Agenda Item #1.1
REPORT TO THE BOARD OF GOVERNORS
SUBJECT
MEETING DATE
CONSOLIDATED FINANCIAL STATEMENTS
as at JUNE 30, 2014
SEPTEMBER 30, 2014
Forwarded to the Board of Governors on the
Recommendation of the President
APPROVED FOR
SUBMISSION
Arvind Gupta, President and Vice-Chancellor
Presented By
David H. Farrar, Provost and Vice-President Academic
Ian Burgess, Comptroller
Frances Yip, Director, Financial Reporting
Report Date
DECISION REQUESTED
September 17, 2014
For information only.
EXECUTIVE SUMMARY
At the end of the first quarter of fiscal 14/15, there was a deficit of $54.5 million, an improvement of $11.5
million from the deficit of $66 million for the same period last year. We expect a deficit at the end of the
first quarter as expenses are generally incurred evenly throughout the year, while revenues generally
increase at a faster rate later into the fiscal year.
The decrease in the deficit was due to increased revenues of $29 million offset by expenses, which
increased by $17.5 million compared to the same period last year. Sales revenue is up $9 million, driven
by student housing; government contributions are up due to increased research activities; a $7.2 million
increase in non-government revenues was due to a large gift received this year; and tuition revenues of $3
million. The increase in expenses was primarily related to research, which is consistent with the increase
observed in revenues; $4.5 million in learning expenses, as faculty headcount has increased; and $4.3
million in student costs, largely due to increased scholarships.
Assets increased by $198 million compared to June 30, 2013. Endowment investments benefited from
strong market returns and increased by $187 million and UBC received $28 million of new donations over
the past year as well. Capital assets increased by a net amount of $49 million, driven by new building
additions and other assets decreased by $38 million, mainly from lower operating investments which is
consistent with the decrease in payables. In addition, there are decreased receivables due to distributions
received from UBC Properties Trust.
Template revised: 4/8/2014 6:25 AM
Consolidated Financial Statements June 30, 2014
Liabilities have increased by $130.6 million, largely from deferred contributions for endowments and
increased deferred land lease revenues. This is partially offset by a decrease in accounts payable of $50
million, largely due to the timing of payments and the release of the deferral for the medical expansion
program funding.
These quarterly financial statements are unaudited and while efforts have been made to present the
information in a fair manner, detailed reconciliations and accruals that take place with the audited yearend financial statements are not carried out at the same level for quarterly reporting.
Attachments:
1. UBC Consolidated Financial Statements June 30, 2014
Page 2
THE UNIVERSITY OF BRITISH COLUMBIA
CONSOLIDATED FINANCIAL STATEMENTS
FIRST QUARTER FISCAL 2014-2015
JUNE 30, 2014
Prepared by:
Frances Yip, Director, Financial Reporting
Contacts:
Frances Yip, Director, Financial Reporting
(604) 822-3584 or frances.yip@ubc.ca
Ian Burgess, Comptroller
(604) 822-3031 or ian.burgess@ubc.ca
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
INDEX
Period in Review
3
Summary of Significant Donations Received in the Quarter
4
Consolidated Statement of Financial Position
5
Consolidated Statement of Operations and Accumulated Surplus
6
Additional information
7
Financial Highlights
8-9
Information provided to the provincial government is limited to the consolidated statements
(pages 5 and 6) and is presented using the government's template.
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
PERIOD IN REVIEW
Consolidated Results of Operations (page 6)
At the end of the first quarter of fiscal 14/15, there was a deficit of $54.5 million, an improvement of
$11.5 million from the deficit of $66 million for the same period last year. We expect a deficit at the
end of the first quarter as expenses are generally incurred evenly throughout the year, but one of the
major sources of revenue (i.e., tuition revenue) does not ramp up until we are closer to the Winter
semester.
The decrease in the deficit over the same period last year is the result of increased revenues of $30
million. Revenues benefited from an increase in sales revenue of $9 million, driven by student
housing; $9 million from government contributions due to increased research activities; $7.2 million in
non-government revenues due to a large unrestricted gift received this year; and tuition revenues of
$3 million, related increases in fees and in FTE's in the international studies programs. Offsetting
these revenues is an increase in expenses of $17.5 million due to increased research costs of $7.3
million largely due to grants to outside agencies; $4.5 million in learning expenses, as faculty
headcount has increased; and $4.3 million in student costs, largely due to increased scholarships.
Consolidated Statement of Financial Position (page 5)
Assets increased by $196 million compared to the balance at June 30, 2013. Endowment investments
increased by $187 million from positive market returns as well as new donations of more than $28
million over the past year. Capital assets increased by $49 million due to new building projects and
other assets decreased by $40 million, mainly from lower operating investments which is consistent
with the decrease in payables. In addition, there are decreased receivables due to the receipt of
distributions from UBCPT during the past 12 months.
Liabilities have increased by $128.5 million, largely from deferred contributions for endowments,
which have benefited greatly over the past twelve months from strong investment returns; and
increased deferred land lease revenues. This is partially offset by a decrease in accounts payable of
$47.5 million, largely due to the timing related to payment of invoices and the recognition of the
previously deferred medical expansion funding.
Page 3
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
SIGNIFICANT DONATIONS RECEIVED IN THE QUARTER
This section is intended to highlight some of the major donations during the past quarter. The highlighted transactions in most
cases represent significant effort and are accomplishments that are worthy of mention. It should be noted that a significant
number of smaller transactions are not highlighted although their academic value may be significant.
Significant gifts (over $200,000) for Q1 14/15 are as follows:
$'000
-
Reichwald Family UBC Southern Medical Program Chair in Preventative Medicine Endowment
UBC Bequest Fund
"Fisheries Centre ""Sea Around Us"" Project"
UBC Alumni Centre
Unconventional Energy Fund
Student Awards Expectancy Fund
Katherine Brearley Entrance Scholarship in Arts
Jane Rule Endowment for the Study of Human Relationships
Walter Gage Bursary
Generation Squeeze - Paul Kershaw
Engineering Student Centre Fund
President's Office Move
Brain Research Centre Expectancy Fund
Lee Foundation Student Exchange Program
3,500
3,217
2,657
750
500
500
300
300
268
255
250
250
221
220
Page 4
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)
(thousands of dollars)
June 30, 2014
Unaudited
FINANCIAL ASSETS
Cash and cash equivalents
$
Accounts receivable
Inventories for resale
Investments
Operating
Endowment (expendable balance)
Investments in government business enterprises
LIABILITIES
Accounts payable and accrued liabilities
Employee future benefits
Deferred contributions
Deferred capital contributions
Deferred land lease revenue
Debt
Net debt
NON-FINANCIAL ASSETS
Capital assets
Investments
Endowment (original contribution)
Inventories for resale
Prepaid expenses
Accumulated surplus
53,922
162,187
2,202
$
7,758
220,295
5,931
Mar 31, 2014
Audited
$
90,565
148,063
6,593
376,214
509,129
68,131
1,171,785
440,338
350,212
34,266
1,058,800
374,072
494,392
67,123
1,180,808
205,827
8,683
724,241
1,392,391
467,924
369,581
3,168,647
255,321
10,709
581,455
1,410,102
408,877
375,715
3,042,179
199,462
10,868
689,619
1,411,204
465,435
373,622
3,150,210
(1,998,862)
(1,983,379)
(1,969,402)
2,723,368
2,674,259
2,746,510
835,505
5,672
6,098
3,570,643
807,065
2,257
4,069
3,487,650
829,155
2,560
8,721
3,586,946
$
1,571,781
$
1,535,074
36,707
1,571,781
Accumulated surplus is comprised of:
Accumulated surplus
Accumulated remeasurement gains
June 30, 2013
Unaudited
$
1,504,271
$
1,497,086
7,185
1,504,271
$
1,617,544
$
1,583,277
34,266
1,617,544
Page 5
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS (unaudited)
(thousands of dollars)
Three Months Ended June 30
2014
Revenues
Government grants and contracts
Tuition and student fees
Sales and services
Non-government grants, contracts and donations
Investment income
Income from government business enterprises
Revenue recognized from deferred capital contributions
$
Expenses
Learning
Research
Facilities
Students
Community engagement
Administration
Deficit from operations
External endowment donations
Deficit for the period
Accumulated surplus, beginning of period
Accumulated surplus, end of period
255,258
57,787
54,850
36,464
8,552
1,007
23,939
437,857
2013
$
245,885
107,151
69,617
48,552
12,879
8,156
492,240
$
$
(54,383)
6,180
(48,203)
1,583,277
1,535,074
246,345
54,488
45,842
29,232
7,940
248
24,856
408,951
241,436
99,820
68,712
44,228
12,840
7,694
474,730
$
$
(65,779)
3,598
(62,181)
1,559,267
1,497,086
Page 6
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
ADDITIONAL INFORMATION (unaudited)
(thousands of dollars)
Three Months Ended
June 30
2014
2013
279,668 $
268,374
Expenses (by object)
Salaries
$
Employee benefits
44,174
42,592
Supplies and sundries
39,932
37,879
Amortization
56,338
55,410
5,712
7,856
11,609
11,481
Travel and field trips
8,604
9,077
Professional and consulting fees
7,942
7,783
25,186
21,873
Utilities
7,155
6,623
Interest on long-term debt
5,919
5,782
Cost of goods sold
Scholarships, fellowships and bursaries
Grants and reimbursements to other agencies
$
492,240
$
474,730
Page 7
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
FINANCIAL HIGHLIGHTS
ASSETS
$ in thousands
Total assets increased by $196 million compared to the
balance at June 30, 2013.
Financial assets increased by $113 million, which is
largely due to an increase in the endowment expendable
balance driven by positive market returns over the past
12 months as well as an increase in the investment in
GBE's resulting primarily from earnings generated by
UBCPT. This was offset by a decrease of $58 million in
receivables due to the receipt of distributions from
UBCPT during the past 12 months and a small decrease
in working capital of $18 million.
$-
$1,000
Non-financial assets increased by $83 million. Capital
assets are up $49 million - $274 million of additions less
$225 million of depreciation over the past 12 months.
Notable capital project additions in the past year include
Ponderosa, Centre for Brain Health and the Student
Union Building). Also, non-financial assets increased due
to $28.5 million of new endowment donations received.
$2,000
June 2014
$3,000
$4,000
$5,000
June 2013
LIABILITIES
$ in thousands
Liabilities have increased by $128.5 million compared to the
balance at June 2013.
Deferred contributions have increased by over $140 million
largely from positive returns earned on endowments and
deferred land lease revenue has also increased by $59
million due to the receipt of proceeds from UBCPT for land
sales over the past 12 months.
These increases were partially offset by a decrease in
accounts payable of $50 million which was driven mostly by
the timing for payment of invoices and the recognition of the
previously deferred medical expansion funding.
$-
$1,000
$2,000
June 2014
$3,000
$4,000
$5,000
June 2013
Page 8
FIRST QUARTER FISCAL 2014-2015
Audit Committee Report for the three months ended June 30, 2014
FINANCIAL HIGHLIGHTS
OVERALL STATEMENT OF OPERATIONS
The deficit for the period increased by $23 million compared with the same period last year, from $68 million to $91 million.
Details of variances to prior year are as follows:
REVENUE
$ in thousands
Total revenues in Q1 2014/15 are $437.9 million relative to
$409.0 million in Q1 2013/14 - an increase of $29 million.
Grants and contracts revenue increased by $16 million . Most
of this is due to increased government revenues of $9 million
due to increased research activities and projects year over
year. Non-government contributions increased by $7.2 million
which is attributable to a large unrestricted gift received in the
current year from the estate of Howard Martin.
The increase in sales and services revenues was driven by
student housing - largely due to Ponderosa which was new in
FY13/14.
$-
$500
Tuition revenues increased by $3 million largely due to
increases in fees, ranging from 2-3%, as well as an increase in
FTE's in the international studies programs.
$1,000
June 2014
$1,500
$2,000
June 2013
EXPENSES
$ in thousands
Expenses are up by $17.5 million over the same quarter last
year.
Research costs are up $7.3 million largely due to a $3.4 million
increase in grants paid to outside agencies which did not occur
last year in the same period due to timing for the most part.
Learning expenses are up by $4.5 million. Faculty headcount
has increased by over 100 FTE's when compared to Q1 of last
year.
Student costs have increased by $4.3 million, largely due to
increased scholarships due to the introduction of the Go Global
exchange program.
$-
$500
$1,000
June 2014
$1,500
$2,000
June 2013
Page 9