Reports and Financial Statements
for the year ended 31 July 2003
Committee Membership
Council 2002-03
Finance Committee 2002-03
Lay Members:
Lord Young of Graffham u* (Chair)
Mr Christopher Jonas u* (Vice-Chair)
Mr Kerry Hawkins u (Treasurer)
Viscount Bearsted
Mr Bryan Bennett
Sir John Birch
Ms Adele Biss*
Sister Teresa Finn
Baroness Flather of Windsor and Maidenhead
Mr Robin Fox
Sir Alan Greengross u*
Mr Roger Lyons
Miss Margaret Rudland
Ms Janet Salmon
Dr Paul Williams
Lay Members:
Mr Kerry Hawkins (Chair)
Mr David Dutton
Mr Robin Fox
Mr Richard Horsman
Mr Christopher Jonas
Professor Peter Moore
Lord Young of Graffham
Academic Members:
Sir Derek Roberts u* (Provost)
Professor Rosemary Ashton*
Professor Ian Dennis
Dr Jane Ferrie
Professor Hugh Griffiths
Professor Christine Hawley
Professor Alan Lord
Dr Sajeda Meghji
Professor Peter Mobbs
Professor Michael Spyer*
Dr Bill Stephenson
Dr Nicholas Tyacke
Professor Peter Wood
Vice-Provosts:
Professor David Delpy
Professor Richard Frackowiak
Miss Marilyn Gallyer
Professor Michael Spyer
Professor Michael Worton
Observers:
Mr Andrew Bethell
Professor Andrew Copp
Mr Martin Else
Professor Humphrey Hodgson
Professor David Latchman
Mr Robert Naylor
Dr Raj Persaud
UCL Union:
Mr Rob Farag
Mr Nigel Harris
Mr Ben McMechan
Academic Members:
Sir Derek Roberts (Provost)
Professor David Bogle
Dr Mike Dworetsky
Professor Hazel Genn
Dr Christine Hoffmann
Mr Peter McLennan
UCL Union:
Mr Ben McMechan
Audit Committee 2002-03
Lay Members:
Sir Alan Greengross (Chair)
Sir John Birch
Ms Adele Biss
Mr John Hustler
Investments Committee 2002-03
Lay Members:
Mr Kerry Hawkins (Chair)
Mr Robert Cottam
Mr David Dutton
Mr Robin Fox
Mr Hugh Stevenson
denotes also member of Remuneration Committee
u
* denotes also member of Nominations Committee
Table of Contents
1
2
4
6
7
8
Financial Highlights
Treasurer’s Report
Corporate Governance
Responsibilities of the Council of UCL
Independent Auditors’ Report to the
Members of the Council of UCL
Statement of Principal Accounting Policies
10
11
12
13
Consolidated Income and Expenditure Account
Consolidated Balance Sheet
Balance Sheet
Statements of Total Recognised Gains and
Losses and of Cash Flow
14-31 Notes to the Accounts
32
Financial Summaries (unaudited)
Financial Highlights
2003
£m
2002
£m
Change
%
Funding Council grants
Academic fees and support grants
Research grants and contracts
Other operating income
Endowment income and interest receivable
131.8
69.7
159.8
92.7
3.9
129.8
59.5
148.0
90.1
6.0
1.5
17.1
8.0
2.9
(35.0)
Total income
457.9
433.4
5.7
Total expenditure
457.5
432.7
5.7
CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT
Share of operating loss in joint ventures and associates
Profit on disposal of tangible fixed assets
(0.2)
1.2
(0.2)
0.5
SURPLUS FOR THE YEAR
1.4
1.0
Fixed assets
Endowment asset investments
Net current assets
325.0
75.4
36.3
305.8
73.2
33.5
6.3
3.0
8.4
Total assets less current liabilities
436.7
412.5
5.9
CONSOLIDATED BALANCE SHEET
Non-current liabilities and provisions
Minority interest
TOTAL NET ASSETS
(85.1)
(79.9)
6.5
(1.1)
(0.7)
57.1
350.5
331.9
5.6
181.2
75.4
93.9
167.2
73.2
91.5
8.4
3.0
2.6
Represented by:
Deferred grants
Endowments
Reserves
OTHER KEY STATISTICS
Consolidated Recognised Gains/(losses)
Consolidated movement in Cash Flow
Student numbers
Average payroll numbers
4.6
0.4
(6.3)
12.0
2003
No.
2002
No.
18,337
8,986
17,317
8,876
5.9
1.2
University College London Reports and Financial Statements 2002/2003
1
Treasurer’s Report
Scope of Financial Statements
Investment performance
The Council of UCL is responsible for these financial
statements, as described on page 6. The format of
the financial statements follows the Statement of
Recommended Practice: Accounting for Further and
Higher Education Institutions.
Once again, it has been a difficult year for investment
management with continuing weak stock markets
worldwide. The value of endowment asset investments
was £75 million at the Balance Sheet date.
The financial statements include the consolidated
results of UCL’s trading activities, details of which are
shown at Note 13 and whose commercial activities
are, for legal and taxation reasons, more appropriately
channelled through limited companies.
The Investments Committee, aided by a specialist
consultancy service, Edward Jewson, actively monitors
performance of its Investment Fund managers against
standard benchmarks and within their peer group.
Although performance for the last six months of the
year was below expectation, over the full year total
returns exceeded the agreed benchmark.
Results for the year
Cash Flow
UCL consolidated Income and Expenditure results for
the years ended 31 July are summarised as follows:
Income
Expenditure
Share of losses in Joint Venture
and Associated companies
Profit on disposal of assets
Surplus for the year
2003
£m
2002
£m
457.9
(457.5)
(0.2)
433.4
(432.7)
(0.2)
1.2
1.4
0.5
1.0
The results for the last two years reflect the very real
challenge in achieving a balanced position against a
background of continued Government under-funding,
and is evidence of the sustained effort, across the
whole of UCL, required under its Income Generation
and Savings Programme. It is pleasing to note some
positive financial highlights on page 1, including: total
income of £457.9m (+ 5.7%); an increase of 17.1% in
Academic Fee income to £69.7 million and an 8.0%
increase in Research grants and contract income to
£159.8 million. The majority of UCL’s research
income is derived from two sources, with income from
UK charitable sources and Research Councils,
representing 47.5% and 29.5%, respectively, of total
research income. At 31 July 2003, total accumulated
funds on the Income and Expenditure Account
amounted to £92 million, of which £79 million was for
departmental purposes, £31 million for earmarked
projects and offset a £18 million accumulated deficit,
arising from UCL’s central operating budget over a
number of years.
Tangible fixed asset additions amounted to £50
million, with £36 million relating to new and
refurbished buildings, which is evidence of UCL’s
continuing programme of improvement to its
infrastructure. A very substantial contribution to the
cost of these developments has been provided from
external sources and, at the year end, a total of £181
million was held as a deferred capital grant to fund
specific projects.
2
University College London Reports and Financial Statements 2002/2003
During the year UCL drew upon a further £5 million of
its unsecured borrowing facility with The Royal Bank of
Scotland, bringing the total borrowing under this
arrangement to £25m.
UCL’s cash position is monitored daily and surplus
funds deposited with Barclays Global Investors and
with Royal London Cash Management.
Capital projects
In August 2002, the Higher Education Funding Council
for England (HEFCE) announced round two of the
Science Research Investment Fund (SRIF) allocations
to Universities. Allocation was based on an
Institution’s total research income and amount of
quality-related (QR) research income, received as part
of the HEFCE recurrent grant. Again, as with the round
one allocation, UCL received the highest allocation to
a single institution in the country, of £63.9 million.
The majority of the SRIF allocation will enable sizeable
developments to take place in some of our science,
engineering and clinical medical departments. The list
of projects is extensive – among the most significant
are new facilities for the Institute of Cancer Sciences,
renovation of space for the Institute of Structural
Molecular Biology, in association with the Birkbeck
School of Crystallography, equipment for the newly
created London Centre for Nanotechnology,
rationalisation of space for the department of
Geography and improved research facilities at the
Institutes of Child Health, Neurology and
Ophthalmology. It is also pleasing to note that, unlike
previous allocations, this second round allows UCL to
allocate a proportion of the funds to humanities,
language based disciplines and the creative arts. As a
consequence, of the 29 projects submitted under this
initiative, UCL is allocating significant sums to the
creation of new research laboratories and
accommodation for the department of Anthropology,
the relocation of the School of Slavonic and East
European Studies, improvements at the Slade School
of Fine Art, the department of History of Art, and
improved accommodation for modern European
languages.
UCL’s capital programme, including both new-build and
renovation projects, is providing new state-of-the-art
facilities, ensuring that UCL maintains its position as
one of the world’s leading research Universities. This
substantial capital programme over the next few years
will exceed £200 million.
Although UCL has benefited substantially from recent
Government capital funding initiatives, in recent years,
there has been a requirement for UCL to provide
some matching funding, which it has financed either
internally or from external sponsors. I would like to
take this opportunity to thank all of UCL’s external
sponsors, whose continuing support has made it
possible for UCL to embark on such an ambitious
programme of capital developments.
Creditors policy
UCL’s policy is to abide by the terms of business
agreed with suppliers, which is often to make payment
within 30 days of the invoiced date.
Staff and their involvement
Considerable value is placed on the involvement of
UCL’s employees and on good communication with
them. Staff are informed of developments within the
organisation through publication of a regular
newsletter and by increasing use of the Intranet and
Web sites. All staff are encouraged to participate in
formal and informal discussion at all levels throughout
UCL. A Staff Training and Development unit provides
technical and general training to all levels of staff.
Other major activity
The UCL community now includes 24,500 staff and
students including more than 3,800 academic and
research staff working in 72 departments, dedicated
to research and teaching of the very highest standard.
An extensive teaching programme is in place
comprising 230 undergraduate programmes, more
than 190 taught Masters’ programmes, and research
teaching to MPhil or PhD across all UCL’s academic
departments.
Conclusion
At the time of publication of the Government’s White
Paper, in January 2003, we had every expectation
that there would be some improvement in the funding
for universities in two to three years’ time. At the time
of writing this report however, the future situation is
less clear, as we await Government decisions on the
level of fees which can be charged in the future for
Home/EU undergraduate students and on current
reviews on the future funding of research. These
issues have very serious implications for UK
universities, and have the potential to significantly
affect the ability of leading universities, like UCL, to
compete in the global market.
However, it is pleasing to note that UCL has achieved
a relatively small surplus of £1.4 million on its Income
and Expenditure Account. On a turnover in excess of
£450 million, this serves to demonstrate the very
tight margins within which the finances are managed.
In the present climate of Government funding, UCL will
need to continue exercising financial stringency, by
formulating and then meeting targets set under its
Income Generation and Savings Programme.
In common with my report from previous years, I
would like to thank staff, students and visitors for
their continued forbearance while the many building
projects are in progress across campus.
On a final note, I would also like to extend my
gratitude, on behalf of the UCL community to Sir
Derek Roberts, who came out of retirement to lead
UCL until a new Provost and President was appointed.
We warmly welcome Professor Malcolm Grant,
previously Pro Vice-Chancellor at the University of
Cambridge, to this position. He is not a new face at
UCL, as he was a member of staff from 1986 to
1991, and Vice-Dean in the Faculty of Laws.
Kerry J Hawkins
Treasurer
Two UCL centres received the Queen’s Anniversary
Prize: the Eastman Dental Institute and the Centre for
Process Systems Engineering, which is run jointly with
Imperial College, were recognised as centres of
excellence. Since the inception of this prize, UCL has
now received recognition with four prize-winning
Departments. This acknowledges the exceptional
contribution made by UCL to the intellectual,
economic, cultural and social fabric of the United
Kingdom.
Over the forthcoming years a rolling plan of new and
upgraded administrative computer systems is planned
to further support and enhance the management
capabilities within UCL. This includes new systems for
Estates and Facilities, replacement systems for
Human Resources and Registry and a major upgrade
to the Finance system.
University College London Reports and Financial Statements 2002/2003
3
Corporate Governance
UCL is committed to exhibiting best practice in all
aspects of corporate governance. This summary
describes the manner in which UCL has applied the
principles set out in Section 1 of the Combined Code
on Corporate Governance issued by the London Stock
Exchange in June 1998, in so far as they relate to
Higher Education Institutions. Its purpose is to help
the reader of the accounts understand how the
principles have been applied.
UCL’s Governing Body, the Council, is responsible for
the system of internal control operating within UCL
and its subsidiary undertakings (“the Group”) and for
reviewing its effectiveness. Such a system can only
provide reasonable, and not absolute, assurance
against material misstatement or loss, and cannot
eliminate business risk. The Council identifies areas
for improvement in the system of internal control,
based on reports and views from the Audit
Committee, Academic Board and other committees.
At its December 2003 meeting, the Council carried
out an annual assessment for the year ended 31 July
2003 by considering a report from the Audit
Committee, and taking account of events since 31
July 2003. The Council is of the view that there is an
ongoing process for identifying, evaluating and
managing the Group’s key risks, and that it has been
in place for the whole of the year ended 31 July 2003,
and up to the date of approval of the annual report
and accounts, that the process has been subject to
regular review, and that it accords with the internal
control guidance for directors on the Combined Code,
as deemed appropriate for higher education.
In accordance with the Statutes of UCL, the Council
comprises lay members, the Provost and President
(Provost hereafter) academic staff members and
student members (in numbers specified by Statute).
The Statutes provide for the distinct roles of Chairman
and Vice-Chairman of the Council, the Treasurer, and
of UCL’s Chief Executive, the Provost. The powers and
duties of the Council are set out in Statutes; by
custom and under the Financial Memorandum with the
Higher Education Funding Council for England, the
Council holds to itself the responsibilities for the
ongoing strategic direction of UCL, approval of major
developments and the receipt of regular reports from
UCL officers on the day to day operations of its
business and its subsidiary companies. The Council
has formally identified those items of business which
it retains to itself for collective decision. The Council
has also considered amendments to its Charter and
Statutes and is in ongoing discussion with officers of
the Privy Council concerning formal approval of these
changes. The Council meets at least three times each
year; it has several committees, including an
Academic Board, Planning and Resources Committee,
Finance Committee, Audit Committee, Risk and
Efficiency Committee, Remuneration Committee and
Nominations Committee. All of these Committees are
formally constituted with Terms of Reference.
4
University College London Reports and Financial Statements 2002/2003
In accordance with Constitution as approved by
Governance Committee on behalf of Council, the
Planning and Resources Committee comprises lay
members, the Provost, Vice-Provosts, staff members
and student members. It makes recommendations
and gives advice to the Council in respect of its
strategic and development responsibilities, including
issues relating to proposals for development and the
resource implications of such. It reports to the
Council at least three times a year.
In accordance with the Regulations for Management of
UCL, the Finance Committee comprises lay members,
the Provost and academic staff members (in numbers
specified by regulation) The Committee meets at least
five times annually, and is chaired by the Treasurer.
Inter alia they recommend to the Council UCL’s annual
revenue and capital budgets and monitor performance
in relation to the approved budgets and review UCL’s
annual financial statements. They also review UCL’s
accounting policies which are applied in the
preparation of those financial statements. The
Committee also receives and considers reports from
the Higher Education Funding Council for England as
they affect UCL’s business and monitors adherence
with the regulatory requirements.
The Audit Committee, which meets at least three
times annually, is chaired by a lay member of Council
and comprises lay members only. They are
responsible for meeting with External Auditors to
consider the nature and scope of the annual audit
and, thereafter discuss audit findings, the
management letter and internal control report arising
out of the audit of the annual financial statements.
The Committee considers reports from the Internal
Auditors arising from their audits, which highlight
significant issues and management’s response
thereon. Whilst UCL officers attend the meetings of
the Audit Committee as necessary, they are not
members of the Committee, and the Committee
meets from time to time with the External Auditors on
their own for independent discussions. The Audit
Committee also approves the annual programme of
the Internal Audit Service and reviews the conclusions
of its work. Audit plans are drawn up based on
assessment of relative risks and significance of each
operating area and their materiality in the context of
overall UCL activity. In complying with Code provision
D.2.1 (to conduct, at least annually, a review of the
Group’s system of internal controls), the Audit
Committee conducts a high level review of the
arrangements for internal control, with regular
consideration of risk and control, based on reports
received from the Risk and Efficiency Committee, with
emphasis given to obtaining the relevant degree of
assurance and not merely reporting by exception. It
reports to the Council the results of this review.
The Risk and Efficiency Committee includes the ViceProvosts for Administration and Teaching and
Learning, the Dean of Students, and the directors of
Administrative Divisions; the Director of Internal Audit
Services is in attendance at meetings. The Committee
has been established to develop a strategy for the
implementation of a Risk Assessment and
Management Policy, including the methodology for
identifying and assessing significant risks on a
continuous basis and ensuring that procedures are in
place for those identified risks to be managed,
monitored and reviewed in a consistent and effective
manner. The Committee reviews, on a regular basis,
the risk management and control process to consider
what changes, if necessary, should be recommended.
It may also consider key risks identified by other
Committees, for example on Health and Safety and
Academic matters. It reports to the Audit Committee
at termly intervals, or more frequently, should the
need arise.
The Academic Committee, which reports to the
Council via Academic Board, is responsible for inter
alia monitoring the effectiveness of the academic
quality assurance strategy, encompassing policies and
procedures in respect of quality management and
quality enhancement.
The Nominations Committee considers the filling of
vacancies in the lay membership of Council and of
other UCL Committees (except the Nominations
Committee, for which Council itself considers
vacancies in the lay membership). The Remuneration
Committee is chaired by the Chairman of Council and
comprises three other members of Council and the
Provost. It determines the annual remuneration of
senior officers of UCL and where necessary decides
on any severance payments. The Provost is excluded
from discussions relating to his own remuneration
package. The Remuneration Committee also receives
a report of the annual review of all professorial
salaries and administrative equivalents not otherwise
considered by it. The remuneration of these staff is
determined by the Provost in consultation with
relevant Vice-Provosts, Deans and Director of Human
Resources. Salary levels are set to attract and retain
members of staff for the successful operation of UCL,
both academically and administratively, and
incorporate rewards for individual performance. No
remuneration is paid to lay members of the Council or
any of its Committees.
University College London Reports and Financial Statements 2002/2003
5
Responsibilities of the Council
of UCL
In accordance with UCL’s Charter and Statutes, the
Council is responsible for the administration and
management of the affairs of UCL, including ensuring
an effective system of internal control, and is required
to present audited financial statements for each
financial year.
The Council is responsible for the keeping of proper
accounting records which disclose with reasonable
accuracy at any time the financial position of UCL and
for ensuring that the financial statements are
prepared in accordance with UCL’s Charter and
Statutes, the Statement of Recommended Practice:
Accounting for Further and Higher Education and other
relevant accounting standards. In addition, within the
terms and conditions of the Financial Memorandum
agreed between the Higher Education Funding Council
for England and the Council of UCL, the Council,
through the Provost, its designated office holder, is
required to prepare financial statements for each
financial year which give a true and fair view of the
state of affairs of UCL and of the surplus or deficit
and cash flows for that year.
In causing the financial statements to be prepared,
the Council has ensured that:
(i) suitable accounting policies are selected and
applied consistently;
(ii) judgements and estimates are made that are
reasonable and prudent;
(iii) applicable accounting standards have been
followed, subject to any material departures
disclosed and explained in the financial
statements;
(iv) financial statements are prepared on the going
concern basis. The Council is satisfied that it has
adequate resources to continue in operation for
the foreseeable future and for this reason the
going concern basis continues to be adopted in
the preparation of the financial statements.
The Council has taken reasonable steps to:
(i) ensure that funds from the Higher Education
Funding Council for England are used only for the
purposes for which they have been given and in
accordance with the Financial Memorandum with
the Funding Council and any other conditions
which the Funding Council may from time to
time prescribe;
(ii) ensure that there are appropriate financial and
management controls in place to safeguard public
funds and funds from other sources;
(iii) safeguard the assets of UCL and prevent and
detect fraud;
(iv) secure the economical, efficient and effective
management of UCL’s resources and expenditure.
6
University College London Reports and Financial Statements 2002/2003
The key elements of UCL’s system of internal control,
which is designed to discharge the responsibilities set
out above, include the following:
(i) clear definitions of the responsibilities of, and
authority delegated to, heads of academic and
administrative departments;
(ii) comprehensive Financial Regulations, detailing
financial controls and procedures, approved by
the Council;
(iii) a professional Internal Audit Service whose
annual programme of work is approved by the
Audit Committee endorsed by the Council, and
whose head provides the Provost, Audit
Committee and Council, with a report on internal
audit activity within UCL and an opinion on the
adequacy and effectiveness of UCL’s system of
internal control, including internal financial control;
(iv) regular reviews of financial performance and
key business risks, and termly reviews of
financial forecasts including variance reporting
and updating;
(v) a comprehensive planning process for the short
term to medium term supported by detailed
income, expenditure, capital and cash flow
budgets and forecasts;
(vi) clearly defined procedures for the approval and
control of expenditure, with investment decisions
involving capital or recurrent expenditure being
subject to formal detailed review according to
levels set by the Council.
Any system of internal control can only provide
reasonable, and not absolute, assurance against
material misstatement or loss.
Independent Auditors’ Report to
the Members of the Council of UCL
We have audited the financial statements of University
College London for the year ended 31 July 2003 which
comprise the statement of principal accounting
policies, the consolidated income and expenditure
account, the consolidated and college balance sheets,
the consolidated cash flow statement, the
consolidated statement of total recognised gains and
losses, and the related notes 1 to 34. These financial
statements have been prepared under the accounting
policies set out therein.
This report is made solely to the Council of University
College London, as a body, in accordance with the
Financial Memorandum dated June 2000. Our audit
work has been undertaken so that we might state to
the Council’s members those matters we are required
to state to them in an auditors’ report and for no
other purpose. To the fullest extent permitted by law,
we do not accept or assume any responsibility to
anyone other than the Council and the Council’s
members as a body for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of the Council and auditors
As described in the statement of responsibilities of
the Council, the Council is responsible for the
preparation of the financial statements in accordance
with applicable United Kingdom law and accounting
standards. Our responsibilities as independent
auditors, are established by statute, the Audit
Practices Board, the Higher Education Funding Council
for England and by our profession’s ethical guidance.
We read the other information contained in the
Treasurer’s report, and the corporate governance
statement, and consider the implications for our
report if we become aware of any apparent
misstatements or material inconsistencies with the
financial statements.
Basis of audit opinion
We conducted our audit in accordance with United
Kingdom auditing standards issued by the Auditing
Practices Board and the Audit Code of Practice issued
by the Higher Education Funding Council for England.
An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in
the financial statements. It also includes an
assessment of the significant estimates and
judgements made by the Council in the preparation of
the financial statements and of whether the
accounting policies are appropriate to the
circumstances of UCL and the Group, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain
all the information and explanations which we
considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that
the financial statements are free from material
misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion, we also
evaluated the overall adequacy of the presentation of
information in the financial statements.
Opinion
We report to you our opinion as to whether the
financial statements give a true and fair view and are
properly prepared in accordance with the Statement of
Recommended Practice on Accounting for Further and
Higher Education. We also report whether income
from funding bodies, grants and income for specific
purposes and from other restricted funds
administered by UCL have been properly applied only
for the purposes for which they were received and
whether income has been applied in accordance with
the Statutes and, where appropriate, with the
Financial Memorandum with the Higher Education
Funding Council for England.
We also report to you if, in our opinion, the
Treasurer’s report is not consistent with the financial
statements, if UCL has not kept proper accounting
records, the accounting records do not agree with the
financial statements or if we have not received all the
information and explanations we require for our audit.
We also, at the request of the Council, review whether
the corporate governance statement reflects the
Group’s compliance with the four provisions of the
Combined Code specified for our review by Council
and we report if it does not. We are not required to
consider whether the Council’s statements on internal
control cover all risks and controls, or form an opinion
on the effectiveness of the Group’s corporate
governance procedures or its risk and control
procedures.
In our opinion:
a) the financial statements give a true and fair view of
the state of affairs of UCL and the group as at 31
July 2003 and of the surplus of the Group for the
year then ended and have been properly prepared
in accordance with the Statement of
Recommended Practice on Accounting for Further
and Higher Education Institutions;
b) in all material respects income from the Higher
Education Funding Council for England, grants and
income for specific purposes from other restricted
funds administered by UCL have been applied for
the purposes for which they were received; and
c) in all material respects income has been applied in
accordance with UCL’s statutes and, where
appropriate, with the Financial Memorandum dated
June 2000 with the Higher Education Funding
Council for England.
Deloitte & Touche LLP
Chartered Accountants
and Registered Auditors
London
17 December 2003
University College London Reports and Financial Statements 2002/2003
7
Statement of Principal
Accounting Policies
1. Basis of Preparation
The financial statements are prepared under the
historical cost convention as modified by the
revaluation of investments and in accordance
with both the Statement of Recommended
Practice: Accounting for Further and Higher
Education (SORP) and applicable United Kingdom
Accounting Standards.
6. Taxation
UCL enjoys charitable status and is therefore
exempt from taxation in respect of non-trading
income or capital gains under Section 505 of the
Income and Corporation Taxes Act 1988 and
Section 256 of the Taxation of Chargeable Gains
Act 1992.
Subsidiary companies are liable to corporation tax.
2. Basis of Consolidation
The consolidated financial statements consolidate
the financial statements of UCL and its subsidiary
undertakings (collectively referred to as “the
Group”) for the financial year to 31 July.
UCL is partially exempt for the purposes of Value
Added Tax and is only able to reclaim a minor
element of VAT charged on goods and services
bought in.
7. Land and Buildings
The UCL Union has not been consolidated since
it is a separate enterprise over which UCL has
limited influence both in areas of financial control
and policy decisions.
3. Income and Expenditure Account
The Income and Expenditure Account has been
drawn up in line with the SORP and with
classifications based on the requirements of the
annual financial return made to the Higher
Education Statistics Agency.
Income received from specific endowments and
donations, research grants and contracts is
included to the extent only of expenditure incurred
during the year, together with any related
overhead contributions towards costs.
4. Pension Arrangements
Pension costs are assessed in accordance with
the advice of professionally qualified independent
actuaries and are accounted for on the principle
of charging the cost of providing pensions over
the period that UCL benefits from the
employees’ services.
A detailed explanation of the arrangements for
each of the pension schemes in operation at
UCL can be found at note 32.
5. Foreign Currencies
Transactions denominated in foreign currencies
are recorded at the rate of exchange ruling at the
dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are
translated into sterling at year end rates unless
such funds are held for onward transmission to a
research partner under an agency agreement. The
resulting exchange differences are dealt with in
the determination of income and expenditure for
the financial year.
8
University College London Reports and Financial Statements 2002/2003
Land and Buildings are stated in the Balance
Sheet at cost. Freehold buildings are depreciated
on a straight line basis over their expected useful
lives of 50 years. Land which is held freehold is
not depreciated and that held on long leasehold is
depreciated over the life of the lease up to a
maximum of 50 years.
Major refurbishments and fixtures and fittings are
capitalised and depreciated as follows:
Major refurbishments
Fixtures and fittings
20 years
10 years
8. Investment Property
Investment properties are stated in the Balance
Sheet at their open market value. No depreciation
is charged on such properties.
The Companies Act 1985 requires all properties
to be depreciated. However, this requirement
conflicts with the generally accepted accounting
principle set out in SSAP 19. UCL considers that,
because this property is not held for consumption,
but for its investment potential, to depreciate it
would not give a true and fair view and that it is
necessary to adopt SSAP 19 in order to give a
true and fair view.
If this departure from the act had not been made,
the deficit for the financial year would have been
increased by depreciation. However, the amount
of depreciation cannot be reasonably quantified,
because depreciation is only one of many factors
reflected in the annual valuation and the amount
which may otherwise have been shown cannot be
separately identified or quantified.
9. Equipment
12. Investments
Expenditure on furniture and equipment costing
less than £25,000 is written off to the Income
and Expenditure Account in full in the year of
acquisition.
Both Fixed Asset and Endowment Asset
Investments are stated at market value in the
Balance Sheet. Subsidiary company investments
are stated at cost less provision for impairment.
Equipment and furniture costing more than
£25,000 is capitalised at cost, and depreciated
over its expected useful life as follows:
In the consolidated accounts the Group’s share of
the results in joint ventures are shown each year
in the Income and Expenditure Account and the
Group’s share of retained profit and reserves is
added to the cost of the investment in the
Balance Sheet.
Equipment funded by
research grants
Other furniture and equipment
Term of grant
5 years
13. Stocks
10. Leased Assets
Finance lease obligations are included within
creditors. Financing amounts are charged to the
Income and Expenditure Account so as to produce
a constant periodic charge on the balance
outstanding.
11. Intangible Fixed Assets
Patents, licences, rights, trade marks and other
similar rights over assets are stated in the
Balance Sheet at cost and amortised over a
period of five years.
Stocks are made up of goods for resale, centrally
held stores holdings and major stores held by
academic departments and are stated at the
lower of cost or net realisable value.
14. Cash Flows and Liquid Resources
Cash flows comprise increases or decreases in
cash. Cash includes cash in hand, deposits
repayable on demand and overdrafts. Deposits
are repayable on demand if they are in practice
available within 24 hours without penalty.
Liquid resources comprise assets held as a
readily disposable store of value. They include
term deposits held as part of UCL’s treasury
management activities. They exclude any such
assets held as Endowment Asset Investments.
University College London Reports and Financial Statements 2002/2003
9
Consolidated Income and Expenditure
Account year ended 31 July 2003
INCOME
Funding Council grants
Academic fees and support grants
Research grants and contracts
Other operating income
Endowment income and interest receivable
Note
2003
£’000
Restated
2002
£’000
1
2
3
4
5
131,847
69,695
159,779
92,694
3,914
129,796
59,538
148,034
90,110
5,966
457,929
433,444
286,760
137,283
7,274
26,139
273,137
129,503
7,119
23,003
457,456
432,762
473
682
Total Income
(In addition, share of joint venture income £1,268,000 (2002 - £202,000))
EXPENDITURE
Staff costs
Other operating expenses
Interest payable
Depreciation
6
7
8
9
Total Expenditure
SURPLUS FOR THE YEAR BEFORE DISPOSAL OF
FIXED ASSETS AND BEFORE TAX
Share of operating loss in joint ventures
Share of operating loss in associate
13
13
(54)
(105)
(202)
-
Loss on disposal of fixed asset investments
Profit on disposal of tangible fixed assets
10
10
(56)
1,164
478
1,422
958
(17)
(10)
1,405
948
41
48
1,446
996
SURPLUS FOR THE YEAR AFTER DISPOSAL
OF FIXED ASSETS BUT BEFORE TAX
Taxation
SURPLUS FOR THE YEAR AFTER DISPOSAL
OF FIXED ASSETS AND TAX
Minority interest
SURPLUS FOR THE YEAR
The consolidated income and expenditure of the group relates wholly to continuing activities.
10
University College London Reports and Financial Statements 2002/2003
Consolidated Balance Sheet
as at 31 July 2003
FIXED ASSETS
Tangible assets
Intangible assets
Investments in joint ventures:
Share of gross assets
Share of gross liabilities
Investments
Note
2003
£’000
Restated
2002
£’000
11
12
313,163
1,214
291,510
839
13
13
13
ENDOWMENT ASSET INVESTMENTS
14
CURRENT ASSETS
Stores
Debtors
Short term deposits and investments
Cash at bank and in hand
15
CURRENT LIABILITIES
Creditors: amounts falling due within one year
Share of net liabilities in associate
16
13
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
1,942
(193)
8,844
1,853
(50)
11,651
324,970
305,803
75,423
73,175
814
99,784
17,953
6,922
744
100,540
454
5,011
125,473
106,749
(89,087)
(105)
(73,250)
-
36,281
33,499
436,674
412,477
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
17
(83,038)
(77,744)
PROVISIONS FOR LIABILITIES AND CHARGES
18
(2,050)
(2,136)
(1,079)
(712)
MINORITY INTEREST
NET ASSETS
DEFERRED CAPITAL GRANTS
350,507
331,885
181,238
167,262
75,066
357
72,810
365
20
75,423
73,175
21
22
23
91,746
2,100
88,748
1,552
1,148
93,846
91,448
350,507
331,885
19
ENDOWMENTS
Specific
General
RESERVES
Income and expenditure account
Revaluation reserve
Other reserves
TOTAL
Approved by Council on 17 December 2003
Kerry J Hawkins
Treasurer
Professor Malcolm Grant
Provost and President
Jack W Foster
Director of Finance
University College London Reports and Financial Statements 2002/2003
11
Balance Sheet as at 31 July 2003
FIXED ASSETS
Tangible assets
Intangible assets
Investments
Note
2003
£’000
Restated
2002
£’000
11
12
13
311,748
267
9,922
290,108
839
7,629
321,937
298,576
75,423
73,175
335
100,763
17,952
2,634
353
103,680
453
2,246
121,684
106,732
(88,349)
(72,787)
33,335
33,945
430,695
405,696
ENDOWMENT ASSET INVESTMENTS
14
CURRENT ASSETS
Stores
Debtors
Short term deposits
Cash at bank and in hand
15
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
16
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
17
(83,038)
(77,744)
PROVISIONS FOR LIABILITIES AND CHARGES
18
(2,050)
(2,136)
NET ASSETS
DEFERRED CAPITAL GRANTS
345,607
325,816
180,172
166,160
75,066
357
72,810
365
20
75,423
73,175
21
90,012
86,481
90,012
86,481
345,607
325,816
19
ENDOWMENTS
Specific
General
RESERVE
Income and expenditure account
TOTAL
Approved by Council on 17 December 2003
Kerry J Hawkins
Treasurer
12
Professor Malcolm Grant
Provost and President
University College London Reports and Financial Statements 2002/2003
Jack W Foster
Director of Finance
Statements of Total Recognised
Gains and Losses and of Cash Flow
STATEMENT OF CONSOLIDATED TOTAL RECOGNISED GAINS AND LOSSES
Note
Surplus after depreciation of assets
Appreciation/(diminution) of endowment asset investments
Endowment income retained for the year
New endowments
Unrealised surplus on revaluation of investment property
Bloomsbury Bioseed Fund Ltd – new Government grants received
2003
£’000
20
20
20
22
23
Restated
2002
£’000
1,446
1,737
(379)
890
952
996
(9,688)
(1,136)
3,273
250
-
4,646
(6,305)
RECONCILIATION TO CLOSING RESERVES AND ENDOWMENTS
Opening reserves and endowments
Total recognised gains and losses for the year
164,623
4,646
Closing reserves and endowments
169,269
RECONCILIATION OF MOVEMENT IN FUNDS TO THE LAST ANNUAL REPORT
Total recognised gains and losses relating to the year
Prior period adjustment for grant income incorrectly deferred (Note 21)
Share of reserves in joint ventures at 1 August 2002
4,646
1,934
1,803
Total movement in funds since last annual report
8,383
STATEMENT OF CONSOLIDATED CASH FLOW
Note
Net Cash inflow from operating activities
Returns on investments and servicing of finance
Taxation
Capital expenditure and financial investment
25
28
2003
£’000
Restated
2002
£’000
29
26,610
(3,022)
(17)
(10,426)
10,413
(1,879)
(10)
(15,846)
Cash inflow/(outflow) before use of liquid resources and financing
Management of liquid resources
Financing
26
30
13,145
(17,499)
4,783
(7,322)
(453)
19,796
Increase in cash in the year
26
429
12,021
University College London Reports and Financial Statements 2002/2003
13
Notes to the Accounts
1. FUNDING COUNCIL GRANTS
HEFCE recurrent grant - Teaching
- Research
- Other
Deferred capital grants released in year
2003
£’000
Restated
2002
£’000
54,721
66,789
4,885
5,452
53,472
66,708
3,512
6,104
131,847
129,796
The analysis of HEFCE recurrent grant has been expanded to include information on teaching, research and
other grants.
The 2002 figure for other HEFCE recurrent grant has been restated to include grant which had previously been
incorrectly deferred.
2. ACADEMIC FEES AND SUPPORT GRANTS
Full-time students charged home fees
Full-time students charged overseas fees
Part time fees
Other fees
Research training support grants
Short course fees
2003
£’000
2002
£’000
21,663
31,693
3,848
3,765
1,789
6,937
19,432
26,206
3,239
3,323
459
6,879
69,695
59,538
2003
£’000
2002
£’000
123,151
36,628
113,052
34,982
159,779
148,034
47,193
75,958
11,234
9,524
8,205
1,441
6,132
92
45,811
67,241
10,277
9,629
7,327
1,038
6,294
417
159,779
148,034
3. RESEARCH GRANTS AND CONTRACTS
Grants
Contracts
Source of income:
OST research councils
UK based charities
UK central government, local/health authorities, hospitals
UK industry, commerce and public corporations
EU government bodies
EU other
Other overseas
Other sources
Income from research grants and contracts includes deferred capital grants released in the year of £8,501,000
(2002 - £6,008,000).
14
University College London Reports and Financial Statements 2002/2003
4. OTHER OPERATING INCOME
Residences and catering
Other services rendered
Health authorities
Donations and sundry grants
Released from deferred capital grants
Other income
2003
£’000
Restated
2002
£’000
13,479
28,044
25,088
13,807
2,146
10,130
13,252
27,275
24,061
14,311
2,511
8,700
92,694
90,110
The analysis of other operating income has been extended to include information on donations and sundry grants.
The 2002 figure of £14,311,000 was previously included under other income. Additionally, the 2002 figure for
other services rendered income has been increased by £1,044,000 in respect of teaching company schemes and
research services, also previously included under other income.
Income from residences and catering includes deferred capital grants released in the year of £9,000 (2002 £9,000)
5. ENDOWMENT INCOME AND INTEREST RECEIVABLE
Income from endowment asset investments (Note 20)
Other interest receivable
2003
£’000
2002
£’000
1,658
2,256
3,210
2,756
3,914
5,966
University College London Reports and Financial Statements 2002/2003
15
Notes to the Accounts
6. INFORMATION REGARDING EMPLOYEES
2003
£’000
2002
£’000
242,071
19,557
25,132
231,178
18,429
23,530
286,760
273,137
£
£
150,881
-
-
150,881
-
28,202
3,948
164,035
22,965
32,150
187,000
Staff costs:
Salaries and wages
NI contributions
Other pension costs
Emoluments of the Provost and President:
D Roberts (1/9/02 - 31/7/03)
C Llewellyn Smith (1/8/02 - 30/9/02)
Salary
Pension
Salary
Pension
The emoluments of the Provost are shown on the same basis as for higher paid staff and pension contributions
to the USS are paid at the same rate as for other academic staff.
Compensation for loss of office in respect of one higher paid employee (2002 - seven staff), totalled £98,708
(2002 - £452,119 of which £53,000 was reimbursed by the NHS).
Remuneration of higher paid staff:
The following sets out the remuneration of all higher paid staff including distinction awards paid to clinical
academic staff and payments relating to consultancy work, both of which are funded from non-HEFCE funds, but
excluding employers pensions contributions:
£70,001
£80,001
£90,001
£100,001
£110,001
£120,001
£130,001
£140,001
£150,001
£160,001
£170,001
£180,001
£190,001
£200,001
-
£80,000
£90,000
£100,000
£110,000
£120,000
£130,000
£140,000
£150,000
£160,000
£170,000
£180,000
£190,000
£200,000
£210,000
2003
No.
2002
No.
112
66
46
25
26
15
15
8
4
4
1
76
58
42
14
30
11
16
2
4
3
1
1
-
The average number of individuals paid through the payroll during the year was 8,986 (2002 - 8,876).
16
University College London Reports and Financial Statements 2002/2003
7. OTHER OPERATING EXPENSES
Residences and catering
Furniture, computer and other equipment costs
Academic consumables and laboratory expenditure
Books, publications and periodicals
Scholarships and prizes
General educational expenditure
Rents, rates and insurance
Heat, light, water and power
Repairs and general maintenance
Long term maintenance
Telephone
Advertising and recruitment
Printing, postage, stationery and other office costs
Conference, travel and training
Professional fees
Audit fees
Other fees paid to auditors
Grants to Students Union and other student bodies
Payments to non contract staff and agencies
Other costs
2003
£’000
2002
£’000
7,042
16,955
26,392
4,588
8,871
5,815
7,830
4,951
11,548
4,648
2,104
1,561
6,866
8,886
5,131
86
92
1,449
3,966
8,502
6,483
17,866
24,951
4,222
7,424
4,212
6,610
4,976
11,832
1,615
2,046
1,470
7,974
8,627
4,892
74
55
1,394
3,404
9,376
137,283
129,503
2003
£’000
2002
£’000
268
3,466
3,540
254
3,184
3,681
7,274
7,119
8. INTEREST PAYABLE
Bank loans and other loans wholly repayable within five years
Loans not wholly repayable within five years
Finance leases
University College London Reports and Financial Statements 2002/2003
17
Notes to the Accounts
9. ANALYSIS OF EXPENDITURE BY ACTIVITY
2003
Academic departments
Academic services
Research grants and contracts
Residences and catering
Premises
Administration
Other expenses
Staff
Costs
£’000
Other
Operating
Expenses
£’000
133,761
12,887
87,546
2,594
6,531
22,882
20,559
19,687
9,332
48,250
7,042
28,830
14,267
9,875
2,009
3,700
1,565
3,060
1,058
8,501
1,140
12,119
150
111
156,508
23,277
144,297
12,785
51,180
37,299
32,110
286,760
137,283
7,274
26,139
457,456
Interest
Payable Depreciation
£’000
£’000
The depreciation charge has been funded by:
Deferred capital grants released (Note 19)
General income
Total
£’000
16,109
10,030
26,139
2002
Academic departments
Academic services
Research grants and contracts
Residences and catering
Premises
Administration
Other expenses
Staff
Costs
£’000
Other
Operating
Expenses
£’000
130,752
12,043
81,426
2,287
6,723
21,272
18,634
17,497
8,976
46,087
6,483
25,365
13,434
11,661
2,028
3,767
1,324
3,160
1,011
6,008
1,111
11,482
114
117
151,409
22,030
133,521
11,909
47,337
34,820
31,736
273,137
129,503
7,119
23,003
432,762
The depreciation charge has been funded by:
Deferred capital grants released
General income
Interest
Payable Depreciation
£’000
£’000
Total
£’000
14,632
8,371
23,003
The 2002 figures for other operating expenditure have been restated to reflect the transfer of £240,000
expenditure in the Bloomsbury Theatre from Administration to other.
10. PROFIT/LOSS ON DISPOSAL OF FIXED ASSETS
During the year, the investment property which had a market value at 31 July 2002 of £4,175,000, was disposed
of resulting in a loss of £56,000.
The Myddleton Sports Ground caretaker’s house (jointly owned with the School of Pharmacy), and 3-5 Rosslyn Hill
were also disposed of during the year, resulting in a profit of £1,164,000.
18
University College London Reports and Financial Statements 2002/2003
11. TANGIBLE ASSETS
UCL
Land and Buildings
Freehold Leasehold
£’000
£’000
Equipment
£’000
Total
£’000
Cost
At 1 August 2002
Additions at cost
Disposals
249,174
34,570
(2,200)
98,057
1,609
(220)
65,268
13,909
-
412,499
50,088
(2,420)
At 31 July 2003
281,544
99,446
79,177
460,167
Depreciation
At 1 August 2002
Charge for year
Disposals
51,403
10,790
-
21,380
3,316
-
49,608
11,922
-
122,391
26,028
-
At 31 July 2003
62,193
24,696
61,530
148,419
Net Book Value
At 31 July 2003
219,351
74,750
17,647
311,748
At 1 August 2002
197,771
76,677
15,660
290,108
Consolidated
Land and Buildings
Freehold Leasehold
£’000
£’000
Equipment
£’000
Total
£’000
Cost
At 1 August 2002
Additions at cost
Disposals
249,210
34,570
(2,200)
99,157
1,609
(220)
66,057
14,033
-
414,424
50,212
(2,420)
At 31 July 2003
281,580
100,546
80,090
462,216
Depreciation
At 1 August 2002
Charge for year
Disposals
51,436
10,795
-
21,533
3,344
-
49,945
12,000
-
122,914
26,139
-
At 31 July 2003
62,231
24,877
61,945
149,053
Net Book Value
At 31 July 2003
219,349
75,669
18,145
313,163
At 1 August 2002
197,774
77,624
16,112
291,510
The declared value of buildings for insurance purposes (day one basis) as at 1 August 2003 was £944.3 million
(2002 - £863.2 million).
The above includes assets held under finance leases. At 31 July 2003 the net book value of assets held under
finance leases was £29.715 million (2002 - £30.353 million) with a depreciation charge for the year of £638,000
(2002 - £638,000).
University College London Reports and Financial Statements 2002/2003
19
Notes to the Accounts
12. INTANGIBLE ASSETS (PATENTS)
Consolidated
UCL
2003
£’000
2002
£’000
2003
£’000
2002
£’000
Cost
At 1 August 2002
Additions at cost
Disposals
2,486
815
-
2,043
443
-
2,486
121
(2,007)
2,043
443
-
At 31 July 2003
3,301
2,486
600
2,486
Amortisation
At 1 August 2002
Charge for year
Disposals
1,647
440
-
1,371
276
-
1,647
109
(1,423)
1,371
276
-
At 31 July 2003
2,087
1,647
333
1,647
Net Book Value
At 31 July 2003
1,214
839
267
839
839
672
839
672
At 1 August 2002
13. INVESTMENTS HELD AS FIXED ASSETS
Joint ventures
The Centre for Scientific Enterprise Ltd (CSE) and London Technology Network Ltd (LTN) are joint venture
companies of London Business School and University College London. The CSE, initially funded by a £4.6 million
Government grant, aims to act as the commissioning and funding body to promote the transfer of science and
technology ideas into commercial products and services. LTN, initially funded by a £4 million Government grant,
aims to improve business links and encourage interaction and research between industry and London-based
academia.
These joint venture investments are disclosed in the financial statements as follows:
Share of income:
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
Share of operating profit/(loss):
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
20
2003
£’000
2002
£’000
364
904
202
-
1,268
202
2003
£’000
2002
£’000
(337)
283
(202)
-
(54)
(202)
Share of gross assets:
2003
£’000
2002
£’000
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
1,594
348
1,853
-
1,942
1,853
University College London Reports and Financial Statements 2002/2003
2003
£’000
Share of gross liabilities:
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
2002
£’000
(128)
(65)
(50)
-
(193)
(50)
Share of reserves:
2003
£’000
2002
£’000
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
1,466
283
1,803
-
1,749
1,803
Associates
The UCL group has a 47.5% holding in Pentraxin Therapeutics Ltd. The company, which began trading in August
2003, has been established for the purpose of developing and commercially exploiting certain technology for
designing, synthesizing and developing novel therapeutic drugs.
The investment in Pentraxin is disclosed in the financial statements as follows:
2003
£’000
Share of operating loss
Share of net liabilities
Share of reserves
(105)
(105)
(105)
2002
£’000
-
Other fixed asset investments
Consolidated
Monies held
on long term
Other
deposits investments
Balance at
1 August 2002
Additions
Disposals
UCL
Total
Monies held
on long term
deposits
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
6,035
292
-
1,441
1,097
(21)
4,175 11,651
1,389
(4,175) (4,196)
6,035
292
-
472
1
-
1,122
2,000
-
7,629
2,293
-
6,327
2,517
6,327
473
3,122
9,922
Investment
property
-
8,844
Other
investments
Investment
in
subsidiaries
Total
Included in monies held on long term deposits is £6.27 million (2002 - £5.98 million) over which there is a legal
charge. The deposit represents a security fund to meet the obligations under finance leases (Note 17).
The following UCL wholly owned (unless indicated otherwise) subsidiary companies which are incorporated and
registered in England and Wales and which have traded during the year have been consolidated into the financial
statements:
UCL
UCL
UCL
UCL
UCL
UCL
Trading Ltd
Investments Ltd
Properties Ltd
Residences Ltd
Enterprises Ltd
Cruciform Ltd
Stanmore Implants Worldwide Ltd
Somerstown Community Sports Centre
(Ltd by Guarantee)
UCL Biomedica Plc
Medic-to-Medic Ltd (100% subsidiary
of UCL Biomedica Plc)
Freemedic Clinical Research Ltd (100%
subsidiary of UCL Biomedica Plc)
Bloomsbury Bioseed Fund Ltd (70%)
Contracting, consultancy and other commercial activities.
Property investment.
Property development and investment.
Commercial lettings of accommodation.
General commercial trading.
Exploitation of intellectual property in the field
of bio-medicine.
Design and manufacture of orthopaedic implants.
Operation of sports centre.
Exploitation of intellectual property.
Development of an IT solution to integrated patient care.
Testing of new drugs in the final approval stage.
Investment in biotechnology start-ups.
University College London Reports and Financial Statements 2002/2003
21
Notes to the Accounts
14. ENDOWMENT ASSET INVESTMENTS
Consolidated and UCL
2003
£’000
2002
£’000
73,175
511
1,737
80,726
2,137
(9,688)
75,423
73,175
Represented by:
Fixed interest securities
Unit trusts (fixed interest)
Equities
Cash
24
35,334
27,664
12,401
30,291
32,891
9,993
Total endowment asset investments
75,423
73,175
Endowment assets at cost
74,739
72,108
Balance at 1 August 2002
Net additions
Appreciation/(diminution) on valuation
15. DEBTORS
Consolidated
Amounts falling due within one year:
Invoiced debtors
Research grants and contracts
Local health authorities/hospitals
Halls of residence debtors
Tax recoverable from Inland Revenue
Advances to members of staff
Inter-company debtors
Other debtors and prepayments
Amounts falling due after one year:
Inter-company debtors
Loan to associate company
22
University College London Reports and Financial Statements 2002/2003
UCL
2003
£’000
2002
£’000
2003
£’000
2002
£’000
8,121
56,910
11,731
334
1,655
20,733
7,524
59,347
10,484
479
9
1,604
21,093
6,459
56,910
11,731
334
1,655
3,369
20,305
6,255
59,347
10,484
479
9
1,604
3,021
20,518
300
-
-
1,963
-
99,784
100,540
100,763
103,680
16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
UCL
Consolidated
Bank loans and overdrafts
Research grants received on account
Purchase ledger creditors
Other creditors including taxation and social security
Obligations under finance leases
Accruals and deferred income
Inter-company creditors
2003
£’000
2002
£’000
2003
£’000
2002
£’000
3,990
31,206
9,633
16,021
203
28,034
-
100
32,063
9,572
15,016
217
16,282
-
3,944
31,206
9,455
15,729
203
27,793
19
32,063
9,469
14,969
217
16,069
-
89,087
73,250
88,349
72,787
17. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Consolidated and UCL
Obligations under finance leases
Cruciform building - Private Finance Initiative
Long term bank loan
Analysis of loan repayments:
In more than one year but no more than two years
In more than two years but no more than five years
In more than five years
2003
£’000
2002
£’000
42,113
15,925
25,000
42,082
15,662
20,000
83,038
77,744
197
936
81,905
31
1,751
75,962
83,038
77,744
It is anticipated that UCL will exercise options under the leasing arrangements between 20 and 25 years into the
term of each lease. The obligations under the long term liabilities will be met from payments which amount to
approximately £5.5 million per annum. Security is provided to the lessors by way of annual payments into a
security deposit (Note 13).
The long term bank loan is a 25 year unsecured term loan facility.
18. PENSION PROVISION
Consolidated and UCL
Balance at 1 August 2002
Utilised in year
Transfer from Income and Expenditure account
Balance at 31 July 2003
2003
£’000
2002
£’000
2,136
2,222
(175)
89
(175)
89
2,050
2,136
University College London Reports and Financial Statements 2002/2003
23
Notes to the Accounts
19. DEFERRED CAPITAL GRANTS
UCL
Land and Buildings
Freehold Leasehold
£’000
£’000
Balance at 1 August 2002 as previously stated
Adjustment for grants incorrectly deferred
Grants received in year
Contribution to depreciation for the year
Balance at 31 July 2003
Equipment
£’000
Total
£’000
120,506
18,209
35,533
1,417
12,055
(1,934)
10,459
168,094
(1,934)
30,085
138,715
36,950
20,580
196,245
(5,346)
133,369
(1,424)
(9,303)
(16,073)
35,526
11,277
180,172
Land and Buildings
Freehold Leasehold
£’000
£’000
Equipment
£’000
Total
£’000
Consolidated
Balance at 1 August 2002 as previously stated
Adjustment for grants incorrectly deferred
Grants received in year
Contribution to depreciation for the year
Balance at 31 July 2003
120,506
18,209
36,635
1,417
12,055
(1,934)
10,459
169,196
(1,934)
30,085
138,715
38,052
20,580
197,347
(5,346)
133,369
(1,460)
36,592
(9,303)
11,277
(16,109)
181,238
20. ENDOWMENTS
Consolidated and UCL
Specific
General
Total
£’000
£’000
£’000
24
Balance at 1 August 2002
Additions/(disposals)
Appreciation of endowment asset investments
Income for the year
Net realised loss from sale of investments
Transferred to income and expenditure (Note 5)
72,810
898
1,737
2,247
(968)
(1,658)
365
(8)
-
73,175
890
1,737
2,247
(968)
(1,658)
Balance at 31 July 2003
75,066
357
75,423
Representing:
Fellowships, scholarships and prize funds
Chairs and lectureships funds
Other funds
10,595
10,031
54,440
357
10,595
10,031
54,797
75,066
357
75,423
University College London Reports and Financial Statements 2002/2003
21. INCOME AND EXPENDITURE ACCOUNT
Consolidated
UCL
2003
£’000
Restated
2002
£’000
2003
£’000
Restated
2002
£’000
Balance at 1 August as previously stated
Prior year adjustment – grant income incorrectly deferred
Share of reserves in joint ventures previously not recognised
85,011
1,934
1,803
85,747
2,005
84,547
1,934
-
84,981
-
Balance at 1 August as restated
88,748
87,752
86,481
84,981
Surplus/(deficit) for the year
Transfer from revaluation reserve
1,446
1,552
996
-
3,531
-
1,500
-
91,746
88,748
90,012
86,481
67,178
36,886
(15,316)
78,607
30,878
(19,473)
67,178
36,886
(17,583)
88,748
90,012
86,481
Balance at 31 July
The Income and Expenditure account is nominally allocated to:
Departmental reserves
78,607
Earmarked reserves
30,878
Revenue reserves
(17,739)
91,746
Prior year adjustments have been made to account for a revenue grant treated incorrectly as a capital grant and
included in deferred grants in the year ended 31 July 2002, and to correct the accounting for the group’s share
of reserves and operating result in a joint venture company, previously excluded from the consolidated financial
statements.
22. REVALUATION RESERVE
Consolidated
2003
£’000
2002
£’000
Balance at 1 August 2002
1,552
1,302
Revaluation of investment property
Transfer to income and expenditure account
(1,552)
Balance at 31 July 2003
-
250
1,552
The balance on the revaluation reserve has been transferred to the income and expenditure reserve following
the disposal of the investment property in 2003.
23. OTHER RESERVES
Consolidated
2003
£’000
2002
£’000
1,148
1,148
952
-
Balance at 31 July 2003
2,100
1,148
24. CAPITAL COMMITMENTS
Consolidated and UCL
Balance at 1 August 2002
Bloomsbury Bioseed Fund Ltd - Government grants received
Commitments contracted at 31 July
Authorised but not contracted at 31 July
2003
£’000
2002
£’000
38,402
148,372
25,000
117,783
186,774
142,783
University College London Reports and Financial Statements 2002/2003
25
Notes to the Accounts
25. RECONCILIATION OF CONSOLIDATED OPERATING SURPLUS
TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Operating surplus before tax
Items not involving cash movements:
Depreciation
Amortisation of intangible assets
Deferred capital grants released to income
Decrease in stocks
Decrease/(increase) in debtors
Increase in creditors
Decrease in provisions
Items which are not operating activities:
Interest receivable
Interest payable
Investment income
Net cash inflow from operating activities
2003
£’000
Restated
2002
£’000
473
682
26,139
440
(16,109)
(70)
1,068
11,484
(175)
23,003
276
(14,632)
(49)
(2,522)
2,677
(175)
(2,256)
7,274
(1,658)
(2,756)
7,119
(3,210)
26,610
10,413
26. ANALYSIS OF CHANGES IN NET DEBT
1 August 2002
£’000
Cash at bank and in hand
Endowment assets (Note 14)
Deposits repayable on demand (net of overdraft)
Overdrafts (Note 16)
9,993
5,011
(100)
Cash
Flows
£’000
2,408
1,911
(3,890)
Other
Changes 31 July 2003
£’000
£’000
-
12,401
6,922
(3,990)
14,904
429
-
15,333
Deposits repayable at short notice
454
17,499
-
17,953
Debt due within one year (Note 16)
(217)
217
(203)
(203)
(77,744)
1,211
(6,505)
(83,038)
(62,603)
19,356
(6,708)
(49,955)
Debt due after one year (Note 17)
27. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2003
£’000
26
Increase in cash in the period
Increase in deposits repayable at short notice
Increase in debt
429
17,499
(5,280)
Change in net debt
12,648
Net debt at 1 August 2002
(62,603)
Net debt at 31 July 2003
(49,955)
University College London Reports and Financial Statements 2002/2003
28. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
2003
£’000
2002
£’000
Income from endowments
Other interest received
Interest paid
1,279
1,910
(6,211)
2,074
2,362
(6,315)
Net cash outflow from returns on investments and servicing of finance
(3,022)
(1,879)
29. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
2003
£’000
Restated
2002
£’000
Purchase of tangible fixed assets
Purchase of intangible fixed assets
Purchase of fixed asset investments
Net purchase of endowment asset investments
(50,212)
(815)
(1,097)
-
(45,276)
(443)
(74)
(861)
Total payments to acquire fixed and endowment assets
(52,124)
(46,654)
4,182
3,584
1,897
30,085
1,360
(300)
890
81
478
26,976
3,273
(10,426)
(15,846)
2003
£’000
2002
£’000
Mortgages and loans acquired
Mortgage and loan capital repayments
5,000
(217)
20,000
(204)
Net cash inflow from financing
4,783
19,796
Proceeds from disposal of fixed asset investments
Proceeds from disposal of tangible fixed assets
Net proceeds from sale of endowment asset investments
Capital grants received towards the purchase of tangible assets
Government grants received by Bloomsbury Bioseed Fund Ltd
Loan to associate company
Endowments received
Net cash outflow from capital expenditure and financial investment
30. FINANCING
31. HARDSHIP AND ACCESS BURSARY FUNDS
Consolidated and UCL
2003
£’000
2002
£’000
Balance at 1 August
Funding Council grants
Interest earned
6
665
9
84
664
9
Disbursed to students
680
(606)
757
(751)
Balance at 31 July
74
6
Funding Council grants are available solely for students and UCL acts only as paying agent. The grants and
related disbursements are therefore excluded from the income and expenditure account.
University College London Reports and Financial Statements 2002/2003
27
Notes to the Accounts
32. PENSION FUNDS
The total pension costs for UCL were:
Contribution
Contribution
Contribution
Contribution
Contribution
Contribution
to
to
to
to
to
to
USS
SAUL
NHS
RFHSM Pension & Assurance Scheme
FPS
other pension schemes
2003
£’000
2002
£’000
19,358
3,092
2,141
531
10
18,068
3,004
2,040
405
13
25,132
23,530
The two principal pension schemes for UCL’s staff are the Universities Superannuation Scheme (USS) and the
Superannuation Arrangements of the University of London (SAUL). Assets of each scheme are held in separate
trustee administered funds. It is not possible to identify UCL’s share of the underlying assets and liabilities of
either scheme and hence contributions are accounted for as if they were defined contribution schemes. The
schemes are defined benefit schemes which are externally funded and contracted out of the State Second
Pension (S2P) and valued every three years by professionally qualified independent actuaries using the Projected
Unit Method.
The rates of contribution for both schemes are determined by the Trustees on the advice of actuaries, the cost
recognised for the year in the Income and Expenditure account being equal to the contribution to the scheme. The
assumptions and other data which have the most significant effect on the determination of the contribution levels
are as follows:
USS
Latest actuarial valuation
Investment returns per annum
Salary scale increases per annum
Pension increases per annum
Market value of assets
at last actuarial valuation date
Proportion of members’ accrued benefits
covered by the actuarial value of assets
SAUL
31 March 2002 31 March 2002
5.0%
6.0%
3.7%
4.2%
2.7%
2.7%
£19.938 million
£941.0 million
101%
121%
14%
10.5%
Current Employers contribution rate
The NHS pension scheme is available for staff who immediately prior to appointment at UCL were members of
this scheme. The scheme is a defined benefit scheme. The employers rate is currently 7%, rising to 14% on
1 April 2004.
UCL also operates two smaller defined benefit schemes for non-academic staff.
The Federated Pension Scheme 1645 (FPS) for Middlesex Hospital Medical School staff which since merger with
UCL on 1 August 1987 has become closed to new entrants.
The Royal Free Hospital School of Medicine (RFHSM) Pension and Assurance Scheme, operated for staff at the
Royal Free Hospital School of Medicine. On merger with UCL on 1 August 1998 this scheme has been closed to
all new entrants.
As a consequence of both FPS and the RFHSM Pension & Assurance Scheme being closed to new entrants,
it is likely that the current service cost will increase as the members approach retirement.
The last triennial valuation of the FPS was undertaken on 31 March 2002 and for the RFHSM Pension and
Assurance Scheme on 1 August 2000. For the purposes of reporting under FRS17 a valuation of both schemes
was undertaken on 31 July 2003, and details are as follows:
28
University College London Reports and Financial Statements 2002/2003
Valuation method
FPS
RFHSM
Projected Unit
Projected Unit
2003
2002
2001
2003
2002
2001
2.50%
2.50%
3.00%
5.90%
4.00%
5.25%
3.00%
3.00%
3.00%
6.50%
4.00%
5.50%
2.50%
2.50%
3.00%
7.00%
4.50%
6.00%
2.60%
2.60%
2.60%
6.80%
4.60%
5.50%
2.50%
2.50%
2.50%
6.70%
4.50%
6.00%
2.75%
2.75%
2.75%
6.90%
4.80%
5.80%
£4.7 m
128.0%
£2.7 m
116.9%
£7.5 m
244.0%
£(6.3) m
50.0%
£(5.1) m
51.9%
£(3.6) m
65.5%
Present value of liabilities
£16.9 m
Fair value of the scheme assets
£21.6 m
Current employers contribution rate
nil
£15.9 m
£18.6 m
-
£11.2 m
£18.7 m
-
£12.6 m
£6.3 m
35.2%
£10.6 m
£5.5 m
-
£10.5 m
£7 m
-
Valuation date (31 July)
Inflation assumption
Increase for pensions
Increase for deferred pensions
Investment return
Salary scale increase per annum
Discount rate for liabilities
Projected over/(under)-funding
Funding level
Disclosure of fair values of assets and expected rates of returns
FPS
At July
Expected
Expected
Expected
rate of return
Fair value rate of return
Fair value rate of return
2003
2002
2002
2001
2001
-
-
6.50%
11,568
7.00%
12,650
7.00%
5.25%
5.00%
3.00%
8,714
7,117
5,502
259
5.50%
-
6,979
-
6.00%
-
6,038
-
Deposit admin contract
Equities
Annuities
Bonds
Cash
Total
RFHSM
At July
Equities
Annuities
Bonds
Cash
Fair value
2003
21,592
18,547
18,688
Expected
Expected
Expected
rate of return
Fair value rate of return
Fair value rate of return
Fair value
2003
2003
2002
2002
2001
2001
7.40%
4.50%
2.40%
5,075
1,205
-
7.30%
4.70%
2.30%
4,352
1,101
66
7.60%
4.80%
2.60%
-
5,364
1,287
224
-
Total
6,280
5,519
6,875
Under the transitional arrangements of FRS 17 the effect of the standard is included by note only. The effects
on the financial statements, when FRS 17 is fully adopted, will be as follows:
FPS
Amounts included within operating profit
RFHSM
2003
£’000
2002
£’000
2003
£’000
2002
£’000
Current service cost
Past service costs
272
-
177
500
355
-
459
-
Total operating charge
272
677
355
459
Amounts to be included on other finance costs
Expected return on scheme assets
Interest costs (discount) on scheme liabilities
Net finance return/(charge)
FPS
RFHSM
2003
£’000
2002
£’000
2003
£’000
2002
£’000
1,136
(873)
1,248
(672)
382
(642)
472
(605)
263
576
(260)
(133)
University College London Reports and Financial Statements 2002/2003
29
Notes to the Accounts
Amounts to be included in the Statement of Total Recognised Gains and Losses (STRGL)
FPS
Difference between actual and expected
return of scheme assets
Experience gains arising on scheme
liabilities
Effects of changes in assumptions underlying
the present value of scheme liabilities
Total actual gains and losses recognised
in the STRGL
RFHSM
2003 % asset or
£’000 liability value
2002 % asset or
£’000 liability value
2,166 (10% on assets)
(1,063) (5.7% on assets)
508 (3% on liabilities)
(658) (4.1% on liabilities)
(612)
(2,984)
2,062 (12% on liabilities)
2003 % asset or
£’000 liability value
(4,705) (29.6% on liabilities)
2002 % asset or
£’000 liability value
Difference between actual and expected
return of scheme assets
Experience gains arising on scheme
liabilities
Effects of changes in assumptions underlying
the present value of scheme liabilities
(1,667)
Total actual gains and losses recognised
in the STRGL
(1,126) (9% on liabilities)
23 (0% on assets)
(1,755) (31.8% on assets)
518 (4% on liabilities)
(538) (5.1% on liabilities)
899
(1,394) (13.1% on liabilities)
Movements in surplus during the year
FPS
RFHSM
2003
£’000
2002
£’000
2001
£’000
2003
£’000
2002
£’000
2001
£’000
Surplus/(deficit) in scheme at beginning of the year
2,675
7,481
*
(5,092)
(3,619)
284
Movement in year:
Current service cost
Contributions
Past service costs
Curtailment costs
Other finance income
Actuarial gain/(loss)
(272)
(177)
(500)
263
576
2,062 (4,705)
(355)
531
(260)
(1,126)
(459)
514
(133)
(1,395)
Surplus/(deficit) in the scheme at end of the year
4,728
(6,302)
(5,092)
2,675
* There was no actuarial valuation of the FPS scheme undertaken at the end of 1999/2000, consequently the
surplus/deficit in the scheme at beginning of 2000/2001 is not available.
Balance sheet presentation
30
2003
£’000
2002
£’000
Net assets
Net pension (liability)/asset
350,507
(1,574)
331,885
(2,417)
Net assets including FRS 17 disclosure
348,933
329,468
Reserves
Net pension (liability)/asset
93,846
(1,574)
91,448
(2,417)
Reserves including FRS 17 disclosure
92,272
89,031
University College London Reports and Financial Statements 2002/2003
33. RELATED PARTY TRANSACTIONS
Transactions with subsidiaries of UCL have been eliminated on consolidation and no disclosure of these
transactions has therefore been given. UCL has no related party transactions which require disclosure under
FRS 8.
34. CONTINGENT LIABILITY
UCL is a member of UM Association (Special Risks) Ltd, a university mutual company limited by guarantee, formed
to provide cover for losses arising from acts of terrorism. If the association suffers a shortfall in any one year,
members are liable for their pro rata share. The scheme’s ability to pay claims is derived from one of the following
sources:
(a) The reserve fund of £10 million accumulated from the net contributions of members;
(b) £15 million ‘internal’ loan facility from member institutions (UCL is not a participating institution);
(c) £350 million aggregate layer of ‘excess’ cover obtained through the Bermudan and Lloyds insurance
market (structured to provide up to two single maximum losses of £175 million each);
(d) In any indemnity year before the year has been closed, the Board may call for a supplementary contribution
to be paid by each member entered for that indemnity year (whether or not such institution remains a
member at the date of such direction) of an amount that the Board thinks fit. All supplementary
contributions levied are to be calculated pro rata to the advance contributions (less any return of them)
made in the relevant indemnity year.
University College London Reports and Financial Statements 2002/2003
31
Financial Summaries (unaudited)
2003
£’000
2002
£’000
2001
£’000
2000
£’000
1999
£’000
INCOME
Funding Council grants
Academic fees and support grants
Research grants and contracts
Other operating income
Profit on disposal of investments
Endowment income, donations and interest
131,847
69,695
159,779
92,694
3,914
129,796
59,538
148,034
90,110
5,966
125,250
55,740
141,000
84,692
5,601
117,521
52,049
123,789
75,639
6,499
5,898
104,928
48,993
126,194
72,043
37
7,538
Total income
457,929
433,444
412,283
381,395
359,733
EXPENDITURE
Staff costs
Other operating expenses
Interest payable
Depreciation
286,760
137,283
7,274
26,139
273,137
129,503
7,119
23,003
258,499
131,096
6,294
19,211
242,118
117,116
5,982
17,376
221,412
114,906
2,582
13,846
Total expenditure
457,456
432,762
415,100
382,592
352,746
473
682
(2,817)
(1,197)
6,987
(54)
(105)
(202)
-
-
-
-
Profit on disposal of fixed asset investments
Profit on disposal of tangible fixed assets
(56)
1,164
478
1,493
2,206
1,027
-
SURPLUS/(DEFICIT) FOR THE YEAR AFTER
DISPOSAL OF FIXED ASSETS BUT BEFORE TAX
1,422
958
882
(170)
6,987
(10)
(2)
(12)
(9)
1,405
948
880
(182)
6,978
41
48
13
-
-
1,446
996
893
(182)
6,978
SURPLUS/(DEFICIT) FOR THE YEAR BEFORE
DISPOSAL OF FIXED ASSETS AND BEFORE TAX
Share of operating loss in joint ventures
Share of operating loss in associate
Taxation
SURPLUS/(DEFICIT) FOR THE YEAR AFTER
DISPOSAL OF FIXED ASSETS AND TAX
Minority interest
SURPLUS/(DEFICIT) FOR THE YEAR
(17)
NOTE
(i) The above summary includes mergers with a number of institutions which in the years of merger achieved
turnover as follows:
The Royal Free Hospital School of Medicine (1998-99)
The Eastman Dental Institute (1999-00)
The School of Slavonic and East European Studies (1999-00)
£ 32,312,000
£ 8,702,000
£ 4,001,000
(ii) The 1999 figures were restated for the inclusion of The Eastman Dental Institute. The 1998 figures were
restated for the inclusion of The Royal Free Hospital School of Medicine. There is no restatement of prior
years’ figures for the other merger.
32
University College London Reports and Financial Statements 2002/2003
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