COMPANY NUMBER:
CHARITY NUMBER:
EDUSERV (LIMITED BY GUARANTEE)
REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
3763109
1079456
EDUSERV (LIMITED BY GUARANTEE)
REPORT OF THE TRUSTEES
FOR THE YEAR ENDED 31 JULY 2012
Status
Governing
Document
Eduserv is a company limited by guarantee and a registered
charity.
Memorandum and Articles of Association (last amended by special
resolution 24 September 2008).
Company Number
3763109
Charity Number
1079456
Registered Office
and Operational
Address
Royal Mead
Railway Place
Bath
BA1 1SR
Trustees
Paul Layzell
—Chairman
Philip French (appointed 14/12/11)
Graham Gilbert
Graham Head
Tony Mather (appointed 14/12/11)
Tim Simpson
David Teague
Anne Bell (term ended 14/12/11)
Eric Burrows (term ended 14/12/11)
Principal Staff
Stephen Butcher (Chief Executive)
Ed Zedlewski
(Chief Information Officer/Deputy
Andrew Hawkins
David Hemmings
Hilary Singleton
Principal Bankers
(Sales Director)
(Operations Director)
(Commercial Director)
RBS Corporate Banking
PO Box 2702
3 Temple Quay East
Temple Quay
Bristol BS1 9BW
Solicitors
Russell Cooke
2 Putney Hill
London
SW15 6AB
Auditors
Nexia Smith 8 Williamson
Portwall Place
Portwall Lane
Bristol
BS1 6NA
Investment Advisors
Rathbone Investment
10 Queen Square
Bristol
BS1 4NT
Management
CEO)
EDUSERV (LIMITED BY GUARANTEE)
REPORT OF THE TRUSTEES
FOR THE YEAR ENDED 31 JULY 2012
The Trustees present their Report and the audited Financial Statements for the year ended 31
July 2012. Legal and administrative information set out on page 2 forms part of this report. The
Financial Statements comply with current statutory requirements, the Memorandum and Articles
of Association and the Statement of Recommended Practice-Accounting and Reporting by
Charities (2005) and the Companies Act 2006.
Sections 1 to 6 refer to our performance against the goals we set for 2011/12 and our ambitions
for 2012/13. Sections 7 to 10 report on our financial performance, risks, reserves and
investments. Sections 11 to 12 describe our governance activities and arrangements.
1. The
Charit 's Ob ects
The objects of the Charity are:
~
to advance education;
~
to promote the effective and efficient provision of education for the public benefit
through information technology;
~
to promote research for the public benefit and, in particular, but not exclusively,
connection with the effective use of information technology in education;
~
to support the effective delivery of services and activities which are for the benefit of
the public and charitable, including the protection of public safety, promotion of
health, the advancement of education and the delivery of other public services which
are for the benefit of the community.
in
The Trustees have noted the Charity Commission's guidance on public benefit and have
reviewed Eduserv's activities in the light of that guidance. They have confirmed that this
public benefit is met through Eduserv's services improving the efficiency of organisations
serving the public good, primarily through the provision of appropriate and cost effective
ICT solutions to them, and through the negotiation on their behalf of preferential licence
terms for software and digital content.
Eduserv is a company limited by guarantee. Its objects as a charity and its governance
arrangements are formally specified in its Memorandum and Articles of Association. It has
a wholly owned subsidiary, Eduserv Technologies Ltd, which delivers ICT services that
may fall outside Eduserv's charitable objectives, but which are expected to generate
surpluses and other benefits of scale or know-how which can then support Eduserv's
charitable activities.
Eduserv's current activities are
in
four main areas:
identity and access management;
licence negotiation;
IT solutions;
research and dissemination.
EDUSERV (LIMITED BY GUARANTEE)
REPORT OF THE TRUSTEES
FOR THE YEAR ENDED 31 JULY 2012
3.
Identit
and Access Mana ement
IAM
Eduserv's Athens and OpenAthens services enable seamless access to multiple protected
on-line resources for learners, researchers and health professionals, regardless of their
location. As a result, they can more readily utilise the full range of resources to which their
institutions have subscribed on their behalf, while their institutions can benefit both through
major administrative savings and through access to usage statistics that can help ensure a
value for money subscription policy.
As planned, 2011/12 saw significant growth in the number of international subscribers for
our services, with most of the new subscribers coming from English-speaking healthcare
markets. In the UK we retained our contract with NICE for the NHS as well as nearly all
our university and college clients, with the majority of UK higher education institutions using
the service.
In 2012/13 we plan to accelerate further the growth in our international client base, to
develop further our service to the NHS and to maintain our strong presence in UK
education.
4.
Licence Ne otiation Services
Eduserv negotiates preferential terms and prices for software and on-line
for universities and colleges. As a result, institutions are able to purchase
for their learners and researchers than would otherwise be the case, and
instance, site licences), that facilitate optimum use of the resource, whilst
time and effort associated with individual negotiations.
content licences
more resources
on terms (for
also saving the
at the close of the year was the agreement with
Adobe of advantageous educational licence terms for their software. We expect this to
deliver benefits in 2012/13 totalling at least 88m to participating institutions, growing the
overall benefit delivered by our licence service by at least 20%. During the year we joined
the Higher Education's central online procurement store and are currently reviewing
options for further facilitating transactions.
A major achievement
5.
finally confirmed
IT Solutions
Our range of
development
infrastructures
development
clients, while
organisations.
offers is growing significantly and now encompasses not only web
and web hosting but also the development of public and private cloud
and of high power density, high security co-location facilities. Our web
skills enable public good organisations to communicate better with their
our infrastructure offers can realise major cost savings for these
the public, educational and charity sectors.
We believe that our pragmatic non-profit approach will make a real difference to the value
these clients get from their IT spend.
In
2011/12 we acquired major new clients
in
EDUSERV (LIMITED BY GUARANTEE)
REPORT OF THE TRUSTEES
FOR THE YEAR ENDED 31 JULY 2012
Alongside these new clients our work for the Department for Education broadened in scope
to include development of a secure cloud infrastructure for internal applications and the
efficient migration into the Department of previously independent Arm's Length Bodies.
Meanwhile we continued the development and hosting of the Department's web presence.
Our Community Cloud Infrastructure (CCI) was developed with the support of the
University Modernisation Fund and attracted over thirty institutions to trialling. We expect
some of these to continue using the CCI as we move to a sustainable business model in
2012/13.
Alongside technology development and growth in our client base, 2011/12 also saw the
certification of all our operations as compliant with the ISO 27001 standard for Information
Security Management.
During 2012/13 we will bring into service a second vault at our Swindon data centre to
meet demand from JANET, HE institutions, and others for high quality co-lo facilities. We
will also continue developing our next-generation
network and the rationalisation of our
presence in third party data centres. Above all we want to continue to expand the number
of major public-good organisations we support.
6.
Research and Dissemination
The building of our Community Cloud Infrastructure, and the development of a private
cloud accredited for government IL3-level data provided exceptional experience in the build
and operation of cloud environments on a large scale. This experience, and the
opportunities these infrastructures provide for efficiencies in educational and government
use of IT, informed a series of both public and by-invitation events addressing Cloud
technology.
The 2012 Eduserv Symposium
on Big Data drew together speakers from academia,
and politics, and from both sides of the Atlantic, to look at the challenges and
opportunities provided by Big Data technically, economically and socially. Delegates to our
Symposium particularly value its vendor-independent
approach and the variety of
perspectives on offer. In 2013 we want to encourage more participation in the Symposium
from government and charity sectors.
industry,
7.
Financial Results and Ob ectives
Our net incoming resources before investments was 6324k (2010/11: 8393k). After income
from investments of F53k (2010/11 853k), and realised and unrealised gains of 66k
(2010/11 8382k), there is a retained surplus for the year of 383k (2010/11 6828k).
f
Eduserv Technologies Ltd provides services that may fall outside our charitable objects.
generated a small surplus in 2011/12 and is expected to continue to do so.
It
EDUSERV (LIMITED BY GUARANTEE)
REPORT OF THE TRUSTEES
FOR THE YEAR ENDED 31 JULY 2012
8.
Risks
Continuing economic stagnation in general, and reductions in public expenditure in
particular, mean that Eduserv can only grow or even maintain its current level of services
and income through replacing existing for-profit providers. Hitherto we have been very
successful in doing this but inevitably such progress is relatively unpredictable. The
Trustees regularly review our progress against plan, our associated exposure to risk, and
our ability to manage shorffalls in projected income.
The Trustees have given consideration
to the appropriate
level of reserves.
31st July 2012 Eduserv held total reserves of E6, 418k of which F4 million were
Designated Funds set aside during the year for further investment in, and development
At
of,
cloud services and data centre facilities.
The General Funds allow the Trustees:
to fund capital investment
charitable operations;
in
facilities and equipment
in
order to maintain our
to support and develop the services delivered by the organisation;
risks — both from liability for professional
and from severe market disruption.
to guard against unforeseen
negligence
10. Investment Portfolio
Eduserv's investments represent funds not immediately required for operational purposes.
The investments are spread across a balanced porffolio and performed in line with the
benchmark indices, with unrealized losses of F1k and realised gains of F7k. The
Investment Committee looks for a steady growth in investment funds using a prudent
approach in its selection of funds as advised by its fund managers.
11. The Trustees
Eduserv is governed by a Board of Trustees. The Trustees act as directors under the
Companies Act and meet at least four times a year. They determine the overall strategy of
the Charity and agree objectives. There are four committees that address and monitor
specific issues:
~
the Audit Committee which meets at least twice a year and oversees financial
control and reporting and risk mitigation;
~
the Remuneration
staff remuneration
staff;
and Appointments Committee which monitors the overall level of
and determines the remuneration and appointment of executive
EDUSERV (LIMITED BY GUARANTEE)
REPORT OF THE TRUSTEES
FOR THE YEAR ENDED 31 JULY 2012
~
the Marketing Committee which reviews market, product and communication
strategies;
~
the Investment Committee which advises the Board on overall investment
authorises investments and reviews on-going investment performance.
strategy,
The Trustees delegate day-to-day management of the Charity and of its subsidiary to an
Executive Committee currently consisting of the Chief Executive who reports directly to the
Board, the Deputy Chief Executive and Chief Information Officer, the Sales Director, the
Commercial Director and the Operations Director.
Members of the charitable company guarantee to contribute an amount not exceeding E1 to
the assets of the charitable company in the event of winding up. The total number of such
guarantees at 31 July 2012 was 7 (2011: 7).
In recruiting new Trustees the Board has sought to identify the skills, experience and
knowledge required and has then asked a search agency specialised in education and the
broader public sector to identify possible candidates. An ad hoc committee of the Board
has reviewed the candidates, met a shortlist of these, and then made recommendations to
the full Board.
Following appointment, new Trustees attend an induction day, providing familiarisation with
Eduserv's current aims and operations, and with the responsibilities of Trustees. Trustees
are provided with a set of key constitutional and planning documents along with Charity
Commission guidelines on the Trustee role and the hallmarks of a good charity.
The following served as Trustees throughout
Paul Layzell
Philip French
2011/12:
Graham Gilbert
Graham Head
Tony Mather
Chair of the Board and the Remuneration Committee
Chair of the Investment Committee and Member of the Audit Committee
(appointed 14/12/11)
Chair of the Audit Committee
Member of the Audit and Marketing Committees
Member of the Marketing and Remuneration Committees (appointed
Tim Simpson
David Teague
Chair of the Marketing Committee
Member of the Investment Committee
14/12/11)
12. The Auditors
Nexia, Smith and Williamson will be proposed for re-appointment as auditors to the
company at the Annual General Meeting in accordance with Section 485 of the Companies
Act 2006.
EDUSERV (LIMITED BY GUARANTEE)
REPORT OF THE TRUSTEES
FOR THE YEAR ENDED 31 JULY 2012
The Trustees (who are also directors of Eduserv for the purposes of company law) are
responsible for preparing the Report of the Trustees and the financial statements in
accordance with applicable law and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).
Company law requires the Trustees to prepare financial statements for each financial year
which give a true and fair view of the state of affairs of the charitable company and the group
and of the incoming resources and application of resources, including the income and
expenditure, of the charitable group for that period. In preparing these financial statements
the Trustees are required to:
select suitable accounting policies and then apply them consistently;
observe the methods and principles
make judgements
in
the Charities SORP;
and estimates that are reasonable and prudent;
state whether applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is
inappropriate to assume that the charitable company will continue in business.
The Trustees are responsible for keeping proper accounting records that disclose with
reasonable accuracy at any time the financial position of the group and charitable company
and enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the group and the charitable
company and hence for taking reasonable steps for the prevention and detection of fraud or
other irregularities.
Insofar as the Trustees are aware:
there is no relevant audit information
of which the charity's auditor is unaware;
the Trustees have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditor is aware of that information.
Approved
by the Board of Trustees on 12'" December
Paul Layzell
Chair
2012 and signed
on their behalf by:-
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EDUSERV (LIMITED BY GUARANTEE)
We have audited the financial statements of Eduserv for the year ended 31 July 2012 which
comprise the consolidated Statement of Financial Activities, the consolidated Balance Sheet,
the charitable company Balance Sheet, the consolidated Cash Flow Statement and related
notes. The financial reporting framework that has been applied in their presentation is
applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).
This report is made solely to the charitable company's members, as a body, in accordance with
chapter 3 part 16 of the Companies Act 2006. Our audit work has been undertaken so that we
might state to the charitable company's members those matters we are required to state to
them in an auditor"s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the charitable company and the
charitable company's members as a body, for our audit work, for this report, or for the opinions
we have formed.
RESPECTIVE RESPONSIBILITIES OF TRUSTEES AND AUDITOR
As explained more fully in the Trustees' Responsibilities Statement set out on Page 8 the
Trustees (who are also the directors of the charitable company for the purposes of company
law) are responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view.
We have been appointed as auditor under the Companies Act 2006 and Section 151 of the
Charities' Act 2011 and report to you in accordance with those Acts.
is to audit and express an opinion on the financial statements in accordance
law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Our responsibility
with applicable
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
at www. frc. or .uk a b sco e rivate. cfm
is provided on the APB's website
Opinion on financial statements
In
our opinion the financial statements
~
~
~
give a true and fair view of the state of the group's and the parent charitable company's
affairs as at 31 July 2012 and of the total incoming resources of the group and the
movements in the total resources, including the income and expenditure, of the group
for the year then ended;
have been properly prepared in accordance with the United Kingdom Generally
Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EDUSERV (LIMITED BY GUARANTEE) (CONTINUED)
Opinion on other matter prescribed by the Companies Act 2006
ln our opinion the information given in the Report of the Trustees for the financial year for which
the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report
require us to report to you
~
~
~
~
in
respect of the following matters where the Companies Act 2006
if, in
our opinion:
the parent charitable company has not kept adequate and sufficient accounting records,
or returns adequate for our audit have not been received from branches not visited by
us; OI
the parent charitable company financial statements are not in agreement with the
accounting records and returns; or
certain disclosures of Trustees' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit
lan Cooper
Senior Statutory Auditor
for and on behalf of Nexia Smith 8 Williamson
Portwall Place
Portwall Lane
Bristol
BS1 6NA
Statutory Auditor
Chartered Accountants
5w~c4'416'v'
Nexia Smith 8 Williamson
Companies Act 2006.
is eligible to act
as an auditor
10
in
terms of Section 1212 of the
EDUSERV (LIMITED BY GUARANTEE)
CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES
FOR THE YEAR ENDED 31 JULY 2012
(INCORPORATING INCOME AND EXPENDITURE ACCOUNT)
Unrestricted
Incoming resources
Total Transactional
Funds
2012
2011
20, 984, 664
17,872, 463
11,641, 936
8, 679, 305
367, 941
53, 138
616, 583
53, 389
12, 063, 015
9, 349, 277
(245, 114)
(11,333,263)
(535, 522)
(8, 273, 324)
93, 814
Notes
Value
Incoming resources from charitable activities
From activities to generate funds:Income generated by Eduserv Technologies
Ltd
Investment
income
Total incoming resources
Resources Expended
Cost of generating funds:—
Cost of Eduserv Technologies Ltd
Charitable activities
Governance
107,746
Total resources expended
11,686, 123
8, 902, 660
Net incoming resources for the year before
other recognised gains
Realised gains on investments
Unrealised (losses)/gains on investments
376, 892
6, 912
1,246
446, 617
39,671
341, 932
Net movement
382, 558
828, 220
6, 035, 790
5, 207, 570
6, 418, 348
6, 035, 790
in
funds
Funds at the start of the year
Funds at the year end
12, 13
incoming resources and resources expended are derived from continuing
There were no recognised gains or losses other than those stated above.
All
The notes on pages 14 to 31 form part of these financial statements.
11
activities.
EDUSERV (LIMITED BY GUARANTEE)
BALANCE SHEET
31 JULY 2012
COMPANY NUMBER
3763109
Charity
Group
2011
2012
2012
2011
Notes
FIXED ASSETS
Tangible fixed assets
Investments
4, 189,952
2, 963, 726
3, 775, 535
2, 928, 297
4, 189,952
2, 963, 726
3, 775, 535
2, 928, 297
7, 153,678
6, 703, 832
7, 153,678
6, 703, 832
3, 787, 676
4, 282, 940
2, 084, 421
3, 641, 912
3, 787, 676
4, 272, 075
2, 084, 656
3, 521, 127
8, 070, 616
(8, 805, 946)
5, 726, 333
(6, 394, 375)
8, 059, 751
(8, 805, 946)
5, 605, 783
(6, 388, 232)
NET CURRENT LIABILITIES
(735, 330)
(668, 042)
(746, 195)
(782, 449)
NET ASSETS
6, 418, 348
6, 035, 790
6, 407, 483
5, 921,383
4, 000, 000
2, 673, 367
4, 000, 000
2, 673, 367
2, 418, 348
3, 362, 423
2, 407, 483
3, 248, 016
6, 418, 348
6, 035, 790
6, 407, 483
5, 921, 383
CURRENT ASSETS
Debtors
Cash at bank and in hand
CREDITORS: Amounts
one year
7
9
10
11
falling due within
FUNDS
Unrestricted
funds
Designated
funds
General funds
TOTAL FUNDS
Approved
12, 13
by the Board of Trustees on 12'" December
2012 and signed on their behalf by:-
Paul Layzell
Chair
The notes on pages 14 to 31 form part of these financial statements.
12
EDUSERV (LIMITED BY GUARANTEE)
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 JULY 2012
2012
2011
Notes
Net cash inflow/(oufflow)
from operating
activities
Returns on investments
1,601,018
(643, 609)
53, 138
53, 389
(983, 365)
544, 031
(577, 532)
(409, 940)
340, 599
(379,599)
3, 737
641, 028
4, 915
(1,034, 245)
3, 641, 912
4, 282, 940
4, 676, 157
3, 641, 912
and servicing of finance
Interest received
Capital expenditure and financial investment
Purchase of tangible fixed assets
Proceeds from disposal of fixed assets investments
Purchase of Fixed Asset Investments
7
9
9
Cash awaiting reinvestment - net movement
Increase/(Decrease) in cash in the year
Opening net cash resources
Closing net cash resources
Reconciliation of net movement in funds to net cash flow from operating activities
2012
2011
F
Net incoming resources
Investment income
Depreciation
Increase in debtors
Increase/(Decrease) in creditors
Net cash flow from operating activities
376, 892
53, 138
323, 754
446, 617
53, 389
393,228
568, 948
(1,703, 255)
2, 411,571
417, 107
(16,407)
1,437, 537
643, 609
1,601,018
Analysis of net cash resources
At 31 July
At 1 August
2011
Cash at hand and
in
bank
3, 641, 912
3, 641, 912
Cash Flow
641, 028
641, 028
The notes on pages 14 to 31 form part of these financial statements.
13
2012
4, 282, 940
4, 282, 940
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2012
ACCOUNTING
POLICIES
a) Basis of Preparation
The Financial Statements have been prepared under the historical cost convention
the exception of the revaluation of investments) and in accordance with applicable
(with
accounting standards. They follow the recommendations in the Statement of
Recommended Practice —Accounting and Reporting by Charities: the Charities SORP
2005 and the Companies Act 2006.
b) Consolidation
Consolidated financial statements ("group accounts") have been prepared in respect of
the charity and its wholly owned subsidiary, Eduserv Technologies Limited (ETL). The
results of Eduserv Technologies Limited have been consolidated into the Statement of
Financial Activities on a line by line basis. In accordance with Section 408 of the
Companies Act 2006, and paragraph 397 of the Charities SORP, a separate Statement
of Financial Activities for the charitable company has not been presented.
c) Incoming Resources
Incoming Resources from activities in furtherance of the charitable activities represents
a combination of fees in respect of licence negotiation and payment for the supply of
ICT services. The fees for performing the services to educational bodies are recognised
in the month that they occur, and the income from fixed term contracts of twelve months
or less is recognised in full at the renewal of each contract. When the fixed term is for
greater than twelve months, the income is apportioned over the contract period. Income
in respect of the delivery of services is recognised over the period that the services were
provided. Fee income received in advance represents contract income invoiced three
months prior to the contract renewal date.
d) Unrestricted
Funds
Unrestricted funds are available to use to further any of the purposes of the charity.
Designated funds comprise unrestricted funds that have been put aside at the discretion
of trustees for particular purposes.
e) Resources Expended
Resources expended are recognised in the period in which they are incurred and direct
costs are identified to the particular business area to which they relate. All other costs
are either apportioned in relation to the net operating margins of the three main
business areas or to the staff costs of those areas as appropriate. Governance costs
include the management of the charitable company's assets, organisational
management
and compliance with constitutional
and statutory requirements.
Depreciation
Depreciation is provided on all tangible fixed assets at rates calculated to write off the
cost of each asset over its expected useful life. Items with a total cost of less than
E1,000 are expensed in the period in which they occur.
14
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
Depreciation (cont)
The depreciation rates in use are as follows:Long Leasehold Property
Long Leasehold improvements
Data Centre Infrastructure
IT equipment (excluding laptops)
Laptops
Software
Office furniture and equipment
Vehicles
50 Years
Over the remaining
life
of the lease
10 years
3 years
2 years
3 years
3 years
3 years
Depreciation costs are allocated to activities on the basis of the use of the related assets
in those activities. Where IT equipment is bought for a particular contract and charged to
the customer, the invoice value and the cost of the equipment are released in the same
period and the asset is held on the books at nil value.
g) Investments
Investments are stated at market value as at the balance sheet date. Investment income
is recognised on an accruals basis. Realised gains/ (losses) on investments are
calculated by deducting opening market values of investments sold from their sales
proceeds. Unrealised gains/ (losses) on investments are calculated by deducting book
values of investments as adjusted for opening market values, from market values of
investments as at the Balance Sheet date.
h) Operating Leases
Rentals payable under operating leases, where substantially all the risks and rewards of
ownership remain with the lessor, are charged to the Statement of Financial Activities
on a straight line basis over the life of the lease.
Pension Costs
Eduserv participates in the Universities Superannuation Scheme (USS), a defined
benefit scheme which is contracted out of the State Second Pension (S2P). The assets
of the scheme are held in a separate trustee-administered
fund. Eduserv is unable to
its
identify
share of the underlying assets and liabilities of the scheme on a consistent
and reasonable basis and therefore, as required by FRS 17 "Retirement benefits, "
accounts for the scheme as if it were a defined contribution scheme. As a result, the
amount charged to the income and expenditure account represents the contributions
payable to the scheme in respect of the accounting period.
Research and Development
Research and development
in
the period
in
costs are expensed to the Statement of Financial Activities
which they occur.
Foreign Currencies
Transactions in foreign currencies are recorded at the rate of exchange ruling at the
date of transaction. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the rate of exchange ruling at the balance sheet date. All foreign
exchange differences are recognised in the Statement of Financial Activities.
15
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
I)
Total Transactional Value
Total transactions value does not represent the group's total incoming resources but
includes the value of license contracts negotiated by the group acting as agents together
with all their incoming resources.
INCOMING RESOURCES FROM CHARITABLE ACTIVITES
Incoming resources from activities in furtherance of charitable objects arise from the
provision of web development and hosting services, the provision of identity and access
management services and the negotiation services for software and information licences
for universities, colleges and libraries.
Research 8 Dissemination
License Negotiation Services
IT Solutions
Identity and
Access Management
2012
2011
947, 905
838, 315
7, 164, 824
2, 690, 892
11,641, 936
453, 320
876, 693
4, 738,498
2, 610,794
8, 679, 305
*Previous year's figures restated due to misallocation
16
*
of IAM income of F399, 000.
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
3.
ANALYSIS OF TOTAL GROUP RESOURCES EXPENDED
Other
Staff Costs
Costs
Depreciation
F
247, 846
736, 935
5, 273, 302
75, 736
36, 093
336, 398
4, 139,086
26, 665
533
67, 520
495, 550
5, 345
Total for Charity
Trading costs of the subsidiary
6, 333,819
4, 538, 242
568, 948
135,295
109,819
Total for the group
6, 469, 114
4, 648, 061
Charitable Expenditure
Research and Dissemination
License Negotiation Services
IT Solutions 8
Governance
IAM
The categories of charitable expenditure
2011
Total
F
F
568, 948
284, 472
1, 140, 853
9, 907, 938
107, 746
279, 772
900, 859
693
092,
7,
93, 814
11,441,009
245, 114
8, 367, 138
11,686, 123
8, 902, 660
535, 522
include the following support costs:
Finance 8
Charitable Expenditure
Administration
License Negotiation Services
IT Solutions & IAM
Research and Dissemination
Management
IT
Total
Marketing
13,592
90, 846
33,437
59, 610
398,420
146,645
31, 141
208, 141
76, 610
11,292
75, 474
27, 779
772, 881
284, 471
137,875
604, 675
315,892
114,545
1, 172, 987
115,635
The support costs have been allocated as per accounting policy 1e).
RESEARCH AND DISSEMINATION
Research and Dissemination
charge
in
the year is as follows:—
2012
2011
F
Under accrual of grant released
Research Staff
Event Sponsorship
Research and Dissemination
costs
All
247, 846
(12,879)
245, 335
5, 175
237,631
36, 626
284, 472
42, 141
279, 772
247, 846
administration
the above expenditure
relates to research into the use of ICT
17
in
education.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
4.
GROUP NET INCOMING RESOURCES FOR THE YEAR
This is stated after charging:-
2012
568, 948 417, 107
15,419 14,671
22, 905
20, 623
10,566
000)
(10,
207, 060 206, 496
Depreciation
Trustees reimbursed expenses
Auditors'
remuneration
—audit
Exchange differences
Operating
2011
Lease rentals —property
Trustees' reimbursed expenses represent reimbursement made to Trustees for travel
and subsistence in attending Trustees' and other meetings. This relates to 9 (201'I: 7)
Trustees.
5.
STAFF COSTS
2012
Salaries and wages
Social security costs
Pension contributions
2011
5, 361,040
4, 395, 312
477, 548
630, 526
389,096
531,784
6, 469, 114
5, 316, 192
The following number of employees exceeded f60, 000 emoluments:
Employees
Employees
Employees
Employees
Employees
Employees
Employees
Employees
Employees
whose
whose
whose
whose
whose
whose
whose
whose
whose
emoluments were f60, 000- F70, 000
emoluments were f70, 000- f80, 000
emoluments were P80, 000- f90, 000
emoluments were f90, 000- F100,000
emoluments were f100, 000- f110,000
emoluments were f110,000- F120, 000
emoluments were F130,000- F140,000
emoluments were f140, 000-2150, 000
emoluments were F150,000- f160,000
18
4
2
(2011: 5)
(2011. 3)
(2011: 1)
(2011: 1)
2
(2011 -)
1
2
(2011.. -)
(2011: 1)
(2011: -)
(2011: 1)
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
5.
STAFF COSTS (CONTINUED)
2012
Average number of employees
equivalent)
(full
time
2011
No
No
126
107
Retirement benefits were paid on behalf of 11 higher paid members of staff
(2011: 12) into the scheme set out in note 17 to the accounts.
in
2012
Three of the higher paid employees also acted as directors of Eduserv Technologies
Limited, the wholly owned trading subsidiary. Payment for these services was made by
way of a management charge on the company.
TAXATION
The charitable company is a registered charity and its income streams are exempt from
Corporation Tax. All of its income is applied for charitable purposes. The subsidiary has
no tax charge for the year.
19
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
7. TANGIBLE FIXED ASSETS
Group
Long
Leasehold
Property
Leasehold
Improvements
IT
Equipment
Office
Furniture &
Equipment
Vehicles
Total
f
COST
2011
823, 844
2, 820, 902
1,627, 903
746, 896
412, 033
5, 585
12,425
230, 884
823, 844
3,051,786
2, 374, 799
417,618
12,425
6, 680,472
DEPRECIATION
At 1 August 2011
Charge for the year
Disposals
24, 715
16,477
401, 580
234, 875
1,273, 752
225, 300
213,586
88, 154
7, 939
4, 142
1,921,572
568, 948
31 July 2012
41,192
636,455
1,499,052
301,740
12,081
2, 490, 520
At 1 August
Additions
5, 697, 107
983, 365
Disposals
At
At
31 July 2012
NET BOOK VALUE
At
31 July 2012
782, 652
2,415,331
875, 747
115,878
344
4, 189,952
At
31 July 2011
799, 129
2, 419,322
354, 151
198,447
4, 486
3, 775, 535
Charity
Long
Leasehold
Property
Leasehold
Improvements
IT
Equipment
Office
Furniture &
Equipment
Vehicles
Total
f
COST
At 1 August
2011
823, 844
2, 820, 902
1,094, 688
746, 896
412, 033
5, 585
12,425
230, 884
823, 844
3,051,786
1,841,584
417,618
12,425
6, 147,257
24, 715
16,477
401, 580
234, 875
740, 537
225, 300
213,586
88, 154
7, 939
4, 142
1, 388, 357
41,192
636,455
965,837
301,740
12,081
1,957,305
782, 652
2, 415,331
875, 747
115,878
344
4, 189,952
799, 129
2, 419,322
354, 151
198,447
4, 486
3, 775, 535
Additions
5, 163,892
983, 365
Disposals
At
31 July 2012
DEPRECIATION
At 1 August
2011
Charge for the year
Disposals
At
31 July 2012
568, 948
NET BOOK VALUE
At 31 July 2012
At
31 July 2011
20
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
SUBSIDIARY UNDERTAKING
Eduserv Technologies Limited (company number 4256630) is a wholly owned trading
subsidiary of Eduserv. The subsidiary generates additional revenue income to the
charity through the extension of the group's services to organisations other than
educational institutions, departments or agencies predominantly in the public sector.
activities have been consolidated on a line by line basis
the results of the subsidiary is shown below:All
The Trustees recognise that the fact that ETL
Eduserv and was therefore unable to build up
liabilities greater than its assets. The Trustees
subsidiary is cash positive and there is no risk
in
the SOFA. A summary
of
has previously gifted all of its profits to
reserves means the subsidiary shows
are however confident that the
that creditors will not be paid in full.
Eduserv Technologies Limited wholly owns Eduserv Technologies (North America)
Limited, which was dormant during the year, and hence has not been consolidated into
Eduserv's accounts. During the year the company set up the Open Athens Federation
but this did not trade during the year and was wound up post year end there being no
requirement for this entity.
2012
2011
E
Turnover Outside group
Turnover within Group
367, 941
616, 583
Cost of Sales
(48, 924)
(54, 912)
319,017
(196, 190)
(18,397)
561,671
(480, 610)
(30, 829)
104,430
50, 232
(16,224)
(17,456)
88, 206
32, 776
88, 206
32, 776
(412, 387)
(500, 593)
Gross profit
Administrative
expenses
Licence fees paid to Eduserv
Operating profit
Interest receivable
Interest payable
Profit on ordinary activities
Gift aid to Eduserv
Profit for the financial year
Net liabilities
21
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
INVESTMENTS
The charity had investments at 31 July 2012 of E2, 963, 726 (2011:E2, 928, 297)
twenty separate unitised funds.
2012
2011
Market value at 1st August 2011
Additions
Disposals at opening market value
Unrealised (loss)/ gain
2, 911,471
2, 490,868
577, 532
(537, 120)
(1,246)
379, 599
(300, 928)
341,932
Total Investments
Invested Cash
2, 950, 637
13,089
2, 911,471
16,826
2, 963,726
2, 928, 297
Market value at
31st July 2012
Disposals differ from actual cash received due to gains recognised
The current portfolio is made up of the following investments
predominately in accumulation units:-
in
in
in
prior periods.
unitised funds,
2012
2011
E
Commodities
Property
Global Investments
Asia Pacific Investments
European Investments
North American Investments
UK Investment
Cos
UK Fixed Interest
UK Index Linked
Emerging Markets
Cash for Reinvestment
22
60, 308
108, 500
463, 995
135,937
100, 748
207, 687
1,062, 485
337,223
371,724
102, 030
13,089
90, 300
109,900
513,750
135,405
120,426
126, 797
919,428
341, 165
489, 200
65, 100
16,826
2, 963,726
2, 928, 297
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
INVESTMENTS (CONTINUED)
The whole portfolio was invested through UK based investment operations. All
investments are either listed on recognised stock exchanges or are valued by reference
to such investments.
The following holdings represented
value:-
more than 5% of total investments
Treasury stock - 2. 5% Index Linked stock 2020
Murray International Trust Plc
Finsbury Growth & Inc Trust Plc
Jo Hambro Capital Management
Psigma Unit Trust Managers
British Empire Sec 8 Gen Trust
NB Private Equity Partnets Ltd
Liontrust Fund Partners
F8C Private Equity Trust Plc
JP Morgan Private Equity Ltd
held at market
f 371,724
f184, 815
F151,830
f192, 528
2149,770
F152,640
6188,860
2174, 627
8148, 362
F164,206
The charity also holds a E1 share (representing the entire issued share capital) of
Eduserv Technologies Limited, and a E1 share capital in each of CHEST Limited, NISS
Limited, and Eduserv Limited which are dormant companies held for name protection
purposes.
Investment
income received
in
the year was:-
2012
2011
Interest received
Received
11,570
41, 568
7, 254
46, 135
Investment
53, 138
53, 389
Dividends
interest
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
10.
DEBTORS
Charity
Group
2012
2011
2012
2011
F
Amounts due from Eduserv Technologies
E
234
Ltd
2, 454, 010
1,333,666
Fees Receivable
Prepayments and accrued income
Other Debtors
3, 787, 676
2, 454, 010
1,333,666
862, 945
1,216, 888
4, 588
2, 084, 421
3, 787, 676
1,578, 832
501,002
4, 588
2, 084, 656
The inter-company debtor between Eduserv Technologies Limited and Eduserv is
secured by a fixed and floating charge over all assets of the company.
11.
CREDITORS: Amounts falling due
within
one year
Charity
Group
2012
Fee income received in
advance
Trade Creditors
Taxation and social security
Accruals
Net License Negotiation
Creditors
There were no commitments
grants during the year.
2011
2012
2011
2, 409, 099
1,349, 715
2, 409, 099
309,486
1,487, 798
1, 195,771
271, 511
1,041, 385
679, 135
309,486
1,487, 798
1, 195,771
271, 510
1,035, 243
679, 135
4, 463, 176
1,993,245
4, 463, 176
1,993,245
8, 805, 946
6, 394, 375
8, 805, 946
6, 388, 232
1, 349, 715
made for Research and Dissemination
24
(formerly Foundation)
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
12.
ANALYSIS OF GROUP NET ASSETS BETWEEN FUNDS
The group's net assets are analysed between funds as follows:—
Investments
Tangible
Fixed
Total
Net
Current
Liabilities
Assets
F
Designated
Funds
General Fund
13.
1,291,204
2, 708, 796
2, 898, 748
254, 930
(735, 330)
2, 418,348
4, 189,952
2, 963,726
(735,330)
6,418,348
4, 000, 000
MOVEMENT IN FUNDS
Realised
At 1
August
2011
Unrestricted funds
Designated funds:
Research & Dissemination
and Development
General Fund
Total Funds
Funds
Incoming
Outgoing
Resources
Resources
F
2, 673, 367
and
unrealised
gain on
investments
F
(284, 472)
3, 362, 423
12, 063, 015
6, 035, 790
12, 063, 015
11,401,651
11,686, 123
5, 666
Transfers
between
funds
1,611,105
1,611,105
5, 666
Purposes of Designated Funds
Eduserv has a research and dissemination programme which is funded on a day to day basis
by operational activities. The designated funds are to allow additional investment in projects
identified as having the potential to significantly improve existing services or to develop new
services. The trustees designated F4 million in the year for further development of, and
investment in, cloud technology and data centre facilities. The general funds are designed to
support on-going capital investment
meeting contingencies.
and to support the operational
25
activities as well
as
As at 31
July 2012
4, 000, 000
2, 418,348
6,418,348
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
14.
OPERATING LEASE COMMITMENTS
The charitable company had annual commitments
expiring
under property operating leases
as follows:2012
Between 2-5 years
More than 5 years
15.
2011
270, 200
270, 200
29, 000
29, 000
299,200
299, 200
OTHER FINANCIAL COMMITMENTS
Eduserv provides a Licence Negotiation Service for educational institutions and for
many of these provides a payments collection service. In order to mitigate the effects of
currency movements when buying from international suppliers Eduserv buys currency
forward and charges the institutions the same forward exchange rate.
The following forward contracts were
in
place at the year end:—
Trade Date
04/05/2012
27/07/2012
16.
Amount
Buying
Buying
$1,000, 000
$500, 000
Rate
1.6128
1.5617
Settlement
Date
06/08/2012
28/09/2012
CAPITAL COMMITMENTS
Eduserv has committed to capital expenditure of F1,651k in respect of further
development of, and investment in, cloud technology and data centre facilities.
26
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
17.
PENSION SCHEME
Eduserv participates in the Universities Superannuation Scheme (USS), a defined
benefit scheme which is contracted out of the State Second Pension (S2P). The assets
of the scheme are held in a separate fund administered by the trustee, Universities
Superannuation Scheme Limited.
The appointment of directors to the Board of the Trustee is determined by the Trustee
company's Articles of Association. Four of the directors are appointed by Universities
UK; three are appointed by the University and College Union, of whom at least one must
be a USS pensioner member; and a minimum of two and a maximum of four are coopted directors appointed by the Board. Under the scheme trust deed and rules, the
employer contribution rate is determined by the Trustee, acting on actuarial advice.
The latest triennial actuarial valuation of the scheme was at 31 March 2011. This was
the second valuation for USS under the scheme-specific funding regime introduced by
the Pensions Act 2004, which requires schemes to adopt a statutory funding objective,
which is to have sufficient and appropriate assets to cover their technical provisions.
The actuary also carries out regular reviews of the funding levels. In particular, he
carries out a review of the funding level each year between triennial valuations and
details of his estimate of the funding level at 31 March 2012 are also included in this
note.
The triennial valuation was carried out using the projected unit method. The
assumptions which have the most significant effect on the result of the valuation are
those relating to the rate of return on investments (i.e. the valuation rate of interest), the
rates of increase in salary and pensions and the assumed rates of mortality. The
financial assumptions were derived from market yields prevailing at the valuation date.
An "inflation risk premium" adjustment was also included by deducting 0.3% from the
market-implied inflation on account of the historically high level of inflation implied
by
government bonds (particularly when compared to the Bank of England's target of 2%
for CPI which corresponds broadly to 2.75% for RPI per annum).
To calculate the technical provisions, it was assumed that the valuation rate of interest
would be 6. 1% per annum, salary increases would be 4.4% per annum (with short term
general pay growth at 3.65% per annum and an additional allowance for increases in
salaries due to age and promotion reflecting historic scheme experience, with a further
cautionary reserve on top for past service liabilities) and pensions would increase
by
3.4% per annum for 3 years following the valuation, then 2.6% thereafter.
27
FOR THE YEAR ENDED 31 JULY 2012
17. PENSION SCHEME
(CONTINUED)
Standard mortality tables were used as follows:
Male members'
S1NA ["light"] YoB tables —no age rating
mortality
S1NA ["light"] YoB tables —rated down
year
Female members' mortality
1
Use of these mortality tables reasonably reflects the actual USS experience but also
provides an element of conservatism to allow for further improvements in mortality rates.
The CMI 2009 projections with a 1.2'/o pa long term rate were also adopted. The
assumed life expectations on retirement at age 65 are:
Males (females) currently aged 65
23.7 (25.6) years
Males (females) currently aged 45
25.5 (27.6) years
date, the value of the assets of the scheme was 232, 433.5 million and
scheme's
technical provisions was F35, 343.7 million indicating a
value
of
the
the
shortfall of E2, 910.2 million. The assets therefore were sufficient to cover 92'/o of the
benefits which had accrued to members after allowing for expected future increases in
earnings.
At the valuation
The actuary also valued the scheme on a number of other bases as at the valuation
date. On the scheme's historic gilts basis, using a valuation rate of interest in respect of
past service liabilities of 4.4'/o per annum (the expected return on gilts) the funding level
was approximately 68'/o. Under the Pension Protection Fund regulations introduced by
the Pensions Act 2004 the Scheme was 93'/o funded; on a buy-out basis (i.e. assuming
the Scheme had discontinued on the valuation date) the assets would have been
approximately 57'/o of the amount necessary to secure all the USS benefits with an
insurance company; and using the FRS17 formula as if USS was a single employer
scheme, using a AA bond discount rate of 5.5/o per annum based on spot yields, the
actuary estimated that the funding level at 31 March 2011 was 82/o.
As part of this valuation, the Trustees have determined, after consultation with the
employers, a recovery plan to pay off the shortfall by 31 March 2021. The next formal
triennial actuarial valuation is as at 31 March 2014. If experience up to that date is in
line with the assumptions made for this current actuarial valuation and contributions are
paid at the determined rates or amounts, the shortfall at 31 March 2014 is estimated to
be E2.2 billion, equivalent to a funding level of 95'/o. The contribution rate will be
reviewed as part of each valuation and may be reviewed more frequently.
28
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
17. PENSION SCHEME
(CONTINUED)
The technical provisions relate essentially to the past service liabilities and funding
levels, but it is also necessary to assess the on-going cost of newly accruing benefits.
The cost of future accrual was calculated using the same assumptions as those used to
calculate the technical provisions but the allowance for promotional salary increases
was not as high. Analysis has shown very variable levels of growth over and above
general pay increases in recent years, and the salary growth assumption built into the
cost of future accrual is based on more stable, historic, salary experience. However,
when calculating the past service liabilities of the scheme, a cautionary reserve has
been included, in addition, on account of the variability mentioned above.
As at the valuation date the Scheme was still a fully Final Salary Scheme for future
accruals and the prevailing employer contribution rate was 16'/0 of Salaries.
Following UK government legislation, from 2011 statutory pension increases or
are based on the Consumer Prices Index measure of price inflation.
these
Historically
increases had been based on the Retail Prices Index measure of price
inflation.
revaluations
Since the previous valuation as at 31 March 2008 there have been a number of changes
to the benefits provided by the scheme although these became effective from October
2011. These
include:
New Entrants
Other than in specific, limited circumstances, new entrants are now provided on a
Career Revalued Benefits (CRB) basis rather than a Final Salary (FS) basis.
Normal pension age
The Normal pension age was increased for future service and new entrants, to age 65.
Flexible Retirement
Flexible retirement options were introduced.
Member contributions increased
Contributions were uplifted to 7.5'/0 p. a. and
CRB Section members respectively.
6.5'/0 p. a. for FS Section members and
Cost sharing
the total contribution level exceeds 23.5'/0 of Salaries per annum, the employers will
pay 65'/0 of the excess over 23.5'/0 and members would pay the remaining 35'/o to the
fund as additional contributions.
If
Pension increase cap
For service derived after 30 September 2011, USS will match increases in official
pensions for the first 5'/0. If official pensions increase by more than 5'/0 then USS
pay half of the difference up to a maximum increase of 10'/o.
29
will
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
17. PENSION SCHEME
(CONTINUED)
Since 31 March 2011 global investment markets have continued to fluctuate and
its peak in September 2011 inflation has declined rapidly towards the year end,
although the market's assessment of inflation has remained reasonably constant. The
actuary has estimated that the funding level as at 31 March 2012 under the scheme
specific funding regime had fallen from 92% to 77%. This estimate is based on the
results from the valuation at 31 March 2011 allowing primarily for investment returns and
changes to market conditions. These are cited as the two most significant factors
affecting the funding positions which have been taken into account for the 31 March
following
2012 estimation.
On the FRS17 basis, using an AA bond discount rate of 4. 9% per annum based on spot
yields, the actuary calculated that the funding level at 31 March 2012 was 74%. An
estimate of the funding level measured on a historic gilts basis at that date was
approximately 56%.
Surpluses or deficits which arise at future valuations may impact on Eduserv's future
contribution commitment. A deficit may require additional funding in the form of higher
contribution requirements, where a surplus could, perhaps, be used to similarly reduce
contribution requirements.
The sensitivities regarding the principal assumptions used
to measure the scheme liabilities on a technical provisions basis as at the date of the
last triennial actuarial valuation are set out below:
Assumption
Change in assumption
Impact on shortfall
Decrease by 0.25%
Increase by F1.6 billion
The gap between RPI and
CPI
Rate of salary growth
Decrease by 0.25%
Increase by E1 billion
Increase by 0.25%
Increase by F0.6
billion
Members live longer than
assumed
1
year longer
Increase by E0.8
billion
Equity markets in isolation
Fall by
25%
Increase by E4.6
billion
Investment
return
USS is a "last man standing" scheme so that in the event of the insolvency of any of the
participating employers in USS, the amount of any pension funding shorffall (which
cannot otherwise be recovered) in respect of that employer will be spread across the
remaining
participant employers and reflected in the next actuarial valuation of the
scheme.
30
EDUSERV (LIMITED BY GUARANTEE)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2012
17. PENSION SCHEME
(CONTINUED)
The Trustees believe that over the long term equity investment and investment in
selected alternative asset classes will provide superior returns to other investment
classes. The management structure and targets set are designed to give the fund a
major exposure to equities through porffolios that are diversified both geographically and
by sector. The Trustee recognises that it would be theoretically possible to select
investments producing income flows broadly similar to the estimated liability cash flows.
However, in order to meet the long term funding objective within a level of contributions
that it considers the employers would be willing to make, the Trustee needs to take on a
degree of investment risk relative to the liabilities. This taking of investment risk seems
to target a greater return than the matching assets would provide whilst maintaining a
prudent approach to meeting the fund's liabilities. Before deciding what degree of
investment risk to take relative to the liabilities, the Trustee receives advice from its
internal investment team, its investment consultant and the scheme actuary, and
considers the views of the employers. The positive cash flow of the scheme means that
it is not necessary to realise investments to meet liabilities. The Trustee believes that
this, together with the on-going flow of new entrants into the scheme and the strength of
covenant of the employers enables it to take a long term view of its investments. Short
term volatility of returns can be tolerated and need not feed through directly to the
contribution rate although the Trustee is mindful of the desirability of keeping the funding
level on the scheme's technical provisions close to or above 100% thereby minimising
the risk of the introduction of deficit contributions. The actuary has confirmed that the
scheme's cash flow is likely to remain positive for the next ten years or more.
At
31 March 2012, USS had over 145, 000 active members and Eduserv had 93 active
in the scheme.
members participating
The total pension cost for Eduserv was F630, 526 (2011: 2531,784). There were no
outstanding contributions at the balance sheet date. The contribution rate payable by
the institution was 16% of pensionable salaries.
18.
RELATED PARTY TRANSACTIONS
Eduserv is exempt from disclosing transactions with its subsidiary
special provisions of FRS 8 —Related Party Transactions.
undertaking
There were no material related party transactions (other than with the subsidiary
undertaking) during the year that require reporting.
31
under the