REPORTS AND FINANCIAL
STATEMENTS FOR THE
YEAR ENDED 31 JULY 2006
LONDON’S GLOBAL UNIVERSITY
MISSION STATEMENT
UCL — LONDON’S GLOBAL UNIVERSITY
We are
u a world-class centre of research and teaching, dedicated to
developing and disseminating original knowledge to benefit
the world of the future.
We believe
u in engaging fully with the world around us;
u in breaking new ground through challenging convention;
u in progress through partnership.
We value
u
u
u
u
u
creativity and innovation;
independent thought;
integrity;
energy;
perseverance.
We are committed
u to the pursuit of excellence and sustainability;
u to maintaining rich academic diversity embracing the Arts and
Sciences;
u to equality of opportunity and fulfilment of potential for all our
staff and students.
We strive always
u to lead;
u to inspire;
u to achieve.
Cover photograph: ‘Frijol Pinto’ by Fraser Simpson (UCL Biology), from the 2006/2007 UCL Graduate School Research Images Collection
CONTENTS
Page
01
02
03
05
07
08
Committee Membership
Financial Highlights
Treasurer’s Report
Corporate Governance
Responsibilities of the Council of University
College London
Independent Auditors’ Report to the Members of the
Council of UCL
09
11
12
13
14
15
16-35
36
Statement of Principal Accounting Policies
Consolidated Income and Expenditure Account
Statement of Total Recognised Gains and Losses
Consolidated Balance Sheet
UCL Balance Sheet
Consolidated Cash Flow Statement
Notes to the Accounts
Financial Summaries (Unaudited)
COMMITTEE MEMBERSHIP
Council 2005-06
Finance Committee 2005-06 (continued)
Lay Members:
Lord Woolf of Barnes◆ * (Chair)
Sir John Birch◆ * (Vice-Chair)
Mr Kerry Hawkins◆ (Treasurer to September 2006)
Ms Adele Biss◆ *
Ms Anne Bulford (Treasurer from October 2006)
Baroness Flather of Windsor and Maidenhead
Lord Hart of Chilton
Mr Rob Holden (from March 2006)
Mr Mark Knight
Ms Vivienne Parry
Miss Margaret Rudland
Ms Janet Salmon
Sir Stephen Wall*
Academic Members:
Professor Malcolm Grant (President and Provost)
Dr Peter Brett
Professor David Bogle
Professor Hazel Genn
Professor Santa Ono
Dr Keith Sullivan
Dr Mark Williams
Academic Members:
Professor Malcolm Grant◆ * (President and Provost)
Professor Mary Fulbrook*
Professor Katherine Homewood
Dr Mark Lancaster
Professor Peter Mobbs*
Professor Richard Munton
Professor Santa Ono
Professor David Price
Dr Andrea Townsend-Nicholson
Dr Nicholas Tyacke
Vice-Provosts:
Professor David Delpy
Professor Richard Frackowiak
Miss Marilyn Gallyer
Professor Michael Spyer
Professor Michael Worton
UCL Union:
Ms Lucy Gould
Audit Committee 2005-06
Lay Members:
Ms Adele Biss (Chair)
Sir John Birch
Mr John Hustler
Mr Mark Knight
Investments Committee 2005-06
UCL Union:
Ms Lucy Gould
Ms Mary-Beth Young
Finance Committee 2005-06
Lay Members:
Mr Kerry Hawkins (Chair)
Sir John Birch
Mr Nigel Buchanan
Ms Anne Bulford
Mr David Dutton
Mr Robin Fox
Mr Derek Thomas
Lord Woolf of Barnes
Lay Members:
Mr Kerry Hawkins (Chair)
Mr Nigel Buchanan
Mr David Dutton
Mr Robin Fox
Mr Hugh Stevenson
◆ denotes also member of Remuneration Committee
* denotes also member of Nominations Committee
01
FINANCIAL HIGHLIGHTS
CONSOLIDATED INCOME & EXPENDITURE ACCOUNT
2006
£m
Restated
2005
£m
Change
%
Funding Council Grants
Academic Fees and Support Grants
Research Grants and Contracts
Other Operating Income
Profit on disposal of current asset investments
Endowment Income and Interest Receivable
167.0
86.3
184.1
115.1
0.9
7.0
153.2
79.8
167.4
104.9
1.3
7.2
9.0
8.1
10.0
9.7
TOTAL INCOME
560.4
513.8
9.1
TOTAL EXPENDITURE
554.0
516.8
7.2
Share of operating loss in joint ventures and associates
Loss on disposal of tangible fixed assets
Profit on disposal of operations
Taxation
Minority interest
Transfer from accumulated income within specific endowments
(2.8)
(0.5)
(0.1)
–
–
–
0.6
(0.3)
(0.4)
7.7
0.1
0.1
0.4
6.4
4.6
CONSOLIDATED BALANCE SHEET
Fixed Assets
Endowment Asset Investments
Net Current Assets
480.1
97.1
43.3
429.0
89.5
60.5
11.9
8.5
(28.4)
Total Assets Less Current Liabilities
620.5
579.0
7.2
Non-Current Liabilities and Provisions
Minority Interest
Pension (liabilities) / assets
(83.3)
0.6
(0.4)
(85.8)
0.6
1.5
2.9
TOTAL NET ASSETS
537.4
495.3
8.5
321.2
97.1
119.1
290.8
89.5
115.0
10.5
8.5
3.6
SURPLUS FOR THE YEAR
Represented by:
Deferred Grants
Endowments
Reserves
OTHER KEY STATISTICS
Consolidated Recognised Gains
Consolidated (decrease)/increase in Cash Flow
Student Numbers
Average Payroll Numbers
02
11.7
(3.5)
23.9
2.4
2006
No.
2005
No.
19,299
8,929
19,414
8,954
TREASURER’S REPORT
Scope of Financial Statements
The Council of UCL is responsible for these financial
statements, as described on page 7. The format of the
financial statements follows the Statement of Recommended
Practice: Accounting for Further and Higher Education
Institutions.
The financial statements include the consolidated results of
UCL’s subsidiary companies, details of which are shown at
Note 12 and whose commercial activities are, for legal and
taxation reasons, more appropriately channelled through
limited companies.
are members (USS, SAUL and NHS Pension Scheme), these
have been accounted on a contributions payable basis. FRS
17 requires the accounts to reflect the movement in asset
values and projected liabilities of the Federated Pension
Scheme and Royal Free Hospital School of Medicine Pension
and Assurance Scheme.
The impact of this in the financial statements to 31 July 2006
is a net credit to the Income and Expenditure Account of
£0.38 million and an actuarial loss of £2.3 million in the
Statement of Total Recognised Gains and Losses.
Investment Performance
Results for the year
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
(Loss)/Profit on disposal of assets
and Operations
Taxation
Minority interest
Transfer from Endowments
Surplus for the year
2006
£m
560.4
(554.0)
2005
£m
513.8
(516.8)
(0.5)
(0.3)
(0.1)
–
–
0.6
6.4
7.3
0.1
0.1
0.4
4.6
Although UCL is able to report that the outturn for the year is
again a surplus, the underlying budget position which it faces
continues to present serious challenges, and has necessitated
a robust programme for reducing costs, including staff
reductions, and wherever possible, the identification of
activities for increased income generation.
The financial highlights, as detailed on page 2, reveal some
positive aspects: total income increasing by 9% to £560
million; an increase of 8% in Academic Fee income to £86
million; and a 10% increase in Research Grants & Contract
Income to £184 million. The majority of UCL’s sponsored
research income is derived from two prominent sources,
with income from UK Charities and Research Councils,
representing 40% and 36%, respectively, of total
research income.
The balance sheet also reflects yet another year of very
significant investment in infrastructure, with tangible fixed
asset additions totalling £86.2 million of which £72.2 million
relates to new and refurbished buildings. This brings fixed
asset additions to £340 million in the last 5 years.
It should be noted that this is the first year the university has
been required to implement in full the provisions of FRS
17 – Accounting for Pension Scheme Liabilities. Since UCL is
unable to identify its share of assets and liabilities relating to
the three largest pension schemes of which UCL employees
Stock markets world-wide experienced a period of turbulence
following the strong growth of 2004-05 although towards the
end of the financial year a period of steady growth resumed.
Against this backdrop, the value of endowment asset
investments increased to £97 million, compared to £89 million
the year before, and includes £5 million from the appreciation
of the underlying investments.
The Investments Committee, aided by a specialist consultancy
service, actively monitors performance of the Investment Fund
Manager against standard benchmarks and within their peer
group. 2005-06 was the first financial year with funds under
the management of Newton Investment Management
following their success in the tender exercise conducted in
early Summer 2005. Returns across the portfolio were good,
with income slightly above the target set by Investments
Committee for the year, although performance was slightly
below external benchmarks. Close scrutiny of performance
will continue in 2006-07.
Cashflow
UCL’s net cash balances, including short term deposits,
remained healthy throughout the year, despite significant
expenditure on the capital programme, closing at £39.8 million
excluding endowment cash. UCL did not need recourse to
draw down further against the borrowing facility with the Royal
Bank of Scotland, and total borrowing under this arrangement
was £24.5 million. UCL’s cash position is monitored daily and
surplus funds placed on deposit, to achieve optimum returns
to UCL from its cash balances.
Capital Projects
Total additions to land and buildings in the year amounted to
£72 million, which included £31 million relating to freehold
academic properties, £14.3m to leasehold property, and £21
million to freehold refurbishments.
Major projects completed in the year included the new
Anthropology building, the London Centre for Nanotechnology
at 17-19 Gordon Street, the SSEES building (School of
Slavonic and East European Studies) and refurbishment
works at the Pearson building, occupied by the
Geography Department.
The new Nanotechnology building represents an exciting and
03
TREASURER’S REPORT (CONTINUED)
significant investment in a relatively young area of science. In
a ground-breaking joint venture with Imperial College, it brings
together both the physical and bio sciences through the
Bio Nano programme.
Other significant developments included a further phase in the
development of the Institute for Child Health and the leasehold
acquisition of a classic Georgian terrace on the eastern side
of Gordon Square for mixed academic and administrative use.
UCL was awarded additional capital funding for research in
the year by HEFCE of £6.425 million covering the period
2006–08, comparing favourably with the other institutions in
the top five for Research income in England. In July 2006
HEFCE announced formula allocations for capital grants to
support teaching and learning, and UCL was awarded £1.485
million for the period 2006–08.
Creditors Policy
UCL’s policy is to abide by the terms of business agreed with
suppliers, which typically is to make payment within 30 days of
the invoiced date.
Staff and Their Involvement
In the course of the year, UCL has implemented a major
streamlining and modernisation of its pay and grading
structures in partnership with its trade unions. The new
arrangements resulted in a significant salary increase for
roughly 30% of staff with a further two thirds receiving a
modest increase on assimilation to the new arrangements.
The new grading structure is under-pinned by the introduction
of a single job evaluation scheme which plays a large part in
assuring equal pay for work of equal value. The opportunity
was also taken to harmonise conditions of employment across
all staff groups in line with UCL’s proud tradition of equality.
UCL continues to develop its remuneration and benefits
packages to ensure that they are competitive in a
global market.
The introduction of a number of new corporate support
systems is in the process of creating an improved and more
efficient administrative infrastructure. The more effective use
of technology and the review of administrative arrangements
to achieve greater economies of scale is a continuing theme
on which work is ongoing.
With an international reputation and a workforce and student
population drawn from around the globe, UCL places great
store on its commitment to equality and the celebration of
diversity. Workforce and student monitoring data are regularly
scrutinised, with targets established to inform the direction of
change and progress against them carefully monitored.
04
A Disability Equality Scheme has been developed with the
involvement of staff and students which includes an action
plan that, amongst other initiatives, addresses the very real
challenges of UCL’s historic estate. In the last year UCL was
awarded a prestigious Athena Award for its work in furthering
the careers of women in science, engineering and technology
disciplines.
Other Major Activity
Throughout the year, work has continued to determine UCL’s
future course and strategy, to ensure the continued delivery
and development of world-class teaching and research within
a sustainable financial environment.
UCL continues to review its activities and structures to achieve
enhancements to efficiency and effectiveness wherever
possible. To this end, a series of reviews of UCL’s major
business streams have been carried out. A comprehensive
review of teaching is underway, encompassing programmes,
modules and timetabling, with the aim of producing a course
portfolio and teaching methodology that is fit for a global
university in the 21st Century.
A review of the structures supporting the delivery of teaching
and research in biomedical sciences has resulted in the
formation of a new Faculty of Biomedical Sciences, bringing
together the specialist postgraduate medical institutes and the
former Faculty of Clinical Sciences into a streamlined
structure that will re-position this vitally important area of
UCL’s work to respond effectively to changes in the
organisation and demands of its collaborative partners and
customer base, including the NHS, Department of Health and
Research Councils.
2005-06 saw the implementation of the new Student Records
and Fees system, Portico, which went live in August 2006.
The system was delivered on time and on budget and offers
major opportunities to modernise the way student records are
managed from the point of application through to graduation
and beyond. Major modernization to the management,
payment and reporting of student tuition fees has been
possible with the introduction of on-line payment and the
facility for students to review their accounts through the
UCL website.
An important feature of the 2005-06 financial performance is
the increase of £16.7 million in research income, of which
£10.2 million came from OST Research Councils. Somewhat
disappointing however was the impact of the transitional
arrangements for the introduction of Full Economic Costing
(FEC). There is a lead time of approximately three years to
the point where overhead recoveries from Research Councils
are fully aligned to the new system but transitional funding
arrangements have not been sufficient to compensate for this
in the meantime. Despite conducting a well-managed process
to produce robust information on full economic costs of
research, and the receipt of £8.5 million transitional funding,
UCL will find itself some £3 million short of where it calculated
full economic costs should be.
My first Treasurer’s Report would not be complete without
mentioning Kerry Hawkins, who retired in July 2006 after nine
years of distinguished service as UCL Treasurer. UCL extends
its thanks for his enormous contribution over the years and
wishes him a long and happy retirement.
Conclusion
It is good that UCL is able to record a surplus outturn for the
year - this reflects the substantial efforts made by staff across
the whole of UCL towards achieving challenging targets on the
operating budget, and the need to generate income to
underpin academic activities. However, it is key to UCL’s future
success that there should be sufficient investment in its
infrastructure, and that a sustainable financial position is
reached. The underlying position is therefore one that
continues to demand further significant effort to manage more
effectively the resources at our disposal, whilst maintaining our
vision of enhanced academic quality through the pursuit of
international excellence.
Anne Bulford
Treasurer
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, in common with all Russell Group
Universities, keeps under careful review its organisation and
arrangements to ensure that the best principles of
Governance and Management are maintained in a manner
appropriate to the nature and character of the institution. In so
doing, it takes into careful account such guidance as set out
for example in the Combined Code, the Reports of the
Committee on Standards in Public Life and the CUC
Governance Code of Practice.
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 November 2006 meeting, the Council carried out an
annual assessment for the year ended 31 July 2006 by
considering a report from the Audit Committee, and taking
account of events since 31 July 2006. 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 2006,
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 President and Provost (Provost
hereafter), academic staff members and student members (in
numbers specified by Statute). The Statutes provide for the
distinct roles of Chair and Vice-Chair 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 meets at least three
times each year; it has several committees, including an
Academic Board, Finance Committee, Audit Committee, Risk
and Efficiency Committee, Remuneration Committee and
Nominations Committee. All of these Committees are formally
constituted with Terms of Reference.
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.
05
CORPORATE GOVERNANCE (CONTINUED)
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 reports 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 UCL’s Internal Audit Services and reviews the
conclusions of the latter’s 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 Vice-Provosts
for Administration and Academic/International Matters, the
Dean of Students, and the heads of UCL’s Corporate Support
Services; 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
06
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
throughout UCL, for example on 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 Chair 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 and Deans and the 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.
RESPONSIBILITIES OF THE COUNCIL OF
UNIVERSITY COLLEGE LONDON
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 UK
Generally Accepted Accounting Practice. 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) judgments 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.
(iv) secure the economical, efficient and effective management
of UCL’s resources and expenditure.
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 Audit Committee
endorsed by the Council, and whose head provides the
Provost and President, 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.
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;
07
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
THE COUNCIL OF UNIVERSITY COLLEGE LONDON
We have audited the financial statements of University College
London for the year ended 31 July 2006 which comprise the
statement of principal accounting policies, the consolidated
income and expenditure account, the consolidated and entity
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 October 2003. 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 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 the responsibilities of the
Council, the Council is responsible for the preparation of the
financial statements in accordance with the University’s
statute, the Statement of Recommended Practice on
Accounting for Further and Higher Education and other
applicable United Kingdom law and accounting standards
(United Kingdom Generally Accepted Accounting Practice).
Our responsibility is to audit the financial statements in
accordance with relevant United Kingdom legal and regulatory
requirements and International Standards on Auditing (UK and
Ireland).
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 University College London 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 if, in our opinion, the Treasurer’s report is not
consistent with the financial statements, if the Group 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 (i.e. A.1.2, D.1.1, D.2.1 and
08
D.3.1) and we report if it does not. We are not required to
consider whether the Council’s statements on internal control
cover all the risks and controls, or form an opinion on the
effectiveness of the Group’s corporate governance
procedures or its risk and control procedures. We read the
other information contained in the Treasurer’s report, including
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 opinion
We conducted our audit in accordance with International
Standards on Auditing 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 Board of Governors in the
preparation of the financial statements and of whether the
accounting policies are appropriate to the Group’s
circumstances, 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
In our opinion:
(a) the financial statements give a true and fair view of the
state of affairs of the university and the Group as at 31
July 2006 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;
(b) in all material respects income from the Higher Education
Funding Council for England, grants and income for
specific purposes and from other restricted funds
administered by the university have been applied only for
the purposes for which they were received; and
(c) in all material respects income has been applied in
accordance with the university’s statutes and, where
appropriate, with the Financial Memorandum, dated
October 2003 with the Higher Education Funding Council
for England.
Deloitte & Touche LLP
Chartered Accountants
and Registered Auditors
London
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES
The Principal Accounting Policies have not changed from the
previous published Financial Statements, other than the
treatment of pensions costs in accordance with FRS 17
(see 4 below). The comparative figures have been
restated accordingly.
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.
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.
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 research grants and contracts is
included to the extent only of expenditure incurred during
the year, together with any related overhead contributions
towards costs.
Income received from endowments is credited to the income
and expenditure account in the period in which it is earned.
Income from specific endowments not expended in the year is
transferred from the income and expenditure account to a
specific endowment reserve fund.
4.Pension Arrangements
For defined benefit schemes the amounts charged to operating
surplus are the current service costs and gains and losses on
settlements and curtailments. They are included as part of
staff costs. Past service costs are recognised immediately in
the income and expenditure account if the benefits have
vested in the scheme membership. If the benefits have not
vested immediately, the costs are recognised over the period
until vesting occurs. The interest cost and the expected return
on assets are shown as a net amount of other finance costs or
credits adjacent to interest. Actuarial gains and losses are
recognised immediately in the statement of total recognised
gains and losses.
Defined benefit schemes are funded, with the assets of the
scheme held separately from those of the Group, in separate
trustee administered funds. Pension scheme assets are
measured at fair value and liabilities are measured on an
actuarial basis using the projected unit method and discounted
at a rate equivalent to the current rate of return on a high
quality corporate bond of equivalent currency and term to the
scheme liabilities. The actuarial valuations are obtained at
least triennially and are updated at each balance sheet date.
The resulting defined benefit asset or liability, net of the related
deferred tax, is presented separately after other net assets on
the face of the balance sheet.
The adoption of this accounting treatment for defined benefit
schemes under FRS 17, which became obligatory for entities
with accounting dates commencing on or after 1 January
2005, has resulted in a prior year adjustment to the financial
statements, including the reversal of the pension provision
created under SSAP 24 (see Note 17).
A detailed explanation of the arrangements for each of the
pension schemes in operation at UCL can be found at
Note 30.
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.
09
6.Taxation
UCL enjoys charitable status and is therefore potentially
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, to the extent that they are
applied for its charitable purposes.
Subsidiary companies are liable to corporation tax.
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
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.Equipment
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.
Equipment and furniture costing more than £25,000 is
capitalised at cost, and depreciated over its expected useful
life as follows:
Equipment funded by research grants
Other furniture and equipment
Term of grant
5 years
9.Leased Assets
Finance lease obligations are included within creditors.
10
Financing amounts are charged to the Income and
Expenditure Account so as to produce a constant periodic
charge on the balance outstanding.
Operating lease costs are charged to the Income and
Expenditure Account in the year in which they are incurred.
10.Intangible Fixed Assets
Expenditure on patents, licenses, rights, trade marks and
other similar rights over assets are charged to the Income and
Expenditure Account in full, in the year in which they are
incurred.
11.Investments
Both Fixed Asset and Endowment Asset Investments are
stated at market value in the Balance Sheet. Subsidiary and
associate company investments are stated at cost less
provision for impairment.
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.
12.Stores
Stores 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.
13.Cash Flows and Liquid Resources
Cash flows comprise increases or decreases in cash. Cash
includes cash in hand and overdrafts.
Liquid resources comprise assets held as a readily disposable
store of value. They include current asset investments and
endowment cash balances.
CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT
YEAR ENDED 31 JULY 2006
INCOME
Funding Council grants
Academic fees and support grants
Research grants and contracts
Other operating income
Profit on disposal of current asset investments
Endowment income and interest receivable
Note
2006
£’000
Restated
2005
£’000
1
2
3
4
166,964
86,308
184,136
115,148
915
6,952
153,201
79,782
167,425
104,908
1,332
7,199
560,423
513,847
347,803
167,451
7,857
30,895
325,636
155,467
7,778
27,924
554,006
516,805
5
Total Income
(In addition, income of £1,132,000 (2005 - £2,110,000) has been derived from
joint ventures as explained in note 12)
EXPENDITURE
Staff costs
Other operating expenses
Interest payable
Depreciation
6
7
8
9
Total Expenditure
GROUP OPERATING SURPLUS/(DEFICIT)
Share of operating loss in joint ventures
Share of operating loss in associates
6,417
12
12
SURPLUS/(DEFICIT) FOR THE YEAR BEFORE PROFIT/LOSS
ON DISPOSAL OF FIXED ASSETS AND BEFORE TAX
Profit on disposal of operations
Loss on disposal of tangible fixed assets
5,871
10
SURPLUS FOR THE YEAR AFTER PROFIT/LOSS
ON DISPOSAL OF FIXED ASSETS BUT BEFORE TAX
AND MINORITY INTERESTS
Taxation (charge)/credit
Share of taxation in associates
34
SURPLUS FOR THE YEAR AFTER DISPOSAL
OF FIXED ASSETS, TAX AND MINORITY INTERESTS
SURPLUS FOR THE YEAR
–
(104)
5,767
Minority interest
Transfer from accumulated income within specific endowments
(282)
(264)
19
(2,958)
(226)
(122)
(3,306)
7,732
(392)
4,034
(57)
6
80
1
45
68
5,761
4,183
613
424
6,374
4,607
The consolidated income and expenditure of the Group relates wholly to continuing activities.
2005 figures have been restated. Details of restatements are provided at notes 2, 5, 6, 7 and 8, and resulted in an increase in
surplus for 2005 of £258,000 from £4,349,000 to £4,607,000
11
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2006
£’000
Restated
2005
£’000
19
19
19
5,761
5,199
1,594
1,453
4,183
5,937
2,082
3,018
20
21
–
10
752
9,540
Note
Surplus after depreciation of assets
Appreciation of endowment asset investments
Net new endowments
Net realised gain from sale of endowment asset investments
Adjustment to income and expenditure reserve for previously
unconsolidated subsidiaries
Unrealised surplus on revaluation of fixed assets
Bloomsbury Bioseed Fund Ltd – Government grants reclassified
from other reserves to deferred grants
Actuarial (loss)/gain in respect of pension schemes
30
–
(2,308)
(2,100)
454
11,709
23,866
RECONCILIATION TO CLOSING RESERVES AND ENDOWMENTS
Opening reserves and endowments
Total recognised gains and losses for the year (as above)
204,524
11,709
Closing reserves and endowments
216,233
RECONCILIATION OF MOVEMENT IN FUNDS TO THE LAST ANNUAL REPORT
Total recognised gains and losses relating to the year (as above)
Prior year adjustment in respect of the introduction of FRS17 (Note 20)
11,709
3,380
Total movement in funds since last annual report
15,089
RECONCILIATION OF RESTATED 2005 FIGURES
Surplus for Total Net
the year
assets
£’000
£’000
2005 balances as previously stated
Write back SSAP24 pension provision per FRS17
Eliminate contributions to RFHSM and FPS pension schemes per FRS17
Current service cost of RFHSM and FPS pension schemes per FRS17
Net finance return of RFHSM and FPS pension schemes per FRS17
Net pension asset per FRS17
Pension reserve per FRS17
12
Total
funds
£’000
4,349
(86)
723
(672)
293
–
–
491,886
1,878
–
–
–
1,502
–
491,886
1,878
–
–
–
–
1,502
4,607
495,266
495,266
CONSOLIDATED BALANCE SHEET AS AT 31 JULY 2006
FIXED ASSETS
Tangible assets
Investments in joint ventures:
Share of gross assets
Share of gross liabilities
Investments
Note
2006
£’000
Restated
2005
£’000
11
469,399
418,471
12
12
12
ENDOWMENT ASSET INVESTMENTS
13
CURRENT ASSETS
Stores
Debtors
Current asset investments
Cash at bank and in hand
14
CURRENT LIABILITIES
Creditors: amounts falling due within one year
Share of net liabilities in associate
15
12
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
16
MINORITY INTEREST
NET ASSETS EXCLUDING PENSION (LIABILITY)/ASSET
PENSION ASSET
PENSION LIABILITY
30
30
NET ASSETS
DEFERRED CAPITAL GRANTS
480,096
429,057
97,119
89,486
1,648
120,659
36,874
14,066
1,178
123,613
31,254
14,250
173,247
170,295
(129,703)
(232)
(109,716)
(119)
43,312
60,460
620,527
579,003
(83,315)
(85,833)
639
594
537,851
493,764
5,435
(5,861)
5,608
(4,106)
495,266
321,192
290,742
96,765
354
89,126
360
19
97,119
89,486
20
21
109,564
9,550
105,498
9,540
119,114
115,038
537,425
495,266
ENDOWMENTS
Specific
General
TOTAL
1,597
(218)
9,207
537,425
18
RESERVES
Income and expenditure account
Revaluation reserve
1,229
(132)
9,600
Approved by Council on 29 November 2006
Anne Bulford
Treasurer
Professor Malcolm Grant
President and Provost
Jack W. Foster
Director of Finance
13
UCL BALANCE SHEET AS AT 31 JULY 2006
FIXED ASSETS
Tangible assets
Investments
Note
2006
£’000
Restated
2005
£’000
11
12
467,759
11,083
416,916
10,563
478,842
427,479
97,119
89,486
345
120,765
36,873
8,969
260
127,710
30,708
4,542
166,952
163,220
ENDOWMENT ASSET INVESTMENTS
13
CURRENT ASSETS
Stores
Debtors
Current asset investments
Cash at bank and in hand
14
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
15 (123,714)
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
16
NET ASSETS EXCLUDING PENSION (LIABILITY)/ASSET
PENSION ASSET
PENSION LIABILITY
30
30
NET ASSETS
DEFERRED CAPITAL GRANTS
Approved by Council on 29 November 2006
Anne Bulford
Treasurer
14
Professor Malcolm Grant
President and Provost
Jack W. Foster
Director of Finance
57,185
619,199
574,150
(83,315)
(83,359)
535,884
490,791
5,435
(5,861)
5,608
(4,106)
492,293
317,682
286,947
96,765
354
89,126
360
19
97,119
89,486
20
21
111,107
9,550
106,320
9,540
120,657
115,860
535,458
492,293
ENDOWMENTS
Specific
General
TOTAL
43,238
535,458
18
RESERVES
Income and expenditure account
Revaluation reserve
(106,035)
CONSOLIDATED CASH FLOW STATEMENT
Note
2006
£’000
Restated
2005
£’000
Net Cash inflow from Operating Activities
Returns on Investments and Servicing of Finance
Taxation
Capital Expenditure and Financial Investment
Acquisitions and disposals
23
26
34
27
12
22,225
(1,396)
(57)
(62,149)
(145)
8,139
(935)
80
25,002
–
Cash (outflow)/inflow before use of Liquid Resources and Financing
Management of Liquid Resources
Financing
24
28
(41,522)
38,287
(295)
32,286
(29,664)
(239)
(Decrease)/increase in cash in the year
24
(3,530)
2,383
The 2005 cash flow statement has been restated to exclude the increase in cash of £39,119,000 within endowment assets from
the overall movement in cash for the year. Management of liquid resources has been decreased by £39,119,000 accordingly.
15
NOTES TO THE ACCOUNTS
2006
2005
£'000
£'000
61,125
92,990
4,469
8,380
57,332
81,455
8,686
5,728
166,964
153,201
2006
£'000
Restated
2005
£'000
26,408
41,542
4,790
5,341
2,643
5,584
24,746
37,808
4,456
4,489
1,565
6,718
86,308
79,782
1. FUNDING COUNCIL GRANTS
HEFCE Recurrent Grant – Teaching
– Research
– Other
Deferred Capital Grants released in year
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
The 2005 figure for research training support grants has been restated to exclude £2,720,000 of Doctoral Training Awards
passed on as student stipends and bursaries (see Note 7).
3. RESEARCH GRANTS AND 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
Research income relating to direct expenditure incurred during the year
Contribution towards overhead costs
2006
£'000
Restated
2005
£'000
66,065
73,776
16,598
7,430
9,700
1,445
8,846
276
55,823
76,819
12,870
7,050
7,360
1,092
6,411
–
184,136
167,425
159,455
24,681
147,893
19,532
184,136
167,425
Income from research grants and contracts includes deferred capital grants released in the year of £7,787,000
(2005 – £8,790,000).
The 2005 figures have been restated following the HESA decision to reclassify the Royal Society under OST research councils.
OST research councils income has increased by £2,051,000, UK based charities income has decreased by £25,000 and UK
central government, local/health authorities and hospitals income has decreased by £2,026,000.
16
4. OTHER OPERATING INCOME
Residences and catering
Other services rendered
Health authorities
Donations and sundry grants
Released from deferred capital grants
Other income
2006
£’000
2005
£’000
17,257
28,804
32,963
15,367
3,609
17,148
16,584
26,774
30,351
11,836
2,560
16,803
115,148
104,908
Income from residences and catering includes deferred capital grants released in the year of £9,000 (2005 - £9,000)
5. ENDOWMENT INCOME AND INTEREST RECEIVABLE
Income from endowment asset investments (Note 19)
Other interest receivable
Net return on pension scheme assets and liabilities (Note 30)
2006
£’000
Restated
2005
£’000
2,789
3,734
429
2,936
3,970
293
6,952
7,199
A prior period adjustment of £293,000 in respect of the net return on pension scheme assets and liabilities has been made
upon the introduction of Financial Reporting Standard 17. Full disclosure of this amount is given in Note 30.
6. INFORMATION REGARDING EMPLOYEES
Staff costs:
Salaries and wages
NI contributions
Other pension costs
2006
£’000
Restated
2005
£’000
289,816
25,869
32,118
271,211
23,997
30,428
347,803
325,636
A prior period adjustment has been made to other pension costs in 2005 upon the introduction of Financial Reporting
Standard 17. This comprised the reversal of £723,000 charged in respect of contributions paid to defined benefit pension
schemes, a charge of £672,000 in respect of the current service cost of those schemes (Note 30) and a charge of £175,000
previously charged to the pension provision (Note 17).
Emoluments of the President and Provost:
M Grant
Salary
Pension
£
£
240,390
21,739
216,004
28,858
262,129
244,862
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.
There were no payments to higher paid employees in respect of compensation for loss of office during the year
(2005 – £117,250 to one employee).
17
NOTES TO THE ACCOUNTS
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:
2006
2005
No.
No.
£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
£210,001
£220,001
£230,001
£240,001
£250,001
£260,001
£290,001
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£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
£220,000
£230,000
£240,000
£250,000
£260,000
£270,000
£300,000
124
79
47
43
21
34
23
29
18
14
11
11
11
5
4
3
4
1
2
1
–
126
67
62
48
24
19
18
22
19
9
16
7
7
5
2
–
–
–
–
1
1
2006
£’000
Restated
2005
£’000
10,743
16,058
25,262
5,008
11,271
9,738
7,040
8,337
5,098
9,810
4,687
1,889
2,009
7,366
11,646
8,099
113
175
1,750
5,770
15,582
8,118
15,813
25,657
4,863
9,769
7,108
8,395
4,948
5,774
9,575
4,736
1,882
1,579
6,985
10,922
7,090
100
88
1,675
5,636
14,754
167,451
155,467
The average number of individuals paid through the payroll during the year was 8,929 (2005 - 8,954).
7. OTHER OPERATING EXPENSES
Residences and catering
Furniture, computer an 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
Service charges
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
The 2005 figure for scholarships and prizes has been restated to exclude £2,720,000 of student stipends and bursaries funded
by Doctoral Training Awards (see Note 2).
18
8. INTEREST PAYABLE
Bank loans and other loans wholly repayable within five years
Loans not wholly repayable within five years
Finance leases
2006
£’000
Restated
2005
£’000
151
4,199
3,507
157
4,122
3,499
7,857
7,778
A prior period adjustment of £89,000 has been made to bank loans and other loans wholly repayable within five years upon
the introduction of Financial Reporting Standard 17. This is a reversal of interest previously transferred to the pension provision
(Note 17).
9. ANALYSIS OF EXPENDITURE BY ACTIVITY
2006
Academic departments
Academic services
Research grants and contracts
Residences and catering
Premises
Administration and central services
Other expenses
Staff
Costs
£’000
Other
Operating
Expenses
£’000
Interest
Payable
£’000
Depreciation
£’000
Total
£’000
169,959
16,113
99,544
2,488
6,261
29,191
24,247
23,229
9,383
52,124
10,743
36,731
20,017
15,224
–
–
–
1,936
3,815
–
2,106
3,046
1,538
7,787
1,412
16,512
299
301
196,234
27,034
159,455
16,579
63,319
49,507
41,878
347,803
167,451
7,857
30,895
554,006
The depreciation charge has been funded by:
Deferred capital grants released (Note 18)
General income
19,785
11,110
30,895
2005 Restated
Academic departments
Academic services
Research grants and contracts
Residences and catering
Premises
Administration and central services
Other expenses
The depreciation charge has been funded by:
Deferred capital grants released
General income
Staff
Costs
£’000
Other
Operating
Expenses
£’000
Interest
Payable
£’000
Depreciation
£’000
Total
£’000
162,354
14,491
89,586
2,644
6,139
27,185
23,237
21,274
9,257
49,517
8,118
34,572
17,794
14,935
–
–
–
1,986
3,773
–
2,019
2,476
1,235
8,790
1,412
13,549
282
180
186,104
24,983
147,893
14,160
58,033
45,261
40,371
325,636
155,467
7,778
27,924
516,805
17,087
10,837
27,924
Details of restatements can be found at notes 6 and 7.
19
NOTES TO THE ACCOUNTS
10. LOSS ON DISPOSAL OF FIXED ASSETS
Capital expenditure incurred in relation to refurbishment projects in previous years, which has subsequently been the subject of
further major capital development works, have been treated as disposals in these accounts. This has resulted in a loss of
£104,000 (2005 – equipment scrapped and sold during the year resulted in a loss on disposal of £392,000).
11. TANGIBLE ASSETS
UCL
Land & Buildings
Freehold
Leasehold
£’000
£’000
Equipment
£’000
Total
£’000
Cost
At 1 August 2005
Additions at cost
Disposals
381,097
56,475
(7,777)
133,440
15,692
(54)
89,298
13,640
–
603,835
85,807
(7,831)
At 31 July 2006
429,795
149,078
102,938
681,811
Depreciation
At 1 August 2005
Charge for year
Disposals
84,383
15,184
(3,423)
32,227
4,106
(38)
70,309
11,304
–
186,919
30,594
(3,461)
At 31 July 2006
96,144
36,295
81,613
214,052
Net Book Value
At 31 July 2006
333,651
112,783
21,325
467,759
At 1 August 2005
296,714
101,213
18,989
416,916
Land & Buildings
Freehold
Leasehold
£’000
£’000
Equipment
£’000
Total
£’000
Consolidated
Cost
At 1 August 2005
Additions at cost
Disposals
381,133
56,475
(7,777)
134,540
15,692
(54)
90,662
14,026
–
606,335
86,193
(7,831)
At 31 July 2006
429,831
150,178
104,688
684,697
Depreciation
At 1 August 2005
Charge for year
Disposals
84,432
15,189
(3,423)
32,463
4,133
(38)
70,969
11,573
–
187,864
30,895
(3,461)
At 31 July 2006
96,198
36,558
82,542
215,298
Net Book Value
At 31 July 2006
333,633
113,620
22,146
469,399
At 1 August 2005
296,701
102,077
19,693
418,471
The declared value of buildings for insurance purposes (day one basis) as at 1 August 2006 was £1,166 million
(2005 – £1,086 million).
The above includes building assets held under finance leases. At 31 July 2006 the net book value of the assets held under
finance leases was £27.80 million (2005 – £28.44 million) with a depreciation charge for the year of £638,000 (2005 – £638,000).
20
12. INVESTMENTS HELD AS FIXED ASSETS
Joint Ventures
All Joint Venture companies are incorporated in the United Kingdom.
UCLBS Limited is a joint venture company of University College London (UCL) and London Business School (LBS). The objects
of the company are to advance education by the promotion and support of collaborative educational ventures entered into by or
on behalf of LBS and UCL.
Two collaborative educational ventures have already been established, namely The Centre for Scientific Enterprise Ltd (CSE)
and London Technology Network Ltd (LTN). 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
2006
£’000
2005
£’000
204
928
1,217
893
1,132
2,110
2006
£’000
2005
£’000
(184)
(98)
(180)
(46)
(282)
(226)
2006
£’000
2005
£’000
913
316
1,140
457
1,229
1,597
2006
£’000
2005
£’000
(54)
(78)
(97)
(121)
(132)
(218)
2006
£’000
2005
£’000
859
238
1,043
336
1,097
1,379
Share of operating loss:
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
Share of gross assets:
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
Share of gross liabilities:
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
Share of reserves:
The Centre for Scientific Enterprise Ltd
London Technology Network Ltd
21
NOTES TO THE ACCOUNTS
Associates
The UCL group has interests in the following associate companies which are all incorporated in the United Kingdom:
(a) 47% 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.
(b) 55% holding (43% of the voting shares) in NCE Discovery Ltd. The company provides a high quality medicinal chemistry
service to biotechnology companies in the UK and Europe.
(c) 33% holding in Evexar Medical Ltd. The principal activity of the company is to develop and commercialise medical and
surgical devices.
(d) 46% holding in Canbex Therapeutics Ltd. The principal activity of the company is research and development on two novel
chemical series aimed at cannabinoid receptors. The disease targets are spasticity and pain.
The investment in associates is disclosed in the financial statements as follows:
Share of operating loss:
Pentraxin Therapeutics Ltd
NCE Discovery Ltd
Evexar Medical Ltd
Canbex Therapeutics Ltd
Share of taxation:
Pentraxin Therapeutics Ltd
NCE Discovery Ltd
Evexar Medical Ltd
Canbex Therapeutics Ltd
Share of net liabilities:
Pentraxin Therapeutics Ltd
NCE Discovery Ltd
Evexar Medical Ltd
Canbex Therapeutics Ltd
2006
£’000
2005
£’000
(42)
(97)
(65)
(60)
(101)
(21)
–
–
(264)
(122)
2006
£’000
2005
£’000
–
6
–
–
–
1
–
–
6
1
2006
£’000
2005
£’000
(277)
25
(45)
65
(235)
116
–
–
(232)
(119)
2006
£’000
Share of reserves:
Pentraxin Therapeutics Ltd
NCE Discovery Ltd
Evexar Medical Ltd
Canbex Therapeutics Ltd
Purchase of investments in associates:
Evexar Medical Ltd
Canbex Therapeutics Ltd
22
2005
£’000
(277)
25
(45)
65
(235)
116
–
–
(232)
(119)
2006
£’000
2005
£’000
20
125
–
–
145
–
Other fixed asset investments
UCL
Monies held
on long
term deposits
£’000
Balance at 1 August 2005
Additions
Revaluations
Impairments
Consolidated
Other Investment in
investments subsidiaries
£’000
£’000
Total
£’000
7,073
523
–
–
378
–
10
(13)
3,112
–
–
–
10,563
523
10
(13)
7,596
375
3,112
11,083
Monies held
on long
term deposits
£’000
Other
investments
£’000
Total
£’000
Balance at 1 August 2005
Additions
Revaluations
Impairments
7,073
523
–
–
2,134
265
10
(405)
9,207
788
10
(405)
7,596
2,004
9,600
Included in monies held on long term deposits is £7.60 million (2005 – £7.07 million) over which there is a legal charge.
The deposit represents a security fund to meet the obligations under finance leases (Note16).
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 Trading Ltd
UCL Investments Ltd
UCL Properties Ltd
UCL Residences Ltd
UCL Enterprises Ltd
UCL Cruciform Ltd
UCL Consultants Ltd
Stanmore Implants Worldwide Ltd
Somers Town Community Sports Centre
(Ltd by Guarantee)
UCL Biomedica Plc
UCL Bio(3) Ltd
(formerly Medic-to-Medic Ltd, now dormant)
Free Clinical Research (Holdings) Ltd
(100% subsidiary of UCL Biomedica Plc)
Free Clinical Enterprises Ltd
(100% subsidiary of UCL Biomedica Plc)
UCL Analgesia Centre Ltd
(100% subsidiary of UCL Biomedica Plc)
UCL Advanced Diagnostics Ltd
(100% subsidiary of UCL Biomedica Plc)
Nervation Ltd (88% subsidiary of Biomedica Plc)
Nervation Vascular Technologies Ltd
(100% subsidiary of Nervation Ltd)
Bloomsbury Bioseed Fund Ltd (70%)
Proaxon Ltd (83%)
(44% UCL Cruciform Ltd, 39% BBF Ltd)
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.
Provision of administrative support to staff engaged in consultancy.
Design and manufacture of orthopaedic implants.
Operation of sports centre.
Exploitation of intellectual property.
Developing interactive teaching and learning solutions.
Holding company.
Testing of new drugs in the final approval stage.
Conducting clinical trials in the field of analgesia.
Conducting medical and clinical diagnostics.
Holding company.
Dormant following disposal of business.
Investment in biotechnology start-ups.
Developing and commercialising medical treatments.
23
NOTES TO THE ACCOUNTS
13. ENDOWMENT ASSET INVESTMENTS
Consolidated and UCL
2006
£’000
89,486
44,888
1,453
(43,907)
5,199
2005
£’000
77,598
(36,186)
3,018
39,119
5,937
97,119
89,486
Represented by:
Fixed interest securities
Equities
Cash
14,239
73,693
9,187
–
36,392
53,094
Total endowment asset investments
97,119
89,486
Endowment assets at cost
89,101
82,683
Balance at 1 August 2005
Net additions/(disposals) (Note 27)
Net realised gain from sale of investments (Note 19)
(Decrease)/Increase in cash balances (Note 24)
Appreciation on valuation (Note 19)
£96.765 million of endowment asset investments are held in trust for specific purposes
14. DEBTORS
UCL
Consolidated
Amounts falling due within one year:
Invoiced debtors
Research grants and contracts
Local health authorities/hospitals
Halls of residence debtors
Tax recoverable from HMRC
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
24
2006
£’000
2005
£’000
2006
£’000
2005
£’000
14,295
51,134
14,809
442
–
1,983
9,626
58,600
15,557
326
477
1,896
37,696
36,831
9,801
51,134
14,809
442
–
1,983
9,023
32,282
6,392
58,600
15,557
326
477
1,896
11,647
31,691
–
300
–
300
1,291
–
1,124
–
120,659
123,613
120,765
127,710
15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Consolidated
Bank loans
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
UCL
2006
£’000
2005
£’000
2006
£’000
2005
£’000
304
11,121
47,833
13,092
24,261
45
33,047
–
248
7,775
44,185
11,191
19,461
47
26,809
–
304
10,923
47,833
12,234
23,480
45
28,550
345
248
7,561
44,185
10,705
18,605
47
24,616
68
129,703
109,716
123,714
106,035
16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Consolidated
Obligations under finance leases
Cruciform building – Private Finance Initiative
Long term bank loan
Accruals and deferred income
UCL
2006
£’000
2005
£’000
2006
£’000
2005
£’000
42,498
16,565
24,252
–
42,422
16,381
24,556
2,474
42,498
16,565
24,252
–
42,422
16,381
24,556
–
83,315
85,833
83,315
83,359
45
304
2,474
47
248
–
45
304
–
47
248
–
54
365
–
45
304
2,474
54
365
–
45
304
–
Analysis of Loan repayments:
In less than one year:
Finance leases
Loans
Other
In more than one year but no more than two years:
Finance leases
Loans
Other
In more than two years but no more than five years:
Finance leases
Loans
In more than five years:
Finance leases
Loans
708
1,606
425
1,309
708
1,606
425
1,309
41,736
38,846
41,952
39,324
41,736
38,846
41,952
39,324
In less than one year (Note 15)
86,138
(2,823)
86,128
(295)
83,664
(349)
83,654
(295)
83,315
85,833
83,315
83,359
The £2,474,000 other payment due in less than one year in 2006 is shown under accruals and deferred income in Note 15.
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 these long term liabilities will be met from payments which amount to approximately £3.5 million per
annum. Security is provided to the Lessors by way of annual payments into a security deposit (note 12).
The long term bank loan is a 25 year unsecured term loan facility.
25
NOTES TO THE ACCOUNTS
17. PENSION PROVISION
Following the introduction of Financial Reporting Standard 17 the pension provision has been eliminated. A prior period
adjustment has been made, charging the £175,000 provision utilised in 2005 to staff costs (Note 6), and reversing the £89,000
transferred to the provision from the Income and Expenditure Account in 2005 (Note 8). The opening balance of £1,964,000 as
at 1 August 2004 has been written back to the Income and Expenditure Reserve (Note 20).
18. DEFERRED CAPITAL GRANTS
UCL
Land and Buildings
Freehold
Leasehold
£’000
£’000
Balance at 1 August 2005
Grants received in year
Disposals
Contribution to depreciation for the year
Total
£’000
216,146
33,804
(4,265)
58,143
9,723
–
12,658
11,223
–
286,947
54,750
(4,265)
245,685
67,866
23,881
337,432
(1,994)
(8,231)
(19,750)
65,872
15,650
317,682
(9,525)
Balance at 31 July 2006
Equipment
£’000
236,160
Consolidated
Land and Buildings
Freehold
Leasehold
£’000
£’000
Balance at 1 August 2005
Grants received in year
Disposals
Contribution to depreciation for the year
Balance at 31 July 2006
Equipment
£’000
Investments
£’000
Total
£’000
216,146
33,804
(4,265)
59,138
9,723
–
12,658
11,223
–
2,800
–
(250)
290,742
54,750
(4,515)
245,685
68,861
23,881
2,550
340,977
(2,029)
(8,231)
66,832
15,650
(9,525)
236,160
–
2,550
(19,785)
321,192
19. ENDOWMENTS
Consolidated and UCL
Specific
£’000
26
General
£’000
Total
£’000
Balance at 1 August 2005
Additions
Disposals
Appreciation of endowment asset investments
Income for the year (Note 5)
Net realised gain from sale of investments
Expenditure
89,126
1,603
(3)
5,199
2,789
1,453
(3,402)
360
–
(6)
–
–
–
–
89,486
1,603
(9)
5,199
2,789
1,453
(3,402)
Balance at 31 July 2006
96,765
354
97,119
Representing:
Fellowships scholarships and prize funds
Chairs and lectureships funds
Other funds
17,136
12,668
66,961
–
–
354
17,136
12,668
67,315
96,765
354
97,119
20. INCOME AND EXPENDITURE ACCOUNT
Consolidated
UCL
2006
£’000
Restated
2005
£’000
2006
£’000
Restated
2005
£’000
Balance at 1 August as previously stated
Prior year adjustment for elimination of pension
provision under FRS17
Pension reserve at 1 August
102,118
98,292
102,940
99,153
1,878
1,502
1,964
704
1,878
1,502
1,964
704
Balance as at 1 August as restated
105,498
100,960
106,320
101,821
Transfer to endowments
Adjustment for previously unconsolidated subsidiaries
Surplus for the year
Actuarial (losses)/gains
–
–
6,374
(2,308)
(1,275)
752
4,607
454
–
–
7,095
(2,308)
(1,275)
–
5,320
454
Balance at 31 July
109,564
105,498
111,107
106,320
The Income and Expenditure account is designated as follows:
Departmental Reserves
Earmarked reserves
Revenue reserves
80,545
61,665
(32,220)
75,902
54,250
(26,156)
80,545
61,665
(30,677)
75,902
54,250
(25,334)
Income and Expenditure account excluding pension
assets and liabilities
Pension reserve
109,990
(426)
103,996
1,502
111,533
(426)
104,818
1,502
Income and Expenditure account at 31 July
109,564
105,498
111,107
106,320
21. REVALUATION RESERVE
Consolidated and UCL
Balance at 1 August 2005
Revaluation of fixed asset investments
Valuation of Examination Halls transferred from
University of London
Balance at 31 July 2006
2006
£’000
2005
£’000
9,540
–
10
40
–
9,500
9,550
9,540
22. CAPITAL COMMITMENTS
Consolidated and UCL
Commitments contracted at 31 July
Authorised but not contracted at 31 July
2006
£’000
2005
£’000
24,934
76,598
93,859
25,696
101,532
119,555
27
NOTES TO THE ACCOUNTS
23. RECONCILIATION OF CONSOLIDATED OPERATING SURPLUS
TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2006
£'000
Operating surplus/(deficit) before tax
Restated
2005
£'000
6,417
(2,958)
30,895
(19,785)
155
(470)
(5,869)
9,928
49
27,924
(17,087)
57
(187)
(16,365)
16,227
(51)
Items which are not operating activities:
Interest receivable
Interest payable
Investment income
(3,734)
7,857
(3,218)
(3,970)
7,778
(3,229)
Net Cash inflow from Operating Activities
22,225
8,139
Other
Changes
£’000
31 July
2006
£’000
Items not involving cash movements:
Depreciation
Deferred capital grants released to income
Impairment of fixed asset investments
Increase in stocks
Increase in debtors
Increase in creditors
Pension cost less contributions payable (Note 30)
24. ANALYSIS OF CHANGES IN NET DEBT
1 August
2005
£’000
Cash at bank and in hand
Endowment assets (Note 13)
Deposits repayable on demand
Overdrafts (Note 15)
Current asset investments
Debt due within one year (Note 15)
Debt due after one year (Note 16)
Cash
Flows
£’000
53,094
14,250
(7,775)
(43,907)
(184)
(3,346)
–
–
–
9,187
14,066
(11,121)
59,569
(47,437)
–
12,132
31,254
5,620
–
36,874
(295)
295
(2,823)
(2,823)
(85,833)
7,151
(4,633)
(83,315)
4,695
(34,371)
(7,456)
(37,132)
The increase in debt is due to interest payable charges of £7,456,000, less interest paid of £7,151,000 and capital repaid of
£295,000, giving a net increase in debt of £10,000.
Management of liquid resources comprises current asset investments and endowment cash balances.
25. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2006
£’000
2005
£’000
(Decrease)/increase in cash in the period
Cash brought forward in previously unconsolidated subsidiary
Increase/(decrease) in current asset investments
(Decrease)/increase in cash within endowment assets
Increase in debt
(3,530)
–
5,620
(43,907)
(10)
2,383
23
(9,455)
39,119
(2,611)
Change in net debt
(41,827)
29,459
4,695
(24,764)
(37,132)
4,695
Net debt at 1 August
Net (debt)/funds at 31 July
28
26. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
2006
£’000
2005
£’000
Income from endowments
Other interest received
Interest paid
Interest element of finance lease rental payment
2,789
3,344
(378)
(7,151)
2,936
3,596
(450)
(7,017)
Net cash outflow from returns on investments and servicing of finance
(1,396)
(935)
27. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets
Purchase of fixed asset investments
Net purchase of endowment asset investments
Total payments to acquire fixed and endowment assets
Proceeds from disposal of operations
Net proceeds from sale of endowment asset investments
Capital grants received towards the purchase of tangible assets
Endowments received
Net cash inflow from capital expenditure and financial investment
28. FINANCING
2006
£’000
2005
£’000
(86,128)
(349)
(44,888)
(72,779)
(2,269)
–
(131,365)
(75,048)
–
–
67,622
1,594
6,270
36,186
55,512
2,082
(62,149)
25,002
2006
£’000
2005
£’000
Mortgage and Loan Capital repayments
(295)
(239)
Net cash outflow from financing
(295)
(239)
29. HARDSHIP AND ACCESS BURSARY FUNDS
Consolidated and UCL
2006
£’000
Balance at 1 August
Funding Council grants
Interest earned
Disbursed to students
Balance at 31 July
2005
£’000
179
554
10
(8)
701
12
743
(679)
705
(526)
64
179
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.
29
NOTES TO THE ACCOUNTS
30. PENSION FUNDS
The total pension costs for UCL were:
Contribution to USS
Contribution to SAUL
Contribution to NHS
Charged to I&E in respect of RFHSM Pension & Assurance Scheme
Charged to I&E in respect of FPS
Contribution to other pension schemes
2006
£’000
22,650
3,593
5,114
329
420
12
Restated
2005
£’000
21,473
3,419
4,855
411
261
9
32,118
30,428
The three principal pension schemes for UCL’s staff are the Universities Superannuation Scheme (USS), the Superannuation
Arrangements of the University of London (SAUL) and the National Health Service Pension Scheme. 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.
Universities Superannuation Scheme (USS)
The latest actuarial valuation of the scheme was at 31 March 2005 using the projected unit method. The assumptions and other
data which have the most significant effect on the determination of the contribution levels are as follows:
Past Service
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
Current Employer’s contribution rate
Future Service
4.5%
3.9%
2.9%
£21,739.7million
77.0%
14.0%
6.2%
3.9%
2.9%
Superannuation Arrangements of the University of London (SAUL)
The latest actuarial valuation of the scheme was at 31 March 2005 using the projected unit method. The assumptions and other
data which have the most significant effect on the determination of the contribution levels are as follows:
Investment returns per annum
1
Salary scale increases per annum *
Pension increases per annum
Past Service
Future Service
5.5%
4.15%
2.65%
6.5%
4.15%
2.65%
Market value of assets at last actuarial valuation date
Proportion of members’ accrued benefits covered by the actuarial value of assets
Current Employers contribution rate
£982.38 million
93.0%
2
10.5%*
1
* excludes an allowance for promotional increases
2
* from 1 August 2006 this will increase to 13%
National Health Service Pension Scheme
The NHS Pension Scheme is an unfunded defined benefit scheme available to staff who immediately prior to appointment at
UCL were members of this scheme.
The last valuation of the scheme took place as at 31 March 2003. Between valuations, the Government Actuary provides an
update of the scheme liabilities on an annual basis. On advice from the actuary the employers’ contributions were increased
from 7% to 14% from the 1st April 2004.
The scheme is a multi-employer scheme, where the assets and liabilities for UCL cannot be identified.
30
Federated Pension Scheme (FPS) and the Royal Free Hospital School of Medicine (RFHSM) Pension and Assurance Scheme
The Federated Pension Scheme (FPS) for non academic staff of Middlesex Hospital Medical School which since merger with
UCL on 1 August 1987 has become closed to new entrants. This scheme is a defined benefit scheme.
The Royal Free Hospital School of Medicine (RFHSM) Pension and Assurance Scheme operated for non academic 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. This scheme is a defined benefit scheme.
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 Royal Free Hospital School of Medicine
Pension and Assurance Scheme on 1 August 2003. For the purposes of reporting under FRS17 a valuation of both schemes
was undertaken on 31 July 2006, and details are given below.
FPS (1645)
Valuation method
Projected Unit
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-funding
Funding level
Present value of liabilities
Fair value of the scheme assets
2006
2005
2004
3.10%
2.90%
3.10%
5.99%
4.60%
5.10%
2.70%
2.70%
3.00%
5.99%
4.00%
5.00%
2.75%
2.75%
3.00%
6.40%
4.25%
5.75%
£5.4 million
£5.6 million
£5.2 million
128.00%
130.00%
131.00%
£19.4 million
£24.8 million
£18.6 million
£24.2 million
£16.5 million
£21.7 million
Current Employers contribution rate
nil
RFHSM Pension & Assurance Scheme
Valuation method
Projected Unit
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 under-funding
Funding level
Present value of liabilities
Fair value of the scheme assets
Current Employers contribution rate
2006
2005
2004
3.20%
3.20%
3.20%
6.90%
3.20%
5.10%
2.70%
2.70%
2.70%
6.90%
2.70%
5.10%
3.10%
3.10%
3.10%
7.30%
3.10%
5.80%
£(5.9) million
65.00%
£16.7 million
£10.8 million
£(4.1) million
68.00%
£13.0 million
£8.9 million
£(4.5) million
60.20%
£11.3 million
£6.8 million
48.7
31
NOTES TO THE ACCOUNTS
Disclosure of fair values of assets and expected rates of return
FPS (1645)
Expected
rate of return
2006
Deposit Admin. contract
–
Equities
Annuities
Bonds
Cash
7.10%
5.10%
5.10%
4.75%
Total
RFHSM Pension
& Assurance Scheme
Expected
rate of return
2005
Fair Value
2006
£’000
Equities
Annuities
Bonds
Cash
11,037
6,489
6,999
280
7.00%
5.00%
5.00%
4.00%
Total
Expected
rate of return
2005
8,682
–
2,189
–
7.50%
–
4.20%
2.50%
10,871
FPS (1645)
2006
£’000
2005
£’000
Current service cost
Past service costs
329
53
261
–
Total Operating Charge
382
261
RFHSM Pension & Assurance Scheme
2006
£’000
2005
£’000
Current service cost
420
Losses on any settlements and curtailments
–
411
–
Total Operating Charge
411
420
Amounts to be included on other finance costs
FPS (1645)
Net finance return
2006
£’000
2005
£’000
1,389
(919)
1,387
(951)
470
436
RFHSM Pension & Assurance Scheme
2006
£’000
Expected return on scheme assets
Interest on scheme liabilities
Net finance charge
32
Fair Value
2005
£’000
7,170
–
1,747
–
8,917
Amounts included within operating profit
Expected return on scheme assets
Interest on scheme liabilities
10,405
6,928
6,586
245
2005
£’000
630
(671)
518
(661)
(41)
(143)
Fair Value
2004
£’000
–
7.50%
5.75%
5.50%
3.50%
24,164
Fair Value
2006
£’000
7.50%
–
4.30%
3.00%
Expected
rate of return
2004
–
24,805
Expected
rate of return
2006
Fair Value
2005
£’000
9,060
6,716
5,729
196
21,701
Expected
rate of return
2004
7.90%
–
4.90%
2.90%
Fair Value
2004
£’000
5,425
–
1,374
–
6,799
Amounts to be included in the statement of Total Recognised Gains and Losses (STRGL)
FPS (1645)
2006 % asset or
£’000
liability
value
Difference between
actual and expected
return on scheme assets
Experience gains/(losses)
arising on scheme liabilities
Effects of changes in
assumptions underlying
the present value of
scheme liabilities
2003
£’000
% asset or
liability
value
2002 % asset or
£’000
liability
value
1,787
(7% on
assets)
(799)
(-4% on
assets)
2,166
(10% on
assets)
(1,063)
(5.7% on
assets)
–
–
646
(3% on
liabilities)
406
(2% on
liabilities)
508
(3% on
liabilities)
(658)
(4.1%
liabilities)
(404)
(2,167)
RFHSM Pension
& Assurance Scheme
2006 % asset or
£’000
liability
value
777
Experience gains/(losses)
arising on scheme liabilities (1014)
Total actual gains/
(losses) recognised in
the STRGL
% asset or
liability
value
(0% on
assets)
(314)
Effects of changes in
assumptions underlying
the present value of
scheme liabilities
2004
£’000
90
Total actual gains/
(losses) recognised in
the STRGL
Difference between
actual and expected
return on scheme assets
2005 % asset or
£’000
liability
value
(2% on
liabilities)
(612)
(2,984)
(1% on
liabilities)
329
(2% on
liabilities)
2,062
(12% on
liabilities)
(4,705) (29.6% on
liabilities)
2005 % asset or
£’000
liability
value
2004
£’000
% asset or
liability
value
2003
£’000
% asset or
liability
value
2002 % asset or
£’000
liability
value
(1,755) (31.8% on
assets)
(7% on
assets)
1,002
(11% on
assets)
184
(3% on
assets)
26
(0% on
assets)
(6% on
liabilities)
–
–
863
(8% on
liabilities)
518
(4% on
liabilities)
(1,757)
(1,994)
266
722
(814)
(12% on
liabilities)
188
1,052
(1% on
liabilities)
2,099
(1,667)
(19% on
liabilities)
(1,123)
(538)
(5.1%
liabilities)
899
(9% on
liabilities)
(1,394) (13.1% on
liabilities)
33
NOTES TO THE ACCOUNTS
Movements in surplus during the year
FPS (1645)
2006
£’000
2005
£’000
Surplus in scheme at beginning of the year
5,608
5,167
Movement in year:
Current service cost
Contributions
Past service costs
Other finance income
Actuarial Gain/(loss)
(329)
53
(53)
470
(314)
(261)
–
–
436
266
Surplus in scheme at end of the year
5,435
5,608
RFHSM Pension & Assurance Scheme
34
2006
£’000
2005
£’000
Deficit in scheme at beginning of the year
(4,106)
(4,463)
Movement in year:
Current service cost
Contributions
Curtailment costs
Other finance cost
Actuarial Gain/(loss)
(420)
700
–
(41)
(1,994)
(411)
723
–
(143)
188
Deficit in scheme at end of the year
(5,861)
(4,106)
31. 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.
32. 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, by way of a supplementary contribution. The scheme’s ability to pay claims is derived from one of the following
sources:
(a) The reserve fund exceeding £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) £550 million aggregate layer of ‘excess’ cover obtained through a selection of insurers and re-insurers (structured as
£275 million for any one loss or in the aggregate, followed by a further loss of £275 million or in the aggregate;
(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; and in the event of any member being unable, due to insolvency, to meet
any such call, the Board is likely to call for further Supplementary Contributions from the remaining Members.
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. UCL’s Advance Contributions currently constitute approximately 7% of the total
contributions received by the Association.
33. CONTINGENT ASSET
UCL Bio(3) Limited is due to receive further consideration from the disposal of its business of up to £4.665 million in March
2007, of which £135,000 is deferred and the balance of £4.53 million is contingent on the level of sales achieved by
the purchaser.
34. TAXATION
Taxation charges and credits are in respect of UK corporation tax in the following subsidiary companies:
2006
£’000
2005
£’000
UCL Trading Limited
Proaxon Limited
UCL Biomedica Plc
Stanmore Implants Worldwide Ltd
18
1
37
1
13
–
(93)
–
Total Tax charge/(credit)
57
(80)
35
FINANCIAL SUMMARIES (UNAUDITED)
2006
£’000
2005
£’000
2004
£’000
2003
£’000
2002
£’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
166,964
86,308
184,136
115,148
915
6,952
153,201
79,782
167,425
104,908
1,332
7,199
145,766
76,480
161,860
99,837
–
5,833
131,847
69,695
159,779
92,694
–
4,503
129,796
59,538
148,034
90,110
–
5,966
Total income
560,423
513,847
489,776
458,518
433,444
EXPENDITURE
Staff costs
Other operating expenses
Interest payable
Depreciation
347,803
167,451
7,857
30,895
325,636
155,467
7,778
27,924
305,010
146,521
7,811
26,544
286,760
137,283
7,274
26,139
273,137
129,503
7,119
23,003
Total expenditure
554,006
516,805
485,886
457,456
432,762
3,890
1,062
682
SURPLUS/(DEFICIT) FOR THE YEAR BEFORE
DISPOSAL OF FIXED ASSETS AND BEFORE TAX
(2,958)
Share of operating loss in joint ventures
Share of operating profit/(loss) in associates
(282)
(264)
(226)
(122)
Profit on disposal of operations
Profit/(loss) on disposal of fixed asset investments
Profit/(loss) on disposal of tangible fixed assets
–
–
(104)
7,732
–
(392)
–
55
4,054
–
(56)
1,164
–
–
478
4,034
7,885
2,055
958
SURPLUS FOR THE YEAR AFTER DISPOSAL
OF FIXED ASSETS BUT BEFORE TAX
Taxation
Share of taxation in associates
Minority interest
SURPLUS FOR THE YEAR AFTER DISPOSAL
OF FIXED ASSETS AND TAX
Transfer from/(to) accumulated income within specific endowments
SURPLUS FOR THE YEAR
36
6,417
5,767
(144)
30
(54)
(61)
(202)
–
(57)
6
80
1
(106)
(1)
(17)
(6)
(10)
–
45
68
489
41
48
5,761
4,183
8,267
2,073
996
613
424
6,374
4,607
(585)
7,682
(589)
1,484
–
996
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