Agenda Item # 8.1
THE UNIVERSITY OF BRITISH COLUMBIA
Report to the Board of Governors
SUBJECT
MEETING DATE
Quarterly Financial Statements December 31, 2012
February 6, 2013
Forwarded to the Board of Governors on the
Recommendation of the President
APPROVED FOR
SUBMISSION
President Stephen J. Toope, President and Vice Chancellor
DECISION REQUESTED )RU,QIRUPDWLRQ
Presented By
Report Date
Pierre Ouillet, Vice President Finance, Resources & Operations
Ian Burgess, Comptroller
Stuart Mackenzie, Director, Financial Reporting
December 31, 2012
EXECUTIVE SUMMARY
Attached are the Consolidated Financial Statements for the third quarter of 2012/13, period ended December 31,
2012.
At the end of the third quarter, there is a Deficiency of Revenue over Expenses of $65 million, which is $12
million less than the deficiency of $77 million for the same period last year, largely due to improved investment
returns. We still expect to be in deficit after Q3, as Q4 typically generates a surplus from Winter Term 2 tuition
revenue.
Revenue increased by $49 million over the same period last year. This increase arises largely from an increase in
investment income of $21 million from improved market returns; higher government grants of $14 million; and
increased tuition of $12 million primarily from higher enrolment.
Expenses increased by $37 million over the prior year, driven by a $26 million increase in salary and benefit costs.
The salary growth reflects additions in faculties and staff of 2% and rate increases of 2%.
Assets increased by $272 million compared to the balance at December 31, 2011. Capital assets increased by $98
million due to new building projects, including the Pharmaceutical Sciences Centre and Ponderosa Housing. Cash
and investments increased by $97 million from positive market returns on endowment investments . Other assets
increased by $77 million, mainly from receivables due from research funding and tuition revenue.
Liabilities have increased by $188 million, largely as a result of the deferral of capital and other contributions.
Overall, Net Assets for the University have increased by $84 million compared to the balance at December 31,
2011. The University's investment in capital assets increased over the period by $105 million, and endowment net
assets by $70m. However, Unrestricted Operating decreased by $89 million due to drawdowns related to the
internal funding of capital assets.
These quarterly financial statements are unaudited and while efforts have been made to present the information in
a fair manner, detailed reconciliations and accruals that take place with the audited year-end financial statements
are not carried out at the same level for quarterly reporting.
The third quarter 2012/13 results were provided to the Province (using the provincial government template).
ATTACHMENTS:
1. UBC Consolidated Financial Statements Third Quarter Fiscal 2012/13.
Page 2
THE UNIVERSITY OF BRITISH COLUMBIA
CONSOLIDATED FINANCIAL STATEMENTS
THIRD QUARTER FISCAL 2012-2013
DECEMBER 31, 2012
Prepared by:
Stuart Mackenzie, Director, Financial Reporting
Contacts:
Stuart Mackenzie, Director, Financial Reporting
(604) 822-3584 or stuart.mackenzie@ubc.ca
Ian Burgess, Comptroller
(604) 822-3031 or ian.burgess@ubc.ca
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
INDEX
Period in Review
3
Summary of Significant Donations Received in the Quarter
4
Consolidated Statement of Financial Position
5
Consolidated Statement of Operations and Changes in Net Operating Assets
6
Financial Highlights
7-9
Information provided to the provincial government is limited to the consolidated statements
(pages 5 and 6); this is presented using the government's template.
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
The third quarter resulted in posting a positive Excess of Revenues
The Endowment shows healthy growth of $61 million largely due to
PERIOD IN REVIEW
Consolidated Results of Operations (page 6)
At the end of the third quarter, there is a Deficiency of Revenue over Expenses of $65 million, which
is $12 million less than the deficiency of $77 million for the same period last year, largely due to
improved investment returns. We still expect to be in deficit after Q3, as Q4 typically generates a
surplus from Winter Term 2 tuition revenue.
Revenue increased by $49 million over the same period last year. This increase arises largely from
an increase in investment income of $21 million from improved market returns; higher government
grants of $14m; and increased tuition of $12m primarily from higher enrolment.
Expenses increased by $37 million over the prior year, driven by a $26 million increase in salary and
benefit costs. The salary growth reflects additions in faculties and staff of 2% and rate increases of
2%.
Consolidated Statement of Financial Position (page 5)
Assets increased by $272 million compared to the balance at December 31, 2011. Capital assets
increased by $98 million due to new building projects, including the Pharmaceutical Sciences Centre
and Ponderosa Housing. Cash and investments increased by $97 million from positive market
returns on endowment investments . Other assets increased by $77 million, mainly from
receivables due from research funding and tuition revenue.
Liabilities have increased by $188 million, largely as a result of the deferral of capital and other
contributions.
Overall, Net Assets for the University have increased by $84 million compared to the balance at
December 31, 2011. The University's investment in capital assets increased over the period by $105
million, and endowment net assets by $70m. However, Unrestricted Operating decreased by $89
million due to drawdowns related to the internal funding of capital assets.
Page 3
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
SIGNIFICANT DONATIONS RECEIVED IN THE QUARTER
This section is intended to highlight some of the major donations during the past quarter. The highlighted transactions
in most cases represent significant effort and are accomplishments that are worthy of mention. It should be noted that a
significant number of smaller transactions are not highlighted although their academic value may be significant.
UBC Development has raised approximately $97.7 million for the nine months to December 31, 2012.
Significant gifts (over $200,000) for Q3 are as follows:
-
Naval Architecture Eng. Institute & Chairs Research
Vancouver Prostate Centre-Prostate Cancer Dream Team-SU2C-PCF
Loon Lake Redevelopment Fund in Forestry
Loon Lake Redevelopment Fund in Forestry
Small-scale aquaculture to strengthen food security in Cambodia
Medicine Expectancy Fund
National Occupational and Enviromental Carcinogen Surveillance Unit Fund
UBC Alumni Centre
Rugby Facility Construction Fund
Mellon Asian Curatorial and Fellowship Fund
Brain Research Centre Expectancy Fund
Estate of Norah Annie Mansell
Brain Research Centre Expectancy Fund
Cameo Project Fund
OvCaRe General Fund-VGH & UBC Fdn
Science - Research Funding thru RIS
Kurt Henze Memorial Prize
Earth Sciences Building
Brain Research Centre-Fetal Alcohol Spectrum Disorder (FASD)
Aluminum Toxicity Research Fund
Continuing Pharmacy Professional Development Fund
Brain Research Centre Expectancy Fund
Harvey Crute Memorial Bursary
mDAWN: Mobile Digital Access to a Web-Enhanced Network
$000s
4,000
1,511
1,000
750
744
719
600
500
475
474
470
470
400
300
300
267
250
250
250
250
250
230
207
200
Page 4
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)
(thousands of dollars)
Dec 31, 2012
Unaudited
ASSETS
Current assets
Cash and short-term investments
Restricted cash
Accounts receivable
Inventory
Prepaid expenses
$
Long term receivables
Investments
Operating investments
Endowment investments
Sinking fund investments
Investments in equity accounted organizations
Capital Assets
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
Current portion of long-term debt
$
$
Employee future benefits
Deferred contributions
Deferred capital contributions
Deferred land lease revenue
Long-term debt
NET ASSETS
Unrestricted operating
Endowment fund
Related organizations
Invested in capital assets
128,623
23,307
303,841
11,131
2,280
469,182
Dec 31, 2011
Unaudited
$
$
113,116 $
21,916
226,658
9,972
4,442
376,104
187,208
10,238
140,507
9,848
5,395
353,196
24,806
25,022
24,904
269,816
1,113,982
35,137
1,418,935
252,714
1,050,951
34,924
1,338,589
343,985
1,096,586
31,865
1,472,436
45,601
44,648
36,741
2,614,516
4,573,040
352,169
5,524
357,693
$
$
8,280
553,955
1,405,757
379,338
407,954
3,112,977
$
Mar 31, 2012
Audited
(143,637)
758,934
14,349
830,418
1,460,064
4,573,041
$
$
2,516,972
4,301,335
314,644
11,283
325,927
$
$
2,599,916
4,487,193
192,858
6,702
199,560
5,831
441,633
1,406,703
336,516
408,733
2,925,343
8,280
566,640
1,420,560
379,956
408,412
2,983,408
(55,106) $
688,889
17,032
725,177
1,375,992
4,301,335 $
(40,971)
734,714
13,935
796,107
1,503,785
4,487,193
out of balance
Page 5
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
CONSOLIDATED STATEMENT OF OPERATIONS AND CHANGES IN NET OPERATING ASSETS (unaudited)
(thousands of dollars)
Nine Months Ended
December 31
2012
Revenues
Government grants and contracts
Student fees
Non-government grants, contracts and donations
Investment income
Income from equity-accounted organizations
Sales and services
Amortization of deferred capital contributions
$
Expenses
Salaries
Employee benefits
Supplies and sundries
Amortization
Cost of goods sold
Scholarships, fellowships and bursaries
Travel and field trips
Professional and consulting fees
Grants and reimbursements to other agencies
Utilities
Interest on long-term debt
Deficiency of revenue over expenses
Allocation of deficiency of revenue over expenses
Increase in invested in capital assets
(Increase)decrease in endowment fund
Increase in equity of related organizations
Change in unrestricted net operating assets
Unrestricted net operating assets, beginning of year
Unrestricted net operating assets, end of period
$
$
$
2011
723,669 $
257,291
97,252
32,734
414
189,294
73,336
1,373,990
710,094
245,399
98,504
11,796
2,230
185,227
72,179
1,325,429
784,298
113,299
132,886
162,370
27,390
34,336
30,311
36,599
79,346
20,895
17,556
1,439,286
(65,296) $
758,221
108,604
126,749
153,610
27,142
34,148
30,596
36,823
87,566
20,714
18,224
1,402,397
(76,968)
(34,311) $
(2,645)
(414)
(102,666)
(40,971)
(143,637) $
(53,714)
28,686
(2,230)
(104,226)
49,120
(55,106)
Page 6
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
FINANCIAL HIGHLIGHTS
ASSETS
$ in millions
Total assets increased by $271.7 million compared to the
balance at December 31, 2011.
Current assets, excluding cash, increased by $76.2 million,
including an increase in tuition receivables of $11m, from
higher tuition revenue, and $60m from research and capital
funding receivables.
Cash and investments increased by $97.2 million due to
improved market returns on endowment investments.
Capital assets increased by $97.5 million due to new building
construction such as Pharmaceutical Sciences Centre, Earth
Systems Science Building, Ponderosa Commons, Centre for
Brain Health and the Student Union Building.
$-
$1,000
$2,000
Dec-2012
$3,000
$4,000
$5,000
Dec-2011
LIABILITIES
$ in millions
Total liabilities increased by $187.6 million compared to the
balance at December31, 2011.
Accounts payable increased by $37.5 million due to higher
deferred tuition revenue and accrued payroll.
Deferred contributions increased by $112.3 million due to
deferral of revenue in research and funding for capital
expenditures .
Deferred land lease revenue increased by $42.8 million from
new long-term land leases in the South Campus.
$-
$1,000
$2,000
Dec-2012
$3,000
$4,000
$5,000
Dec-2011
Page 7
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
FINANCIAL HIGHLIGHTS
NET ASSETS
$ in millions
Net Assets have increased by $84.1 million compared to the
balance at December 31, 2011.
Unrestricted net operating assets decreased by $88.5 million.
This reflects internal funding of capital additions.
Endowment net assets increased by $70.0 million representing
new contributions of $33 million and a surplus of endowment
income over expenses.
Investment in capital assets increased by $105.2 million due to
new building construction such as Pharmaceutical Sciences and
Ponderosa Commons, partially offset by amortization of capital
assets.
$-
$500
$1,000
Dec-2012
$1,500
$2,000
Dec-2011
Page 8
THIRD QUARTER FISCAL 2012-2013
Audit Committee Report for the nine months ended December 31, 2012
FINANCIAL HIGHLIGHTS
OVERALL STATEMENT OF OPERATIONS
Deficiency of revenue over expenses decreased by $11.7 million compared with the same period last year, for a total consolidated
deficiency of revenue over expenses of $65.3 million. Details of variances to prior year are as follows:
REVENUE
$ in millions
Total revenue for the nine months ended December 31,
2012 was $1,374.0 million, a $48.6 million increase over
results from the same period in the prior fiscal year.
Government grants increased by $13.6 million mainly due to
increased Provincial funding for targeted expansion in
Pharmaceutical Sciences and Medicine undergraduate and
postgraduate residency programs.
Student fees increased by $11.9 million primarily from
higher enrolment in credit tuition programs.
Investment income increased by $20.9 million due to an
increase in endowment income compared to last year. The
market return for endowment investments was
2.6%
during the period, compared to -3.2% over the same period
last year.
$-
$200
$400
$600
$800
$1,000
Dec-2012
$1,200
$1,400
$1,600
$1,800
$2,000
Dec-2011
Sales and service revenue increased by $4.1 million, as a
result of general increases across ancillary services.
EXPENSES
$ in millions
Total expenses were $36.9 million higher than the same
period in the prior year for a total of $1,439.3 million.
Salary and benefit costs were $30.8 million higher and relate
to employee growth at both campuses and salary increases.
Amortization has increased by $8.8 million as a result of
completion of new buildings and equipment additions.
Grants and reimbursements to other agencies decreased by
$8.2 million due to several Research projects with grants to
other agencies ending last year.
$-
$200
$400
$600
$800
$1,000
Dec-2012
$1,200
$1,400
$1,600
$1,800
$2,000
Dec-2011
Page 9