasofficiallyinauguratedinFebruaryin

EduCity,Iskandar.Thisstate-of-the-artcampusallowstheUniversitytoprojectitsworld-

leadingresearchandteachingacrossAsia,whileofferingstudentsandstaffoutstanding

opportunitiestostudyandworkabroad.

WorkcontinuedonthenewThamesValleyScienceParkbeingconstructedonlandowned

bytheUniversitylocatedtothesouthoftheM4inShinfieldnearReading.TheSciencePark

willopenin2017andaimstoattractinnovativesmallandmedium-sizedtechnology-based

companiesthatareresearchinganddeliveringinnovativenewproducts.

TheUniversityofReadinghasalong-establishedrelationshipwiththeNanjingUniversityof

InformationScienceandTechnology(NUIST),China’spremieruniversityinmeteorology.The

twoinstitutionshavenowestablishedajointacademy,afterreceivingformalapprovalfrom

theMinistryofEducationofChina.TheacademyenablesChinesestudentstoworktowards

oneofsixaccreditedUKdegreesintheirhomecountryoverthreeyearsandthencomplete

theirdegreeatReading.

AsimilarrelationshiphasbeenforgedbetweenHenleyBusinessSchoolandtheBeijing

InstituteofTechnology(BIT).Nearly500studentsarefollowing4+0degreesinaccountancy

andfinance,withthefirstcohortgraduatingin2017.

TeachingTheUniversityprovidesanintellectuallychallenginglearningexperiencewithinasupportive

educationalenvironmentthatisresponsivetotheneedsofstudents.Italsoprovidesarich

extra-curricularexperiencethatattractsengagedstudentsfromavarietyofbackgrounds

andcultures.Asanestablishedandhighlysuccessfulresearch-intensiveuniversitywith

aglobalreach,Readingaimstoproducegraduateswithsoundacademicknowledgeand

essentialskillssothattheycanachievetheirmaximumpotentialandfutureambitions.

TheUniversityaimstorecruitanddevelopwell-qualifiedprofessionalacademicstaff.

Innovativeapproachestoteachingandlearningareencouragedtocapitaliseonemploying

methodsoflearningthatareeffectiveandmakeuseoftechnologicaldevelopmentsin

learningmethods.

TheUniversityappointedfiveTeachingandLearningDeanswho,alongsidethePro-

Vice-ChancellorforTeachingandLearning,providestrategicleadershipandleadactivity

1ST

IN THE UKFOR HENLEY BUSINESS SCHOOL

FULL-TIME MBA

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intheirareasofparticularresponsibility:studentattainment;studentexperience;

internationalisation;andquality,curriculumandenhancement.TheyalsoleadUniversity-

widestrategicprojectsinteachingandlearning.

IntheNationalStudentSurvey2016,theoverallsatisfactionlevelofstudentswas87%

comparedtoasectoraverageof86%.Animpressive91%ofstudentswouldrecommend

theUniversitytoothers.TheUniversity’sStudents’Unionwasranked13thintheUK.

TherehasbeenaUniversity-wideprojecttoimprovestudents’experiencesofassessment

andfeedback.Aframeworkhasbeenestablishedforthecurriculum,andaprocessof

curriculumreviewhasbegun.TheUniversitycontinuedtoprioritisestaffdevelopment

inteachingandlearningthroughtheFLAIRCPDscheme,whichallowsstafftogainHEA

accreditedrecognitionfortheirwork.Theschememadeits100thawardthisyear.

Inautumn2016,theUniversity’snewSchoolofArchitecturewelcomeditsfirstcohortof

over40students.Therewereover200applicants,andtheSchoolexceededitsrecruitment

targets.AllstudentswhoenrolledontheBSc(Hons)Architecturecoursein2016hadthe

opportunityofsecuringanannual£3,000scholarshipforeachofthethreeyearsofthe

undergraduatedegree.

ResearchTheUniversityishighlyregarded,nationallyandinternationally,forthequalityofitsresearch

andiscommittedtoenhancingitspositionasaleadingresearchuniversity.Reading’s

particularresearchprioritiesandinternationallyacknowledgedexpertiseextendacross

abroadrangeofdisciplinesintheenvironmental,physicalandlifesciences,artsand

humanities,businessandsocialsciences.TheUniversityattractshighqualitypostgraduate

researchstudentsandprovidesthemwithastimulatingandsupportiveresearch

environmentandtraining.

Overall,researchincome(awards)wasc.£40mfromaround650grantsduringtheyear.

July2016sawthecompletionoftheimplementationofthe2020ResearchPlanwithregard

tothenewleadership,management,researchsupportandorganisationalstructures.

TheUniversityofReading’sresearchisstructuredaroundfivethemes,withabroadrangeof

activityineacharea.Belowareexamplesofrecentresearchfromeachtheme.

Environment

Asco-chairoftheUN’sIntergovernmentalPanelonBiodiversityandEcosystemServices

(IPBES),ProfessorSimonPottsisoneoftheworld’smostinfluentialscientistsinwildlife

conservation.Hisworkhasincludeddozensofstudies,includingpublicationinbothScience

andNature,lookingattheinfluenceofvariousfactorsinthedeclineofcrucialpollinating

insects,suchasbees.Hisworkhasshednewlightonthetruecausesofdeclineincluding

theeffectsofhabitatloss,climatechangeandpesticideuse.

Food

ProfessorIanGivens’researchhasdevisedsustainabledietarystrategiesfordairycows

thatwouldconsistentlyreducetotalsaturatedfattyacids(SFA)enteringthefoodchain

byreplacingaproportionofitsnormalSFA,mainlywithcis-monounsaturatedfattyacids

(MUFA)typicalofthefattyacidsinoliveoil.ThisresearchhasachievedareductioninSFAsin

milkandalsoareductionintheamountofmethaneproducedbytheanimal.

Health

ResearchbytheUniversityofReadingandLoughboroughUniversityledtothedevelopment

ofminiaturisedtechnologythatcanbeusedforavarietyoftestsrangingfromovernight

detectionofanti-microbialresistancetobloodteststhatcanrapidlydiagnoseaheartattack.

TheLabonastickprojectusesminiaturisedtestingtechnologyknownas‘microfluidics’–

tinytesttubesaboutthesizeofahumanhair–thatmakelabanalysisportableandupto12

timesquickerthancurrentmicrobiologicaltests.

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Heritage and Creativity

ProfessorAlisonBlackintheCentreforInformationDesignResearch(CIDR)inthe

DepartmentofTypographyhascarriedoutaseriesofdesignresearchprojectsforhealth

care.Thisincludesaninnovativeapproachtoinvolvingfamilycarersinpainassessmentfor

peoplewithdementiaandthere-designofcarebundlestosupportmulti-disciplinaryclinical

teamsinhospitalsettings.4,500copiesofthesecarebundlesareheldbytheWestBerkshire

memoryclinicsandtheyhavealsobeensuppliedtoGPsurgeries,thelocalAlzheimer’s

Societyandothercareorganisations.

Prosperity & Resilience

BeatriceKrebsarguedforaradicallydifferentapproachtojointenterpriseliability

(acontroversialareaofcriminallawdealingwithcasesofgreatseriousness)based

onendorsementof,ratherthanforesightof,harm.Herarticlewasofsignificantvalue

totheAppellantlawyerspreparingfortheSupremeCourt’shearinginthecaseof

RvJogee,whichispoisedtoreviewandrestatethelawinthisarea.Theappealteam

drewheavilyonthearticleintheirwrittensubmissionstotheSupremeCourt,andalso

citeditduringtheiroralsubmissionsandargument.Itimpactedupontheappealcase,

andearlysignsarethatithasalsoprovedinfluentialinthewaythattheLawLordsarelikely

toredrawthelawinthisarea.

FundraisingTheUniversityreceived£2.2minphilanthropicincomein2015/16andtheUniversity

isverygratefultoitsalumniandothersupporterswhomadeadonationduring

theyear.

Fundraisingisconductedprimarilythroughbuildingdirectrelationshipswithpotential

donors,makingsubmissionstocharitabletrustsandfoundations,conductingin-house

telephonecampaignsandsmalldirect-mailappeals.Alloftheseactivitiesarecarried

outbydedicatedstaffwithintheUniversityandnocommercialparticipatorsfundraiseon

itsbehalf.

TheUniversity’sDonorCharterenshrinesthestandardsitadherestoinitsfundraising,

andissupportedbyitsethicalfundraisingpolicy.Itsstandardsarebasedonthose

recommendedbyCASE,theprofessionalbodyforhighereducationfundraisingand

advancement.

FundraisingisprimarilyaimedatUniversityofReadingalumniandsupportersrather

thanthegeneralpublic,andisthereforerelativelytargetedandoftenbasedonexisting

relationships.TheDonorChartermakesacommitmenttoensuringthattheUniversity’s

fundraisingtreatspotentialdonorsfairlyandavoidsfundraisingtovulnerablepeople.

Inpractice,theUniversity’sfundraisingstaffaretrainedtodealsensitivelywithanyone

theycontactforwhomtheythensuspectitmaynotbeappropriatetoaskforadonation.

TheUniversityalsohascontrolssuchasagerestrictionstoavoidcontactingthoseabove

certainageboundaries.

TheUniversityhasnotidentifiedanyinstanceswhereithasfailedtomeetthesestandards

inthepastyear.

AllfundraisingisconductedbyUniversityofReadingemployeesandiscloselymanaged

andmonitoredthroughitsmanagementstructure.Fortelephonecampaigns,where

studentcallersareemployed,callingismonitoredbytrainedsupervisorsandother

fundraisingteammanagers.

In2015/16,approximately2%ofthosecalledduringatelephonecampaignsaidthatthey

didnotwishtobeincludedinfuturetelephonefundraising.Inthesameyear,theUniversity

mailedover40,000peoplewithdirectmailappealsandreceivedaround30complaints

(0.08%)abouttheapproachbeingmade.TheUniversitydidnotreceiveanycomplaints

aboutitsface-to-facefundraisingprogramme.

OF STUDENTSWOULD RECOMMENDTHE UNIVERSITY OFREADING TO OTHERS

91%

£2,288,782IN PHILANTHROPICINCOME IN 2015/16

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Groupincomefortheyearincreasedto£344.8m,duelargelytoincomegeneratedonthe

disposaloflandinShinfieldtothesouthofReading.Thegainondisposalrecognisedinthe

yearwasaround£71.7m.

Groupexpenditurefellby£4.5mduetoadropincostsincurredonthereviewofefficiency

andeffectivenessandtheeffectoftheUSSdeficitplanprovisiononstaffcosts.Thegroup

surplusfortheyearwas£65.3m.

Group income (£m)

Financial performance in the year

2016 2015

£’000 £’000

Income 344,768 288,465

Surplus for the year 65,268 5,034

Total comprehensive income for the year 56,435 9,270

Funding bodygrants

Researchincome

160

140

120

100

80

60

40

20

0

2016

2015

Tuition fees OtherEndowmentland disposals

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Tuitionfeesincreasedby£12.6mwhichwasdrivenbyanincreaseinstudentnumbersfor

home/EUandinternationalstudentsincludingthenewcampusinMalaysia.

Fundingbodygrantsincreasedslightlyintheyearto£31.0mduetoanincreaseinHigher

EducationFundingCouncilgrantsandcapitalgrants.

Totalresearchincomewas£32.7m(2015:£34.1m).Theprincipalreasonitdecreasedwas

theResearchandDevelopmentExpenditureCredit(RDEC),anHMRCresearchincentive

schemerelatingtothelevelofeligibleresearchexpenditureincurred.Thiscreditwasonly

availabletouniversitiesuntil31July2015.

Theendowmentlanddisposalsof£71.7marosefromthesaleoflandsouthofReading

knownasShinfieldWesttohousebuildersinNovember2015.Thisdisposalwillallowthe

Universitytoinvestfurtherinitscorefacilitiesonitscampuses.

Otherincomefellslightlyto£56.8m(2015:£58.0m)andcamefromanumberofsources

includingresidences,catering,conferencesandpropertyrentals.

Group expenditure (£m)Totalstaffcostsof£158.6mweresimilartothepreviousyear.Althoughpayrollcosts

increasedduetopayrisesandanincreaseinstaffnumbers,thiswasoffsetbyareductionin

thechargerelatingtotheUniversity’sobligationstomakepaymentstoreduceitsshareof

thedeficitintheUSSpensionscheme.

Other operatingexpenses

Depreciation

160

140

120

100

80

60

40

20

0

2016

2015

Staff costs Interestpayable

14


Otheroperatingexpensestotalled£100.6m(2015:£104.4m)andincluded£4.8minrespect

oftheefficiencyandeffectivenessreview(2015:£12.1m).ThecampusinMalaysiabecame

operationalintheyearandledtoanincreaseinexpenditureof£4.2m.

Depreciationontangiblefixedassetsincreasedslightlyto£24.3mwhileinterestpayablewas

similarat£5.2m.

Financial positionOveralltheGrouphasastrongbalancesheetwithconsolidatednetassetsof£401.0mat

31July2016(2015:£344.6m).Theincreaseagainstthepreviousyearwasduelargelytothe

proceedsgeneratedontheShinfieldWestdisposal.Netcurrentassetsstandat£100.3m

(2015:£48.6m).

Fixed assetsTheUniversityprovidesahighqualityenvironmentwhichfacilitatesstudentrecruitmentand

theretentionofstaff,andprovidestheconditionsinwhichteachingandresearch,students

andstaff,canthrive.InfrastructuredevelopmentsaredesignedtoenhancetheUniversity’s

academicactivityandensurethatitcontinuestoberegardedasoneoftheleading

universitiesintheUKandinternationally.

Duringtheyearformalapprovalwasgivenforthefour-yearprojecttocomprehensively

refurbishtheLibrary.ConstructionofthenewChancellor’sBuildingisnearingcompletion.

Severaladditionalprojectsareatvaryingstagesofthedeliveryprocessincludingthe

creationofanewHealthandLifeSciencescomplex,anextensiontotheHenleyBusiness

Schoolanda£35millionrefurbishmenttotheURSBuilding.

TheUniversityoffersawiderangeofaccommodationoptionsforitsstudentsinpartnership

withitsaccommodationproviderUniversityPartnershipsProgramme(UPP).Plansare

beingdrawnuptoredevelopStPatrick’sHallinresponsetogrowingdemandforhighquality,

affordableaccommodationlocatedonornearWhiteknightscampus.

Investments and investment propertiesThetotalinvestmentsheldbytheUniversityanditstrustswerevaluedat£88.4m(2015:£79.7m).

TheUniversitypublishesitsinvestmentpolicyonitswebsiteaswellaspublishingannually

alistofinvestmentsheld.ThepolicyissetandmonitoredbytheInvestmentsCommittee.

Theportfolioismanagedonaday-to-daybasisbyaprofessionalinvestmentmanager.As

wellastargetingincomereturnsandcapitalgrowth,themanagerisrequiredtoconsiderthe

social,environmentalandethicalissuesofthecompaniesinwhichinvestmentsareheld.

TheUniversityhasreceivedrequestsfromstudentsandothersforittodisinvestfromfossil

fuelcompanies.WhiletheUniversityhaschosennottoautomaticallydisinvestfromallof

thesecompanies,itplanstomoveitsportfoliotoinvestmentfundsthat:

• excludecompaniesgeneratingthebulkoftheirrevenuesfromthemostcarbon-intensive

fossilfuels,

• giveprioritytoinvestmentinfirmswhicharetakingsignificantstepstocutfossilfueluse,

• activelyengagewithcompaniestoreducetheirdependenceonfossilfuelsandchange

businesspracticestoreduceenvironmentalimpact.

TheUniversityanditstrustsholdsomepropertiesfortheirinvestmentpotential.Their

combinedmarketvalueat31July2016was£50.6m(2015:£49.4m).

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Pensions deficitThefinancialstatementsreporttheoverallsurplusordeficitoftheUniversityofReading

Employees’PensionFund(UREPF)onthebalancesheet,inlinewiththerequirementsofFRS

102.Theschemeshowedanoveralldeficitof£6.2mat31July2016(2015:surplusof£0.9m).

Thenegativemovementwasduetoafallinthediscountratewhichisbasedoncorporate

bondyields.Aswellasmakingregularemployercontributions,theUniversityhascommitted

topaying£600,000perannumtowardsthescheme’sadministrationcostsandtocontinuing

tomakeadditionalcashpaymentsuntil2020.

TheUniversityalsocontributestotheUniversitiesSuperannuationScheme(USS),amulti-

employerscheme.TheUniversityandtheotheremployerswhocontributetoUSSmake

additionalcontributionstoreducetheoveralldeficitonthescheme.TheUniversityhas

recognisedaprovisionof£34.7mforitsshareoftheadditionalcontributions(2015:£30.8m).

Cash flow and borrowingsTheUniversity’streasurypolicysetsoutthekeycontrolsplacedonthetreasury

managementfunctionattheUniversity.Itcontainsguidanceonanumberofkeyareasand

focusesontherisksthattheUniversityfacesinitsday-to-dayactivities.Thepolicycontains

significantdetailsaboutthedelegationssurroundingtheinvestmentofsurpluscashfunds

andsetsfirmlimitsinregardtothecredit-worthinessofpotentialcounterparties.The

StrategyandFinanceCommitteereceivesreportsontreasurymanagementincludingan

annualstrategyandplaninadvanceofthenextyear.

TheUniversity’snon-endowmentcashbalancesareheldprimarilyintheformofinterest-

bearingdepositswithfinancialinstitutions.TheUniversityalsohasborrowingsincludinga

£70mcorporatebond,a£60msterlinglong-termloanfacilityandashort-termloanfromthe

Homes&CommunitiesAgencyofover£13mtoenableconstructionoftheShinfieldEastern

ReliefRoadandbridgeovertheM4requiredasaconditionoftheresidentialandThames

ValleyScienceParkdevelopmentsatShinfield.Inadditiontoitsborrowings,theUniversity

hasprovidedperformancebondguaranteestotheHighwaysAgencyandWokingham

BoroughCounciltotalling£16.0minrespectofitsdeliveryoftheroadandthebridge.

TheGroupgeneratedanetcashinflowfromoperatingactivitiesof£16.5m(2015:outflow

of£4.9m).Thenetincreaseincashandcashequivalentsfortheyearwas£7.8m(2015:

decreaseof£0.8m)andincludedproceedsfromthesaleofShinfieldWestof£51.0mand

expenditureoncapitalassetsof£56.5m.

Netdebtat31July2016was£29.6m(2015:£50.0m).Thedecreasewasduetothenetcash

generatedintheyearandanincreaseinthevalueofcurrentinvestments.

Human resourcesTheUniversityaimstobeanemployerofchoiceandtocreateastimulatingandsupportive

workingenvironmentwherepeoplecanflourishwithopportunitiesforindividualprofessional

andpersonaldevelopmentandcareerprogression.TheUniversityrewardsstaffwho

demonstrateexceptionalperformance,leadershipandinnovation.

TheUniversityvaluesitshighlyskilledanddedicatedstaff.ManyoftheUniversity’sacademic

staffmembersareacknowledgedtobeworld-leadingexpertsintheirfield,workingatthe

cuttingedgeoftheirareaofspecialism.

TheUniversityactivelyengageswithstaffonaregularbasisusingavarietyofmethods

includingpublications,theintranet,staffbriefingmeetingsledbytheVice-Chancellorand

theappointmentofstaffrepresentativestoCouncil.TheUniversityalsoconsultsregularly

withstaffandtheirrepresentativestodiscussissuesaffectingtheirworkinglives.

16


ThePeopleDevelopmentteamprovidesacomprehensiverangeoftrainingprogrammesfor

staff,designedtodevelopmanagementandleadershipcapability,aswellasawiderangeof

practicalskillsthatstaffneedfortheirday-to-daywork.Furtherpracticalsupportforstaffis

available24/7viatheEmployeeAssistanceProgramme.

TheHRdepartmentcontinuestoprovideprofessionalsupportacrosstheUniversityasit

implementsandembedssignificantstructuralchange,andwillworkalongsidecolleagues

todesign,implementandrespondtoamajorstaffengagementinitiativeduringthe2016/17

session.

TheUniversitycontinuestoembeditsDiversityandInclusionactivitiesasledbythe

DeansofDiversityandInclusion.Arangeofrelatedopportunitiesareprovidedsuchas

theSpringboardandAuroraprogrammesaimedatdevelopingfemalestaff,andstaff

participationonStonewall’sLGBTrolemodelsandalliesprogrammes.Furtheraccreditation

isbeingsoughtviatheAthenaSWANandRaceEqualityCharterbanners.

TheUniversityhasannouncednewtargetsfor2020topromotestrongergenderandracial

representationonallkeydecision-makingcommittees,toreducepaygapsatseniorlevels

andtoachieveelevatedrecognitionforbeingtheplacewhereanindividualcanfulfiltheirfull

potential,irrespectiveofwhotheyareandwheretheycomefrom.

Environmental mattersTheUniversityofReadingtakesitsenvironmentalresponsibilitiesseriouslyandmanages

itsoperationsinwaysthatareenvironmentallysustainable,economicallyfeasibleand

sociallyresponsible.TheUniversityiscommittedtoachievingthehigheststandardsof

environmentalperformance,protectingtheenvironmentandminimisingtheimpactofits

operations.TheUniversitysetschallengingenvironmentaltargetstocontinuallyimprove

itsenvironmentalperformance.Theseobjectivesandtargetsarereviewedandupdated

annually.

DuringtheyeartheUniversitydelivereda£786,000upgradetoitssciencelabstoimprove

energyefficiencyandcuttheenvironmentalimpactofitsscientificteachingandresearch.

TheinvestmentwillhelptheUniversitycutitscarbonemissionsbymorethan694

tonnesofcarbondioxideeveryyear.Inaddition,theUniversityhasinvested£224,000in

recommissioningheatingandventilationacrosstheUniversity’slargestbuildings.This

workisexpectedtodeliversignificantcarbonsavingsaswellasimprovingthecomfortof

Universitybuildings.

TheUniversitysuccessfullyrecertifiedforISO14001andISO50001foritsenvironmental

andenergymanagementsystems,andsocontinuestomanageitsenvironmentalimpact

effectively.TheUniversitynowdiverts99%ofitswasteawayfromlandfill,with50%being

recycledand49%beingrecoveredtogenerateelectricity.

Tosupportstaffandstudentstomakesustainabletravelchoices,theUniversityhasinvested

£78,000inimprovingcycleparkingfacilitiesacrossitsestate.

Principal risks and uncertaintiesAsexplainedintheGovernanceStatement,theUniversityhassystemsforriskmanagement

andinternalcontrolstomanageandcontroltheriskoffailuretoachieveacademicand

businessobjectives.

ThereisaRiskManagementGroupwhichreportstotheUniversityExecutiveBoardand

overseesriskmanagementacrosstheUniversity.Ariskregisterisinplacewithkeyrisks

assignedtoriskownersandappropriatereportingchannelsestablished.Ariskprioritisation

frameworkisinplaceformingthebasisofriskassessment,identificationandmanagement.

17


Foreachitemidentifiedontheriskregister,anassessmentismadeofitslikelihoodand

itsimpactandanoverallnetriskscoreisgiven.Thosecurrentlyconsideredtobekeyrisks

include:

• failuretomaintainfinancialstabilityanddeliverstrategicobjectivesaspartoftheMalaysia

campusproject;

• failuretosecureplannedadditionalsavingsfromtheefficiencyandeffectivenessreview;

• failuretoadequatelymaintainbuildingsandestateinfrastructure;

• failuretoworktogethereffectivelywiththeaccommodationpartnerinoptimisingthe

availablestudentaccommodation;

• failuretorecruitandretainkeystaff;and

• failuretorecruitappropriatenumbersandqualityofpostgraduateresearchstudents.

European Union referendumTheUniversityofReadingisatrulyglobalinstitution.Itsstudentsandstaffrepresenta

majorityoftheworld’snationsanditsresearchhasalwayscrossednationalborders.The

voteforBrexitisthereforeofparticularsignificancetotheUniversityandtomanyofitsstaff

andstudents.

Whiletheremaybesignificantimplicationsforstaff,studentsandtheUniversitymore

broadlyofthedecisiontoleavetheEU,theUniversityisadamantthattheoutcomeof

thereferendumdoesnotchangeitscorevaluesanditsbeliefinthebenefitsofglobal

engagement.

TheUniversityisfirmlyembeddedwithinaEuropeancontext,andwhileaspectsof

itsrelationshipwithpartnersonthecontinentmaybemademoredifficultbythe

consequencesofBrexit,itisfirmlycommittedtothoserelationshipsandtoensuringthe

continuedmobilityofstaff,studentsandknowledge.

TheUniversityisdevelopingitsglobalfootprintandrelationshipsmorewidely.Inthepast

yearnewinitiativeshavebeenlaunchedinAsiaincludingtheopeningofthecampus

inMalaysiaandtheNUIST-ReadingAcademyinNanjing,China,whichaddtothelong-

establishedHenleyBusinessSchoolcampusinJohannesburg.

Future developmentsUniversitiesfacechallengespresentedbythevolumeandpaceofchangeinanincreasingly

competitiveenvironment.TheUniversity’sstrategyandaclearunderstandingofitslong-

termgoalswillenablethesechangingcircumstancestobeaddressedeffectively.The

strategyisincreasinglybuiltintothinkingandplanningacrosstheUniversity,fosteringa

greatersenseofambitionandhavingapositiveimpactontheUniversity’sadaptability

andperformance.TheUniversityhasalwaysbeenaninternationallymindeduniversity

withresearchactivitiesspanningtheglobeandanetworkofpartners,teachingbasesand

campusesacrosstheworld.

TheUniversity’sGlobalEngagementstrategyencouragestheoutwardmobilityofUKbased

students.By2026,itisplannedthatatleastonethirdoftheUniversity’sstudentswillspend

sometimeoverseasaspartoftheirdegree.

TheUniversityisalsoinvestingmorethan£200millionoverthenextfiveyearsinamajor

capitalinvestmentprogrammetoredevelopcampusfacilitiesforfuturestudents.

ThedevelopmentoftheThamesValleyScienceParkwillenabletheUniversitytohost

innovativetechnology-basedcompaniesinafirst-classenvironment.Theincomederived

willcontributetofundingtheUniversity’scoreactivitiesanditsinvestmentinthefuture.

18


TheUniversityhasastrongassetbaseandthis,alongwithitsplanstomaximiseincoming

resourcesandactivelymanageitscostbase,willcontinuetoensureithasafirmfinancial

footing.

TheUniversityiswellplacedtorespondpositivelytothechallengesandopportunitieswhich

lieaheadanditsstaffandstudentscancontinuetobeproudofReading.

Sir David Bell KCB David SavageVice-Chancellor Chief Operating Officer

25November2016

19


STATEMENT ON PUBLIC BENEFITTheUniversityisanindependentcorporationwithcharitablestatusestablishedbyRoyal

Chartergrantedin1926.Itsobjects,powersandframeworkofgovernancearedefinedinthe

CharterandsupportingOrdinances.ItisanexemptcharitywithinthemeaningofSchedule

3oftheCharitiesAct2011andisacharitywithinthemeaningofPara1ofSchedule6to

theFinanceAct2010.ItisnotrequiredtoberegisteredwiththeCharityCommissionbutis

howeversubjecttotheCharityCommission’sregulatorypowerswhicharemonitoredbythe

HigherEducationFundingCouncilforEngland(HEFCE).TheUniversity’sCouncilhasdue

regardtotheCharityCommission’spublicbenefitguidance.TheUniversity’sHandbookfor

Council Members contains additional guidance on members’ responsibilities in respect of

publicbenefit.

Allcharitiesmusthavecharitablepurposesandapplythemforthepublicbenefit.The

University’scorecharitablepurposesarethedeliveryofhighereducationteachingand

research.TheUniversityseekstoachieveexcellentstandardsintheseareaswhichitbelieves

aretothebenefitofthelocal,nationalandinternationalcommunities.

AkeypartoftheUniversity’sstrategyinensuringitdeliversitscorepurposesforthepublic

benefitliesinitspolicyofequalopportunitiesforall.TheUniversityaimstoencourage

peopleofallbackgroundstoparticipateinandbenefitfromitsteaching,researchandother

activities.

TheUniversityanditssubsidiariesalsocarryoutteachingandresearchofamore

commercialnature,forexampleinsomeoftheexecutiveeducationprogrammesrunby

HenleyBusinessSchool,andinresearchcarriedoutforprivatesectororganisations.The

Universityiscarefultoensurethattheextentoftheseactivitiesdoesnotconflictwithor

detractfromitscorecharitablepurposes.

Teaching and learningTheUniversity’sadmissionspolicyistoattractandadmitthemostableandmotivated

undergraduateandpostgraduatestudentswiththegreatestpotentialtocontributeto,and

tobenefitfrom,theeducationprovided,irrespectiveoftheirbackground.Theadmissions

proceduresandtheprovisionofbursariesaredesignedtosupportthispolicyfully.

TheUniversitypromotesamongallitsstudentsexcellenceintheirstudiesandtheother

activitiesinwhichtheyparticipatewhileatReadingsuchassporting,culturalandvoluntary

engagements,andencouragestheopportunitiestheseactivitiesprovideforstimulating

personaldevelopmentandthewellbeingofthecommunity.Whenstudentscompletetheir

studies,theyareabletousetheskillstheyhaveacquired,bothacademicandnon-academic,

intheirlivesandcareersbeyondtheUniversity.

TheUniversityofferssupporttostudentsthroughitsaccessbursaryschemewhichallows

ittorecruitthemostablestudents,regardlessoffinancialbackground.TheUniversityaims

toofferprogrammesofstudythatareattractivetoadiverserangeofpotentialstudents,

havefairandtransparentadmissionpolicies,andprovidefinancialsupporttolowincome

students.TheUniversityhasacomprehensiveStudentComplaintsProceduretodealswiftly

andeffectivelywithproblemswhichariseduringastudent’stimeatReading.

TheUniversityofReadingiscommittedtowideningaccessintohighereducationand

demonstratingtheopportunitiesadegreecanaffordtoasdiverseabodyofstudentsas

possible.TheUniversityworksinanumberofwaystoachievethis.Thisincludesthedelivery

ofeventsandactivitiesinschools,collegesandoncampus,aswellasprovidingsupportand

informationforpupils,teachersandadvisors.

20


TheStudentsinSchoolsprogrammeenablesUniversitystudentvolunteerstoworkinlocal

schoolsalongsideteachers,providinggeneralclassroomassistance,one-to-onesupport,

languagesupportandenhancingsubjectknowledge,raisingaspirationsofpupilsandan

awarenessofhighereducationasafuturepossibility.

Eventsforschoolsintheyearhaveincludedmicroscopyworkshops,givingpupilsand

teachersaccesstotheUniversity’son-sitefacilitiesandenhancingcurriculumteachingin

schools,andanAlternativestoMedicineDayshowcasingtherangeofpossibilitiesavailable

inthehealthcaresciences.Astockmarketchallengehasseenpupilscompetingtomake

theirmillions,andschoolpupilshaveconsideredtheconceptof‘freedom’inaPhilosophy

andPoliticstaster.

TheUniversityalsorunsaseriesofpubliclecturesthroughouttheyear.

ResearchTheUniversityishighlyregarded,nationallyandinternationally,forthequalityofitsresearch,

andiscommittedtoenhancingitspositionasaleadingresearchuniversity.Itaimstodeliver

outstandingresearch,asignificantproportionofwhichisspecificallydesignedtomakea

significantimpactonknowledge,peopleortheeconomy,ortoenhanceorchangesociety

forthebetter.

TheUniversityisawarethatresearchoftenraisesethicalissueswhichneedtobeconsidered

beforeadecisionistakenonwhethertocarryouttheresearch.TheUniversity’sResearch

EthicsCommitteeconsidersallareasofresearchwhichmaygiverisetoethicalissuesand

makesjudgmentsonwhetherapprovalshouldbegivenfortheresearchtobecarriedout.

AnexampleofarecentprojectisReadingInternational,whichwillbringworld-classartto

Readingresidentsandvisitorsoverthenextthreeyears,thankstoanew£1millionproject.

Theprojectbeginswith‘Inside:ArtistsandWritersinReadingPrison’,amajornewexhibition

attheprison.TheUniversitywillleadthemillion-poundscheme,incoalitionwithadiverse

groupoflocalartsorganisations,nationalartscommissioningagencyArtangelandReading

BoroughCouncil.

ProfessorHannahClokewassecondedtoadvisetheUKgovernmentonflooding,andhas

workedwiththeEuropeanCentreforMedium-RangeWeatherForecastsandcolleaguesto

developGLOFAS,aglobalfloodwarningsystemwhichhasthepotentialtosavethousands

oflives,whereverfloodsareathreat.TheGLOFASsystemwasusedbyaidagenciesin

AfricatotriggeranemergencydisasterresponseinUganda,whichallowedaidagencies

tomoveemergencysuppliesandmobiliseresourcesonthegroundbeforeroadsbecame

impassable.Itallowedcommunitiestoprepareforoncomingfloods.Thissaveslivesand

livelihoods,andhelpsgovernmentsandaidagenciesmakethebestuseofscantresources.

ProfessorsPeterCooperandLynneMurrayconductedresearchinSouthAfricatodesignan

interventionprogrammetoimprovethecognitivedevelopmentofpre-schoolchildren.This

wasachievedthroughabook-sharingtrainingprogramforparentsandchildrenfacilitated

bytrainers.Theworkhasshownextremelygoodresults,withmoderatetolargeeffectsizes

achievedinbothchildlanguageandchildattention.Thisapproachisanticipatedtoimprove

thecognitivedevelopmentof4,000childrenayearperfacility,withsixfacilitiesoperational

bytheendof2016.Buildingonthissuccess,CooperandMurrayareincreasingthereachof

theprogrammebyhelpingsitesinSouthAfrica,Thailand,PeruandItaly.

21

UniversityofReading| STATEMENT ON PUBLIC BENEFIT

CommunityTheUniversityiskeentoencourageparticipationby,andengagementwith,thelocal

community.

TheUniversityandtheReadingUniversityStudents’Union(RUSU)runavarietyofvolunteer-

ledprojectstomakeconnectionswithandsupportthewidercommunity.Forexample,

studentsdeliveredvitalbefriendingsupporttolocalcarehomeresidents,andranfortnightly

project-basedsessionsinlocalschoolstoinspireconfidenceinyounggirls.

TheMuseumofEnglishRuralLife,partoftheUniversity,continuedtocarryoutamajor

refurbishment,fundedbyagrantof£1.7millionfromtheHeritageLotteryFund.Through

participationincommunitypartnershipprojects,ithassuccessfullyengagedwithnew

groupsfromtheNepali,BarbadianandChinesecommunities,withYoungPeoplewith

DementiaandwithReadingMencap.ItalsoengagedwiththeReadingCooksthrougha

communitygrowingspacethatprovidesopportunitiestoexplorefoodandnutritionandto

learnhorticulturalskills.

TheUniversityhasworkedwithavarietyofbusinesspartnersinthecommunityincluding

ReadingCommunityInterestCompanyontheReadingUK2050project,theThamesValley

LocalEnterprisePartnershipandtheConfederationofBritishIndustry.TheUniversityhas

alsocontinuedtoregularlyattendlocalcommunitygroupsandresidents’associationsto

worktogetheroncommunity-basedprojects.

TheUniversityprovidesfacilitiesopentothepublic,includinglecturesandconcerts,

museums,sportsfacilitiesandothervisitorattractions.Thisyear’scommunityengagement

eventshaveincludedtheChildren’sChristmasLectureonlearningtosingwithsign

language,theUniversity’s90thanniversarycelebrationseventsandtheEUReferendum

DebatewithEddieIzzardandDanielHannan,organisedwithRUSU.

22


GOVERNANCE STATEMENT

Responsibilities of the University’s Council and structure of corporate governanceTheUniversityiscommittedtothehigheststandardsofgovernanceandcontinuesto

reviewitsprocessesandframeworktorefineitsgovernancearrangements.Indeveloping

itsapproachtheUniversityhasdrawnontheCombinedCodeonCorporateGovernance.In

additiontheUniversityhasreferredtoguidelinespublishedbytheHigherEducationFunding

CouncilforEngland(HEFCE),theBritishUniversitiesFinanceDirectorsGroup(BUFDG)and

theCommitteeofUniversityChairs(CUC)includingtheCUCHigherEducationCodeof

Governance.ThisstatementsetsouthowtheUniversityhasappliedtherelevantcorporate

governancerecommendationsduringtheyear.

TheCouncil’sresponsibilitiesincludethemanagementoftheaffairsoftheUniversityandit

isrequiredtopresentauditedfinancialstatementseachyear.

TheCouncilhasreviewedandcontinuestoreviewtheUniversity’sgovernance

arrangementsandissatisfiedthattheUniversityhasfullycompliedwithHEFCE’sguidelines

throughoutthefinancialyear,includingbeingfullycompliantwiththenewCUCCodeof

Governance.

Amongotherbusinessthisyear,theCouncilhas:

• scrutinisedtheUniversity’sEfficiencyandEffectivenessProgramme;

• approvedtheannualreportoftheAuditCommittee;

• receivedbriefings,andprovidedadvicetotheUniversity,onsuchmattersasthe

University’sHealthStrategy,theTeachingExcellenceFramework,theUniversityofReading

Malaysia,theUniversity’sobligationsandtargetsintheareaofdiversityandinclusion;

• approvedsignificantcapitalinvestment;

• engagedinaninformalstrategicsessiononthegrowthplansoftheUniversity;

• receivedreportsonmatterstodowithStatuteXXXIII.

OverviewTheCharterandOrdinancesdeterminetheprimaryorganisationalstructureofthe

University,thekeyconstituentpartsofwhicharetheCouncilandtheSenate.Eachhas

definedanddiscreteresponsibilitiesandfunctionsdescribedinfurtherdetailinthis

statement.

The CouncilTheCouncilistheUniversity’sgoverningbody,meetingatleastfourtimesduringthe

academicyear.ItsetstheUniversity’sstrategicdirection,ensurescompliancewithstatutory

requirementsandapprovesconstitutionalchanges.TheCouncilisultimatelyresponsible

formanagingtheUniversity’sestate,financeandstaff,withmuchofthedetailedwork

fallingtosub-committees.Herebroadmajorityrepresentationbylaymembers,drawnfrom

commercial,communityandprofessionalorganisations,providesavaluableperspective.

TheprimaryresponsibilitiesoftheCouncilaresetoutinOrdinanceA2,StatementofPrimary

ResponsibilitiesoftheCouncil,whichcanbeviewedontheUniversitywebsiteat

http://www.reading.ac.uk/web/FILES/Calendar2015-16/Section_F.pdf

LaymembersoftheCouncilreceivenoremunerationfortheirroleinthesebodiesalthough

theyarereimbursedforexpensesincurredinattendingmeetings.

23

UniversityofReading| GOVERNANCE STATEMENT

TheroleofPresidentofCouncilisseparatedfromtheroleoftheUniversity’sChief

Executive,theVice-Chancellor.TheVice-Chancellorisanex-officiomemberoftheCouncil

andtheprincipalacademicandadministrativeofficeroftheUniversity.Heisalsothe

‘designatedofficer’undertheMemorandumofAssuranceandAccountabilitywithHEFCE

andmayberegardedasthechiefexecutiveoftheUniversity.Heexercisesconsiderable

influenceuponthedevelopmentofinstitutionalstrategy,theidentificationandplanningof

newdevelopmentsandtheshapingoftheinstitutionalethos.TheDeputyVice-Chancellor,

Pro-Vice-Chancellors,DeansandHeadsofServiceallsupportandcontributetothiswork.

The SenateTheSenateistheUniversity’smainacademicadministrativebody.ReportingtotheCouncil

andmeetingatleastfourtimesayear,theSenateadvisesonareassuchasstudententry,

assessmentandawards.Witharound90members,theSenateincludesDeans,Headsand

electedrepresentativesofSchools,aswellasprofessionalstaffandstudents.University

Boardsresponsiblefordevelopmentsinenterprise,researchandteachingandlearning

reporttotheSenate.

Committees of CouncilTheCouncilhasfiveprincipalcommitteeseachofwhichreportstotheCouncilonaregular

basis.Thesecommitteeshaveformallyprescribedtermsofreferenceandspecified

membership,includingamajorityoflaymembers.Theprincipalcommitteesare:

• theStrategyandFinanceCommitteewhichmeetsatleastfourtimesayearand,interalia,

advisestheCouncilonkeystrategic,policyandoperationalissuesincludingthefinancial

managementoftheUniversity.ThisCommitteeconsidersfinancialplans,monitoring

reportsandproposalswithfinancialimplicationsrecommendedbytheUniversity

ExecutiveBoard.

• theAuditCommittee,whichisindependentandadvisory,andreportsdirectlytothe

Council.ThisCommitteeisresponsibleforconsideringthefindingsofinternalandexternal

audit,themanagementresponsesandprogressagainstimplementationplansand

hasanoverviewoftheinternalandexternalauditfunctions.Italsohasoversightofthe

internalcontrolsystem,riskmanagementarrangementsandtheframeworkforensuring

economy,efficiencyandeffectivenessincludinggovernancearrangements.TheAudit

Committeemonitorscompliancewithregulatoryrequirements.Itmeetsthreetimes

ayearandhastherightofaccesstoinformationitconsidersnecessary.Whilesenior

executiveshavetherighttoattendmeetingsoftheCommittee,theyarenotmembers

oftheCommittee.TheCommitteemeetswithboththeinternalandexternalauditorsfor

independentdiscussions.

• theRemunerationCommitteewhichdeterminesthepayandconditionsforthe

University’sseniorexecutivemanagement,includingtheVice-Chancellor,the

Professoriateandequivalentnon-academicstaff.IthasoversightoftheUniversity’s

employmentpoliciesandthepowertomakerecommendationstotheCouncilon

remunerationandcontractualarrangements.AreportfromtheRemunerationCommittee

isincludedwithinthefinancialstatements.

• theAppointmentsandGovernanceCommitteewhichmeetstermlyanddischargesthe

Council’sresponsibilitiesinrespectofnon-financialaspectsofstaffingmattersandsome

governancematters.ItalsooperatesastheNominationsCommitteeinseekingand

recommendingpersonstoserveontheCouncilandothercommittees.

• theStudentExperienceCommitteewhichhasoversightofnon-academicservicespolicy

andadvisoryoversightofstudentservicesingeneral.ItalsodischargestheCouncil’s

responsibilityinrespectofformalstudentcomplaintsanddisciplinarymatters.

24


ManagementandstrategicdirectionoftheUniversityisundertakenbytheUniversity

ExecutiveBoardcomprisingtheVice-Chancellor,theDeputyVice-Chancellor,thePro-Vice-

ChancellorsandtheHeadsofService.TheBoardmeetsweeklythroughoutmostoftheyear

andreportsroutinelytotheSenateandStrategyandFinanceCommittee.

Supply of informationPaperssummarisingfinancialandnon-financialperformance,majoreventsandkey

indicatorsofperformancearepresentedtotheCouncil,StrategyandFinanceCommittee

andUniversityExecutiveBoardonaregularbasis.Papersexplainingtopicsontheagendafor

thevariousCouncilandcommitteemeetingsareissuedinadvance.TheCouncilmonitors

performanceandvariouskeyareasonaregularbasisincludingoperatingandfinancial

performance,annualoperatingplansandbudgets,strategicproposals,studentrecruitment,

changesintheoperationalenvironmentincludingthoseduetofunding,regulatoryor

legalchanges,staffrecruitmentandretention,remunerationandriskmanagement

arrangements.

Risk management and internal controlsTheUniversityacknowledgestherisksinherentinitsactivities,andiscommittedto

managingthoserisksthatposeasignificantthreattotheachievementofitsacademic

andbusinessobjectivesandfinancialhealth.Thesystemsforriskmanagementand

internalcontrolsexisttomanageandcontroltheriskoffailuretoachieveacademicand

businessobjectivesandcanonlyprovidereasonablebutnotabsoluteassuranceagainst

materialmisstatementorloss.Thereisacontinuousprocessforidentifying,evaluatingand

managingthesignificantrisksfacedbytheUniversityandthisisreviewedregularlybythe

UniversityExecutiveBoard,StrategyandFinanceCommitteeandtheCouncil.Thisprocess

wasinplacethroughouttheyearunderreviewanduptothedateofapprovalofthefinancial

statements.

InaccordancewiththeUniversity’sCharterandOrdinancesandtheMemorandumof

AssuranceandAccountabilitywithHEFCE,theUniversity’sCouncilisultimatelyresponsible

forthemanagementoftheaffairsoftheUniversity,advancingitsinterests,promoting

teachingandresearchandprovidinganexcellentstudentexperience.

AkeyresponsibilityoftheCouncilistoensureaneffectivesystemofinternalandfinancial

controlstosupporttheachievementoftheUniversity’sobjectiveswhilesafeguardingthe

publicandotherfunds.

Thesystemofinternalcontrolisdevelopedonanongoingbasisandisdesignedtoidentify

theprincipalbusiness,operational,complianceandfinancialriskstotheachievementof

aimsandobjectives,toevaluatethenatureandextentofthoserisksandmanagethem

efficiently,effectivelyandeconomically.

TheCouncil,throughtheStrategyandFinanceCommittee,hasoverallresponsibilityfor

reviewingtheeffectivenessofthesystemsofinternalcontrolandriskmanagement.The

Universityhasdevelopedandadoptedaformalandstructuredriskmanagementpolicyand

systemtoensurethatkeyrisksareidentified,prioritisedandmanagedconsistentlyacross

theUniversity.Thepolicyandsystemarereviewedandupdatedonaregularbasis.Reports

documentingthepolicy,system,proceduresandissuesarisingarereportedtotheStrategy

andFinanceCommitteeonaregularbasis.Acomprehensivesetofpoliciesandprocedures

designedtomanageandmonitorrisksisinplace.Thekeyelementsofthesesystemsare

explainedbelow:

25


• theCouncilmeetsfourtimesayeartoconsidertheUniversity’sstrategicdirection,

decisionsandprogressagainststrategicplansandisadvisedbyvariouscommittees.The

Council,throughtheStrategyandFinanceCommittee,isresponsibleforreviewingthe

effectivenessoftheinternalcontrolsoftheUniversity.

• theUniversityhasdevelopedasystemofinternalcontrolinlinewithbestpractice.

Thissystemisdesignedtoidentifytheprincipalriskswhichmaypreventorinhibitthe

achievementoftheUniversity’saimsandobjectives,toevaluatethenatureandextentof

thoserisksandmanagethemefficiently,effectivelyandeconomically.

• theAuditCommitteereceivesregularreportsfromtheHeadofInternalAuditServices,

togetherwithrecommendationsforimprovement.Thesereportscommentonthe

arrangementsforinternalcontrol,riskmanagementandgovernance.

• aRiskManagementGroupreportingtotheUniversityExecutiveBoardandledbythe

DeputyVice-ChancelloroverseesriskmanagementattheUniversity.TheUniversity

hasdevelopeditsstrategicplanswithspecificreferencetothekeyrisksidentifiedfor

theUniversity.TheRiskManagementGroupalsooverseesworkonmajorincidentand

businesscontinuityplanning.

• aframeworkformanagingriskisinplaceandincludesariskregister.Eachkeyriskis

assignedtonamedmembersoftheUniversityExecutiveBoard.Eachriskhasalsobeen

assigned to the appropriate committee to monitor the operation of the associated

controlswithintheirbroaderremit.Therisksareprioritisedbasedonthelikelihoodof

aneventarisingfromaparticularriskandanassessmentoftheanticipatedimpact.The

assignedpriorityhelpsfocusresourcesoncriticalareas.

• corporateandsubsidiaryriskregistersheldatschoolandcentralserviceslevelwhichdocumentcontrols,mitigatingactionsandearlywarningmechanismsinplacetomanage

eachrisk.TheseregistersareassessedbytheRiskManagementGroupwhoconsiderthe

risksidentified,theirinteractionsandinterdependencies,theexposureandtheproposed

processesformanagingtheserisks.Schoolsandcentralservicesalsoreportontheirrisk

managementarrangementstotheRiskManagementGroup.Theregistersaredirectly

linkedtoandinformthestrategicandoperationalplans.

• internalauditreviewsthesystemofriskmanagementandinternalcontrolsonanongoing

basis.Theinternalauditprogrammeisdrivenbythestrategic,operationalandfinancial

riskspotentiallyaffectingtheUniversitywitheachriskbeingreviewedbyinternalaudit

onathreeyearrollingprogramme.Indischargingitsplan,internalauditgivesassurance

onthequalityandreliabilityoftheriskmanagementframeworkandthecontrolswhich

protecttheUniversityagainstexposuretoriskandreviewscompliancewithpoliciesand

procedures.

Thedevelopmentofariskmanagementframeworkoverrecentyearshasbeenan

evolutionaryprocess.Significantworkonembeddingtheframeworkandraisingawareness

acrosstheUniversityhasbeenundertakenandeffortscontinuetoensurestaffatschool

levelareabletoparticipateinandinformtheprocess.

Register of interestsTheSecretarytotheCouncilmaintainsaregisterofinterestsforCouncilmembers,lay

membersofUniversitycommitteesandseniormembersofstaff.

Preparation of the financial statementsTheCouncilisresponsibleforkeepingproperaccountingrecordswhichdisclosewith

reasonableaccuracyatanytimethefinancialpositionoftheGroupandenableittoensure

thatthefinancialstatementsarepreparedinaccordancewiththeUniversity’sCharterof

26


Incorporation,theStatementofRecommendedPractice:AccountingforFurtherandHigher

Educationandapplicableaccountingstandards.Inaddition,withinthetermsandconditions

ofaMemorandumofAssuranceandAccountabilityagreedbetweenHEFCEandthe

University,theCouncil,throughitsdesignatedofficeholder,isrequiredtopreparefinancial

statementsforeachfinancialyearwhichgiveatrueandfairviewofthestateofaffairsofthe

GroupandUniversityandofthesurplusordeficitandcashflowsforthatyear.

Inpreparingthefinancialstatements,theCouncilisrequiredtoensurethat:

• suitableaccountingpoliciesareselectedandappliedconsistently;

• judgementsandestimatesaremadethatarereasonableandprudent;

• applicableaccountingstandardshavebeenfollowed,subjecttoanymaterialdepartures

disclosedandexplainedinthefinancialstatements;

• financialstatementsarepreparedonagoingconcernbasisunlessitisinappropriateto

presumethattheUniversitywillcontinueinoperation.TheCouncilissatisfiedthatithas

adequateresourcestocontinueinoperationfortheforeseeablefuture;forthisreason

thegoingconcernbasiscontinuestobeadoptedinthepreparationofthesefinancial

statements.

TheCouncilhastakenreasonablestepsto:

• ensurethattheUniversity’sfundshavebeenappliedinaccordancewiththeUniversity’sOrdinances,theMemorandumofAssuranceandAccountabilityagreedwithHEFCE

and the funding agreement with the National College for Teaching and Leadership as

appropriate;

• ensurethatthereareappropriatefinancialandmanagementcontrolsinplacetosafeguard

publicfundsandfundsfromothersources;

• safeguardtheassetsoftheUniversityandpreventanddetectfraudandotherirregularities;

• securetheeconomical,efficientandeffectivemanagementoftheUniversity’sresources

andexpenditure;

• ensurethatmaterialrisksareidentified,carefullyconsideredandproperlymanagedand

thatappropriateriskmanagementproceduresandprocessesareinplaceacrossthe

University.

Internal financial controlsThekeyelementsoftheUniversity’ssystemofinternalfinancialcontrolsandtheassociated

processformonitoringtheeffectivenessofthesecontrolsincludethefollowing:

• cleardefinitionsoftheresponsibilitiesof,andtheauthoritydelegatedto,headsofacademicschoolsandcentralservicesandsuchotherstafftowhomsuchauthorityand

responsibilityisfromtimetotimedelegated;

• acomprehensivecorporateplanningprocesssupportedbykeystrategicandfinancial

resourceplansandarobustinvestmentappraisalprocess;

• regularreviewsofacademic,operationalandfinancialperformanceundertakenonan

ongoingbasisusingoperationalperformanceinformationandfinancialmonitoring

reports;

• clearlydefinedandformalisedrequirementsforapprovalandcontrolofexpenditure,with

capitalexpenditurebeingsubjecttoformaldetailedappraisalandreviewaccordingto

approvallevelssetbytheCouncil;

• comprehensivefinancialregulationsreviewedanddevelopedbytheStrategyandFinance

CommitteewithamendmentssubjecttoapprovalbytheCouncil;

27


• anannualprogrammeofworkundertakenbytheinternalauditteamwhichisreviewedand

approvedbytheAuditCommittee;

• reviewsbytheAuditCommitteeoftheeffectivenessofriskmanagement,controland

governancearrangements.

TheDirectorofInternalAuditServicesisresponsibleforprovidingreasonableassurance

ontheadequacyandeffectivenessofriskmanagement,controlandgovernance

arrangements.

Information held on the University’s websiteTheCouncilisresponsibleforthemaintenanceandintegrityofthecorporateandfinancial

informationincludedontheUniversity’swebsite.LegislationintheUKgoverningthe

preparationanddisseminationoffinancialstatementsmaydifferfromlegislationinother

jurisdictions.

28


REPORT OF THE REMUNERATION COMMITTEETheRemunerationCommittee,oneofthefiveprincipalcommitteesoftheCouncil,

determinesontheauthorityoftheCounciltheremunerationofeachindividualmemberof

theUniversity’sseniorexecutiveandacademicleadershipandmanagement,specificallythe

Vice-Chancellor,theProfessoriateandequivalentnon-academicstaff.Ithasthepowerto

makerecommendationstotheCouncilonthecontractualarrangementsandthetermsand

conditionsofemploymentforsuchstaff.

TheCommitteehassixmembers,fiveofwhomarelaymembersoftheCouncilandthe

othertheVice-Chancellor.ItischairedbyaVice-PresidentoftheCouncil,theUniversity

SecretaryisitsSecretaryandtheDirectorofHumanResourcesisinattendanceatits

meetings.NoemployeesoftheUniversityarepresentwhentheirownremunerationis

underconsideration.TheCommitteereportsdirectlytotheCouncilandreceivesreports

andrecommendationsfromitsProfessorialStaffSalariesAdvisoryGroupanditsSenior

StaffSalariesAdvisoryGrouprespectively.TheseAdvisoryGroups,andtheCommittee

itself,routinelyhaveregardtotheannualUCEARemunerationSurveyinthecourseoftheir

deliberationsandaremindfulatalltimesofsuchguidanceasHEFCEmayfromtimetotime

provide.

TheCommitteemetthreetimesintheyearending31July2016and,inthecourseofthose

meetings:

i. revieweditsowntermsofreferenceandconfirmedthattheseremainappropriate;

ii. conformedwiththeStatementoftheUniversity’sRemunerationPolicyas

approvedbytheCouncil;

iii. monitoredtheapprovalprocessesthatapplyinrespectofseveranceandearly

retirementarrangementsandpronounceditselfcontent;

iv. hadregardtothenationalandlocalcontextasitaffectstheremunerationof

seniorstaffinthehighereducationsector;

v. agreedanapproachinregardtocertainpensionsmatters;

vi. agreedaStaffRetentionPolicy;

vii. agreed,onthebasisofareportfromitsProfessorialSalariesAdvisoryGroup,

adjustmentstosalaryforcertainProfessorialstaffwitheffectfrom1August2016;

viii. agreed,onthebasisofareportfromitsSeniorSalariesAdvisoryGroup,

adjustmentstosalaryforcertainseniorstaffwitheffectfrom1August2016;

ix. agreedadjustmentstosalaryforcertainPro-Vice-Chancellorswith

effectfrom1August2016;

x. agreedadjustmentstosalaryfortheDeputyVice-Chancellorwitheffectfrom1

August2016;

xi. agreedadjustmentstosalaryforcertainHeadsofServicewitheffectfrom1

August2016;and

xii. agreedadjustmentstotheemolumentsoftheVice-Chancellorwitheffectfrom1

August2016.

29

UniversityofReading| AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT TO THE COUNCIL OF THE UNIVERSITY OF READINGWehaveauditedthefinancialstatementsoftheUniversityofReadingfortheyearended

31July2016setoutonpages31to63.Thefinancialreportingframeworkthathasbeen

appliedintheirpreparationisapplicablelawandUnitedKingdomAccountingStandards

(UnitedKingdomGenerallyAcceptedAccountingPractice)includingFRS102TheFinancial

ReportingStandardapplicableintheUKandRepublicofIreland.

ThisreportismadesolelytotheCouncil,inaccordancewiththeCharterandOrdinancesof

theUniversity.OurauditworkhasbeenundertakensothatwemightstatetotheUniversity

Councilthosematterswearerequiredtostatetoitinanauditor’sreportandfornoother

purpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibility

toanyoneotherthantheUniversityCouncilforourauditwork,forthisreport,orforthe

opinionswehaveformed.

Respective responsibilities of the University Council and auditorAsexplainedmorefullyintheGovernanceStatementsetoutonpage22to27,theCouncilis

responsibleforthepreparationoffinancialstatementswhichgiveatrueandfairview.

Ourresponsibilityistoaudit,andexpressanopinionon,thefinancialstatementsin

accordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).

ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandards

forAuditors.

Scope of the audit of the financial statementsAnauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancial

statementssufficienttogivereasonableassurancethatthefinancialstatementsare

freefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesan

assessmentof:

• whethertheaccountingpoliciesareappropriatetotheGroup’sandUniversity’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;

• thereasonablenessofsignificantaccountingestimatesmadebytheCouncil;

• andtheoverallpresentationofthefinancialstatements.

Inaddition,wereadallthefinancialandnon-financialinformationinthefinancial

statementstoidentifymaterialinconsistencieswiththeauditedfinancialstatementsand

toidentifyanyinformationthatisapparentlymateriallyincorrectbasedon,ormaterially

inconsistentwith,theknowledgeacquiredbyusinthecourseofperformingtheaudit.Ifwe

becomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsiderthe

implicationsforourreport.

Opinion on financial statementsInouropinionthefinancialstatements:

• giveatrueandfairviewofthestateoftheGroup’sandtheUniversity’saffairsasat31July2016,oftheGroup’sandUniversity’sincomeandexpenditure,gainsandlossesand

changesinreservesandoftheGroup’scashflowsfortheyearthenended;

• havebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAccepted

AccountingPracticeandwiththe2015StatementofRecommendedPractice–

AccountingforFurtherandHigherEducation;and

• meettherequirementsofHEFCE’sAccountsdirectiontohighereducationinstitutionsfor

2015-16financialstatements.

30


Opinion on other matters prescribed in the HEFCE Audit Code of Practice issued under the Further and Higher Education Act 1992Inouropinion,inallmaterialrespects:

• fundsfromwhateversourceadministeredbytheGroupandtheUniversityforspecific

purposeshavebeenproperlyappliedtothosepurposesandmanagedinaccordancewith

relevantlegislation;

• fundsprovidedbyHEFCEhavebeenappliedinaccordancewiththeMemorandumof

AssuranceandAccountabilityandanyothertermsandconditionsattachedtothem;and

• thecorporategovernanceandinternalcontrolrequirementsofHEFCE’sAccounts

directiontohighereducationinstitutionsfor2015-16financialstatementshavebeenmet.

Joanne LeesForandonbehalfofKPMGLLP,StatutoryAuditor

Chartered Accountants

15CanadaSquare

CanaryWharf

London

E145GL

1December2016

31


Statement of comprehensive income for the year ended 31 July 2016Consolidated University

2016 2015 2016 2015

£'000 £'000 £’000 £’000

Income

Note 1 Tuition fees and education contracts 152,481 139,864 147,452 135,526

2 Fundingbodygrants 31,020 27,859 31,020 27,859

3 Research grants and contracts 32,721 34,096 32,468 33,833

4 Other income 49,870 51,090 49,140 47,444

5 Investmentincome 4,043 4,062 2,210 1,790

Total income before donations and endowments 270,135 256,971 262,290 246,452

6 Donationsandendowments-regular 2,884 2,862 2,406 2,378

6 Donationsandendowments-exceptional 71,749 28,632 0 0

Total income 344,768 288,465 264,696 248,830

Expenditure

7 Staffcosts 158,623 160,979 154,266 157,544

Otheroperatingexpenses–regular 95,815 92,238 82,157 80,668

Otheroperatingexpenses–exceptional 4,831 12,144 4,831 12,144

11 Depreciation 24,262 22,387 22,516 21,321

8 Interestandotherfinancecosts 5,242 5,506 5,671 5,370

9 Total expenditure 288,773 293,254 269,441 277,047

Total income less total expenditure

(Loss)/gainondisposaloffixedassets

(Loss)/gainondisposalofinvestmentproperties

(Loss)/gainondisposalofinvestments

55,995

(360)

(214)

(57)

(4,789)

985

17

3,607

(4,745)

(360)

(214)

0

(28,217)

1,056

17

0

14 Gainonrevaluationofinvestmentproperties

Gainonrevaluationofinvestments

2,212

7,469

4,227

2,801

1,009

724

1,916

1,350

16 Shareofoperatingsurplus/(deficit)inassociates 139 (724) 0 0

Surplus/ (deficit) before tax 65,184 6,124 (3,586) (23,878)

10 Taxationcredit/(charge) 84 (1,090) (39) (438)

Surplus / (deficit) for the year 65,268 5,034 (3,625) (24,316)

16 (Deficit)/surplusonrevaluationoffixedassetsheldbyassociate (240) 3,397 0 0

33 Remeasurement(losses)/gainsinrespectofpensionschemes

Exchangedifferencesonconsolidationofoverseassubsidiaries

(8,763)

170

473

366

(8,763)

0

473

0

Total comprehensive income for the year 56,435 9,270 (12,388) (23,843)

Represented by:

Endowmentcomprehensiveincomefortheyear

Restrictedcomprehensiveincomefortheyear

Unrestrictedcomprehensiveincomefortheyear

Revaluationreservecomprehensiveincomefortheyear

79,564

593

(23,482)

(240)

37,506

330

(31,963)

3,397

868

474

(13,730)

0

1,352

258

(25,453)

0

56,435 9,270 (12,388) (23,843)

32


Statement of changes in reserves Year ended 31 July 2016

Incomeandexpenditureaccount

ConsolidatedEndowment

£'000Restricted

£'000Unrestricted

£’000

Revaluationreserve

£’000Total

£’000

At 1 August 2014 90,445 658 203,382 40,832 335,317

Surplus/(deficit)fortheyear 37,506 330 (32,802) 0 5,034

Othercomprehensiveincome 0 0 839 3,397 4,236

Transfersbetweenendowmentandunrestrictedreserves (263) 0 263 0 0

At 1 August 2015 127,688 988 171,682 44,229 344,587

Surplus/(deficit)fortheyear 79,564 593 (14,889) 0 65,268

Othercomprehensiveincome 0 0 (8,593) (240) (8,833)

Transfersbetweenendowmentandunrestrictedreserves (376) 0 376 0 0

Transfersbetweenrestrictedandunrestrictedreserves 0 43 (43) 0 0

At 31 July 2016 206,876 1,624 148,533 43,989 401,022

Incomeandexpenditureaccount

University Endowment£’000

Restricted£’000

Unrestricted£’000

Revaluationreserve

£’000Total

£’000

At 1 August 2014 12,559 461 173,561 37,814 224,395

Surplus/(deficit)fortheyear 1,352 258 (25,926) 0 (24,316)

Othercomprehensiveincome 0 0 473 0 473

At 1 August 2015 13,911 719 148,108 37,814 200,552

Surplus/(deficit)fortheyear 868 474 (4,967) 0 (3,625)

Othercomprehensiveincome 0 0 (8,763) 0 (8,763)

At 31 July 2016 14,779 1,193 134,378 37,814 188,164

33


Balance sheet at 31 July 2016Consolidated University

2016 2015 2016 2015

£'000 £'000 £'000 £'000

Non-current assets

Note 11 Fixedassets 372,228 352,033 346,664 319,714

12 Heritage assets 39,346 39,346 39,167 39,167

13 Biological assets 429 459 429 459

14 Investmentproperties 50,587 49,423 25,073 24,862

15 Non-currentinvestments 19,902 18,520 27,944 22,536

16 Investmentsinassociates 11,289 11,257 10,567 10,569

493,781 471,038 449,844 417,307

Current assets

Stock 1,270 1,194 1,218 1,179

17 Tradeandotherreceivables 83,993 39,406 48,568 50,359

18 Currentinvestments 68,508 61,170 0 0

Cashandcashequivalents 46,333 38,505 44,098 34,427

200,104 140,275 93,884 85,965

19 Creditors:Amountsfallingduewithinoneyear (99,767) (91,725) (173,292) (127,719)

Net current assets / (liabilities) 100,337 48,550 (79,408) (41,754)

Total assets less current liabilities 594,118 519,588 370,436 375,553

20 Creditors:Amountsfallingdueaftermorethanoneyear (152,257) (144,506) (141,433) (144,506)

21Provisions Pensionprovisions (40,839) (29,907) (40,839) (29,907)

22 Otherprovisions 0 (588) 0 (588)

Total net assets 401,022 344,587 188,164 200,552

Restricted reserves

23 Incomeandexpenditurereserve-endowment 206,876 127,688 14,779 13,911

24 Incomeandexpenditurereserve-restricted 1,624 988 1,193 719

Unrestricted reserves

Incomeandexpenditurereserve-unrestricted 148,533 171,682 134,378 148,108

Revaluationreserve 43,989 44,229 37,814 37,814

Total reserves 401,022 344,587 188,164 200,552

Dr P R Preston President of the Council

Sir David Bell KCB Vice-Chancellor

C A B Wright Director of Finance & Corporate Services

The financial statements on pages 31 to 63 were approved by Council on 25 November 2016, and signed on its behalf by:

34


Statement of cash flows – Year ended 31 July 2016Consolidated

2016 2015

£'000 £'000

Cash flow from operating activities

SurplusfortheyearAdjustments for non-cash items:DepreciationGainonrevaluationofinvestmentpropertiesGainonrevaluationofinvestmentsLossonrevaluationofbiologicalassetsAmortisationoffinancecostsExchangedifferences(Increase)/decreaseinstockDecrease/(increase)inreceivablesIncrease in creditorsIncreaseinpensionprovisionsRemeasurement(losses)/gainsinrespectofpensionschemes(Decrease)/increaseinotherprovisionsShareofoperating(surplus)/deficitandtaxinassociatesAdjustments for investing or financing activities:InvestmentincomeNet return on pension schemeCapital grant incomeNew endowmentsInterestpayableLoss/(gain)ondisposaloffixedassetsGainondisposaloflandheldbyendowmentLoss/(gain)ondisposalofinvestmentpropertiesLoss/(gain)ondisposalofinvestments

65,268

24,262(2,212)(7,469)

11(71)

(804)(76)

4,2766,581

10,932(8,763)

(588)(274)

(4,043)128

(4,697)(56)

5,242360

(71,749)214

57

5,034

22,387(4,227)(2,801)

93(12)691

26(9,249)

2,08413,208

473574

1,184

(4,062)37

(2,986)(25)

5,506(611)

(28,632)(17)

(3,607)

Net cash inflow / (outflow) from operating activities 16,529 (4,932)

Cash flows from investing activities

Proceeds fromsalesoffixedassetsandinvestmentpropertiesProceedsfromsaleoflandheldbyendowmentNetpaymentsforinvestmentsInvestmentincomeCapitalgrantsreceivedPaymentsmadetoacquirefixedassetsPaymentsmadetoacquireheritageassetsNetreceiptsfrom/(paymentsfor)biologicalassetsPaymentsmadetoacquireinvestmentpropertiesAdjustmenttoloan notesinUPP(ReadingI)HoldingsLimited

69051,039(1,308)

3,9154,697

(57,162)0

19(157)

2

6,91838,785(1,479)

4,0252,986

(60,240)(46)(49)

0(14)

1,735 (9,114)

Cash flows from financing activitiesNew endowmentsInterest paidNew unsecured loansRepaymentsof amounts borrowed

56(5,242)

400(5,650)

25(5,506)22,282(3,535)

(10,436) 13,266

Increase / (decrease) in cash and cash aquivalents in the year

Cashandcashequivalentsatbeginningoftheyear

7,82838,505

(780)39,285

Cash and cash equivalents at end of the year 46,333 38,505

35

UniversityofReading| STATEMENT OF PRINCIPAL ACCOUNTING POLICIES

STATEMENT OF PRINCIPAL ACCOUNTING POLICIES

Basis of preparationThesefinancialstatementshavebeenpreparedinaccordancewiththeStatementof

RecommendedPractice(SORP):AccountingforFurtherandHigherEducation2015and

applicableaccountingstandards.

TheUniversityispreparingitsfinancialstatementsinaccordancewiththeSORPandFRS

102forthefirsttimeandconsequentlyhasappliedthefirst-timeadoptionrequirements.

Anexplanationofhowthetransitionhasaffectedthereportedfinancialposition,financial

performanceandcashflowsoftheGroupisprovidedinnote35.TheUniversityisapublic

benefitentityandhasthereforeappliedtherelevantpublicbenefitrequirementsof

applicableaccountingstandards.

Thefinancialstatementsarepreparedinaccordancewiththehistoricalcostconvention

modifiedbytherevaluationofcertainfixedassets.TheCouncilbelievesthatthegoing

concernbasisisappropriateforthereasonsdescribedinnote34.

Basis of consolidationTheconsolidatedfinancialstatementsincludetheUniversity,theUniversity’ssubsidiary

companiesandtheUniversity’strusts.Theresultsofsubsidiariesacquiredordisposedof

duringtheperiodareincludedintheconsolidatedstatementofcomprehensiveincome

fromthedateofacquisitionoruptothedateofdisposal.

Intra-Grouptransactions,gainsandlossesareeliminatedonconsolidation.Intra-Group

amountsreceivableandamountspayablearealsoeliminatedonconsolidation.

TheconsolidatedfinancialstatementsalsoincludetheGroup’sshareofthetotal

comprehensiveincomeofassociatedundertakingsusingtheequitymethod.

TheconsolidatedfinancialstatementsdonotincludetheactivitiesoftheStudents’Unionas

theUniversitydoesnotexertcontrolordominantinfluenceoverpolicydecisions.

Income recognition(i) Goods and services

Incomefromthesaleofgoodsorservicesiscreditedtothestatementofcomprehensive

incomewhenthegoodsorservicesaresuppliedorthetermsofthecontracthavebeen

satisfied.

(ii) Fee income

Feeincomeiscreditedtothestatementofcomprehensiveincomeovertheperiodinwhich

studentsarestudying.Bursariesandscholarshipsareaccountedforgrossasexpenditure

andnotdeductedfromincome.Wheretheamountofthetuitionfeeisreducedbya

discountforpromptpayment,incomereceivableisshownnetofthediscount.

(iii) Revenue grants

Revenuegrantsfrombothgovernmentandnon-governmentsources,includingallteaching

andresearchgrants,arerecognisedwithinthestatementofcomprehensiveincomewhen

theUniversityisentitledtotheincomeandanyperformance-relatedconditionshavebeen

met.Incomereceivedinadvanceofperformance-relatedconditionsisdeferredonthe

balancesheetandreleasedinlinewithsuchconditionsbeingmet.

36


(iv) Capital grants

Capitalgrantsfrombothgovernmentandnon-governmentsourcesarerecordedinthe

statementofcomprehensiveincomewhentheUniversityisentitledtotheincomesubject

toanyperformance-relatedconditionsbeingmet.

(v) Investment income

Investmentincomeiscreditedtothestatementofcomprehensiveincomeonareceivablebasis.

(vi) Donations and endowments

Donationsandendowmentsaretypesofnon-exchangetransactionswithoutperformance-

relatedconditions.Donationsandendowmentswithdonor-imposedrestrictionsare

recognisedwithinthestatementofcomprehensiveincomewhentheUniversityisentitledto

theincome.Incomeisretainedwithintherestrictedreserveuntilsuchtimeasitisutilisedin

linewiththerestrictionsatwhichpointtheincomeisreleasedtogeneralreservesthrougha

reservetransfer.

Investmentincomefromendowmentsandchangesinthefairvalueofendowmentsare

recordedinthestatementofcomprehensiveincomeintheperiodinwhichtheyariseandas

eitherrestrictedorunrestrictedincomeaccordingtothetermsapplicabletotheindividual

endowmentfund.

Donationswithnorestrictionsarerecordedwithinthestatementofcomprehensiveincome

whentheUniversityisentitledtotheincome.

Themaintypesofendowmentaregivenbelow:

• unrestrictedpermanentendowmentsarefundswherethedonorhasspecifiedthatthe

fundistobepermanentlyinvestedtogenerateanincomestreamforthegeneralbenefit

oftheUniversity.

• restrictedexpendableendowmentsarefundswherethedonorhasspecifiedaparticular

objective,otherthanthepurchaseorconstructionoftangiblefixedassets,andthe

Universitycanconvertthedonatedsumintoincome.

• restrictedpermanentendowmentsarefundswherethedonorhasspecifiedthatthefund

istobepermanentlyinvestedtogenerateanincomestreamtobeappliedtoaparticular

objective.

TheUniversity’strustsareexcludedfromUniversityendowmentsandareincludedon

consolidation.

(vii) Agency arrangements

FundswhichtheUniversityreceivesanddisbursesaspayingagentonbehalfofafunding

bodyorotherorganisationareexcludedfromthestatementofcomprehensiveincome

wheretheUniversityisexposedtominimalriskorenjoysminimaleconomicbenefitrelated

tothetransaction.

Accounting for retirement benefitsTheprincipalpensionschemesfortheUniversity’sstaffaretheUniversitiesSuperannuation

Scheme(USS),theUniversityofReadingEmployees’PensionFund(UREPF)andthe

UniversityofReadingPensionScheme(URPS).

USSisamulti-employerhybridschemewhichhasbothdefinedbenefitanddefined

contributionelements.Until5April2016,theschemewascontractedoutoftheState

SecondPension(S2P).Theassetsoftheschemeareheldinaseparatetrustee-

administeredfund.Becauseofthemutualnatureofthescheme,thescheme’sassetsare

nothypothecatedtoindividualinstitutionsandascheme-widecontributionrateisset.

37


TheUniversityisthereforeexposedtoactuarialrisksassociatedwithotherinstitutions’

employeesandisunabletoidentifyitsshareoftheunderlyingassetsandliabilitiesofthe

schemeonaconsistentandreasonablebasisandtherefore,asrequiredbySection28of

FRS102“Employeebenefits”,accountsfortheschemeasifitwereadefinedcontribution

scheme.Asaresult,contributionsarerecognisedasanexpenseintheperiodduringwhich

servicesarerenderedbyemployees.Additionally,sincetheUniversityhasenteredintoan

agreement(theRecoveryPlan)thatdetermineshoweachemployerwithintheschemewill

fundtheoveralldeficit,theUniversityrecognisesaliabilityforthecontractualcommitment

tofundpastdeficitswithintheUSSscheme.

UREPFisadefinedbenefitschemewhichclosedtonewmemberson31July2011.The

assetsoftheschemeareheldinaseparatetrustee-administeredfund.Thescheme

isvaluedeverythreeyearsbyaprofessionallyqualifiedindependentactuaryusingthe

projectedunitcreditmethod,theratesofcontributionpayablebeingdeterminedbythe

trusteesontheadviceoftheactuaries.Intheinterveningyears,theactuaryreviewsthe

progressofthescheme.TheGroup’snetobligationiscalculatedbydiscountingtopresent

valuetheestimatedamountoffuturebenefitthatemployeeshaveearnedinreturnfor

theirserviceinthecurrentandpriorperiodslessthefairvalueofanyplanassets.The

statementofcomprehensiveincomeischargedwiththecurrentservicecost,anypast

servicecostsandthenetfinancingcostattributabletothepensionliabilitiesandreturn

onassets.Actuarialgainsandlossesonthescheme,includingthedifferencesbetween

expectedandactualreturnonschemeassets,arerecognisedinothercomprehensive

income.Whenthecalculationresultsinasurplus,theassetrecognisedislimitedtothetotal

ofanyunrecognisedpastservicecostsandthepresentvalueofbenefitsavailableinthe

formofanyfuturerefundsfromtheplan,reductionsinfuturecontributionstotheplanoron

settlementoftheplanandtakesintoaccounttheadverseeffectofanyminimumfunding

requirements.

URPSisadefinedcontributionschemewhichwasestablishedon1August2011andis

availabletostaffnoteligibletojointheUSSscheme.Contributionsarerecognisedasan

expenseintheperiodduringwhichservicesarerenderedbyemployees.

Asmallnumberofstaffremaininotherpensionschemes.

Employee benefitsShort-termemploymentbenefitssuchassalariesandcompensatedabsencesare

recognisedasanexpenseintheperiodinwhichtheemployeesrenderservicetothe

University.Anyunusedbenefitsareaccruedandmeasuredastheadditionalamountthe

Universityexpectstopayasaresultoftheunusedentitlement.

Leases(i) Finance leases

LeasesinwhichtheUniversityassumessubstantiallyalltherisksandrewardsofownership

oftheleasedassetareclassifiedasfinanceleases.Assetsheldunderfinanceleasesare

statedatanamountequaltotheloweroftheirfairvalueandthepresentvalueofthe

minimumleasepaymentsatinceptionofthelease,lessaccumulateddepreciationand

impairmentlosses.Minimumleasepaymentsareapportionedbetweenafinancecharge

andareductionoftheoutstandingliability.Thefinancechargeisallocatedtoeachperiod

during the lease term so as to produce a constant periodic rate of interest on the remaining

balanceoftheliability.

38


(ii) Operating leases

Costsinrespectofoperatingleasesarechargedonastraight-linebasisovertheleaseterm.

Anyleasepremiumsorincentivesarespreadovertheminimumleaseterm.

(iii) Service concession arrangements

Fixedassetsheldunderserviceconcessionarrangementsarerecognisedonthebalance

sheetatthepresentvalueoftheminimumleasepaymentswhentheassetsarebrought

intousewithacorrespondingfinancialliability.Paymentsundereachserviceconcession

arrangementareallocatedbetweenservicecosts,financechargesandfinancialliability

repaymentstoreducethefinancialliabilitytoniloverthelifeofthearrangement.

(iv) Lessor accounting

WheretheUniversityactsasalessorunderanoperatinglease,theleasedassetis

recognisedwithintangiblefixedassetsandleaseincomeisrecognisedonastraight-line

basisovertheleaseterm.WheretheUniversityactsasalessorunderafinancelease,an

amountreceivableisrecognisedonthebalancesheetandleasepaymentsaresplitbetween

creditingtheprincipleamountandfinanceincome.

Foreign currencyTransactionsinforeigncurrenciesaretranslatedtotherespectivefunctionalcurrencies

ofGroupentitiesattheforeignexchangeraterulingatthedateofthetransaction.

Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesatthebalancesheet

dateareretranslatedtothefunctionalcurrencyattheforeignexchangeraterulingatthat

date.Foreignexchangedifferencesarisingontranslationarerecognisedinthestatement

ofcomprehensiveincomeintheperiodinwhichtheyarise.Non-monetaryassetsand

liabilitiesthataremeasuredintermsofhistoricalcostinaforeigncurrencyaretranslated

usingtheexchangerateatthedateofthetransaction.Non-monetaryassetsand

liabilitiesdenominatedinforeigncurrenciesthatarestatedatfairvalueareretranslated

tothefunctionalcurrencyatforeignexchangeratesrulingatthedatesthefairvaluewas

determined.

Theassetsandliabilitiesofforeignoperations,includinggoodwillandfairvalueadjustments

arisingonconsolidation,aretranslatedintosterlingatforeignexchangeratesrulingatthe

balancesheetdate.Incomeandexpenditureofforeignoperationsaretranslatedatan

averageratefortheyearwherethisrateapproximatestotheforeignexchangeratesruling

atthedatesofthetransactions.Exchangedifferencesarisingfromthetranslationofforeign

operationsarereportedinothercomprehensiveincome.

TaxationTheUniversityisanexemptcharitywithinthemeaningofSchedule3oftheCharitiesAct

2011andisthereforeacharitywithinthemeaningofParagraph1ofSchedule6tothe

FinanceAct2010.Accordingly,theUniversityispotentiallyexemptfromtaxationinrespect

ofincomeorcapitalgainsreceivedwithincategoriescoveredbysections478-488ofthe

CorporationTaxAct2010orsection256oftheTaxationofChargeableGainsAct1992to

theextentthatsuchincomeorgainsareappliedtoexclusivelycharitablepurposes.Non-

charitablesubsidiarycompaniesareliabletocorporationtax.

TheUniversityispartiallyexemptinrespectofValueAddedTax,sothatitcanonlyrecover

aminorelementofVATchargedonitsinputs.IrrecoverableVAToninputsisincludedinthe

costsofsuchinputsandaddedtothecostoftangiblefixedassetsasappropriate,wherethe

inputsthemselvesaretangiblefixedassetsbynature.

39


Deferredtaxisprovidedinfullinrespectofalltimingdifferencesthathaveoriginatedbutnot

reversedatthebalancesheetdatewheretransactionsoreventsthatresultinanobligation

topaymoretaxinthefutureorlesstaxinthefuturehaveoccurredatthebalancesheet

date.Timingdifferencesarisefromtheinclusionofitemsofincomeandexpenditurein

taxationcomputationsinperiodsdifferentfromthoseinwhichtheyareincludedinthe

financialstatements.

Deferredtaxismeasuredattheaveragetaxratesthatareexpectedtoapplyintheperiodsin

whichthetimingdifferencesareexpectedtoreversebasedontaxratesandlawsthathave

beenenactedorsubstantivelyenactedbythebalancesheetdate.

Anetdeferredtaxassetisregardedasrecoverableandthereforerecognisedonlywhen,on

thebasisofallavailableevidence,itcanberegardedasmorelikelythannotthattherewillbe

suitabletaxableprofitsfromwhichthefuturereversaloftheunderlyingtimingdifferences

canbededucted.

Deferredtaxassetsandliabilitiesarenotdiscounted.

Tangible fixed assetsTangiblefixedassetsarestatedatcostlessaccumulateddepreciationandaccumulated

impairmentlosses.Wherepartsofatangiblefixedassethavedifferentusefullives,they

areaccountedforasseparateitemsoftangiblefixedassets.Costsincurredinrelationto

atangiblefixedassetafteritsinitialpurchaseorproductionarecapitalisedtotheextent

thattheyincreasetheexpectedfuturebenefitstotheUniversityfromtheexistingtangible

fixedassetbeyonditspreviouslyassessedstandardofperformance.Thecostsofanysuch

enhancementsareaddedtothecarryingamountofthetangiblefixedassetconcerned.

Assetsunderconstructionarenotdepreciateduntiltheyarebroughtintouse.

Wherematerial,atangiblefixedasset’santicipatedusefuleconomiclifeisreviewedannually

andtheaccumulatedandfuturedepreciationadjusted.

Expendituretoensurethattangiblefixedassetsmaintaintheirstandardofperformanceis

recognisedinthestatementofcomprehensiveincomewhenitisincurred.TheUniversity

hasacomprehensiveplannedmaintenanceprogramme,whichisreviewedonanannual

basis.

(i) Land and buildings

Freeholdlandisnotdepreciatedasitisconsideredtohaveanindefiniteusefullife.

Thecomponentsoffreeholdbuildingsaredepreciatedonastraightlinebasisover

theirexpectedusefullivesasfollows:

• Fabric–construction 50years

• Fabric–improvementsandextensions 30years

• Mechanicalandelectrical 20years

(ii) Plant, machinery and equipment

Thepurchaseofequipmentcostinglessthan£10,000perindividualitemorgroupofrelated

itemsischargedtothestatementofcomprehensiveincomeintheyearofacquisition.All

otherequipmentiscapitalisedanddepreciatedoveritsexpectedusefullifeasfollows:

• Plantandmachinery 10-30years

• Furnitureandfittings 10years

• Computersystemsandassociatedsoftware 4-10years

• Motorvehiclesandgeneralequipment 4years

• Equipmentacquiredforspecificresearchprojects 3years

40


(iii) Borrowing costs

Borrowingcostsdirectlyrelatingtoexpenditureontheconstruction,developmentormajor

refurbishmentofaqualifyingtangiblefixedassetarecapitalised.Theamountcapitalisedis

calculatedusingtheUniversity’sweightedaveragecostofborrowingsovertheperiodfrom

thecommencementoftheworkuntilthedateofpracticalcompletion.Thecapitalisation

offinancecostsissuspendedifthereareprolongedperiodswhendevelopmentactivityis

interrupted.Allotherborrowingcostsarerecognisedinthestatementofcomprehensive

incomeintheperiodinwhichtheyareincurred.

Heritage assetsHeritageassetsarebooks,manuscripts,specimens,artworks,objectsorotherassetsthat

havehistorical,artistic,scientific,technological,geophysicalorenvironmentalqualitiesthat

areheldandmaintainedprincipallyfortheircontributiontoknowledgeandculture.

Heritageassetsarecapitalisedandrecognisedattheircostorvaluewherereasonably

obtainable.Revaluationsarecarriedoutperiodicallybyanexternalvaluer.Heritageassets

arenotdepreciatedduetotheirlongeconomiclifeandhighresidualvalue.

AgricultureBiologicalassetsarelivinganimalsorplantsheldasnon-currentassetsfromwhich

economicbenefitsflowtotheUniversity.Agriculturalproduceistheharvestedproductofa

biologicalasset.TheUniversity’sfarmingoperationsincludedairycattlewhichareclassified

asbiologicalassets.Dairycattlearestatedatfairvaluelesscoststosell.Changesinfair

valuelesscoststosellarerecognisedinthestatementofcomprehensiveincome.The

associatedagriculturalproduce,milk,isstoredonlyforashorttimebeforeonwardsaleand

hencethevalueheldisnotconsideredmaterialandisnotincludedonthebalancesheet.

TheUniversity’soperationsalsoincludearablefarmingfromwhicheconomicbenefitsare

derived.Theplantsandtheirharvestedcropsaretreatedascurrentassetswithinstock.

Investment propertiesInvestmentpropertyislandandbuildingsheldforrentalincomeorcapitalappreciation

ratherthanforuseindeliveringservices.Investmentpropertiesaremeasuredinitially

atcostandsubsequentlyatfairvaluewithmovementsrecognisedinthestatementof

comprehensiveincome.Propertiesarenotdepreciatedbutarerevaluedannuallyaccording

tomarketconditionsasatthebalancesheetdate.

InvestmentsInvestmentswhicharepubliclytraded,orwheretheirfairvaluecanbemeasuredreliably,are

heldatfairvaluewithmovementsrecognisedinthestatementofcomprehensiveincome.

Otherinvestmentsarestatedatcostlessanyprovisionforimpairmentintheirvalue.

AssociatedundertakingsarethoseentitiesinwhichtheUniversityhassignificantinfluence,

butnotcontrol,overthefinancialandoperatingpolicies.Theconsolidatedfinancial

statementsincludetheGroup’sshareofthetotalcomprehensiveincomeofassociateson

anequityaccountedbasis,fromthedatethatsignificantinfluencecommencesuntilthe

datethatsignificantinfluenceceases.

StockStockisstatedatthelowerofcostandnetrealisablevalueaftermakingdueprovisionfor

obsoleteandslowmovingitems.

41


Cash and cash equivalentsCashincludescashinhand,cashatbank,depositsrepayableondemandandoverdrafts.

Depositsarerepayableondemandiftheyareavailablewithin24hourswithoutpenalty.

Cashequivalentsareshortterm,highlyliquidinvestmentsthatarereadilyconvertibleto

knownamountsofcashwithinsignificantriskofchangeinvalue.

Financial instrumentsBasicfinancialinstrumentsarerecognisedinaccordancewiththerequirementssetoutin

Section11ofFRS102.Other,morecomplex,financialinstrumentsmaybeusedfromtime

totimeandthesearemeasuredatfairvalue,inaccordancewithSection12ofFRS102,with

changesinfairvaluebeingrecognisedinthestatementofcomprehensiveincome.Where

thecriteriaofSection12forhedgeaccountingaremet,theprovisionsofthatSectionare

adopted.

Provisions, contingent liabilities and contingent assetsProvisionsarerecognisedwhentheUniversityhasapresentlegalorconstructiveobligation

asaresultofapastevent,itisprobablethatanoutflowofeconomicbenefitswillberequired

tosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.

Theamountrecognisedasaprovisionisdeterminedbydiscountingtheexpectedfuture

cashflowsataratethatreflectsrisksspecifictotheliability.

AcontingentliabilityarisesfromapasteventthatgivestheUniversityapossibleobligation

whoseexistencewillonlybeconfirmedbytheoccurrenceorotherwiseofuncertainfuture

eventsnotwhollywithinthecontroloftheUniversity.Contingentliabilitiesalsoarisein

circumstanceswhereaprovisionwouldotherwisebemadebuteitheritisnotprobablethat

anoutflowofresourceswillberequiredortheamountoftheobligationcannotbemeasured

reliably.

AcontingentassetariseswhereaneventhastakenplacethatgivestheUniversityapossible

assetwhoseexistencewillonlybeconfirmedbytheoccurrenceorotherwiseofuncertain

futureeventsnotwhollywithinthecontroloftheUniversity.

Contingentassetsandliabilitiesaredisclosedbywayofnotewherethereisapossible

ratherthanactualorprobableassetorobligationarisingfromapasteventorwhereitisnot

possibletomeasuretheassetorobligation.

ReservesReservesareallocatedbetweenrestrictedandunrestrictedreserves.

Restrictedreservesincludeendowmentreservesandotherrestrictedreserves.Wherethe

termsofanendowmentindicatearestrictionontheuseofthefund,thebalanceisheld

withinrestrictedendowmentreserves.Otherrestrictedreservesincludeamountsreceived

forwhichadonorhasdesignatedaspecificpurposefortheuseofthesefunds.

Allotherreservesaretreatedasunrestricted.

42


Notes to the financial statements

1 Tuition fees and education contracts Consolidated University

2016 2015 2016 2015

£'000 £'000 £’000 £’000

Full-timehomeandEUstudents 82,716 74,774 82,716 74,773

Full-timeinternationalstudents 49,851 44,734 48,907 44,496

Part-timestudents 13,679 14,313 10,688 11,366

Research training support grants 4,798 4,158 4,798 4,158

Short course fees 1,094 1,152 0 0

Education contracts 343 733 343 733

152,481 139,864 147,452 135,526

2 Funding body grants Consolidated University

2016 2015 2016 2015

£'000 £'000 £’000 £’000

Recurrent grants

HigherEducationFundingCouncil(HEFCE) 24,224 22,299 24,224 22,299

NationalCollegeforTeachingandLeadership(NCTL) 0 275 0 275

Capital grants 4,501 2,741 4,501 2,741

Specificgrants

HigherEducationAcademicSubjectCentres 258 310 258 310

HigherEducationInnovationFund 1,990 2,171 1,990 2,171

Other 47 63 47 63

31,020 27,859 31,020 27,859

3 Research grants and contracts Consolidated University

2016 2015 2016 2015

£'000 £'000 £’000 £’000

Research Councils 14,673 14,483 14,673 14,483

Charities 2,877 2,799 2,877 2,799

Industryandcommerce 5,624 4,509 5,371 4,246

Government(UKandoverseas) 9,367 10,297 9,367 10,297

ResearchandDevelopmentExpenditureCredit(RDEC) 180 2,008 180 2,008

32,721 34,096 32,468 33,833

4 Other income Consolidated University

2016 2015 2016 2015

£'000 £'000 £’000 £’000

Residences,cateringandconferences 10,331 10,033 10,305 10,002

Other capital grants 196 50 572 242

Other income 39,343 41,007 38,263 37,200

49,870 51,090 49,140 47,444

5 Investment income Consolidated University

2016 2015 2016 2015

£'000 £'000 £’000 £’000

Incomefromshort-terminvestments 3,915 4,025 2,082 1,753

Net return on pension scheme 128 37 128 37

4,043 4,062 2,210 1,790

43

UniversityofReading| NOTES TO THE FINANCIAL STATEMENTS

6 Donations and endowments Consolidated University

2016 2015 2016 2015

£'000 £'000 £’000 £’000

New endowments 56 25 56 25

Donations with restrictions 1,514 1,132 1,206 905

Unrestricteddonations 650 626 480 369

Othernon-recurrentgrants 664 1,079 664 1,079

2,884 2,862 2,406 2,378

Gainondisposaloflandheldbyendowment 71,749 28,632 0 0

74,633 31,494 2,406 2,378

Gain on disposal of land held by endowment Consolidated University

2016 2015 2016 2015

£’000 £’000 £’000 £’000

ShinfieldWest 71,705 0 0 0

Cutbush Lane North (83) 16,125 0 0

Manor Site 127 12,507 0 0

71,749 28,632 0 0

On9November2015landtothesouthofReadingknownasShinfieldWestwassoldtoaconsortiumofdevelopers.Theland

hadbeenheldunderendowmentwithintheNationalInstituteforResearchinDairyingTrust,aconnectedcharitableinstitution

oftheUniversity.ThisfollowedsimilardisposalsoflandinthesameareainthepreviousyearknownasCutbushLaneNorthand

theManorSite.ThedisposalswereallpartofalargerdevelopmentofhousingandinfrastructureintheareaaspartoftheSouth

ofM4StrategicDevelopmentLocation(SDL)beingundertakenbytheUniversityandotherparties.

Underthetermsofthecontractsforthesedisposals,theUniversityisobligedtocontributetosignificantinfrastructureand

siteimprovementworkswhicharearequirementoftheplanningpermissionobtainedforsiteswithintheSDL.Someofthese

workshavebeencarriedoutalreadyandsomewillbecarriedoutoverthenextfewyears.TheUniversityhasaccountedforeach

disposalastwoseparatecomponents:

(i)thesaleofland

(ii)theprovisionofaservicedsitetothedevelopers

Inordertosplitthedisposalsintothesetwoelements,anestimatehasbeenmadeofthecontributiontothesiteservicing

costsandamark-upof20%oncosthasbeenassumedinlinewithtypicalmarginsachievedbydevelopmentcompanies.The

amountofincomerecognisedforthiselementhasbeendeterminedbythepercentageofsiteservicingcostsincurredbythe

balancesheetdate.Theremainderoftheproceedshavebeenallocatedtothesaleofland.

Thetotalgainondisposalrecognisedintheyearisshownbelow.

Sale of land£’000

Siteservicing£’000

2016£’000

2015£’000

Shinfield West

Proceeds 81,977 17,827 99,804 0

Less:Deferredproceedsrelatingtofutureobligations 0 (14,360) (14,360) 0

Less:Bookvalueofcostsincurred81,977

(10,923)3,467

(2,816)85,444(13,739)

00

Gainrecognisedintheyear 71,054 651 71,705 0

Cutbush Lane North(Loss)/gainrecognisedintheyear 0 (83) (83) 16,125

Manor SiteGainrecognisedintheyear 0 127 127 12,507

Totalgainrecognisedintheyear 71,054 695 71,749 28,632

Deferredproceedsrelatingtofutureobligationsareincludedindeferredincomeincreditors.FortheShinfieldWestdisposal,thebuyer

ispayingoveraperiodofthreeyearsandtheoutstandingproceedsareshownintradeandotherreceivablesattheirdiscountedvalue.

44


7 Staff costs Consolidated University

2016 2015 2016 2015

Analysis of staff costs £’000 £’000 £'000 £'000

Salaries 117,500 110,358 113,870 107,574

Socialsecuritycosts 10,147 9,051 9,967 8,889

MovementonUSSprovision 2,868 15,288 2,868 15,288

Other pension costs 26,607 23,712 26,071 23,313

Otherstaffcosts 1,501 2,570 1,490 2,480

158,623 160,979 154,266 157,544

2016 2015

Emoluments of the Vice-Chancellor £ £

SirDavidBell:

Salary 257,550 255,000

Pension contributions 42,789 40,800

300,339 295,800

Remunerationofhigherpaidstaff,excludingemployer’spensioncontributions:

2016 2015

Number Number

£100,000to£109,999 11 11

£110,000to£119,999 9 10

£120,000to£129,999 11 7

£130,000to£139,999 1 3

£140,000to£149,999 2 3

£150,000to£159,999 3 1

£160,000to£169,999 0 1

£170,000to£179,999 0 1

£180,000to£189,999 2 2

£190,000to£199,999 1 0

£200,000to£209,999 0 0

£210,000to£219,999 0 0

£220,000to£229,999 0 0

£230,000to£239,999 0 1

£240,000to£249,999 0 0

£250,000to£259.999 1 0

41 40

2016 2015

£ £

Compensationforlossofofficepayableinrespectof1memberofstaffearninginexcessof£100,000peryear(2015:1) 50,002 45,000

Key management personnelKeymanagementpersonnelarethosepersonshavingauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesoftheUniversity.TheUniversityhasidentifieditskeymanagementpersonnelasbeingthemembersoftheUniversityExecutiveGroupconsistingoftheVice-Chancellor,theDeputyVice-Chancellor,thePro-Vice-Chancellors,theChiefOperatingOfficerandtheChiefStrategyOfficer&UniversitySecretary.

2016 2015

£ £

Salaryandbenefitsofkeymanagementpersonnel(includingpensioncontributions) 1,253,762 1,234,532

45


10 Taxation charge Consolidated University

2016 2015 2016 2015

£’000 £’000 £'000 £'000

Shareofcurrenttaxfromassociates (135) 460 0 0

TaxpayableontheResearchandDevelopmentExpenditureCredit(RDEC) 39 438 39 438

Overseas-currenttax 140 169 0 0

Overseas-deferredtax (128) 23 0 0

(84) 1,090 39 438

8 Interest and other finance costs Consolidated University

2016 2015 2016 2015

£’000 £’000 £'000 £'000

Loan interest 4,331 4,393 4,331 4,393

InterestchargeonUSSpensiondeficitrecoveryplan 941 460 941 460

Exchangedifferences (285) 306 (323) 273

Other 255 347 722 244

5,242 5,506 5,671 5,370

9 Analysis of total expenditure by activity Consolidated University

2016£’000

2015£’000

2016£’000

2015£’000

Academicandrelatedexpenditure 150,088 159,181 146,145 154,988

Administrationandcentralservices 34,278 40,985 31,024 40,549

Premises 45,140 40,484 40,098 39,040

Residences,cateringandconferences 11,919 9,167 11,887 9,167

Research grants and contracts 22,719 23,032 21,144 22,974

Otherexpenses 24,629 20,405 19,143 10,329

288,773 293,254 269,441 277,047

Consolidated University

2016 2015 2016 2015

Other operating expenses include: £’000 £’000 £'000 £'000

Operating lease rentals

Land and buildings 4,517 2,329 1,375 1,964

Other 1,316 1,618 1,231 1,601

Externalauditor’sremuneration

Auditservices 181 149 96 85

Non-auditservices 224 361 144 270

Includedinotheroperatingexpensesisanamountof£4,831,000(2015:£12,144,000)inrespectofthereviewofefficiencyandeffectiveness.Inadditiontothisamount,expenditureof£6,724,000(2015:£11,488,000)arisingfromthereviewhasbeentreatedascapitalexpenditureandisincludedinadditionstofixedassets.

Average staff numbers by major category:2016 2015

Number Number

Academic 925 848

Research 330 327

Management and specialist 876 767

Technical 153 151

Other 998 962

3,282 3,055

7 Staff costs (continued)

46


11 Tangible fixed assets ib

ConsolidatedLand and buildings

Plant and machinery Equipment

Assetsinthecourse of

construction Total

Cost or valuation £’000 £’000 £’000 £’000 £’000

At1August2015 383,068 11,717 120,537 32,569 547,891

Additions 5,964 1,714 17,365 32,119 57,162

Transfers between categories 19,128 0 0 (19,781) (653)

Transferstoinvestmentproperties 0 0 0 (59) (59)

Disposals (13,505) 0 (12) (142) (13,659)

Exchangedifferences 545 8 677 (32) 1,198

At 31 July 2016 395,200 13,439 138,567 44,674 591,880

Depreciation

At1August2015 131,685 3,881 60,292 0 195,858

Transfers between categories (653) 0 0 0 (653)

Chargefortheyear 14,006 551 9,705 0 24,262

Disposals (27) 0 (12) 0 (39)

Exchangedifferences 83 6 135 0 224

At 31 July 2016 145,094 4,438 70,120 0 219,652

Net book value at 31 July 2016 250,106 9,001 68,447 44,674 372,228


UniversityLand and buildings

Plant and machinery Equipment

Assetsinthecourse of

construction Total

Cost or valuation £’000 £’000 £’000 £’000 £’000

At1August2015 349,446 11,705 118,373 30,420 509,944

Additions 2,189 1,715 13,974 32,369 50,247

Transfers between categories 18,036 0 0 (18,036) 0

Transferstoinvestmentproperties 0 0 0 (309) (309)

Disposals (330) 0 0 (142) (472)

At 31 July 2016 369,341 13,420 132,347 44,302 559,410

Depreciation

At1August2015 126,572 3,869 59,789 0 190,230

Chargefortheyear 12,960 529 9,027 0 22,516

At 31 July 2016 139,532 4,398 68,816 0 212,746



Includedinlandandbuildingsaboveislandwhichisnotdepreciatedasfollows:


2016 2015 2016 2015

£’000 £'000 £'000 £'000

Land not depreciated 23,631 23,540 15,540 15,540

Interestof£725,000hasbeencapitalisedintheyearto31July2016(2015:£568,000)andisincludedwithintangiblefixedassets.

Totalaggregatecapitalisedfinancecoststodatewithinthecostoftangiblefixedassetsat31July2016were£4,512,000(2015:£3,873,000).

47


Consolidated 2016 2015 2014 2013 2012

Cost or valuation £'000 £'000 £'000 £'000 £'000

AcquisitionspurchasedwithUniversityfunds 0 46 962 8 0

At1August 39,346 39,300 38,338 23,097 23,097

Revaluations 0 0 0 15,233 0

At 31 July 39,346 39,346 39,300 38,338 23,097

University 2016 2015 2014 2013 2012

Cost or valuation £'000 £'000 £'000 £'000 £’000

AcquisitionspurchasedwithUniversityfunds 0 46 962 8 0

At1August 39,167 39,121 38,159 22,947 22,947

Revaluations 0 0 0 15,204 0

At 31 July 39,167 39,167 39,121 38,159 22,947

12 Heritage assets

HeritageassetsincludemanyuniqueitemsandcollectionswhichtheUniversityhasaccumulatedsinceincorporation.Theseareheld

andmaintainedprincipallyfortheircontributiontoknowledgeandculture.TheUniversityconservestheseassetsandaugmentsthe

collections where appropriate in order to enable use of the assets for teaching and research and access to the assets for engagement

withmembersofthepublic.Theitemsandcollectionsarecarefullycataloguedandcustodianshipisgiventospecificareasandpersons

fortheircareandmaintenance.

TheUniversity’scollectionsspanmuseum,archiveandlibraryholdingsofregional,nationalandinternationalsignificance.Theseinclude

theUniversityLibrary,theMuseumofEnglishRuralLife,theColeMuseumofZoology,theHerbarium,theUreMuseumofGreek

Archaeology,andotherimportantteachingandresearchdepartmentalmuseum,libraryandarchivecollections.Thesecollectionscan

beviewedbymembersofthepublic(somecollectionscanonlybeviewedbyappointment).

TheUniversityLibraryholdscollectionsofrarebooksincludingearlyprintedbooksfromthehandpressera(pre-1851),privatepress

books,modernliteraryfirsteditionsandotherprintedmaterial.Italsocontainsaround140collectionsofhistoricalandliterarypapers,a

smallnumberofhistoricalmanuscriptsandalargebodyofUniversityarchivesandrecords.

TheMuseumofEnglishRuralLife(MERL)reopenedinOctober2016aftera£3millionredevelopmentprojectwhichradically

transformedthepublicdisplayswithnewinteractiveandimmersivegalleries.ThecollectionstellthestoryofruralEngland.The

collectionhasover25,000objectsandthemuseumlibraryhasthemostcomprehensivecollectionofbooksrelatedtoruralEngland

witharound100,000volumes.Thecollectionalsocontainshundredsofhoursofhistoricfilmandover1millionphotographs,including

materialfromprominentagriculturalpublicationsandorganisations.Thearchivescovermorethan4.5kilometresofshelvingandhold

recordsfromthethirteenthtothetwenty-firstcentury.

TheColeMuseumofZoologywasestablishedintheearly20thcenturybyFrancisJ.Cole,ProfessorofZoologyfrom1907to1939.

Itcontainsaround4,000specimens.Themuseumillustratestherelationshipbetweenformandfunctionintheanimalkingdomand

housesoneofBritain’smostimportantzoologicalcollections.HighlightsincludecompleteskeletonsofamaleIndianelephant,akiller

whale,afivemetrereticulatedpythonandapairofgiantspidercrabs.

TheHerbariumintheSchoolofPlantScienceswasfoundedin1900andcontainsover260,000driedplantspecimens.Thecollection

isrichinspecimensfromEurope,NorthAfrica,Macaronesia,theMiddleEast,temperateSouthAmericaandtheFalklandIslands.Ferns

andfernalliesarealsorepresentedonaworldwidescale.ThereareverysignificantBritishlichenandbryophyteholdings

TheUreMuseumofGreekArchaeologywasformedintheearly1920sandcontainsthefourthlargestcollectionofancientGreek

ceramicsinBritain.ThecollectionprimarilyconsistsofmaterialfromtheGreekandGreco-RomancivilisationsoftheMediterranean,

mostnotablyGreekandEtruscanceramicsandterracottas.Otherartefactsincludeprehistoricpottery,aswellasmetalandstone

artefactsofGreekandRomandate.ThereisalsoanimportantcollectionofEgyptianantiquities,rangingfromthePre-dynastictothe

Romanperiod.Thereareapproximately2,000objectsinthemuseum.

TheUniversityishometotheBeckettInternationalFoundationandtheBeckettCollection,theworld’slargestcollectionofresources

relatingtoSamuelBeckett,andhasmanyinternationally-renownedBeckettscholars.

ThecollectionsarerevaluedperiodicallybyAdamSchoon,anexternalantiqueandfineartdealerandvaluerwithover35years’

experience,ona‘walkthrough’basisforinsurancepurposes.ThelastvaluationwasinDecember2012.Themovementonheritage

assetsis:

48


12 Heritage assets (continued)

Thesplitofheritageassetsbytypeofassetis: Consolidated University

2016 2015 2016 2015

Cost or valuation £'000 £'000 £'000 £'000

Books&manuscripts 25,708 25,708 25,708 25,708

Artworks 3,938 3,938 3,938 3,938

Naturalhistory 2,156 2,156 2,156 2,156

Agricultural 4,176 4,176 4.176 4,176

Other 3,368 3,368 3,189 3,189

39,346 39,346 39,167 39,167

13 Biological assetsConsolidated & University Dairy cattle Total

Fair value less costs to sell £'000 £'000

At1August2015 459 459

Netdecreaseinlivestock (19) (19)

Decreaseinfairvaluelesscoststosell (11) (11)

At 31 July 2016 429 429

14 Investment propertiesConsolidated

Total

Fair value £’000

At1August2015 49,423

Additions 157

Transfersfromfixedassets 59

Disposals (1,264)

Increaseinvalueofpropertiesinyear 2,212

At 31 July 2016 50,587

University

Total

Fair value £’000


Additions 157

Transfersfromfixedassets 309

Disposals (1,264)

Increaseinvalueofpropertiesinyear 1,009

At 31 July 2016 25,073

TheUniversityanditstrustsholdanumberofcommercialandresidentialinvestmentproperties.Allpropertiesarevaluedonacyclicalbasiswiththeintentionofrevaluingallpropertiesatleastonceeverythreeyears.ValuationsarecarriedoutbyafirmofindependentvaluersinaccordancewiththeRICSappraisalandvaluationmanuals.Anindexisappliedinrespectofpropertieswhichhavenotbeenrevaluedattheendofthecurrentfinancialyeartoreflectthemovementinthepropertymarketduringtheyear.

49


15 Non-current investmentsConsolidated Listed

investmentsOther

investments Total

Cost or valuation £'000 £'000 £'000

At1August2015 18,475 45 18,520

Additions 658 0 658

Changesinmarketvalue 724 0 724

At 31 July 2016 19,857 45 19,902

University Listed investments

Subsidiarycompanies Total

Cost or valuation £’000 £’000 £’000

At1August2015 18,475 4,061 22,536

Additions 658 4,026 4,684

Changesinmarketvalue 724 0 724

At 31 July 2016 19,857 8,087 27,944

16 Investments in associates Consolidated University

2016 2015 2016 2015

£’000 £’000 £’000 £’000

Shareofoperatingsurplus/(deficit)inassociates 139 (724) 0 0

Shareofcurrenttaxfromassociates-credit/(charge) 135 (460) 0 0

(Deficit)/surplusonrevaluationoffixedassets (240) 3,397 0 0

Totalcomprehensiveincomeintheyearforassociates 34 2,213 0 0

At1August 11,257 9,030 10,569 10,555

Othermovementsinyear (2) 14 (2) 14

At 31 July 11,289 11,257 10,567 10,569

TheUniversityispartytoanarrangementwithUPPinrespectoftheprovisionandoperationofitsstudentresidentialaccommodation.TheaccommodationisoperatedbyUPP(ReadingI)Limited,awholly-ownedsubsidiaryofUPP(ReadingI)HoldingsLimited.TheUniversityhasgrantedlongleaseholdintereststoUPP(ReadingI)Limitedinrespectoftheaccommodation.TheUniversityhasa20%holdinginboththeequityandloannotesofUPP(ReadingI)HoldingsLimitedandhasaccountedforitsinterestasaninvestmentinanassociatedundertaking.

Listed investments comprise: Consolidated University

2016 2015 2016 2015

£’000 £’000 £’000 £’000

Sarasin&PartnersAlphaCIFforEndowments 19,780 18,414 19,780 18,414

Genus plc 77 61 77 61

19,857 18,475 19,857 18,475

Theseinvestmentshavebeenstatedatmarketvaluewheretheyarelistedonarecognisedstockexchange.Wherethereisnoactivemarkettheinvestmentshavebeenstatedatcost.

Shares Loan notes Total

£’000 £’000 £’000

At1August2015 441 10,128 10,569

Movementsinyear 0 (2) (2)

At 31 July 2016 441 10,126 10,567

50


17 Trade and other receivables Consolidated University

2016 2015 2016 2015

Amounts falling due within one year: £'000 £'000 £'000 £'000

Researchgrantsreceivables 3,535 3,331 3,535 3,331

Tradereceivables 14,556 17,417 11,462 14,063

ProceedsdueonthesaleofShinfieldWest 9,963 0 0 0

Otherreceivables 7,733 7,804 7,400 7,704

Prepaymentsandaccruedincome 7,624 8,551 7,217 8,269

Amountsduefromsubsidiaryundertakings 0 0 15,404 13,173

AmountsduefromUniversityendowmenttrusts 0 0 1,868 1,553

Amountsduefromassociatedundertakings-UPP(ReadingI)Limited 1,285 1,840 1,285 1,840

44,696 38,943 48,171 49,933

Amounts falling due after more than one year:

ProceedsdueonthesaleofShinfieldWest 38,900 0 0 0

Otherreceivables 397 463 397 426

83,993 39,406 48,568 50,359

Theloannotesareinterest-bearing,securedandsubordinatetotheseniorlender’ssecurity.Theyaretransferrablesubjecttocertainrestrictions.

UnderthearrangementwithUPP,theassociateanditswholly-ownedsubsidiarieshaveresponsibilityfortheprovisionandoperationoftheaccommodation.TheUniversitycontinuestoprovidecertainsoftfacilitiesmanagementservicesinrespectoftheaccommodation.

ConsiderationhasbeenmadeastowhetherthearrangementmeetsthecriteriaforclassificationasaserviceconcessionarrangementunderSection34ofFRS102.UnderthearrangementwithUPP,theUniversityhassome,butnotcomplete,controlovertheuseandpricingoftheaccommodationunits.Thecontractspecifiesamaximumpricewhichmaybecharged,butUPP(ReadingI)Limitedareabletosetalowerprice.TheUniversityrequirestheroomstobeletprimarilytostudents,butUPP(ReadingI)Limitedareabletofillanyremainingroomswithnon-studentsiftheUniversityconsistentlyfailstofilltheplaces.

TheUniversitytakesontheriskofstudentsdefaultingonrentalpaymentsandsomeofthevoidriskforstudentsnottakingupassignedplaces.However,theUniversitydoesnotguaranteeanyparticularlevelofoccupancyornominateacertainnumberofrooms.Italsoconsidersitsinvolvementtobemoreakintoanagencyarrangementratherthanactingasprincipal.Forthesereasons,thereisnominimumleasepaymentfigureunderthearrangementandthereforenoassetorliabilityhasbeenaccountedfor.

Includedinthestatementofcomprehensiveincomeareamountsreceivablefrom/(payableto)theassociateanditssubsidiariesinrespectofthefollowingservices.

Consolidated & University Income Expenditure 2016 Income Expenditure 2015

£’000 £’000 £’000 £’000 £’000 £’000

Rent collection 1,473 0 1,473 1,343 0 1,343

Facilitiesmanagementservices 1,635 0 1,635 1,629 0 1,629

Utilities 1,011 0 1,011 898 0 898

Estatesservicechargeandinfrastructurefees 468 0 468 429 0 429

Vacation residence and conferencing 0 (205) (205) 0 (998) (998)

Wifiupgrade 36 0 36 689 0 689

Interestreceivablesonloannotes 865 0 865 848 0 848

Other income 53 0 53 38 0 38

Otherexpenditure 0 0 0 0 (73) (73)

5,541 (205) 5,336 5,874 (1,071) 4,803

TheUniversitychargesandreceivesrentsfromstudents.PaymentsaremadetoUPP(ReadingI)Limitedwithreferencetothenumberofunitsofstudentaccommodationsoldduringtheyear.PaymentsmadetoUPP(ReadingI)duringtheyeartotalled£27,530,000(2015:£26,834,000)andhavebeennettedwiththeincomereceivedfromstudentsinthestatementofcomprehensiveincome.

TheproceedsfromthesaleofShinfieldWestarereceivableininstalmentsoverthe3-yearperiodfollowingthepointofcompletioninNovember2015.Theamountsduehavebeenincludedattheirdiscountedvalueasshownbelow(2015:nil).Adiscountrateof1.5%hasbeenappliedinlinewithsimilardebtinstruments.

16 Investments in associates (continued)

51


19 Creditors: amounts falling due within one year Consolidated University

2016 2015 2016 2015

£'000 £'000 £'000 £'000

Unsecuredloans 3,402 5,650 3,402 5,650

Tradepayables 7,785 7,901 7,714 7,203

Socialsecurityandothertaxationpayable 3,366 3,013 3,286 2,867

Otherpayables 20,108 18,583 19,852 18,191

Accruralsanddeferredincome 53,061 48,275 44,045 44,758

Deferred income on land disposals 5,463 1,601 0 0

Amountsduetosubsidiaryundertakings 0 0 1,385 1,424

AmountsduetoUniversityendowmenttrusts 0 0 87,026 40,924

Amountsduetoassociatedundertakings–UPP(ReadingI)Limited 6,582 6,702 6,582 6,702

99,767 91,725 173,292 127,719

18 Current investmentsConsolidated Total

Cost or valuation £’000


Net additions 593

Changesinmarketvalue 6,745

At 31 July 2016 68,508

University Total

Cost or valuation £’000

At1August2015 0

Net additions 0

Changesinmarketvalue 0

At 31 July 2016 0

Deferred incomeIncludedwithinaccrualsanddeferredincomearethefollowingitemsofincomewhichhavebeendeferreduntilspecificperformance-relatedconditionshavebeenmet.

Deferred income on land disposals Asexplainedinnote6,aproportionoftheincomeonthesalesofShinfieldWest,CutbushLaneNorthandtheManorSitehasbeendeferredandwillberecognisedwhentheassociatedsiteservicingoutputsaredelivered.Theportiondueinlessthanoneyearrelatestothoseoutputsexpectedtobedeliveredwithinthenext12months.


2016 2015 2016 2015

£'000 £'000 £'000 £'000

Tuition fees 6,516 6,740 3,377 3,909

Researchgrantsreceivedonaccount 15,133 15,486 15,133 15,486

Other income 13,288 12,250 12,823 12,218

34,937 34,476 31,333 31,613

Consolidated Fullvalue Discounted

£'000 £'000

Receivableinlessthanoneyear 10,000 9,963

Receivableingreaterthanoneyear 40,000 38,900

50.000 48,863

17 Trade and other receivables (continued)

Listed investments comprise: Consolidated University

2016 2015 2016 2015

£’000 £’000 £’000 £’000

SegregatedportfoliosmanagedbySarasin&Partners 60,696 53,880 0 0

Sarasin&PartnersAlphaCIFforEndowments 7,812 7,290 0 0

68,508 61,170 0 0

Theseinvestmentshavebeenstatedatmarketvalue.

52


20 Creditors: amounts falling due after more than one year Consolidated University

2016 2015 2016 2015

£’000 £’000 £'000 £'000

Unsecuredloans 141,014 144,016 141,014 144,016

Netfinancecoststobeamortisedoverthetermoftheunsecuredloans 419 490 419 490

Deferred income on land disposals 10,652 0 0 0

Otherpayables 172 0 0 0

152,257 144,506 141,433 144,506

Consolidated&University

2016 2015

Analysis of loans: £'000 £'000

Duewithinoneyear:orondemand 3,402 5,650

Duebetweenoneandtwoyears 3,177 3,295

Duebetweentwoandfiveyears 11,951 10,499

Dueinfiveyearsormore 125,886 130,222

144,416 149,666

Less:Duewithinoneyearorondemand (3,402) (5,650)

Total loans due after more than one year 141,014 144,016

TheUniversityissuedabondfor£70mthroughaprivateplacementfacilitatedbyTheRoyalBankofScotlandinMay2007.Thisloanisunsecuredandisrepayablein2047byasinglepaymentof£70m.Interestispayablehalfyearlyinarrearsatacouponrateof5.42%.

TheUniversityhasa£60msterlingloanfromBarclaysBankplcwithatermof37years.ItcurrentlyhasarepaymentholidayuntilJuly2019.Theinterestrateonthisloanisatasetmarginof1.4%aboveLIBOR.

TheUniversityhasaloanfromtheHomes&CommunitiesAgencywhichisbeingusedtofundtheconstructionoftheShinfieldEasternReliefRoadandmotorwaybridgeassociatedwiththeUniversity’slanddisposalsinShinfield.Theamountoutstandingat31July2016was£13.6m(2015:£19.0m).TheloanisrepayablebyquarterlyinstalmentsuntilSeptember2021.Theinterestrateonthisloanisatasetmarginof1.31%abovetheEUreferenceratefortheUK.

Deferred income on land disposals

Asexplainedinnote6,aproportionoftheincomeonthesalesofShinfieldWest,CutbushLaneNorthandtheManorSitehasbeendeferredandwillberecognisedwhentheassociatedsiteservicingoutputsaredelivered.Theportiondueinmorethanoneyearrelatestothoseoutputsexpectedtobedeliveredbeyondthenext12months.

21 Pensions provisions

Consolidated & University Obligation tofundUSS

deficit

UREPFscheme deficit Total

£’000 £’000 £'000

At1August2015 30,844 (937) 29,907

Netchargetostatementofcomprehensiveincome 25,621 12,262 37,883

Contributionspaidinyear (21,812) (5,139) (26,951)

At 31 July 2016 34,653 6,186 40,839

TheobligationtofundthepastdeficitontheUniversitiesSuperannuationScheme(USS)hasarisenfromthecontractualobligationofemployerswithinthescheme,includingtheUniversity,tomakeadditionalcontributionstoreducetheoveralldeficitarisingfrompastperformance.Anassessmenthasbeenmadeoftheexpectedfutureemployeeswithintheschemeandthesalarypaymentsovertheperiodofthecontractedobligationinassessingthevalueofthisprovision.

TheGroup’snetobligationinrespectoftheUniversityofReadingEmployees’PensionFund(UREPF)hasbeencalculatedbydiscountingtopresentvaluetheestimatedamountoffuturebenefitsthatemployeeshaveearnedinreturnfortheirserviceinthecurrentandpriorperiodslessthefairvalueofanyplanassets.

MoreinformationontheGroup’spensionschemesisgiveninnote33.

53


23 Endowment reserves

ConsolidatedUnrestricted

permanentRestricted

permanentRestricted expendable 2016 2015

At1August £’000 £’000 £’000 £’000 £’000

Capital 2,444 6,857 115,036 124,337 87,430

Accumulatedincome 502 2,537 312 3,351 3,015

2,946 9,394 115,348 127,688 90,445

New endowments 0 0 56 56 25

Income 99 290 3,803 4,192 4,064

Expenditure (25) (108) (4,807) (4,940) (27)

Gainondisposaloflandheldbyendowment 0 0 71,749 71,749 28,632

Increaseinvalueofinvestmentproperties 0 0 1,203 1,203 2,312

Increaseinvalueofinvestments 126 363 6,815 7,304 2,500

Transferstounrestrictedreserves 0 0 (376) (376) (263)

At 31 July 3,146 9,939 193,791 206,876 127,688

Represented by:

Capital 2,571 7,219 193,469 203,259 124,337


3,146 9,939 193,791 206,876 127,688

UniversityUnrestricted

permanentRestricted

permanentRestricted expendable 2016 2015

At1August £’000 £’000 £’000 £’000 £’000

Capital 2,444 6,857 1,265 10,566 9,523


2,946 9,394 1,571 13,911 12,559

New endowments 0 0 56 56 25

Income 99 290 51 440 417

Expenditure (25) (108) (54) (187) (139)

Increaseinvalueofinvestments 126 363 70 559 1,049

At 31 July 3,146 9,939 1,694 14,779 13,911

Represented by:

Capital 2,571 7,219 1,376 11,166 10,566


3,146 9,939 1,694 14,779 13,911

22 Other provisionsConsolidated University

SSE closure provision

Total SSE closure provision

Total

£’000 £’000 £'000 £'000

At1August2015 588 588 588 588

Utilisedinyear (214) (214) (214) (214)

Transferred to accrurals and deferred income (88) (88) (88) (88)

Credittostatementofcomprehensiveincome (286) (286) (286) (286)

At 31 July 2016 0 0 0 0

InJuly2015theUniversityannouncedtheclosureoftheSchoolofSystemsEngineering(SSE).Aprovisionof£588,000wasmadeforredundancycosts.Duringtheyearanumberofpaymentsweremade.Theremainingbalancehasbeenreclassifiedasanaccrualwithincreditorsandtheresultingoverprovisionhasbeenreleasedtothestatementofcomprehensiveincome.

54


24 Restricted reserves Consolidated University

2016 2015 2016 2015

Restricted funds / donations £’000 £’000 £’000 £’000

At1August 988 658 719 461

New donations 1,514 1,132 1,206 905

Expenditure (921) (802) (732) (647)

Transfersfromunrestrictedreserves 43 0 0 0

At 31 July 1,624 988 1,193 719

Analysis of restricted funds / donations by type of purpose Consolidated University

2016 2015 2016 2015

£’000 £’000 £’000 £’000

Lectureshipsandstaff-related 0 59 0 59

Scholarships and bursaries 721 391 721 391

Research support 379 151 379 151

ReadingRealEstateFoundation 431 269 0 0

Other 93 118 93 118

1,624 988 1,193 719

Analysis by asset Consolidated University

2016 2015 2016 2015

£'000 £'000 £'000 £'000

Landandproperty 55 9,615 0 0

Investmentproperties 25,514 24,561 0 0

Investments 83,622 75,204 15,069 13,989

Receivablesdueingreaterthanoneyear 38,900 0 0 0

FundsheldbytheUniversity 65,250 19,677 (292) (78)

Other (6,465) (1,369) 2 0

206,876 127,688 14,779 13,911

25 Net debtAt1August

2015 MovementAt31July

2016

Consolidated £’000 £’000 £’000

Cashatbankandondeposit 38,505 7,828 46,333

Cashandcashequivalents 38,505 7,828 46,333

Currentinvestments 61,170 7,338 68,508

Debtduewithinoneyear (5,650) 2,248 (3,402)

Debtdueafteroneyear (144,016) 3,002 (141,014)

(49,991) 20,416 (29,575)

26 Capital commitments Consolidated University

2016 2015 2016 2015

Provisionhasbeenmadeforthefollowingcapitalcommitments: £’000 £’000 £’000 £’000

Commitments contracted for 50,981 21,561 50,981 19,549

Thesecommitmentsarisefromcontractsincludedintheongoingcapitalprogramme.

23 Endowment reserves (continued)

55


27 Contingent liabilities

TheUniversityreclaimedalltheVATincurredintheconstructionoftheAgriculturebuildingatEarleyGatewhichwascompletedin1996andwasthesubjectofaleaseandleasebackarrangementwithathirdparty.HMRevenueandCustomschallengedthisrecoveryofVATandraisedanassessmenttotaxfor£1.2m.TheUniversityappealedtheassessmentandemphasisedthatnocashadvantagewassoughtunderthearrangement.TheongoingleasearrangementsensurethatVATispaidbytheUniversity.TheUniversitystoodbehindasimilarcasewhichwasbroughttothecourtsbytheUniversityofHuddersfield.Thatcasewasunsuccessful,buttherearekeydifferencesinthearrangementsundertakenbyReadingandHuddersfield.TheUniversitywillnowconsiderwhethertocontinuetoappealtheassessmentortoseekacompromisewithHMRC.

AspartofitsdevelopmentoftheShinfieldEasternReliefRoadandrelatedbridgeovertheM4,theUniversityhasprovidedperformanceguaranteebondstoWokinghamBoroughCouncilfor£12.2mandtheHighwaysAgencyfor£3.8m.IntheeventthattheUniversityfailstodelivertheroadandthebridge,theguaranteedamountswouldbecomepayablebytheguarantor,BarclaysBankplc,whowouldthenseektorecoverthecostsfromtheUniversity.

TheUniversityhasundertakentoprovidecontinuedsupporttoitstrustsandsubsidiarycompaniesforaperiodofatleasttwelvemonthsfromthedateofapprovalofthoseundertakings’financialstatements.

28 Future lease obligations and receivablesThetotalfutureminimumleasepaymentsdueundernon-cancellableoperatingleasesareasfollows:

Land and buildings Other 2016 2015

Consolidated £’000 £’000 £’000 £’000

Future minimum lease payments due:

Notlaterthan1year 3,122 451 3,573 3,014

Laterthan1yearandnotlaterthan5years 23,654 796 24,450 17,108

Laterthan5years 38,900 0 38,900 44,627

65,676 1,247 66,923 64,749


University £’000 £’000 £’000 £’000

Future minimum lease payments due:



Laterthan5years 18,076 0 18,076 19,909

24,622 1,122 25,744 29,234

IncludedintheUniversityandconsolidatedtotalsforlandandbuildingsis£23,868,000inrespectoftheEnterpriseCentreontheWhiteknightscampus(2015:£25,092,000).Theleaserunsuntil2036.Alsoincludedintheconsolidatedtotalis£40,683,000inrespect oftheEduCitycampusinMalaysia(2015:£34,741,000).PaymentsaredenominatedinMalaysianringgitsandtheleaserunsuntil2027.

Inaddition,underthetermsofthearrangementwithUPP,theUniversitymakespaymentswithreferencetothenumberofunitsofstudentaccommodationsoldduringtheyear.At31JulytheUniversitywascommittedtomakingpaymentsinrespectofthosestudentswhohadacceptedoffersofaccommodationfortheforthcomingyear.Furtherdetailsofthearrangementaregiveninnote16.

Thegroupalsoactsaslessorinanumberofleaseagreements.Thetotalfutureminimumleasepaymentsreceivableundernon-cancellableoperatingleasesareasfollows:

56


30 Disclosure of related party transactions

Councilmembersarethetrusteesforcharitablelawpurposes.DuetothenatureoftheUniversity’soperationsandthecompositionoftheCouncil,beingdrawnfromlocalpublicandprivatesectororganisations,itisinevitablethattransactionswilltakeplacewithorganisationsinwhichamemberoftheCouncilmayhaveaninterest.AlltransactionsinvolvingorganisationsinwhichamemberofCouncilmayhaveaninterestareconductedatarm’slengthandinaccordancewiththeUniversity’sFinancialRegulationsandusualprocurementprocedures.Expendituretotalling£14,520wasincurredinrespectofTextMattersLimited,acompanyinwhichamemberofCouncilhasasignificantinterest.Therewerenooutstandingamounts.

CouncilmembersdonotreceiveremunerationorfeesinrespectoftheirservicesasCouncilmembers.TheexpensesofCouncilmembersincurredandclaimedintheperformanceoftheirdutiesincludingattendanceatCouncilmeetingsarereimbursedbytheUniversity.AllsuchreimbursementsaresubjecttoapprovalbytheSecretarytotheCouncil.Thetotalexpensespaidtooronbehalfof10membersofCouncilwas£1,840(2015:£1,378to7membersofCouncil)whichrelatedtotravelandsubsistenceexpensesincurred.


Consolidated £’000 £’000 £’000 £’000

Future minimum lease payments receivable:



Laterthan5years 2,245 0 2,245 4,150

13,452 0 13,452 11,007


University £’000 £’000 £’000 £’000

Future minimum lease payments receivable:



Laterthan5years 1,774 0 1,774 4,150

8,509 0 8,509 9,520

29 Amount disbursed as agent - Consolidated & UniversityNCTLBursary NCTLBursary

2016 2015

£'000 £'000

Excessofincomeoverexpenditureat1August 401 206

Income

FundingCouncilgrants 2,199 2,258

Expenditure

Disbursed to students (2,313) (2,063)

Excess of income over expenditure at 31 July 287 401

TheUniversityactsonlyasapayingagentinrelationtoNationalCollegeforTeachingandLeadership(NCTL)bursaries,distributingthemtostudents.Thefundsreceivedandrelateddisbursementsarethereforeexcludedfromthestatementofcomprehensiveincome.

28 Future lease obligations and receivables (continued)

57


TheUniversity’sfinancialstatementsincludethefollowingbalancesduefromReadingUniversityStudents’Union(RUSU):

2016 2015

£'000 £'000

Due from RUSU 462 489

TheUniversitypaidthefollowinggrantstoRUSU: 2016 2015

£’000 £’000

Coreblockgrant 1,112 1,033

Specificgrant 18 44

1,130 1,077

TransactionswiththeUniversity’s20%ownedassociate,UPP(ReadingI)HoldingsLimited,anditswhollyownedsubsidiary,UPP (ReadingI)Limited,aresetoutinnote16.

31 Subsidiary undertakings

Thesubsidiarycompanies,wholly-ownedoreffectivelycontrolledbytheUniversity,areasfollows:

Name of company Country of registration Principal activity Status

HenleyBusinessAngelsLimited England&Wales Business launch support Limitedbyguarantee

HenleyBusinessSchoolLimited England&Wales Management education 100%owned

ReadingRealEstateFoundation England&Wales Real estate education Limitedbyguarantee

ThamesValleyScienceParkLimited England&Wales Propertylettingbusiness 100%owned

TheUniversityofReadingScience& TechnologyCentreLimited England&Wales Ceasedtradinginyear Limitedbyguarantee

HenleyBusinessSchoolGmbH Germany Management education 100%owned

HenleyBusinessSchool(HongKong)Limited HongKong Ceasedtradinginyear 100%owned

RUMALReadingSdn.Bhd. Malaysia Overseascampus 100%owned

HenleyBusinessSchool(SouthAfrica)Limited SouthAfrica Management education 100%owned

TheHenleyBusinessSchool(SouthAfrica) SouthAfrica Notcurrentlytrading 100%owned

HenleyManagementCollege (SouthAfrica)Section21A SouthAfrica Notcurrentlytrading 100%owned

AnumberofcharitableinstitutionsareadministeredbyoronbehalfoftheUniversityandhavebeenestablishedforitsgeneralorspecialpurposes.Asaresult,underparagraph28ofSchedule3totheCharitiesAct2011,theseconnectedinstitutionsareexemptfromregistrationwiththeCharityCommission.TheseconnectedinstitutionsareincludedintheconsolidationsincetheUniversityisthesoletrusteeofeachandexercisescontrolovereachone’sactivities.Themovementsintheyearonthetotalfundsofallconnectedinstitutions,asreportedintheirownaccounts,wereasfollows:

32 Connected charitable institutions

At1August2015

Total income

Total expenditure

Other gains and losses

At31July2016

£’000 £’000 £’000 £’000 £’000

Research Endowment Trust 99,735 2,703 (3,677) 6,997 105,758

NationalInstituteforResearchinDairyingTrust 27,824 72,566 (1,078) 599 99,911

Hugh Sinclair Trust 5,828 231 (315) 296 6,040

BeckettInternationalFoundation 7 1 (3) 0 5

Greenlands Trust 16,624 3 (603) 0 16,024

30 Disclosure of related party transactions (continued)

58


33 Pension schemes

TheprincipalpensionschemesfortheUniversity’sstaffaretheUniversitiesSuperannuationScheme(USS),theUniversityofReadingEmployees’PensionFund(UREPF)andtheUniversityofReadingPensionScheme(URPS).USSprovidesbenefitsbasedonfinalpensionablesalaryforacademicandrelatedemployeesforallUKuniversities.TheUREPFandURPSschemesprovidebenefitsforothermembersofUniversitystaff.ContributionsarealsopaidtotheTeachersPensionScheme(TPS)forasmallnumberofstaffandtootherpensionschemesinoverseasjurisdictions.

TheResearchEndowmentTrustprovidesfundsforspecificresearchandeducationprojectsattheUniversityofReading.

TheNationalInstituteforResearchinDairyingTrustaimstopromoteanddevelophighqualityresearchintoagricultureandfoodattheUniversityofReading.

TheHughSinclairTrustpromotesresearchintohumannutritionattheUniversityofReading.

TheBeckettInternationalFoundationprovidesseminarsandexhibitionsonandpromotesresearchintotheworksofSamuelBeckett.ItalsocontributestothepreservationandcataloguingoftheSamuelBeckettArchiveheldbytheUniversityofReading.

TheGreenlandsTrustaimstoadvanceeducationandlearninginbusinessandmanagementstudieswhichitdoesthroughtheprovisionofspecificgrantstoHenleyBusinessSchoolattheUniversityofReading.

Total pension costs for the year Consolidated University

2016 2015 2016 2015

£'000 £'000 £'000 £'000

USScontributions 21,812 19,604 21,540 19,369

MovementonUSSprovision 2,868 15,288 2,868 15,288

UREPFcurrentservicecost 3,324 2,893 3,292 2,865

URPS 1,240 1,069 1,224 1,056

Other pension schemes 231 146 15 23

Total pension costs 29,475 39,000 28,939 38,601

Includedinothercreditorsareunpaidpensioncontributionsof£2,451,000(2015:£2,111,000).

Universities Superannuation Scheme (USS)

TheUniversityparticipatesintheUniversitiesSuperannuationScheme(USS),amulti-employerhybridschemewhichhasbothdefinedbenefitanddefinedcontributionelements.

Forthedefinedbenefitelementofthescheme,theUniversitycontributesaspecifiedpercentageofpayrollcostsuptoacertainsalarythreshold.Since1April2016,thepercentagehasbeen18%withasalarythresholdof£55,000perannum.Priortothatdate(andthroughoutthewholeofthepreviousyear)thepercentagewas16%withnosalarythreshold.Memberscurrentlyaccrueapensionof1/75thforeachyearofservicealongwitha3/75thlumpsumunderacareeraverageearningsarrangement.

Forthoseemployeeswishingtomakeadditionalvoluntarycontributions(AVCs)andforthoseearninginexcessofthesalarythreshold,adefinedcontributionelementwillshortlybeintroduced.TheUniversitywillmatchAVCsmadebyallemployeesuptoamaximumof1%.Itwillalsocontribute12%formembersonearningsabovethesalarythreshold.

Thelatestavailablefullactuarialvaluationoftheschemewasat31March2014(“thevaluationdate”),whichwascarriedoutusingtheprojectedunitmethod.

TheUniversityisunabletoidentifyitsshareoftheunderlyingassetsandliabilitiesoftheschemeonaconsistentandreasonablebasisfromotherinstitutionswhichcontributetotheschemeandthereforeaccountsfortheschemeasifitwereadefinedcontributionscheme.Thefollowingdisclosuresreflectthoserelevantfortheschemeasawhole.

The2014valuationwasthethirdvaluationforUSSunderthescheme-specificfundingregimeintroducedbythePensionsAct2004,whichrequiresschemestoadoptastatutoryfundingobjective,whichistohavesufficientandappropriateassetstocovertheirtechnicalprovisions.Atthevaluationdate,thevalueoftheassetsoftheschemewas£41.6billionandthevalueofthescheme’stechnicalprovisionswas£46.9billionindicatingashortfallof£5.3billion.Theassetsthereforeweresufficienttocover89%ofthebenefitswhichhadaccruedtomembersafterallowingforexpectedfutureincreasesinearnings.

32 Connected charitable institutions (continued)

59


2016Years

2015Years

Malescurrentlyaged65 24.3 24.2

Femalescurrentlyaged65 26.5 26.4

Malescurrentlyaged45 26.4 26.3

Femalescurrentlyaged45 28.8 28.7

2016 2015

Scheme assets £49.8bn £49.1bn

Total scheme liabilities £58.3bn £60.2bn

FRS102totalschemedeficit £8.5bn £11.1bn

FRS102totalfundinglevel 85% 82%

Thetrusteeshavedetermined,afterconsultationwiththeemployers,arecoveryplantopayofftheshortfallby31March2031. TheUniversityhasmadeprovisionforitsshareoftherecoveryplanasoutlinedinnote21. University of Reading Employees’ Pension Fund (UREPF)

TheUniversityparticipatesintheUREPF,whichisafundedUKdefinedbenefitpensionschemewherecontributionsareheldinaseparatetrustee-administeredfund.

TheUniversitypaidcontributionsatarateof23.8%ofpensionablesalariesandmemberswererequiredtocontribute6.25%ofpensionablesalaries.Salarysacrificearrangementsexistforthosememberswishingtoparticipate.Underthesearrangements,participatingmembersagreetoareductioninsalaryinreturnfortheUniversitypayingthe6.25%contributionontheirbehalf. TheUniversityalsocontributedanadditionalamountof£1.94maswellasafurther£600,000towardstheadministrationcostsof thescheme.

From1August2016Universitycontributionswillremainat23.8%andmembercontributionswillremainat6.25%.TheUniversitywillalsocontributeanadditionalamountof£2.04maswellasafurther£600,000towardstheadministrationcostsoftheschemefortheyearended31July2017.

Afullactuarialvaluationwascarriedoutat31July2014byaqualifiedindependentactuary.Theactuaryhasreviewedtheprogressoftheschemesincethevaluationdateindeterminingthenetdeficitat31July2016.Theservicecosthasbeencalculatedusingtheprojectedunitcreditmethod.ThediscountrateisoneofthekeyassumptionsusedincalculatingthevalueoftheliabilitiesandisbasedonAAratedcorporatebondyields.Theexpectedreturnonplanassetsisalsobasedonthediscountrate.

2016 2015

Discount rate 3.6% 3.3%

PensionablesalarygrowthYear1 N/A 3.5%

Year2onwards N/A 4.0%

Priceinflation(CPI) 2.2% 2.2%

Themaindemographicassumptionusedrelatestothemortalityassumptions.MortalityinretirementisassumedtobeinlinewiththeContinuousMortalityInvestigation’s(CMI)S1NAtablesasfollows:

• Malemembers’mortality 98%ofS1NA[‘light’]YoBtables-noagerating

• Femalemembers’mortality 99%ofS1NA[‘light’]YoBtables-rateddown1year

UseofthesemortalitytablesreasonablyreflectstheactualUSSexperience.Toallowforfurtherimprovementsinmortalityrates,theCMI2014projectionswitha1.5%palongtermratewerealsoadopted.Thecurrentlifeexpectanciesonretirementatage65are:

Definedbenefitliabilitynumbersfortheschemehavebeenproducedusingthefollowingassumptions:

33 Pension schemes (continued)

60


Analysis of movement in benefit obligation 2016£’000

2015£’000

At1August 151,057 137,889

Currentservicecost 3,324 2,893

Interestexpense 5,642 5,753

Benefitspaidfromplan (5,170) (4,987)

Plan participants’ contributions 29 38

Premiums paid 0 (62)

Remeasurements-Effectofchangesinassumptions 19,404 7,566

Remeasurements-Effectofchangesinadjustments (347) 1,967

At 31 July 173,939 151,057

Analysis of movement in plan assets

Fairvalueat1August 151,994 136,285

Interest income 5,770 5,790

Employercontributions 5,139 5,397

Plan participants’ contributions 29 38

Benefitspaidfromplan (5,170) (4,987)

Administrativeexpensespaidfromplanassets (303) (473)

Premiums paid 0 (62)

Remeasurements-Returnonplanassets 10,294 10,006

Fair value at 31 July 167,753 151,994

Amounts recognised in the balance sheet

Definedbenefitobligation (173,939) (151,057)

Fairvalueofplanassets 167,753 151,994

Net defined benefit (liability) / asset (6,186) 937

Components of pension cost

Currentservicecost 3,324 2,893

Interestexpenseondefinedbenefitobligation 5,642 5,753

Interest income on plan assets (5,770) (5,790)

Administrativeexpensespaidfromplanassets 303 473

Total cost recognised in surplus before tax 3,499 3,329

Remeasurements 8,763 (473)

Total cost recognised in the statement of total comprehensive income 12,262 2,856

Scheme assetsTheweighted-averageassetallocationwasasfollows:

2016£’000

2015£’000

Equities 84,255 79,224

Gilts 65,395 35,199

Corporate bonds 6,180 27,057

Property 7,256 6,318

Other 4,667 4,196

167,753 151,994


61


Actual return on plan assets 2016£’000

2015£’000

Interest income 5,770 5,790

Remeasurements-Returnonplanassets 10,294 10,006

16,064 15,796

Experience gains and loses 2016£’000

2015£’000

Remeasurements-ReturnonplanassetsAmountPercentage of plan assets

10,2946.1%

10,0066.6%

Remeasurements-EffectofexperienceadjustmentsAmountPercentageofpresentvalueofplanliabilities

3470.2%

(1,967)(1.3%)

Weighted average assumptions used to determine benefit obligations 2016 2015

Discount rate

Rateofsalaryincreases

RateofRPIpriceinflation

RateofCPIpriceinflation

Assumedlifeexpectancyonretirementatage65:

Malememberaged65(currentlifeexpectancy)

Malememberaged45(lifeexpectancyatage65)

Femalememberaged65(currentlifeexpectancy)

Femalememberaged45(lifeexpectancyatage65)

2.60% 3.80%

3.70% 4.25%

2.70% 3.25%

1.80% 2.35%

23.0 23.0

25.2 25.2

25.3 25.1

27.5 27.4

Weighted average assumptions used to determine cost relating to defined benefit plan 2016 2015

Discount rate

Rateofsalaryincreases

RateofRPIpriceinflation

RateofCPIpriceinflation

3.80% 4.25%

4.25% 4.25%

3.25% 3.25%

2.35% 2.35%

TheUniversityparticipatesintheURPS,whichisafundeddefinedcontributionpensionschemeintheUK.TheUniversitypayscontributionsatarateof5%ofpensionablesalariesformemberswhohavebeenemployedforlessthanfiveyearsand7%formemberswhohavebeenemployedformorethanfiveyears.Membersarerequiredtocontribute4%ofpensionablesalaries.Salarysacrificearrangementsexistforthosememberswishingtoparticipate.Underthesearrangements,participatingmembersagreetoareductioninsalaryinreturnfortheUniversitypayingthe4%contributionontheirbehalf.

34 Accounting estimates and judgements

Inpreparingthesefinancialstatements,judgementshavebeenmadeindeterminingthemostappropriatemethodsofapplyingtheUniversity’saccountingpoliciestotheeconomictransactionswhichhavearisenduringtheyear.Ithasalsobeennecessarytomakeassumptionsaboutthefutureindeterminingthevaluesofassetsandliabilitiesatthebalancesheetdate.

ThefinancialstatementshavebeenpreparedonthegoingconcernbasiswhichtheCouncilbelievestobeappropriate.TheUniversityhassufficientresourcestomeetitsobligationsastheyfalldueforaperiodofatleast12monthsfromthedateofapprovalofthesefinancialstatements.ThestrengthoftheUniversity’sassetbaseandtheimpactofsignificantsavingsthroughtheefficiencyandeffectivenessreviewhaveputtheUniversityonasoundfootingforthefuture.TheCouncilisthereforesatisfiedthattheUniversityanditssubsidiariesandtrustshaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.


62


InrecentyearstheUniversityhasdisposedofanumberoflandholdingsintheShinfieldarea.ThescaleofthesedisposalshasrequiredtheUniversitytoundertakesignificantobligationsinrespectofinfrastructuredevelopmentandmaintenanceinthelocalarea.Inaccountingforthesedisposals,estimateshavebeenmadeofthetotalobligationsinordertocalculatetheamountofincometobedeferreduntiltheseobligationsaremet.Theobligationswillbereassessedannually.

Inrespectofpensionschemes,FRS102makesthedistinctionbetweenagroupplanandamulti-employerscheme.Agroupplanconsistsofacollectionofentitiesundercommoncontroltypicallywithasponsoringemployer.Amulti-employerschemeisaschemeforentitiesnotundercommoncontrolandrepresents(typically)anindustry-wideschemesuchasthatprovidedbyUSS.Theaccountingforamulti-employerschemewheretheemployerhasenteredintoanagreementwiththeschemethatdetermineshowtheemployerwillfundadeficitresultsintherecognitionofaliabilityforthecontributionspayablethatarisefromtheagreement(totheextentthattheyrelatetothedeficit)andtheresultingexpenseisrecognisedinthestatementofcomprehensiveincome.USSmeetsthedefinitionofamulti-employerscheme.Therefore,aliabilityhasbeenrecordedwithinpensionprovisionsfortheUniversity’scontractualcommitmenttofundpastdeficitswithintheUSSscheme.Thecalculationofthisprovisionhasreliedontheactuary’soverallviewofthefundingoftheschemeandtheUniversity’sassumptionsonfuturesalarypaymentsandthemostappropriatediscountratetobeapplied.Variationsintheseestimatescouldleadtoasignificantchangeintheprovision.

TheoveralldeficitontheUREPFschemehasbeenincludedinpensionprovisions.Anumberofactuarialassumptionshavebeenmadeinestimatingthedeficit.

Transition to FRS 102 and the 2015 SORP

ThesearetheUniversity’sfirstfinancialstatementspreparedinaccordancewithFRS102andthe2015SORP.Theaccountingpoliciesonpages35to41havebeenappliedinpreparingthefinancialstatementsfortheyearended31July2016,thecomparativeinformationfortheyearended31July2015andtheopeningbalancesheetpositionat1August2014.

Thefirst-timeadoptionhasnecessitatedanumberofchangestotheUniversity’spreviousaccountingpolicies.Inpreparingthesefinancialstatementsundertherevisedaccountingpolicies,theUniversityhasadjustedamountsreportedpreviouslyinfinancialstatementspreparedinaccordancewithitsoldbasisofaccounting(2007SORP).AnexplanationofthekeychangesinaccountingpolicieswhichhavehadthemostsignificantimpactandtheeffectontheUniversity’sfinancialpositionandperformanceissetoutbelow.

Changes in accounting policies

Grant income recognition

GrantincomeisrecognisedinthestatementofcomprehensiveincomewhentheUniversityisentitledtotheincomeandanyperformance-relatedconditionshavebeenmet.Previously,grantincomewasmatchedagainstrelatedexpenditure.Theimpactonrevenuegrantsissmall,buttheimpactoncapitalgrantsismoresignificant.Undertheoldaccountingpolicy,capitalgrantsweredeferredandreleasedtotheincomeandexpenditureaccountinlinewiththedepreciationchargeontheassetconstructedoracquired.Underthenewaccountingpolicy,theincomeisrecognisedwhenanyperformance-relatedconditionshavebeenmet,typicallythecompletionofconstructionoracquisitionofanasset.Theeffectofthischangeinpolicyhasbeentoacceleratetherecognitionofincomefromcapitalgrants.ThischangehashadverylittleeffectonthetotalnetassetsoftheUniversitysincethecapitalgrantspreviouslydeferredwerereportedwithintotalfundsratherthanliabilities,butithasledtoareductionintotalcomprehensiveincomeof£2.0mfortheyearended31July2015.

Retirement benefits - USS scheme

USSisamulti-employerdefinedbenefitschemeforwhichtheUniversityisunabletoidentifyitsshareoftheunderlyingassetsandliabilitiesonaconsistentandreasonablebasisanditthereforeaccountsfortheschemeasifitwereadefinedcontributionscheme.FRS102requiresthatwherethereisanagreementtofundaschemedeficitbetweentheemployers,eachemployershouldrecognisealiabilityforthecontributionspayablethatarisefromtheagreement.Consequently,theUniversity’snewaccountingpolicyistorecordaliabilitywithinprovisionsforitscontractualcommitmenttofundpastdeficitswithintheUSSscheme.Theeffectofthischangeinpolicyhasbeentoreduceconsolidatednetassetsat31July2015by£30.8mandtoreducethetotalcomprehensiveincomefortheyearthenendedby£15.7m.

Employee benefits

Short-termemploymentbenefitssuchassalariesandcompensatedabsencesarerecognisedasanexpenseintheperiodinwhichtheemployeesrenderservicetotheUniversity.AnyunusedbenefitsareaccruedandmeasuredastheadditionalamounttheUniversityexpectstopayasaresultoftheunusedentitlement.Underitsoldaccountingpolicies,theUniversitydidnotrecognisealiabilityforunusedbenefitsaccruedduringtheyear.Themostsignificantimpacthasbeentherecognitionofaliabilityforannualleaveaccruedinayearbutnottakenuntilthefollowingyear.Theeffectofthischangehasbeentoreduceconsolidatednetassetsat31July2015by£3.6m.

35

34 Accounting estimates and judgements (continued)

63


Depreciation of freehold buildings

Underitsoldaccountingpolicy,theUniversitydepreciatedfreeholdbuildingsoveraperiodof50yearsandbuildingimprovementsandextensionsoveramaximumof30years.Thispolicyhasbeenrevisedtorecognisethatdifferentcomponentsofabuildingmayhavedifferentusefuleconomiclives.Underthenewpolicy,thecomponentsofabuildingaredepreciatedasfollows:

• Fabric-construction 50years

• Fabric-improvementsandextensions 30years

• Mechanicalandelectrical 20years

Theeffectofthischangeinpolicyhasbeentoreduceconsolidatednetassetsat31July2015by£14.7mandtoreducethetotalcomprehensiveincomefortheyearthenendedby£0.9m.

Agriculture

TheUniversity’sfarmingoperationsincludedairycattlewhich,underFRS102,areclassifiedasbiologicalassetswithinnon-currentassets.Theyarestatedatfairvaluelesscoststosell.Underitspreviousaccountingpolicies,dairycattlewereclassifiedasstockwithincurrentassetsandwerestatedatthelowerofcostandnetrealisablevalue.Theimpactofthischangeonoverallnetassetshasbeensmallandnoadjustmenthasbeenrequiredtothetotalnetassetsat31July2015.

Investments in associates

TheUniversity’sassociatedundertaking,UPP(ReadingI)HoldingsLimited,madeanumberofchangestoitsownaccountingpolicieswhichhavehadanimpactontheamountsstatedintheconsolidatedfinancialstatements.Thekeyadjustmentsrelatetothemeasurementofcertaindebtinstrumentsatamortisedcostandtheprovisionfordeferredtaxonrevaluedproperty,plantandequipment.Theoveralleffectofthesechangeshasbeentoreduceconsolidatednetassetsat31July2015by£0.6mandtoreducethetotalcomprehensiveincomefortheyearthenendedby£0.3m.

Effect on financial position Consolidated University31July2015 1August2014 31July2015 1August2014

£'000 £'000 £'000 £'000

Netassetsreportedinpreviousfinancialstatements 394,699 367,920 249,495 256,688

Adjustments:

ObligationtofundpastdeficitwithintheUSSscheme (30,844) (15,095) (30,844) (15,095)

Liabilityforannualleavecarriedover (3,586) (3,425) (3,558) (3,405)

Cumulativedepreciationoftangiblefixedassets (14,661) (13,794) (14,661) (13,793)

Investmentsinassociates (588) (286) 0 0

Otheradjustments (433) (3) 120 0

Net assets in accordance with FRS 102 344,587 335,317 200,552 224,395

Effect on financial performance Consolidated UniversityYearended

31July2015

Yearended

31July2015

£'000 £'000

Reportedinpreviousfinancialstatements:

Deficitfortheyearretainedwithingeneralreserves (14,687) (8,011)

Other gains and losses 43,060 3,145

Totalrecognisedgains/(losses)intheyear 28,373 (4,866)

Adjustments:

Capital grant income (2,028) (2,761)

IncreaseinobligationtofundpastdeficitswithintheUSSscheme (15,748) (15,748)

Increaseinliabilityforannualleavecarriedover (161) (153)

Depreciationchargefortheyear (867) (867)

Shareofoperatingdeficitandtaxinassociates (302) 0

Otheradjustments 3 552

Total comprehensive income for the year in accordance with FRS 102 9,270 (23,843)

Transition to FRS 102 and the 2015 SORP (continued)35

BXXXXX 02.11

UNIVERSITY OF READINGFINANCIAL STATEMENTS2015-2016

For more information, please contact:

Director of Financial & Corporate Services

PO Box 217

Whiteknights

Reading, RG6 6AH

[email protected]

Tel (0118) 378 6700

/theuniversityofreading

@UniofReading

www.reading.ac.uk

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