Global Review and Financial Statements 2017 Global Review and Financial Statements 2017 Council membership Contents 1 August 2016 to 31 July 2017
The Council is the University’s governing body and, among other matters, it is responsible for overseeing the administration and management of the affairs Council Membership 1 of the University and is required to present audited financial statements for each financial year. President and Vice-Chancellor’s Welcome 3 Global Strategy 2020 Review 5 President of Council External members Other Senior Officers and Pro-Chancellor appointed by the Council Chancellor Treasurer’s Report 13 John Mills Simon Amess Sir Andrew Witty Baroness Brenda Dean Registrar Risk 25 Dr Paul Greatrix Vice-President of Council John Finch (Secretary to Council) Dame Elizabeth Fradd Public Benefit Statement 27 Lynette Eastman Pro-Vice-Chancellors (from 1 November 2016) Professor Graham Kendall Members ex-Officio Carolyn Morgan Professor Dame Jessica Corner Governance 37 Pro-Chancellor Trevor Moss Professor Nick Miles OBE Dr Hamid Mughal OBE Independent Auditor's Report 43 Jeff Randall Professor Chris Rudd Vice-Chancellor (to 30 November 2016) Faculty Pro-Vice-Chancellors Professor Sir David Greenaway David Ross Statement of Principal Accounting Policies 45 Professor John Atherton Deputy Vice-Chancellor Nora Senior Professor Jeremy Gregory Professor Karen Cox (from 1 December 2016) Financial Statements 51 Professor Todd Landman Treasurer David Tilly Stephen Walton Professor Andrew Long Notes to the Financial Statements 57 Neil Watkinson Pro-Vice-Chancellors Professor Kevin Shakesheff Professor Sarah O’Hara Chief Financial Officer Professor Dame Jessica Corner Appointed by the Margaret Monckton Students’ Union (from 28 November 2016) From 1 July 2016 to 30 June 2017 Members of staff Chief Estates and Facilities President Officer Professor Tony Avery Ismail Sadurdeen Chris Jagger Professor Neil Crout Education Officer Chief Marketing and Dr Rachel Gomes Beth Massey Communications Officer Kerry Law Professor Kevin Lee From 1 July 2017 (from 21 February 2017) Chief Information Officer President Mary Visser Dr Gabriele Neher Alan Holey (to 8 January 2017) Education Officer Director of Human Resources Catherine O’Boyle Jaspal Kaur Chief Student Management Officer Breda Walls
1 2 Global Review and Financial Statements 2017
Our research has a global impact, and in 2017 we committed “to the most significant planned investment in the University's history. Our Research Vision underlines our commitment to world-leading, transformational discovery.”
At a time of unprecedented change in higher education, and The new vision for research dovetails with our Global in the wider world, the University of Nottingham is a thriving Engagement Strategy, connecting activities across all our institution offering an outstanding student experience, world- campuses and internationally to maximise our impact and changing research and a global reputation for excellence. reputation. This continues apace with further growth and development at the University of Nottingham Malaysia Campus As the University’s new President and Vice-Chancellor, I am and the University of Nottingham Ningbo China, recognised delighted to present this summary of our achievements across with the award for International Strategy of the Year at the Times the academic year and the dedicated work of my colleagues to Higher Education Leadership & Management Awards 2017. take teaching, learning and research to new levels. New strategic and teaching partnerships have been developed It was particularly gratifying to see the University awarded a with key overseas institutions in China, Sweden and the USA, gold rating in the first Teaching Excellence Framework (TEF). providing enhanced opportunities for teaching and research Achieving the gold standard reflects the excellent education collaboration. In the UK, the successful embedding of the offered at Nottingham, investment in world-class facilities and University of Nottingham International College has expanded students’ access to truly global opportunities. It is a resounding undergraduate foundation and pre-masters provision. endorsement of the Nottingham student experience and an institutional culture which rewards excellent teaching. Above all, The University’s global family of alumni also played their part it is recognition of the professionalism and dedication of our in Impact: The Nottingham Campaign – the most successful staff who are involved in every aspect of teaching and learning at development campaign in the institution’s history. The campaign the University. engaged alumni, staff, partners and friends of the University on a scale not seen before, and raised more than £242m over a The success of our graduates was also recognised this year six-year period. Its funding is making a huge contribution in many with the University being named the University of the Year for areas, including our world-leading research into breast cancer, Graduate Employment by The Times and Sunday Times Good President and children’s brain tumours and dementia research. University Guide 2017. This reflects the attention we pay to providing career guidance, skills workshops, application There is much to celebrate, but also much more to do as we support, employer and alumni engagement, and placement position the University for continued success. As I commence development, as well as continued development of the my first year as President and Vice-Chancellor, I look forward Nottingham Advantage Award. to getting to know colleagues and working together to start the next chapter in the history of the University of Nottingham. Vice-Chancellor’s Our research has a global impact, and an unprecedented investment in our Research Vision announced in 2017 will position the University as an institution that recruits and retains
the best people and creates practical solutions to today’s
global challenges. This will support 100 early career fellowships
throughout the University over the next five years, as well as Welcome six multidisciplinary Beacons of Excellence which will deliver
transformative research in the fields of human rights, healthcare,
food, advanced materials and transport, bio-manufacturing, and
smart industries. As the University’s new Vice-Chancellor, Our world-leading facilities and equipment, libraries and “I am delighted to present this summary of our professional services are dedicated to supporting our researchers and translating their discoveries into applications achievements across the academic year and the with real impact for people across the world. We are also Professor Shearer West dedicated work of my colleagues to take teaching, working hard to ensure they have the best research environment, President and Vice-Chancellor with significant investment in facilities and infrastructure, such as University of Nottingham learning and research to new levels. the GlaxoSmithKline Carbon Neutral Laboratory for Sustainable ” Chemistry, which had its official opening during the year.
3 4 Global Review and Financial Statements 2017
During the year, the University's Global Strategy 2020 has been through a review and refresh to ensure the key themes remain relevant to the University in 2017 and beyond.
Core Strategy: Excellence in an embedded culture of personalised Their success reflects the availability learning; student engagement with of individual career guidance, skills Education and Student Life advanced technology-enhanced learning; workshops, application support, employer Education transforms lives – and it is focused, discipline-specific careers and alumni engagement, and, more this belief upon which the University support; and an institutional culture recently, placement development, as of Nottingham is founded. It is a belief that rewards excellent teaching – our well as continued development of the Global which drives a commitment to teaching academic staff hold more than 1,000 Nottingham Advantage Award. The and learning of the very highest quality, Higher Education Academy Fellowships services available to students helped to unlocking students’ potential and between them. make the University The Times and Sunday preparing them to shape the world for Times Good University Guide University At an institutional level, the award is a the better. of the Year for Graduate Employment. resounding endorsement of one of the We are also regularly named as one of Strategy Recognition came in 2017 in the form University’s core strategies: providing the most targeted universities by Britain’s of a gold award in the first Teaching excellence in education and student leading graduate employers in the annual Excellence Framework (TEF) – a rigorous life. Systematic delivery in this area has UK Graduate Careers Survey, ranking assessment of teaching and learning been achieved through the University’s either first or second in four of the last across UK higher education. Achieving Transforming Teaching Programme, five years. 2020 the gold standard reflects the excellent commended by the UK Quality Assurance education offered at the University, and an Agency which stated that it “…has a Of course, excellence requires outstanding all-round student experience central role and is particularly effective institutional commitment – and we have that helps to make our graduates some in enhancing the student learning invested significantly in facilities and of the most sought-after by leading experience.” infrastructure to create the best possible employers. student experience, transforming spaces, Review Professor Sarah O’Hara, Pro-Vice- places and programmes. This includes The TEF panel judged that the University Chancellor for Education and Student the new Student Service Centres, which delivers “…consistently outstanding Experience, said: “We’re absolutely support students on their journey, teaching, learning and outcomes for our delighted that we have received a TEF improvements to our Portland Building students... of the highest quality found in gold rating. This reflects the hard work (the focal point of student life), to our the UK.” and creativity of our teaching staff libraries and sporting facilities with the and support colleagues across our UK TEF gold encompasses many aspects of construction of the David Ross Sports campuses. Every single one of them has student life, including excellent teaching Village (DRSV). The DRSV provides a contributed to this institutional award.” and academic support, investment in superb platform for the development of world-class facilities and access to truly TEF success followed data from the a sports leadership academy, greater global opportunities. national Longitudinal Educational engagement from our community in support of general health wellbeing, and It also recognises the systematic Outcomes (LEO) study which found the opportunity to improve on its best- evaluation of student feedback at that our students are among the highest ever position in the British Universities and the University; the role of students as earners in the UK and progress in their Colleges Sports league table. change agents; levels of contact time; careers faster than graduates from other universities.
We’re absolutely delighted that we have received a TEF gold rating.“ This reflects the hard work and creativity of our teaching staff and support colleagues across our UK campuses.” Professor Sarah O’Hara Pro-Vice-Chancellor for Education and Student Experience
5 6 Global Review and Financial Statements 2017
By building upon our past endeavours, and“ looking firmly to the future, we will continue to transform the lives of people and societies across the world.” Professor Dame Jessica Corner Pro-Vice-Chancellor for Research and Knowledge Exchange
Consistent improvement in recent ■■ six Beacons of Excellence ■■ Green Chemicals: securing the low and translating their discoveries into Excellence Framework (REF) submissions exceptional opportunities for staff, National Student Survey (NSS) and carbon bio-economy of the future applications with real impact for people in 2021. students and stakeholders. And activity ■■ world-class researchers and teams Nottingham Student Experience Survey across the world. Allied to this is a new like this brings recognition at the highest ■■ Smart Industrial Systems: towards smart (NSES) scores underline an increasing ■■ industrial collaborations strand of work to deliver the Digital level: we won the International Strategy of production of smart products Global engagement focus on the student experience. Students Research Environment project, which will the Year category at the 2017 Times Higher ■■ international collaborations A global outlook is part of the University have reported some of our highest-ever The six Beacons cover all the United support researchers in three key areas: Education Leadership & Management of Nottingham’s DNA. A pioneering spirit levels of satisfaction with teaching, ■■ transdisciplinary research Nations’ Sustainable Development research data management, analytics and Awards (THELMAs). that led to the establishment of campuses learning and student life at our University. Challenges, and together they will help to communication/collaboration. ■ in Malaysia and China, and the forging The Times Higher accolade was awarded ■ a world-class research environment raise the profile of our research. As one The coming year will see a renewed As a pioneer in international education of lasting partnerships around the world for our Creative Hub, which brings ■ element of a robust and diverse research focus on digital learning programmes, ■ the University of Nottingham World – and the first to establish an overseas to extend our global reach, impact and together science, technology and the portfolio worth £600m – complementing the delivery of Higher Degree Institute campus – we also recognise that networks of education, research and arts to respond to changes in government the work of our Research Priority Areas, Apprenticeships, the development of international collaboration is vital in the industrial engagement. policy in China and the UK. The Hub links Professor Dame Jessica Corner, Pro-Vice- Global Research Themes, centres, groups global programmes for undergraduates at delivery of globally significant research. government, universities and businesses Chancellor for Research and Knowledge and institutes – they will also provide a all three locations and the implementation Our Research Vision dovetails with our 2017 has been no exception. New strategic in China and the UK to ensure that Exchange, said: “We are making an model approach to attracting increased of a global Nottingham Advantage Award Global Engagement Strategy, connecting and teaching partnerships have been cutting-edge ideas can be applied to new unprecedented investment in both our funding, strengthening international – all helping to ensure delivery of the gold activities across our campuses, and developed with key overseas institutions products and services and subsequently people and our research. partnerships and accelerating the standard in teaching and learning. internationally, to maximise impact in China and Sweden, providing reach the market. impact of new discoveries. Because the “I’m excited by what lies ahead for and reputation. We have reaffirmed enhanced opportunities for teaching and Beacons are challenge-led, their outputs Our students are global citizens, and research at our great University, and the our dedication to world-class research research collaboration. In the UK, the Core Strategy: World- are aligned to government and funder international experience adds to their opportunities offered by this significant with international partners, and we successful embedding of the University strategies, boosting access to sources employability after graduation. Inter- Changing Research investment. By building upon our past are determination to build successful of Nottingham International College has of investment. campus student mobility – between An unprecedented investment in research endeavours, and looking firmly to the relationships with current and future EU/ expanded undergraduate foundation and pre-masters provision, in partnership China, Malaysia and the UK – is a core will build on the University’s reputation future, we will continue to transform the People are fundamental to the success international researchers. with Kaplan UK Ltd. Working with Kaplan goal of our Global Engagement strategy as an institution that creates solutions to lives of people and societies across the of the new Research Vision. We are As we embark on an exciting new is enabling a significant increase in the as part of an overall vision to have at least today’s global challenges. world.” committed to attracting and retaining the chapter in our proud history of world- number of international students coming 25% of Nottingham students adding an very best researchers and their teams, A new Research Vision, unveiled in The Beacons of Excellence will deliver changing research, we will bring a to the University through undergraduate international experience to their studies. and have pledged to recruit 100 fellows 2017, will ensure that as a research- transformative work of global importance, new level of focus to attracting and foundation programmes and pre-masters This commitment to global mobility over the next five years to expand our led university we continue to produce with transdisciplinary teams working in six retaining outstanding researchers at all programmes. reached a new milestone in 2016/17, with prestigious fellowship schemes. exceptional research of the very highest broad areas: career stages; supporting the Beacons the largest-ever number of UK students These and other partnerships are helping quality by bringing together talented and The right environment is crucial too of Excellence; developing the World visiting the University of Nottingham ■■ Future Food: exploring new ways to to develop our world-class offering in passionate staff and investing in a world- – which is why this year has seen a Institute; and preparing for the Research Ningbo China (UNNC). feed the world the UK, China and Malaysia, providing class environment for them to thrive. continuation of investment in research ■■ Rights Lab: helping to end global slavery infrastructure such as the GSK Carbon At the heart of the new Vision is a Neutral Laboratory for Sustainable major research investment programme, ■■ Precision Imaging: transforming Chemistry, which had its official opening announced at a high-profile event healthcare with pioneering imaging in 2017. A global outlook is part of the attended by the Minister of State for ■■ Propulsion Futures: at the heart of a Universities, Science, Research and World-leading facilities and equipment, revolution in greener transport University of Nottingham’s DNA Innovation. Particular areas of focus for libraries and professional services are investment include: dedicated to supporting our researchers
7 8 Global Review and Financial Statements 2017
Professor Sir Martyn Poliakoff with Minister of State for Universities, Science, Research and Innovation, Jo Johnson at Nottingham in Parliament Day NIPD IMAGE HERE
Impact: The Nottingham Campaign
raised £242m – exceeding all expectations
Professor Nick Miles OBE, Pro-Vice- Reputation and recruitment the Council for Advancement and Support Chancellor for Global Engagement, said: of Education (CASE). The higher education landscape is “Our global connections are at the heart of evolving. The national and global An improvement in Nottingham’s league what we do as a University. We are proud environment in which the University table position has seen it in the top 20 of to be a global University, working hard to operates is changing at an unprecedented all three major UK rankings: The Guardian, encourage collaboration and partnerships rate – with increasing student Complete University Guide and The Times to mutual benefit.” expectations, the globalisation of higher and Sunday Times Good University Guide – The University’s family of 270,000 alumni education, disruptive new technologies which also named Nottingham best in the are a key part of our global presence and increased competition for the very UK for graduate employment. – a network of successful, talented best talent. Student recruitment targets up to 2020 individuals who continue to play a part To thrive and succeed in the face of such have been set with schools, departments in Nottingham’s success. Nowhere more change, we must share our vision and and faculties following a review of our ‘size so than with Impact: The Nottingham highlight our success with the world so and shape’. To support the achievement of Campaign, our biggest-ever fundraising that we remain a first choice for students these targets, domestic and international initiative launched in 2011 with a target and staff. This imperative drove a review recruitment teams have been aligned to of £150m. of reputation and positioning which deliver both efficiency and synergy. The campaign has engaged alumni, staff, culminated in the launch of a refreshed Looking ahead, further work will improve partners and friends of the University at global brand and dynamic reputation how the most talented students are a global level, and closed in 2017 after campaign – Discover our World. This targeted, attracted and recruited, to raising an incredible £242m – far beyond focuses on research to tell the story and ensure we achieve student numbers and all expectations. Campaign funding is takes a proactive approach to articulate quality applicants. Other developments making a huge contribution in many areas, what is special and unique about the include producing coordinated The launch of the Academic Profile New Equality Diversity and Inclusion celebrating diversity and supporting the including world-leading research into institution. recruitment plans, boosting outreach Tool for academic colleagues is helping (EDI) structures have been embedded, continuing professional development of breast cancer, children’s brain tumours The University’s brand has been reviewed and liaison activity, and enhancing the support effective performance and with the creation of an EDI Board all staff. and dementia research. and refreshed to strengthen our profile in admissions policy. development conversations by bringing underpinned by faculty and professional Looking to the future, we seek to further an increasingly competitive environment. key performance related metrics into services EDI groups. Programmes Being a digital university one central space, while the creation of have been delivered across the People develop our curriculum and extracurricular We have implemented a new approach Foundations To thrive and grow in the age of digital, activity to match our aspirations for a truly to marketing with the introduction of a a Talent Dashboard is supporting us to and Culture events calendar to raise The University’s two core strategies – identify and manage talent across the awareness of diversity and inclusive we must transform the way in which staff tri-campus model – further enhancing Global Student Recruitment Campaign. and students connect, communicate international employability options for all Excellence in Education and Student Research and Teaching family. The launch working practices and the University Kerry Law, Chief Marketing and and collaborate – creating the digital our students. Life, and World-Changing Research of a Staff Career Development Hub has published our Equality Objectives for Communications Officer said: “We – and its two enabling strategies – provided staff with a clear understanding 2017-2020, defining and guiding our university of the future. Brexit will change the external have seen increased competition in Global Engagement and Reputation of career pathways across the University ambitions in this important area. The institution’s digital strategy is driving environment for UK higher education UK higher education, and a growing and Recruitment – need a solid base while also providing a source of guidance The Staff Engagement Survey highlighted continuous improvement across the institutions in ways that are not yet clear. need to differentiate ourselves and be to ensure they can be fully realised as on career progression and growth that the need to work hard to communicate estate, with multiple projects aiming to It will also present opportunities in terms distinctive. The work that has been started Global Strategy 2020 moves into its final staff can interact with to support their and engage with all staff across the provide a responsive and global service of collaboration with organisations and to reposition the University and build stage. Extensive work took place in 2017 development. University, to support them in developing which supports education and research. funding bodies around the world. But our reputation will help to meet these to strengthen that base and provide the To improve the service provided to while external factors may change, the challenges and secure the University’s foundations needed for a successful The newly created Leadership and successful and fulfilling careers, and Management Academy (LMA) focuses to contribute to the future success of students, we have installed Lecture principles upon which our great University long-term success.” institution. Capture in 326 teaching rooms globally, was founded will not: our international on improving the capability of leaders, the University. The hugely successful Nottingham with eight new leadership programmes with the UK installation the largest of its community of students and staff remains Brexit continues to provide some in Parliament Day saw more than 100 People and a wealth of online resources to help kind in Europe. one of our greatest strengths. challenges and uncertainty, but our partners from across the city, county and The successful delivery of any strategy develop staff in their leadership roles, commitment to attracting the very best Five Smart Bars have been established in We remain committed to bringing the wider region ‘take over’ the Houses of needs talented people who are as well as preparing new leaders early in from around the world is undiminished. libraries, offering a one-stop shop for staff brightest and best to our University to Parliament. The event brought together empowered, supported and motivated to their careers. In addition, coaching and and students with IT questions. Eduroam study, teach, research and work – whether 45 events in Westminster to showcase and make it succeed. Our staff are at the heart mentoring has been expanded and moved Through the People Strategy, colleagues is now the core Wi-Fi service at our UK, they are from the UK, other countries in celebrate the institutions, businesses and of the University’s success, and work to onto a more sustainable footing, enabling are working hard to ensure the institution China and Malaysia campuses for staff, Europe or beyond. people that make Nottingham great, and nurture their extraordinary talents has more staff the opportunity to benefit from can both attract and retain a highly students, researchers, associates and went on to win a number of awards from taken major steps forward during 2017. these important development approaches. talented and motivated community,
9 10 Global Review and Financial Statements 2017
Global Strategy 2020 is being supported through a prioritised capital investment Award winning programme, recent highlights of which include the following projects: green spaces ■■ George Green Library refurbishment Our UK campuses have won 16 and extension prestigious Green Flag Awards ■■ David Ross Sports Village ■■ GSK Carbon Neutral Laboratory for Sustainable Chemistry ■■ Refurbishment of the existing Chemistry building ■■ Sir David and Lady Susan Greenaway Building at the University of Nottingham Ningbo China ■■ Tuanku Zara Salim Teaching Centre at the University of Nottingham Malaysia Campus
visiting academics. We are continuously rolling programme of refurbishment task force has supported the new modernising our infrastructure to increase and investment in our catered halls, Chief Financial Officer in developing a network resilience and reduce the improving the accommodation offer to financial strategy focused on long-term number of incidents that affect services, prospective students, and supporting sustainability, supported by a more and transforming the way staff, students recruitment. Estates teams will also be detailed medium-term financial plan and researchers can engage and work working hard to ensure that physical and for the period 2017/18 to 2021/22. It is together. digital infrastructure are developed in anticipated that there will be significant partnership, to ensure integration inflationary pressures on both pay and The Smarter Computing project and alignment. non-pay budgets through the remainder of completed the foundation work for the period until 2022. upgrades to Windows 10, enablement An external review of performance this of Office 365 online applications and year concluded that the estate is of a high Tuition fees remain a significant the use of Skype for Business for instant quality overall; energy and sustainability proportion of the University’s income and messaging, online meetings and metrics are above average and that there the impact of the recently announced voice calls. is more academic space per staff and tuition fee freeze provide further student than the average for its peer challenges in future years. As the power, reach and capability of group. Overall, we are well-positioned for digital technologies continues to grow, The implications of Brexit continue to the future with a well-maintained estate we must evolve and adapt our digital be closely monitored as the situation and land available to support further capabilities to become a digital exemplar develops, with particular attention development. An estates masterplan will in higher education. There is much more being paid to developments relating to be developed to create a 10-year roadmap to come as a digital approach is fully EU student demand and to EU research in support of strategic aspirations embedded in all the University’s global funding. Both directly and through sector beyond 2020. activities, and it seeks to become a digital bodies, the University continues to lobby exemplar for the higher education sector. for the best possible outcomes. Creating resources for An important element of becoming a The University’s financial strategy has digital institution will be delivered through long-term success been reviewed over the course of the past the roll out of functionality relating to Delivering Global Strategy 2020 requires year as part of the Global Strategy 2020 the student lifecycle project – project long-term investment supported by a refresh process. The agreed strategy transform. This will start a phased go live strong financial plan. The plan needs to places financial sustainability at its centre in October 2017, with the majority focus on generating income and managing and is supported by a medium-term of functionality expected during costs, increasing our profits for investing financial plan. January 2018. in strategic priorities. The University has been able to make Building on a world-class major investments to support its strategic estate objectives, while continuing to return financial surpluses and retaining a strong The University’s campuses, buildings and financial position relative to relevant facilities are unrivalled, providing stunning comparator institutions. spaces and places to inspire our staff and students. Investment is continuous, to One element of our financial plan deals ensure this world-class estate is enhanced with Contribution Based Budgeting, and meets the rising expectations of which was introduced as a means of students and staff. more closely and transparently aligning faculty income to faculty expenditure. Keeping pace with student and staff Contribution Based Budgeting targets expectations of the environment in which each faculty to deliver a percentage of they research, study and live requires a their income as their contribution to the huge programme of work in infrastructure central running costs of the University. and facilities. Following a review of halls of residence this will include a During 2016/17 a financial sustainability George Green Library, University Park
11 12 Global Review and Financial Statements 2017
Key highlights
The University of Nottingham continues to be one of the leading research and teaching institutions in the world. 2017 £646m £33m £433m Total income Surplus Total net assets
£341m £90m £160m Tuition fees and education contracts Funding body grants £98m £309m Treasurer’s £124m Research grants and contracts Other income £59m
Staff costs Report £123m Research awards Capital investment Cash generated from operating activities
2016 £635m £18m £400m Total income Surplus Total net assets
£324m £93m £159m Tuition fees and education contracts Funding body grants £101m £125m £298m Research grants and contracts Other income £45m
Staff costs £119m Research awards Capital investment Cash generated from operating activities
13 14 Global Review and Financial Statements 2017
The University of Nottingham is a Russell Group university and one of the largest universities in the country, with
Unique among UK higher education institutions, the University of Nottingham has two overseas campuses run as joint ventures with local partners.
students at the University of students at the University of Nottingham Ningbo China Nottingham Malaysia Campus
The University also employs
15 16 Global Review and Financial Statements 2017
The University of Nottingham has retained its position among the best in the world – appearing 75th in the 2017 QS World Total expenditure for the year University Rankings – the 13th highest placed UK university. Income Tuition Fees
£621m Income breakdown (£m) 350 800 Total Income (£m) Tuition fees (£m)
(up £28m from 2015/16) ■■ Fees 309 The new fee regime continues to 298 646
700 300 276
place additional pressure on University 636 ■■ Funding 253 594
finances, largely due to the timing 572 body 600 561 grants 17.4% 250 520
of funding from the Students Loans 220 511 Company as fees are paid in three 500 ■■ Research tranches, October, February and 200 185 grants 48.3% 172 May. This provides some challenges 400 and in relation to cash as it creates peaks contracts 19.3% 150 and troughs that need to be managed 300 ■■ Other This figure includes accordingly. 200 income 14.1% 100 11/12 12/13 13/14 14/15* 15/16 16/17 Despite these challenges, the 10/12 ■■ Misc 15/16 13/14 14/15 10/11 11/12 12/13 University consistently delivers strong 100 income 50 16/17 *Restated financial results, has generated good 0 levels of operating cash and at the 0 scholarships and bursaries Income has increased by £11m compared has now been accompanied by the same time has made substantial to the prior year. The main drivers of this Jubilee Conference Centre, an in year investments, not only in infrastructure, increase are increased student numbers, acquisition by the University to provide The University continues to maintain high but also in research. for both home and international cohorts additional hotel and conferencing facilities levels of demand for places, with student 2016/17 saw an Earnings Before as a result of recruitment initiatives, offset on Jubilee Campus. In aggregate, these number and income targets achieved for Interest, Taxation, Depreciation and £28m £14m £12m by lower grant receipts from the Higher venues have contributed £11.7m (2015/16 the September 2016 intake with slight over Amortisation (“EBITDA”) of £49.5m, to postgraduate to international to students from Education Funding Council for England – £10.3m) to total income. Surpluses from recruitment among home/EU students students students low-income (HEFCE). the hotel and conferencing facilities have offsetting slight under recruitment of which is better than the University’s families performance for a number of years. dipped from last year to £1m (2015/16 overseas students. The Orchard Hotel, opened by Operating cash flows were £59m, – £2.2m), largely due to the bedding the University in November 2012 Tuition fees are £11m (4%) up on 2015/16 compared to £45m in 2015/16 – in of the new acquisition, but under to complement the East Midlands and now represent almost half of total supporting the University’s investment the stewardship of the De Vere Group, Earnings Before Interest, Tax, Conference Centre on University Park, University income. Since 2014/15 there plans. Depreciation and Amortisation expectations are that this will improve. has been an increase in income relating Cash continues to be tightly managed, to real growth in student numbers within with balances (cash at bank and Earnings Before Interest, Tax, donations and deferred capital grants, faculties that have the capacity and short term investments) of £6m at 31 Depreciation and Amortisation (EBITDA) so cannot be considered altogether capability to grow, both in home/EU and Funding Body Grants July 2017 compared to £16.7m at 31 is now a widely used measure of representative of future performance. international. These increases continue July 2016. As with the prior year, the underlying financial performance within to be partially offset by reductions in the Higher Education sector. It measures Funding Body Grants. University has made more use of its Funding body grants – which consist operating performance and as such EBITDA (£m/% of adjusted income) Funding body grants (£m) credit facilities to support the ongoing mainly of funding for Home/EU
provides a high degree of comparability 62.7 investment programme. At the year- undergraduates who are on high cost between universities. For the purpose of 145 end the University had £80m of bank subjects and support for research remains150 139 calculating EBITDA as a percentage of borrowing, (£69m in 2015/16). In spite 9.9% largely flat. Funding body grants in total 125 income, the impact of deferred capital 49.5 of £98m in year capital investment, were down £3m on 2015/16 to £90m
grant releases are deducted from the 120 110 borrowings increased by just £11m. and now make up almost 14% of total % 97 This is reflective of a concerted effort headline income figure. 38.2 7.7
University income. This reduction in 93 35.0 90 34.6 to focus on sustainability and effective income in year relates to one-off funding The University’s performance against this 30.1 90 management of resources while % 28.6 measure has dipped compared to the prior 7.7 initiatives, rather than that specifically for % % maintaining significant investment 6.2 6.1 teaching and research. year to 7.7% of adjusted income. However, % levels. This results in a net borrowing % 5.5 2015/16 was the transition year for the 5.6 60 position (excluding cash held by the Further and Higher Education Statements endowment fund) of £73.9m at 31 July of Recommended Practice (SORP) that
2017 compared to net borrowings of 10/11 11/12 12/13 13/14 14/15* 15/16 16/17 30 saw large scale releases in income on
£52.3m at 31 July 2016. 10/11 11/12 12/13 13/14 14/15 15/16 16/17 *Restated 0
17 18 Global Review and Financial Statements 2017
Research Grants and Contracts Income Expenditure Balance Sheet
Income from Research Grants and and £5m from a Local Authority Growth Total expenditure rose in year by £28m 150 Research grants and contracts income (£m) Contracts is the recognition of income as Fund. There are also a further 17 financial (4.7%) in 2016/17 to £621m. This is due in 500 Net assets (£m)
research is conducted and is £124m for awards, each in excess of £1m totalling large part to the increased costs of staff 433 404 400 125 124 the year, approximate to the prior year. more than £36m. (£17m) and professional fees (£7m) to
support the teaching of a larger cohort of 382 120 112 There has been a significant shift in While all these successes have been 400 108
105 students and depreciation (£3m) as some 100 funding in year from EU funded research achieved through intense competition large scale projects have completed. to that funded from within the UK. from other universities a growing feature 800 90 of many large awards is a requirement 300 Research awards are the order book to collaborate both within the University Total expenditure (£m) which sustains the University’s research 700 but also externally with other universities, £28m 621
base. Total awards won in 2016/17 Restated 13/14 14/15 Restated 15/16 16/17 60 606 200 industry partners and users of research 593 was £160m, similar to that in 2015/16. 600 invested in 546
such as the NHS, and international leading 539 NB: historic data not comparable due to SORP changes researchers. 500 postgraduate 479 30 Research awards (£m) 500 475 100 The distribution of awards by faculty and students to help
11/12 12/13 13/14 14/15* 15/16 16/17 by sponsor category is shown here. 400 Between 2015/16 and 2016/17, the
200 186 0 181 those with the 0 University’s net assets grew by £33m to 170
159 £433m. *includes £11.6m Research and Development 160 Research awards by faculty (£m) 300 ability to further Expenditure Credit Income 150 132 130 200 200 their studies at Research grants and contract Nottingham 100 9/10
income by funder (£m) 11/12 10/11 16/17 12/13 15/16 13/14 100 14/15 150 150 0
120 50 Staff Costs Included within the University’s costs are
10/11 11/12 12/13 13/14 14/15 15/16 16/17 £54m (£55m in 2015/16) of scholarships 90 100 and bursaries to a wide range of students, 0 Underlying staff costs (excluding pension pension contributions for the Contributory including: provision adjustments) rose to £341m in Pension and Assurance Scheme (CPAS) 60 Although there seems to be a change ■■ £12m to students from low income 2016/17. This is an increase of £15m on and the Universities Superannuation in mix of the research awarded, being families in the form of bursaries and the prior year, which represents a 5% rise Scheme (USS). more UK focused, this will continue to 50 30 stipends from that seen in 2015/16 (£324m). Staff provide a stable platform for the Research costs remain consistent as a proportion of Staff costs (£m/% of total expenditure) Vision with many of the secured awards ■■ £14m to international students to 16/17 15/16 14/15 total costs with prior years, and continue 0 generating research income for three to encourage the most talented students to be the largest element of total costs at 15/16 16/17 to come to Nottingham 341 five years, while also mitigating against 0 324
55% of total expenditure. 316
RDEC income 302 the risk of EU funded research. 295
■■ £28m to postgraduate students to help 284 278 Other grants and contracts Science The University continues to invest in 273 The University has a large and complex those with the ability to further their Medicine and Health Sciences Project Transform – a large scale change EU government and other sources research portfolio with 1,037 new awards studies at Nottingham. Postgraduate 58% programme investing in systems and % Engineering scholarships and bursaries are often 57% 57 UK industry, commerce and public won from multiple funders during the people to enhance the student lifecycle, 55% 55% 55% 55% 55% supported by external funding corporations year. The three largest grants are: £9.4m Social Sciences and in addition will make a significant UK central/local government, from HEFCE for the development of a Arts investment in research, starting in 2016/17. health and health authorities Research Innovation Centre; £7.9m from In spite of these initiatives total staff costs Other UK based charities the Engineering and Physical Sciences remain consistently 55% of total costs. Research related Research Council (EPSRC) to fund a 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Research councils Futures Composites Manufacturing Hub (inc Doctoral Training) Staff costs were also affected by the full year effect of the rise in both employer’s National Insurance and employer’s
19 20 Global Review and Financial Statements 2017
The GSK Carbon Neutral Laboratory for Sustainable Chemistry exterior, £98m Jubilee Campus capital investments to enhance student experience
Endowments and Donations Pensions Capital Expenditure
The University continues to build a strong The latest triennial actuarial valuation ■■ The final salary section of the USS The University continues to make endowment portfolio, building on the for the CPAS was conducted as at 31 scheme closed on 31 March 2016 with significant capital investments to successes of recent years. The University July 2017, but the outcome has yet to be accrued benefits at that date revalued enhance the student experience. Capital received a total of £6.3m (2015/16: £7.4m) published. Therefore the valuation used in line with CPI in the future. All future expenditure in the year at £98m remains in gifts for the year, of which £2.7m has for the year ending 31 July 2017 remains accruals are in the form of Career at a record high and consistent with been classified as either permanent or that as at 31 July 2014. Revalued Benefits (CRB) which are that seen in 2015/16. This represents a expendable endowments. intended to provide pension benefits in sustained period of investment not seen On an FRS102 basis at 31 July 2017, line with an employee’s average salary for many years and is a fundamental The University’s endowment fund the CPAS deficit (as included in these over their career. shift from the average of around £60m continues to grow and has now been Financial Statements) has remained investment a year seen in prior years. supplemented with a medium term largely stable at £139m (2016: £140m). ■■ The capping of CRB benefits at a investment fund to offer more flexibility to During the year, the value of the scheme’s pensionable salary level of £55,000. Significant projects in the year include: donors. The endowment fund increased assets rose by £15m (8%), lower than in Benefits above this salary level are ■■ the David Ross Sports Village (£40m) by £5m in the year to £55.1m as a result of prior years (2016: £22m, 13%) but a further now provided through a new defined completed in year new endowments, capital growth of the reduction in the discount rate applied contribution section of the USS. Financing assets and investment income retained to the liability (linked to lower expected ■■ the Jubilee Conference Centre (£12.5m) ■■ A 2% increase in employer’s within the fund. future investment returns) increased the acquired in year contributions to 18% of pensionable pay. At 31 July 2017 the University had £6m in December 2017. The University has liability by £14m (4%), prior year (2016: Investment income of £4.9m was received ■■ the Advanced Manufacturing Building of cash and short-term deposits (31 July begun discussions with various banks to £56m, 21%). ■■ An increase in employee’s contributions in the year of which £1m was expended by (£23m) that commenced in year 2016: £16.7m). determine the best source of financing to to 8% of pensionable pay from previous the University. As with CPAS, the latest triennial fund future investment plans. rates of 7.5% for members of the final ■ The University has continued its policy actuarial valuation for the Universities ■ Energy Research Accelerator (£13m) salary section and 6.5% for members of of holding minimal cash balances while The University has the ability to Superannuation Scheme (USS) was carried that commenced in year Total endowments (£m) the CRB section. retaining a significant and flexible drawdown and repay its borrowings as out as at 31 March 2017, but as yet the ■ ■ Teaching Building (£20m) that borrowing facility available to support required to manage its cash requirements. 60 55 report hasn’t been published. Therefore In line with CPAS, the estimated deficit commenced in year both short and long term financing The University’s approach is to minimise 50 the valuation used to 31 July 2017 remains on the USS pension has decreased by The University plans to make significant requirements. its borrowings thereby carrying limited 50 44 that as at 31 March 2014. £2m as a result of the deficit recovery investment going forward, but in doing cash reserves. Surplus cash is only 40 plan implemented in 2016, in spite of the Borrowing has increased by only £11m 39 This year has seen the full year effect of invested with counterparties for short 40 fall in bond yields. Expectations are that so will be changing the emphasis of that in year to £80m at the year-end (£69m: 33
32 the changes implemented in April 2016, periods. All counterparties are approved the 2017 valuation will show a worsening investment. Investments in research and 2015/16) as a result of the £98m in year namely; by the University’s Finance Committee, position and therefore a need to review digital will be made as well as continued capital investment. Operating cashflows 30 with a maximum of £15m being deposited the current arrangements. investment on the estate. for the year were £59m (£45m: 2015/16). with any single counterparty. 20 As at 31 July 2017, overall net borrowing 120 Capital expenditure (£m) excluding cash held within the endowment Cash and short-term deposits (£m) 10 fund was £73.9m compared to net 101 98
10/11 11/12 12/13 13/14 14/15 15/16 16/17 100 borrowing of £52.3m at 31 July 2016.
20 18.4 0 Investment income of
At the balance sheet date, the University 16.7 80 has a committed facility to borrow up Of the £6.3m received during the year, to £139m. This consists of two revolving15 62 61 60 £1.7m (27% of the total) came from legacy 60 credit facilities and a £15m multi-option bequests and £3.4m (54% of the total) £4.9m 50 facility. Interest on the University’s loans came from 32 gifts of £25k or over. A from the Royal Bank of Scotland is at 10
was received in the year of which 35 further £0.9m (14% of the total) came from 40 a rate linked to the London Interbank 7.2 6.0 6.0
£1m was expended by the 5.4 some 208 donations of between £1k and Offered Rate (LIBOR). Of the two 4.8 £25k. The remaining £0.3m (5%) came University 20 revolving credit facilities, one is an £89m5 4.0 from a large number of donations of less facility reducing to nil on a straight-line 11/12 10/11 16/17 12/13 15/16 13/14 14/15 9/10 11/12 10/11 16/17 12/13 15/16 13/14 than £1k – with a significant number of 0 basis over 25 years, from October 2010, 14/15 people and organisations donating for the and the other a £35m facility, expiring 0 first time.
21 22 Global Review and Financial Statements 2017
Looking Forward
The University continues to perform review and refresh of Global Strategy £80m for digital initiatives that will look well financially and now has in place a 2020 in order that it remains relevant. at modernising our infrastructure and new Financial Strategy supported by a This work continues to highlight the updating systems to better support medium term Financial Plan to deliver need for investment in infrastructure students and academics in the 21st sustainable financial performance into the and systems to support the University century; significant investments in future under the stewardship of our new in its vision, in order to address some of research in order to improve our President and Vice-Chancellor. the underlying issues and constraints research standing and power both in the experienced as a result of legacy UK and globally; as well as substantial There are however significant challenges systems. continued investment in the estate. ahead: ■■ The cost of pensions, both the ■■ The UK’s decision to leave the European University’s own CPAS and the Union continues to create uncertainty University’s share of the USS, is a Conclusion of the across the Higher Education sector. significant cost to the University. We Although the impact on student and Treasurer await the result of the 2017 triennial staff recruitment, as well as access to actuarial valuations but the expectation research funding, has been minimal to The University continues to report Cash and Liquidity Credit Rating is that both the deficit and cost of date, it remains unclear how this will strong financial performance providing future pensions will be develop in the longer term. and has had an exceptional substantially higher than the last Net cash in-flow from operating activities The University’s credit rating from Following an exercise conducted in year, year, while making significant ■ valuation. This will pose a challenge not rose by £18m in the year to £59m (2015/16: Standard and Poor’s consists of two the University’s SACP and the published ■ Recruitment of UK students continues investments and announcing to be strong, but challenges remain to only to our University, but to the sector £45m). components, a Stand Alone Credit rating remained unchanged at 'A+ – ambitious plans to invest further diversify the University’s income and as a whole. Profile (SACP) and the published rating Outlook Stable'. This rating has been to strengthen our research, increase the proportion of income that which adjusts the SACP to reflect any constant for over 10 years. The University is working hard to deal with Net cash inflow from operating activities (£m) is earned from overseas students. The accelerate our digital strategy government support that the University these challenges: and continue to upgrade our first may receive in the event of a default. challenge caused by the Government’s 59 student visa policy is compounded by ■■ Our international reputation, as class estate. Income levels have
51 competition from other UK universities evidenced by the University’s world steadily increased, and, although 45 44 there are challenges ahead
42 and increasingly from highly ranked ranking, remains strong, making the universities in other English speaking University in Nottingham, Ningbo and with the uncertainty of Brexit, 35 Student Analysis countries across the world. Malaysia attractive to students across international recruitment and the 25 the world. falling number of 18-year-olds, ■■ Project Transform continues to The total number of students enrolled and overseas. The remaining increase we believe the University is in a ■■ across all campuses in 2016/17 increased is in the UK campuses where growth progress and has gone live in China Student recruitment remains strong. and Malaysia. In the UK, there has been Targets for 2016/17 were largely met and good position to face them head 11/12 10/11 16/17 12/13 15/16 13/14 14/15 by 573 to 45,522, with the largest relates to postgraduate enrolments while on. Cost pressures in all areas proportion of this increase being at undergraduate numbers have remained some further delay, however, some early indications for 2017/18 are positive. major functionality will go live during The University plans for a significant continue to build and significantly the campus in China (347), due to an largely static. A breakdown, including no so in respect of staff. In response, The 2016/17 performance reflects strong October 2017 with the remaining system expansion of international recruitment increase in undergraduates, both home award students, can be seen below. however, the University underlying financials and a continued expected to follow during 2018. underpinned by the international foundation year have been re-assessed has refreshed its strategy improvement in cash generation in line Net cash inflow from operating activities (£m) ■■ Competition for research income and deliverable, yet challenging targets underpinned by a forward with that planned. continues to increase among the UK’s 74 1. Home/EU undergraduates have been agreed. thinking plan that focuses on 720 , ,5 leading universities, with margins under 21 21 2. Home/EU postgraduates diversification and increasing the pressure and greater expectations of ■■ The University has refreshed and re- efficiency of its operations, which 3. International undergraduates match-funding from grant awarding prioritised its Global Strategy 2020 4. International postgraduates bodies. This combines with the so that it remains relevant today and will help ensure that we can continue to generate the funds to 5. The University of Nottingham increasing trend for large consortium through to 2020. Early work continues invest in core teaching, research Ningbo China* based awards, such as the Nottingham on developing the University’s strategy led Energy Research Accelerator, which to 2030. and the student experience. 6. The University of Nottingham 7 77 77 5,365 5,046 require a new approach because of their 3,8 3,8 3,613 3,613 Malaysia Campus ■ 3,382 3,382 3,382 3,35 ■ The University has developed a medium size, complexity and combination of Stephen Walton *excludes students who are undertaking part term financial plan that looks 10 years public and private funding. Treasurer and Chair of of their studies in Nottingham. into the future. Inbuilt are significant Finance Committee 123456 ■■ In year there has been a large scale assumptions for investments, including
23 24 Global Review and Financial Statements 2017
A University Executive Board member our ability to respond to uncertainty by has responsibility for managing each of encouraging a focus on actively managing Risk Management the enterprise-level risks, supported by and measuring our response, and on To facilitate risk management in a a dedicated member of staff. Risks are identifying where opportunities exist. complex, international university, formally reviewed four times a year, and Both the University's pension schemes, the University’s Risk Management any risk which is red-rated is formally USS and CPAS, completed their 2017 Framework continues to include: reviewed each month. A summary of valuations during the year. We await the changes following these reviews is outcome of these valuations, therefore the reported to the University Executive ■■ an enterprise-level university 2014 valuations have been incorporated Board and the Audit and Risk Committee Risk Register articulating risks into the financial statements. It is which keeps them informed of changes which affect the international, anticipated that current market conditions and provides initial assurance on risk tri-campus university mean that the 2017 valuations may result management activities. in significantly increased deficits which ■ may require further changes. Risk ■ entity-level risk registers Principal Risks and articulating risks affecting each Other principal risks to achieving Global country campus Uncertainties Strategy 2020 continue to be the impact The University’s managed risk appetite is of our major transformation programme ■■ unit-level risk registers shown through its initiatives and ventures. covering core student administration systems at all campuses; and our ability to articulating risks affecting each Being a partner in two overseas-based protect our information assets sufficiently faculty, school or professional joint ventures naturally carries risks and and appropriately in the face of increasing service and major initiatives uncertainties; these are managed by external attacks, online fraud and having a shared vision and working closely information theft. Our Risk Management with our joint venture and other local This structure is designed to Framework is structured to enhance our partners to achieve it. Staff and student provide clarity, transparency ability to monitor the risks we face and mobility between the campuses is actively and direct accountability of risk respond quickly to any issues that arise. management activities. It also encouraged and supported as it leads to enables escalation and cascade of better understanding and strengthens relationships. It enables our staff and risks where appropriate. students to be truly global citizens. Across higher education, funding availability – whether markets for The University Risk Register comprises student recruitment, research funding, six strategic risks and three operationally- or government funding – continues based risks which impact the international to be increasingly competitive and university. The latter are the risks around unpredictable and unreliable. The achieving a significant change to our core The University’s presence potential impact of the UK exit from the student administration systems, risks EU is significant for student recruitment, in the UK, Malaysia and around information management and research funding and our ability to recruit China offers significant security, and risks around undergraduate and retain staff; likewise, the impact of the recruitment to the UK campus in light of opportunities to our staff Higher Education and Research Act. uncertainties caused by the UK exit from and our students the EU. The University’s Global Strategy 2020 remains part of its response to this with its Since responses to implications of the UK focus on long-term sustainability, income exit from the EU are embedded in day-to- diversification, and prioritising excellence day activities, the University has initially in our core teaching, learning and research chosen to embed mitigation activities activities. It was confirmed this year by in existing risks, rather than articulate a a mid-strategy review and refresh. Our separate, specific risk. Risk Management Framework supports
25 26 Global Review and Financial Statements 2017
The University of Nottingham is an exempt charity. The University and the Our vision Council have had regard to the Charity Commission’s guidance on public benefit, The vision for the University set out and the Council has noted the number in Global Strategy 2020 builds on the of ways in which the University has words of Sir Jesse Boot in 1928 at the delivered its charitable purposes for the opening of the University: public benefit. At the moment of the opening by“ His Majesty the King, when the stones of the coming University The University’s core values remain, are still un-weathered by time, it however, almost 90 years of globalisation is difficult to appreciate the full and technological developments make the significance of this educational world a very different place and our vision development. Thousands of for 2020 needs to reflect these changes. students as yet unborn will pass The University’s vision for 2020, as set out along the corridors and learn in the in the strategy is as follows. lecture rooms, and wrest the secrets from nature in the laboratories. Public Their work will link still more closely industry with science, add to the honour of our city and help to increase the well-being of our Benefit nation.”
Statement The University of Nottingham is an inspiring place of learning and scholarship that transforms lives through:
offering an outstanding, broad-based, developing undertaking international skilled, reflective fundamental and education to global citizens and transformative talented students leaders discovery
sustaining and being engaged being committed improving the internationally to to excellence, places and enhance industry, enterprise communities in health and well- and social which we are being, policy responsibility located formation, culture and purposeful citizenship
27 28 Global Review and Financial Statements 2017
Firbeck KS1 pupils locating Our comprehensive evaluation strategy In 2016-17 the University provided Widening participation is supported by Spanish speaking countries for Nottingham Potential, developed in means-tested financial support to 30% funds from a range of sources: additional during an Arts and partnership with the Sutton Trust and the of UK undergraduate students. This fees income, philanthropic support Humanities Wow day Centre for Evaluation and Monitoring at is a drop from the previous year, due and the HEFCE Student Opportunity Durham University, measures the impact to a reduction in the upper eligibility funding. HEFCE provided the latter – of our work on young people’s attainment, threshold for our bursaries. Additional about £500,000 annually – for the last attitudes and progression to further and funds were also provided to international time in 2016-17, but the Office for Fair higher education. We can see that our students. We surveyed our first-year core Access (OFFA) expects all universities to outreach work is yielding results. Students bursary recipients in January 2017; of the find the funds to continue the outreach from local widening participation schools recipients who knew before choosing us work it supported. Philanthropic support and colleges comprise 10-11% of our the level of bursary they would receive currently provides about one-third of the intake, up from 4% in 2002. Of those who at Nottingham, 71% said this influenced budget for outreach, helping even more participate in our summer schools, over them. The survey also provided clear local learners to reach their potential. It 20% successfully take up places at the evidence of the value of financial support also allows us to enhance the financial University of Nottingham, and 30% at in enabling students to benefit from their support we provide our own students, other Russell Group universities. university education: 85% reported that ensuring that a University of Nottingham our bursaries reduced the need for them education provides all our students with The University’s flexible admissions to work part-time during study. fair and equal opportunity to succeed, arrangements provide contextual both as undergraduates and subsequently information about every UK applicant. The University has the ongoing aim within society. On the basis of this information, of maintaining non-continuation rates admissions staff may preference for students from low participation OFFA requires universities recruiting applicants for a standard offer or make neighbourhoods at no more than 4%. lower proportions of low-income a slightly lower offer. Special entry students to spend at least 30% of higher Figures for 2008-09 to 2014-15 have pathways (‘gateway’ Year 0 courses) fees income on widening participation. ranged from 5.4% to 3.0%. The most facilitate the annual entry of dozens of The University of Nottingham’s total recent figure is 5.4%, up from the previous students from widening participation OFFA-countable expenditure on access year, and twice the rate for students from backgrounds to medicine, veterinary and widening participation in 2015-16 was other neighbourhoods. The continuation medicine and the Faculty of Arts. £16.8m, or 30.2% of higher fees income. rate for mature students with no previous Of this, £13.3m was allocated to In terms of our own intake, the University qualification improved to 10.9%. Our means-tested bursaries for new and has made excellent progress in widening Teaching Transformation Programme continuing students. Widening Participation participation over the last ten years. 24% seeks to improve retention for all students, of UK students entering the University in and we are augmenting this with measures The University has two aims in widening participation: first, to enrol and retain, September 2016 were from low-income to ensure that mature students and those backgrounds, up from 17% in 2004, from minority ethnic backgrounds and on all UK-based courses, UK students who are currently under-represented at though down from a high point of 26.5% in less advantaged backgrounds benefit. the University; secondly, to contribute to regional efforts to raise aspirations, 2014. The target for 2019-20 is 28.25%. attainment and progression to higher education.
Since 2010 our widening participation ■■ The introduction of the Pathways to Law Summer school Pharmacy session outreach activity has more than and Pathways to science, technology, quadrupled its outputs through engineering and maths (STEM) Nottingham Potential, a £7m expansion programmes, in partnership with the of our work with learners from less Sutton Trust advantaged backgrounds. Working with ■■ The expansion of our primary schools’ local schools, communities and individual programme in terms of both scale young people, and in partnership with and reach, with a particular focus on London-based charity IntoUniversity, the discovering university and engaging University of Nottingham seeks to have with learning through curriculum-linked of UK undergraduate students an immediate effect on participants as activities received means-tested well as help establish a culture that values education and plans for progression. ■■ The extension of our long-standing work financial support from the Highlights over the past five years include with mature students to include more University in 2016-17 the following: measures to aid successful transition to Nottingham and retention ■■ The opening of three Nottingham Potential Learning Centres, in Other activities of longer standing include partnership with IntoUniversity, in our schools and colleges service, which less advantaged communities across has been providing information and advice Nottingham, to provide after-school about higher education in over 100 local School students took up over homework support and other activities schools annually for over 15 years. ■■ The doubling of places from 200 to 400 In 2016-17, school students took up well on our July summer schools for higher over 83,000 places on our activities, achieving students significantly over our target. The rate of increase has steadied, with our focus ■■ The extension of our Ambition places on our activities, well increasingly on improving the quality Nottingham programme, which and impact of our programmes. Our own over our target provides extra-curricular support for students assist on many activities, acting higher achieving students, so that it now as role models and gaining valuable skills runs from the first year of secondary in the process. school through to sixth form
29 30 Global Review and Financial Statements 2017 Ingenuity Centre, Jubilee Campus
Academy Relationships
The University continues to co-sponsor three academies, working with educational partner the Nova Education Trust In the coming year, UNIP celebrates its (formerly the Torch Academy Group), which manages the 10th anniversary schools on a day-to-day basis. reflecting a decade of tangible investment in business engagement In its most recent full Ofsted inspection gained a strong pass (grades 5-9) in and knowledge exchange in in October 2015, NUSA was judged to be English and maths, putting NUAST among Nottingham an Academy which requires improvement. the highest performing schools in the city NUSA This was a positive development from of Nottingham. the previous inspection two years earlier The Nottingham University Firbeck is also on an upward trajectory. and the most recent interim inspection Samworth Academy (NUSA) In its most recent OFSTED Inspection – showed that NUSA continues to make provides a high-quality educational December 2016 – Firbeck was judged progress towards becoming a ‘Good’ facility for pupils from one of the to be requiring improvement. This Business Engagement Academy*. Over the last two academic country’s most deprived areas with demonstrates progress from Ofsted’s years, NUSA has been focusing on one of the lowest rates nationally previous rating of the school. Standards improving standards of teaching and of progression to higher education. University of Nottingham 10th Anniversary of teaching and learning in the school and levels of attainment, so it has been NUSA is co-sponsored by Sir David In the coming year, UNIP will celebrate its More than attainment levels continue to improve. Innovation Park pleasing to note that the GCSE results in Samworth CBE, his family and The tenth anniversary with a number of events Firbeck, like NUSA in the secondary University of Nottingham Innovation the summer of 2017 were the academy's Samworth Foundation, together with and a vision, which reflects both the phase, offers specialist provision for deaf Park (UNIP) enables tech-driven and best results to date. Post-16 take up at the the University of Nottingham. decade of tangible investment in business children. The schools cater for the needs knowledge-intensive businesses to co- SMEs school is small, but those who did stay on engagement and knowledge exchange 1800 of deaf children from across the city as an locate with University research expertise, achieved creditable results this summer in Nottingham by the University and an are part of the Ingenuity Network integral part of the mainstream school. talent, and facilities. and four students achieved places at the intention to develop into the future. University of Nottingham. The Innovation Park allows the University University of Nottingham staff make Small and Medium-Sized Enterprise Enabling Innovation a range of contributions to the three to engage with a community of 100 NUAST had its first Ofsted inspection in Firbeck Primary Engagement Enabling Innovation is a three-year academies. Widening Participation staff businesses with many of these companies June 2017 and achieved a very pleasing At the University of Nottingham we collaborative programme with Nottingham facilitate the enrichment links between engaging in collaborative research, the overall rating of ‘Good’, with its sixth form In 2013, the NUSA Trust took on appreciate that small and medium- Trent University and the University of the University and the three academies; commissioning of research, or providing judged to be ‘Outstanding’. NUAST’s the sponsorship of Firbeck Primary sized businesses (SMEs) need help with Derby funded by the EU which will provide while academic and professional service internships and graduate employment first two cohorts of Year 13 students School, one of NUSA’s ‘feeder’ business development and in reaching support to over 2,000 local SMEs during staff serve on academies’ governing opportunities for the local economy. have achieved outstanding A level and primary schools, as a step towards their full potential. We work with local 2016-2019. It will stimulate an innovation bodies. Since September 2016, University BTEC results. In summer 2017, students encouraging an all-through approach UNIP continues to be one of only four pilot businesses every day in a variety of ways, ecosystem designed to commercialise of Nottingham colleagues involved achieved a 100% pass rate in all subjects, to education in the locality. University Enterprise Zones supported by such as identifying academic expertise in cutting edge R&D; support product and in academies meet termly to share with over 46 % of A level students the Department for Business, Energy & a specialist subject, placing a student into process innovation within SMEs; and drive information and discuss strategic support; having achieved A* or A in at least one Industrial Strategy with the specific aim a business to work on a particular project, innovation through supply chains. and they receive half-termly written subject and the A*–C pass rate was 84%. of supporting companies to start-up and or providing bespoke training. updates. It offers in-depth support for businesses in Students studying vocational courses in grow. sectors such as manufacturing, materials engineering and ICT achieved excellent Ingenuity Programme Examples of the enrichment support NUAST Ingenuity Centre engineering, computing and data, results, with the average grade being offered by the University include: Ingenuity, our local business network, Since opening in October 2016, the new aerospace, food and drink, chemistry Distinction. NUAST students have secured students visiting academic faculties and offers businesses the chance to network Nottingham University Academy for Ingenuity Centre has also been home to and satellite navigation, providing places at top UK universities in science, enjoying lectures; use of lab facilities; with each other and to hear about some of Science and Technology (NUAST) 26 independent technology-driven start- unprecedented access to university computing and engineering; others have academic mentoring from University the latest academic ideas about business opened fully in January 2015, near ups, the University’s IP and consultancy expertise and graduate talent. A separate been accepted onto prestigious Level 3 undergraduates; involvement in bespoke and leadership, through the Ingenuity the University Park Campus in teams, the technology Demonstrator, strand of the programme delivers support apprenticeships with local and national projects; an extensive programme Knowledge Xchange seminar programme. Nottingham. Originally designed as and the Haydn Green Ingenuity Lab. for student and alumni entrepreneurship companies and entry to the armed forces of workshops run by our partner an inspiring and business-focused These businesses have benefitted from The Ingenuity programme includes an through the Ingenuity Lab. at officer level. NUAST’s partnership with organisation, IntoUniversity; large- educational choice for around 650 easier access to the University expertise, events programme covering our popular the University of Nottingham has helped scale science demonstrations to whole We deliver an ongoing programme of students aged 14-18, from September facilities, research, and talent that has Ingenuity breakfasts, workshops, to equip its students for applications to year groups; higher education focused workshops designed to help businesses 2018 it will admit Year 7 students to fuelled their growth. conferences and business events; a Russell Group universities – and 17% of assemblies; whole school topic-based to innovate, explore new ideas and unlock become an 11-18 Academy. NUAST business directory of local and regional this year’s Year 13 cohort have gained “Wow” days; aspiration-raising campus their growth potential through leadership will maintain its specialism in science, Space Incubation Programme SMEs connected through the Ingenuity places at the University of Nottingham. visits; information and guidance sessions and management development. We also engineering and IT, but will function UNIP also contains a first wave Space Network; a website and newsletter, and NUAST's GCSE results were also their delivered in the academies; academics offer opportunities for businesses to take as a non-selective community Incubation Programme, housed in the links to other University resources. best ever and well above the national visiting the academies to deliver on graduates via placement opportunities, school serving an area of the city of Ingenuity Centre, supported by the UK average across all subjects, with workshops or lectures. More than 1800 SMEs are part of the allowing them to explore the benefits of Nottingham that is currently short of Space Agency, which has already assisted particularly strong results in maths, Ingenuity Network with over 100 regularly employing graduates. school places. nine start-up companies to join the UK’s science and engineering. 45% of students Space Sector. joiningIngenuity us for breakfast Centre, seminars. Jubilee Campus
31 *For the latest Ofsted report and rating for NUSA please visit http://reports.ofsted.gov.uk 32 Global Review and Financial Statements 2017
Volunteering and Fundraising
The University continues to inspire alumni, supporters and friends to contribute to an outstanding experience for current and future students and to support our innovative, world-changing research programmes.
world. The total Cascade fund disbursed The University’s Impact Campaign and with during FY2016-17 was £163,000 to fund closed on 31 July 2017 having surpassed 37 student projects. The University both its financial and volunteering Nigerian Students’ Society used funding targets, raising to launch their ‘Liter of Light Nigeria’ outreach initiative to make sustainable solar lighting accessible to impoverished volunteers regions of Nigeria. Funding for Project (target 1000) Myemyela enabled a team of students from the Department of Architecture in charitable donations participating in the University’s and Built Environment to design and (target £200m) ‘Giving Time’ programme. build a nursery school in the village of Lephepane, South Africa. The Vet School’s #lookoutforeachother project During FY2016-17 there were 5,902 donors Cash received from legacies to 31 July raises awareness of mental health and to the Campaign, compared with 5,145 in 2017 was £1.7m, representing 24% of encourages a culture of support for FY2015-16 and 6,360 in FY2014-15. First the total cash gifts received within the each other. time donor renewal continues to be an financial year. Significant legacy bequests The University continues to have strong area of focus for FY2017-18. received include £1m from Elizabeth internal and external support for its Life Ratcliff to support the John Mortimer Significant pledges secured during Cycle fundraising initiatives. As of July Shipstone Ratcliff Medical Scholarships, FY2016-17 include £1m from Sir Andrew 2017, Life Cycle 7 had raised £420,000 £382,000 from Friends of the University P Witty to support Witty Scholarships, towards its £500,000 target to give of Nottingham: America Inc. to support £1m from Sir Harry A Djanogly towards children battling brain tumours a brighter the Ethel & Kevin B Malone Scholarship the Portland Hill Fountain Garden and future, bringing the total for all seven Life Fund (supported by FUN America Inc.) Amphitheatre and £100,000 from The Cycle events to over £3m (LC1: £245,000; Arts and Culture and £200,000 from Edmund B Wootten to David Ross Foundation to establish LC2: £254,000; LC3: £271,000; LC4: support the Department of Electrical and the Greenaway Sports Scholarships. £785,000; LC5: £386,000; LC6: Electronic Engineering. A number of significant pledges for £700,000). 2017 heralded the 25th anniversary of the founding of continued support include £300,000 from The University’s Cascade Fund is Lakeside Arts with the opening of the Djanogly Gallery ABInBev for the Chair in Brewing Science, maintained through charitable donations £300,000 from Santander Universities for and awards up to £25,000 to students at on the site of the Highfields Lido. scholarships, Cascade and the Santander our UK, China and Malaysia campuses Lakeside flagged this landmark year with long projection and music piece was seen Nottingham New Theatre culminating Enterprise Lab and £300,000 from BP plc to fund projects that will enrich the lives a celebratory digital installation returning by a capacity audience of 3000 people in six capacity performances of Blue for the BP STEM Scholarship Programme. of our students and people across the the main gallery space to its roots as a over two nights. Stockings by Jessica Swale in the lido complete with interactive elements, Djanogly Theatre. Lakeside premiered an evening of and a celebratory dinner to which the commissions by female composers Lakeside took 20 actors and musicians major donors to the original arts centre including a new work by Dr Elizabeth from the University to the third campaign were invited. Kelly, Music Department; and the ongoing Tri-Campus Arts festival in Ningbo in The Victor Pasmore exhibition attracted research programme into Midlands June, where they had the opportunity to the greatest amount of national press Alabasters involving Dr Philip Weller and perform to audiences of 4,500 members and media coverage of any exhibition Professor Andrew Kirkman (University of of the local community in the new in the gallery’s history with features in Birmingham) was brought to life with an auditorium across a period of one week. broadsheets, specialist magazines, and enhanced series of digital projections in Students are also involved in delivering regional media, including being featured the theatre. and supporting Lakeside’s Learning on the New Year pick of the year on Radio Lakeside’s strong programme of student programme as volunteers and paid 4’s Saturday Review. engagement included an Albert Hall assistants, including the UPP funded Chinese New Year rang the changes at the concert with Philharmonia and Choir Grand Day Out which attracted 40 end of January with a hugely successful performing Beethoven Symphony No9 classes from 20 schools to participate in digital commission Jixiang (Propitious) which also featured 23 members of the a day long curriculum related programme The University using the south face of the Trent Building alumni community; and a professional at Lakeside. of Nottingham as a giant canvas. The resultant 17 minute development programme with Lifecycle 6
33 34 Global Review and Financial Statements 2017 Gateway Building, Sutton Bonington
Healthcare Sustainability In the area of medicine and health sciences, the University contributes to The University’s position as a leader in the field the health and wealth of the nation in various ways. For example, alongside of sustainability saw it ranked 2nd in the 2017 UI other graduates we train about 330 GreenMetric World University Ranking and maintaining new doctors every year, 600 new a top two placing since its inception in 2010. nurses, 135 new physiotherapists and 78 new midwives. We have specific programmes to increase the We have a longstanding commitment environmental impact and maximise its There was also a reduction in site mains diversity of students entering such to institution-wide social responsibility positive contribution to the local, national water consumption following removal training, including recruiting students as set out in Global Strategy 2020. The and international community. Particular the evaporative cooling towers saving from economically-disadvantaged University’s Research Vision sets out note should be taken of the following: an average 3,850m3 of water a year commitment to global challenges and backgrounds. ■■ The creation of newly landscaped areas Further investments in combined heat sustainability and the research Beacons including at Sutton Bonington Campus and power and solar are being planned Our research has enormous real-world are aligned with the United Nation’s to enhance public amenity, biodiversity for development in 2018 subject to relevance and impacts strongly on Sustainable Development Goals. We have and enhance the student experience funding approval. A decision to withdraw healthcare. For example, researchers significant internationally recognised a planning application for a wind turbine from the University of Nottingham were research strengths and teaching and ■■ The formal opening of the GSK Carbon at Sutton Bonington was taken following responsible for work underpinning learning in the field of sustainability Neutral Laboratory for Sustainable consultation with the Civil Aviation the national bowel cancer screening and our estates operations are built on Chemistry, which incorporates the Authority. Alternative schemes are being programme and for research on a strong environmental ethos and by latest technologies to allow it to be considered. prescribing acid-suppressing drugs adopting progressive environmental carbon-neutral over its lifetime to prevent peptic ulcers caused by strategies in our capital projects we have aspirin and other painkillers. Both these ■■ The 2017 #beastsofUoN limited edition embedded sustainability at the heart of The University’s Sustainability initiatives have saved thousands of lives calendar was a great success and a our operations. Strategy builds upon our successes and in the UK and worldwide. photographic competition was held sets out a framework for delivering a We recognise that we have a promoting wildlife and biodiversity truly sustainable University, focusing There are many other similar examples, responsibility to the local and global across both the UK, China and Malaysia on six strategic areas: ranging right back to the first use of environment and, as an educator of future campuses ahead of the 2018 calendar MRI in medical imaging – a technology generations, many of whom will be at the launch and showcased at Wonder now used throughout the world. The cutting-edge of research and captains ■ recent award of a Biomedical Research of industry, we influence our students ■ Targeted investment at the Sutton centre, a government investment of through our curriculum, teaching and Bonington Campus to reduce carbon £24m, to the partnership of the NUH research and also by their surroundings, emissions, costs and improve reliability NHS Trust and the University, will the campus experience and through the with the installation of combined heat ensure that this translation of our best leadership of the University. Alongside the and power (CHP) unit to simultaneously Student Education for research into real medical advances Green Metric ranking we have received produce heat and electricity for use Experience Sustainability continues, and will further strengthen further recognition, including: in our buildings. The CHP delivered our many partnerships with industry 40% of the sites electrical and heating that create wealth for the nation and ■■ The University of Nottingham has demand has achieved annual savings of promote its health. secured a prestigious Green Flag £0.3m and over 1000t CO2 for a total award for the fifth year in a row on the installed cost £1.4m Finally, many of our medical academics University’s Jubilee Campus and for the ■ work jointly for the University and 14th year on University Park ■ The University’s Medical School was a partner NHS Trust and so directly identified as a key strategic investment ■■ In 2016 we were finalists at the Green to assist in achieving carbon reduction, contribute cutting edge patient care to Research for Partnership and Gown Awards for our investment in improving resilience and reducing our local population. Sustainability Engagement Diamond Wood – a new woodland for costs. Investment of over £3m targeted biodiversity and the community near to heating and cooling infrastructure, 600 nurses the Sutton Bonington Campus – and in controls, and the building fabric. The the Continuous Improvement category Chilled Water Project and part of the 330 doctors for our work on sustainable transport voids ventilation work was funded by SALIX ‘revolving green fund 4’ while ■■ In 2017 we have five nominations for the reminding areas of work were 135 physios the Green Gown Awards across the funded direct by the University’s carbon following categories: Carbon Reduction; management programme. The overall Enterprise; Food & Drink; Student Operations for Governance and 78 midwives annual cost saving achieved is £0.6m as Engagement; and Leadership Sustainability Quality Assurance a result of reduced steam consumption are trained at the University In 2016/17 the University continued to (despite an increase in electrical cost of Nottingham each year. invest in its infrastructure to reduce its to power the new chilled water plant).
35 36 Global Review and Financial Statements 2017 Trent Building, University Park Governance
The University Council is the governing body of the University. It is responsible for overseeing the The University is a corporation formed by Royal Charter and University’s activities, determining its is an educational charity, with exempt status, regulated by the future direction and developing and sustaining an environment in which its Higher Education Funding Council for England (HEFCE) in its mission is achieved and learning capacity as Principal Regulator. is fostered.
The Council is the University’s governing achieved and learning is fostered. of four years and may serve for two responsibility for the University’s body and, among other matters, it terms, although if elected as an Officer liabilities, including pension liabilities ■■ The Council is responsible for is responsible for overseeing the of the University their previous service is (subject to approved delegated limits) ensuring compliance with the Charter, administration and management of the disregarded for the purpose of calculating and acting as trustee for legacies Statutes and Ordinances regulating affairs of the University and is required to terms. endowments, bequests or gifts; the University and its governance present audited financial statements for framework. Subject to these it makes 6. To ensure the establishment and each financial year. all final decisions on matters of Primary powers and responsibilities: monitoring of effective systems of fundamental concern to the University. Overall powers and responsibilities internal control and accountability, Responsibilities of the 1. To approve the mission and strategy including financial and operational University's Council and Membership and meetings of the University and its academic and controls and the management of business plans; conflicts of interest. To establish Structure of Corporate ■■ Council has a clear majority of external appropriate procedures for internal members who are independent of the 2. To ensure that processes are in Governance audit and monitor the results of University. Its membership also includes place to monitor the performance The University is committed to best internal audit work; the President and Vice-Chancellor and and effectiveness of the University practice in corporate governance. The members drawn from the Pro-Vice- against plans and agreed performance 7. To ensure procedures for assessing Council notes the Combined Code on Chancellors. Recognising the distinctive indicators and benchmarking against risk and risk mitigations and controls, Corporate Governance and the HEFCE characteristics and requirements of a comparable universities; consider the assessments arising and Accounts Direction requirements. In University, the Council also includes ensure that appropriate actions are addition, the University has had regard to 3. To appoint the President and Vice- members elected by and from the taken to respond to risk; the Higher Education Code of Governance Chancellor, after considering a report Senate and student members, the (the Code) published by the Committee from a Joint Committee of Council President of the Students’ Union and 8. To receive reports on and consider of University Chairs (CUC). In response to and Senate (which is chaired by one other student. Council meetings are teaching and research and pastoral the Code and in accordance with overall the Chair of Council) and to put in also attended by the Registrar and Chief care and student development; good governance the Council periodically place arrangements for monitoring Financial Officer. reviews the role of the Council and its the President and Vice-Chancellor’s 9. To be the employing authority for all effectiveness. The most recent review ■■ Members of Council must conduct performance and providing feedback. of the staff employed by the University of the Council’s effectiveness concluded themselves in accordance with and to approve and monitor its human 4. To delegate authority to manage the in January 2016 and confirmed that accepted standards of behaviour in resources strategy and practices; University to the President and Vice- governance arrangements were well public life – including those relating Chancellor, who is the Chief Executive 10. To establish and receive reports from a aligned with the updated Code. Following to conflicts of interest. These require of the University. This includes its Remuneration Committee, comprising the review enhancements continue to be selflessness, integrity, objectivity, corporate, financial, estate and external members, which determines introduced. In order to comply with the accountability, openness, honesty and personnel management. The Council the remuneration of the President and Code the Council approved the following leadership. will regularly review the policies, Vice-Chancellor, approves proposals Statement of Primary Responsibilities in ■■ All members of Council, including procedures and limits for delegated from the President and Vice- October 2016. Senate and student members, are authorities; Chancellor for the remuneration of under an obligation to make decisions senior management and professorial 5. To act as the principal financial and Statement of the role solely in accordance with the best staff and reviews overall remuneration business authority of the University; interests of the University and should and remuneration policies; and primary powers and including approving annual audited not act in accordance with the interests responsibilities of University financial statements, appointing 11. To establish delegated procedures or delegations of the constituencies external auditors, approving for the appointment of staff and Council by which they are elected. Student budgets and financial plans, the approval of contracts with staff members are not present when specific approving transactions, contracts, and to appoint external members of Role matters relating to individual members leases, investments and banking Council to Appointment Committees ■■ The University Council is the governing of staff and their remuneration or arrangements (subject to approved dealing with senior appointments or body of the University. It is responsible individual students are discussed. appointments when the involvement of for overseeing the University’s activities, delegated limits), ensuring the Council normally meets five times a year. maintenance of proper accounting external members of Council would be determining its future direction appropriate; and developing and sustaining an The Registrar is the Secretary to Council. records, having overall responsibility for the University’s assets, environment in which its mission is External members are elected for terms 12. To appoint Committees for property and estate, having overall hearing grievances and to consider
37 38 Global Review and Financial Statements 2017
Governance continued
DH Lawrence Auditorium looking over the lake, China Campus
redundancies and appeals in relation 20. To appoint external members of ensure that there is a direct and ■■ The Council Nominations Committee determines the salaries of senior President and Vice-Chancellor and the to employment matters and to Council on the recommendation effective line of accountability to the considers nominations for vacancies in staff of the University. The salary of Pro-Vice-Chancellors have specific receive reports from the Committees of the Nominations Committee. Chair of Council in relation to Council the Council membership in accordance the President and Vice-Chancellor is responsibilities for major policy areas, and, where relevant, approve the The Nominations Committee is business; with Statute 6. determined by the external members whilst responsibility for Professional recommendations of the Committees; responsible for the recruitment and of the Committee. The Committee Services is largely shared between 28. To oversee the Students’ Union; ■■ The Audit and Risk Committee assessment of possible candidates also reviews retention and recruitment the Registrar and the Chief Financial 13. To ensure that non-discriminatory comprises only external members and and for considering and making 29. To select a Seal Arms and a Mace policies relating to professorial and Officer. The Council are kept informed systems are in place to provide advisors and meets at least four times recommendations on the appropriate for the University and have the sole other senior staff. of the key decisions and discussions of Equality and Diversity of opportunity annually. All meetings are attended balance and diversity of skills, custody and use of the Seal. the University Executive Board including for staff and students and to monitor by the appointed External Auditor to ■■ The Safety Committee comprises expertise, attributes and backgrounds via formal statements presented by their effectiveness; discuss audit findings, and with the 15 representatives from academic within Council; In 2016/17 the Council of the University the President and Vice-Chancellor comprised the President and Vice- Internal Auditors to consider internal schools and central support service 14. To have ultimate responsibility for statement, which is also delivered at the 21. To establish appropriate procedures Chancellor, up to 14 external, two student audit reports and recommendations departments and two members from the Health and Safety of employees, University’s Senate meetings. for rotation and induction of members; and eight academic persons appointed for the improvement of the University’s the Students’ Union and one Council students and others affected by its under the University’s Statutes, the systems of risk management, internal Member. Its terms of reference are to ■■ Senate, membership of which includes operations. This responsibility includes 22. To appoint annually the Chairs and majority of whom are non-executive. control and governance framework. formulate safety and environmental senior academics from across the ensuring that there is a written the external members of Council The role of Chair of Council is separated Incorporated into the internal audit policies in order to ensure that University (in the UK, Malaysia and statement of policy, arrangements for Committees and to approve the terms from the role of the University’s Chief reports are management’s response the University meets all legislative China) as well as student members, the implementation of the policy and of reference of Council Committees; Executive, the President and Vice- and implementation plans. The Senior requirements and best practice meets three times a year. Inter alia, appropriate monitoring; 23. To delegate in accordance with Chancellor. The matters specifically Strategy and Risk Analyst attends these standards, and to promote and monitor it has the power, subject to the 15. To be the University’s legal authority, Ordinances the appointment of reserved to the Council for decision are meetings to consider the University Risk effective implementation of those Statutes and Ordinances, to oversee ensuring that processes are in place Emeritus Professors and Honorary set out in the University’s Statutes. By Register and the effectiveness of the policies. teaching, education and research and for managing legal obligations arising Professors, Honorary Associate custom and under the Higher Education mitigations to the main risks affecting is responsible for the academic quality ■■ Day to day management of the from contract and legal commitments Professors, Honorary Assistant Funding Council for England (HEFCE) the activities of the University. The and standards of the University. In July University is via the University Executive and ensuring they are complied with; Professors or Fellows, to regulate the Financial Memorandum, the Council is committee also receives and considers 2017, Council approved title changes to Board, comprising the President and conferment of Honorary Degrees and responsible for the University’s ongoing reports from HEFCE as they affect the posts of Vice-Chancellor and Chair Other powers and responsibilities Vice-Chancellor, the Deputy President to establish delegated procedures for strategic direction, approval of major the University’s business. It considers of Council to ensure that the roles are and Vice-Chancellor, the Pro-Vice- appointing external examiners; developments and receiving regular the form of the annual report on better understood internationally. The 16. To propose amendments to the Chancellors, the Faculty Pro-Vice- Charter and to draft and enact reports from Executive Officers on the Corporate Governance together with post of Vice-Chancellor has become 24. To approve the expulsion of students; Chancellors, the Chief Financial day-to-day operations of its business the accounting policies and reviews the President and Vice-Chancellor. The role Statutes, provided that Senate is given Officer, the Registrar and the Chief and its subsidiaries. The Council met five implementation of risk management of President of Council has become the opportunity to submit reports 25. To establish processes to monitor and Estates and Facilities Officer, the times during the year and has several within the University. While senior Chair of Council. The title changes are on any proposals for change to the evaluate the effectiveness of Council; Chief Marketing and Communications Committees, all of which are formally executives attend meetings of the Audit now in effect and will be reflected in the Charter or Statutes, and to approve including a formal review to be Officer, the Chief Information Officer, constituted with terms of reference. The and Risk Committee as necessary, with Statement of Role and Primary Powers Ordinances and Regulations; conducted at least every four years; the Director of Human Resources and key Committees are noted below. the President and Vice-Chancellor and Responsibilities of University the Chief Student Management Officer. 17. If necessary to appoint an Acting 26. To exercise all such powers as are or attending at least once per annum, they Council to be considered and noted at ■ University Executive Board acts as an President and Vice-Chancellor; may be conferred on the Council by ■ The Finance Committee, inter alia are not members of the Committee, and the next meeting of Council. executive committee and normally the Charter, Statutes, Ordinances and recommends to the Council the the Committee meets with the External 18. To appoint a Chancellor; meets monthly, with weekly sub- Regulations and to ensure compliance University’s annual revenue and capital and Internal Auditors on their own for meetings, to consider the strategic and 19. To elect the Chair of Council to act as with the University’s Charter, Statutes, budgets and monitors performance independent discussions. financial direction of the University. The its chair and to elect Pro-Chancellors, Ordinances and Regulations; in relation to the approved budgets. ■ the Treasurer and the Vice-Chair of The Committee also reviews major ■ The Remuneration Committee, which President and Vice-Chancellor is the 27. To appoint a Secretary in accordance Council; investment decisions prior to final comprises five senior external members principal academic and administrative with Statutes and Ordinances and approval by the Council. and the President and Vice-Chancellor, officer of the University. The Deputy
39 40 Global Review and Financial Statements 2017
The climbing wall at David Ross Sports Village, University Park Governance continued
Statement of internal control effectiveness of the institution’s systems Practice on Accounting for Further ■■ A comprehensive medium and of risk management, internal control and Higher Education Institutions and short-term planning process, The Council as the governing body and governance. Reports are also other relevant accounting standards. In supplemented by detailed annual of the University of Nottingham has received from the External Auditors as addition, within the terms and conditions income, expenditure, capital and responsibility for ensuring that a sound part of their year-end work. of the Memorandum of Assurance and cash flow budgets; regular reviews system of internal control is maintained Accountability agreed between the of performance and monthly reviews ■■ An organisation-wide risk management which supports the achievement of HEFCE and the Council of the University, of financial results involving variance framework, which implements the policies, aims and objectives, while the Council, through its designated office reporting and updates of forecast University’s Risk Management Policy, safeguarding the public and other funds holder, is required to prepare financial outturn; is maintained and considered regularly and assets for which it is responsible, statements for each financial year which by the University Executive Board. The ■ Comprehensive Financial Regulations, in accordance with the responsibilities give a true and fair view of the state of ■ Audit and Risk Committee considers the approved by the Audit and Risk assigned to the Council in the Charter and affairs of the University and of the surplus effectiveness of the mitigations of the Committee, Finance Committee and Statutes and HEFCE’s Memorandum of or deficit and cash flows for that year. Assurance and Accountability. main risks to achieving the University’s the Council; activities, including those reported In causing the financial statements to be ■ Clear definitions of the These controls cover the period 1 August through the University Risk Register. prepared, the Council has ensured that: ■ responsibilities of, and the authority 2016 to 31 July 2017, and up to the date the Risk considerations form part of the ■■ Suitable accounting policies are delegated to, heads of academic financial statements are approved. annual budgeting and planning cycle selected and applied consistently; and administrative departments, and inform the work undertaken by The system of internal control and risk supported by clearly defined and Internal Audit. ■■ Judgements and estimates are made management is designed to manage formalised requirements for approval that are reasonable and prudent; rather than eliminate the risk of failure to ■■ Key financial performance indicators and control of expenditure, with achieve policies, aims and objectives; it and monthly management accounts ■■ Applicable accounting standards have investment decisions involving capital can therefore only provide reasonable and are presented at each meeting of the been followed, subject to any material or revenue expenditure being subject not absolute assurance of effectiveness. Finance Committee. departures disclosed and explained in to formal detailed appraisal and the financial statements; review according to approval levels The system of internal control and risk ■■ The annual budget, forward estimates set by the Council; management is based on an ongoing and major investment proposals are ■■ Financial statements are prepared process designed to identify the principal approved by both Finance Committee on the going concern basis unless it ■■ A professional Internal Audit Service risks to the achievement of policies, aims and the Council, following detailed is inappropriate to presume that the whose annual programme is approved and objectives, to evaluate the nature and review, challenge and assessment by University will continue in operation. by the Audit and Risk Committee; extent of those risks and to manage them the University Executive Board. The Council is satisfied that it has ■■ Self-assessment Controls Assurance efficiently, effectively and economically. adequate resources to continue in ■■ The review of the effectiveness of the certification completed by managers operation for the foreseeable future: During the year the internal audit service system of internal control is informed responsible for key systems of for this reason the going concern identified a number of weaknesses as a by the Internal Audit Service, which financial control, reviewed by the basis continues to be adopted in the result of their normal audit programme. operates to the professional standards Internal Audit Service and the results preparation of the financial statements. These were reported to the University’s of the Chartered Institute of Internal reported to the Audit and Risk Audit and Risk Committee and are being Auditors and meets the requirements The Council has taken reasonable Committee. acted upon by management with regular of the HEFCE Audit Code of Practice steps to: ■ Any system of internal financial updates being provided to the Committee. within the Memorandum of Assurance ■ ■ control can, however, only provide and Accountability. The Internal Audit ■ Ensure that funds from the HEFCE are As noted above, the Council has reasonable, but not absolute, Service was last subject to an external used only for the purposes for which responsibility for reviewing the assurance against material review in July 2012. they have been given and in accordance effectiveness of the system of internal with the Memorandum of Assurance misstatement or loss. control and risk management and ■■ The review of the effectiveness of and Accountability with the Funding in undertaking that responsibility the system of internal control is also Council and any other conditions which the following processes have been informed by the work of the executive the Funding Council may from time to established: managers within the University, who time prescribe; have responsibility for the development ■■ The Council considers the plans and ■■ Ensure that there are appropriate strategic direction for the University and maintenance of the internal control framework, and by comments financial and management controls in on a regular basis, advised by its key place to safeguard public funds and Committees. made by the external auditor in their management letter and other reports. funds from other sources; ■■ The Audit and Risk Committee has ■■ Safeguard the assets of the University been requested to provide oversight Preparation of the Financial and prevent and detect fraud; of risk management. This provides a formalised reporting and appraisal Statements ■■ Secure the economical, efficient mechanism in addition to management The Council is responsible for keeping and effective management of the reports noted above. proper accounting records which disclose University's resources and expenditure. with reasonable accuracy at any time the ■■ The Audit and Risk Committee receives ■■ The key elements of the University's financial position of the University and regular reports from the Director system of internal financial control, to enable it to ensure that the financial of Internal Audit, together with which is designed to discharge the statements are prepared in accordance recommendations for improvement. responsibilities set out above, include with the University's Charter and This includes the annual Internal the following: Statutes, the Statement of Recommended Audit opinion on the adequacy and
41 42 Global Review and Financial Statements 2017 Independent Auditor's Report to the Members of the Council of the University of Nottingham
We have audited the financial statements Conclusions relating to going information. If, based on the work we error and are considered material if, of the University of Nottingham (the concern have performed, we conclude that there individually or in the aggregate, they Opinion ‘University’) and its subsidiaries (the is a material misstatement of this other could reasonably be expected to influence ‘group’) which comprise: We are required by ISAs (UK) to report in information, we are required to report that the economic decisions of users taken on fact. the basis of these financial statements. In our opinion the financial statements: ■■ the group and University statement of respect of the following matters where: ■■ give a true and fair view of the state of the group’s and comprehensive income; ■■ the Council’s use of the going concern We have nothing to report in respect of A further description of our these matters. responsibilities for the audit of the the University’s affairs as at 31 July 2017 and of the group’s ■■ the group and University balance sheet; basis of accounting in preparation of the and the University’s income and expenditure, gains and financial statements is not appropriate; financial statements is located on the ■ Financial Reporting Council’s website at: losses and changes in reserves and of the group’s cash ■ the group and University statements of or Responsibilities of the Council changes in reserves; www.frc.org.uk/auditorsresponsibilities. flows for the year then ended; ■■ the Council has not disclosed in the As explained more fully in the Statement This description forms part of our auditor’s ■■ the consolidated cash flow statement; financial statements any identified of the role and primary powers and ■■ have been properly prepared in accordance with United report. material uncertainties that may cast responsibilities of University Council, the ■■ the statement of principal accounting Kingdom Generally Accepted Accounting Practice significant doubt about the group’s Council is responsible for the preparation policies; and including Financial Reporting Standard 102 “The and the university’s ability to continue of the financial statements that give a true Use of our report Financial Reporting Standard applicable in the UK and ■■ the related notes 1 to 31. to adopt the going concern basis of and fair view, and for such internal control This report is made solely to the Council Republic of Ireland” and the Statement of Recommended accounting for a period of at least as the Council determines is necessary in accordance with the Memorandum Practice: Accounting for Further and Higher Education. The financial reporting framework that twelve months from the date when the to enable the preparation of financial of Assurance and Accountability 2016. has been applied in their preparation financial statements are authorised for statements that are free from material Our audit work has been undertaken so is applicable law and United Kingdom issue. misstatement, whether due to fraud or that we might state to the Council those Accounting Standards, including Financial error. matters we are required to state to it in an We have nothing to report in respect of Reporting Standard 102 “The Financial auditor’s report and for no other purpose. these matters. In preparing the financial statements, Reporting Standard applicable in the UK To the fullest extent permitted by law, we the Council is responsible for assessing and Republic of Ireland” (United Kingdom do not accept or assume responsibility to the group’s and the university’s ability to Generally Accepted Accounting Practice) Other information anyone other than the board of governors continue as a going concern, disclosing, and the Statement of Recommended as a body, for our audit work, for this The Council is responsible for the other as applicable, matters related to going Practice: Accounting for Further and report, or for the opinions we have information. The other information concern and using the going concern Report on other legal and Higher Education. formed. comprises the information included in the basis of accounting unless the Council Global Review and Financial Statements, regulatory requirements Basis for opinion either intends to liquidate the group or the other than the financial statements and university or to cease operations, or has We conducted our audit in accordance our auditor’s report thereon. Our opinion Opinions on other matters prescribed by the Higher Education no realistic alternative but to do so. with International Standards on Auditing on the financial statements does not Funding Council for England Audit Code of Practice (HEFCE) Deloitte LLP (UK) (ISAs (UK)) and applicable law. Our cover the other information and we do not Auditor’s responsibilities Chartered Accountants and In our opinion, in all material respects: responsibilities under those standards express any form of assurance conclusion for the audit of the financial Statutory Auditor Nottingham are further described in the auditor's thereon. ■■ funds from HEFCE administered by the university for responsibilities for the audit of the statements In connection with our audit of the specific purposes during the year ended 31 July 2017 financial statements section of our report. financial statements, our responsibility Our objectives are to obtain reasonable have been applied to those purposes and managed in We are independent of the group and the is to read the other information and, in assurance about whether the financial accordance with relevant legislation; University in accordance with the ethical doing so, consider whether the other statements as a whole are free from material misstatement, whether due to ■■ funds provided by HEFCE have been applied in requirements that are relevant to our information is materially inconsistent with fraud or error, and to issue an auditor's accordance with the memorandum of assurance and audit of the financial statements in the the financial statements or our knowledge report that includes our opinion. accountability and any other terms and conditions UK, including the FRC’s Ethical Standard, obtained in the audit or otherwise appears to be materially misstated. If we identify Reasonable assurance is a high level attached to them during the year ended 31 July 2017; and and we have fulfilled our other ethical responsibilities in accordance with these such material inconsistencies or apparent of assurance, but is not a guarantee ■■ the requirements of HEFCE's accounts direction have requirements. We believe that the audit material misstatements, we are required that an audit conducted in accordance been met. evidence we have obtained is sufficient to determine whether there is a material with ISAs (UK) will always detect a and appropriate to provide a basis for our misstatement in the financial statements material misstatement when it exists. opinion. or a material misstatement of the other Misstatements can arise from fraud or
43 44 Global Review and Financial Statements 2017 Student walking around the Accommodation Area on the Ningbo Campus Statement of Principal Accounting Policies
1. Accounting Convention 2. Basis of Consolidation and conference, sales of goods and services, royalties and research income The financial statements have been The consolidated financial statements from commercial sources. prepared under the historical cost consolidate the financial statements convention, modified to include certain of the University and its subsidiary University funded bursaries and items at fair value, and in accordance with undertakings for the financial year to scholarships are accounted for gross as both the Statement of Recommended 31 July. The consolidated Statement of both income and operating expenses Practice on Accounting for Further and Comprehensive Income includes the where the transaction does not represent Higher Education 2014 (HEFE SORP) Group’s share of the comprehensive a discount. and Financial Reporting Standard 102 income of associated undertakings and Donations and endowment transactions (FRS102). They conform to the guidance the consolidated balance sheet includes are assessed to determine whether published by the Higher Education the investment in associated undertakings performance related conditions, Funding Council for England. at the Group’s share of their underlying net tangible assets (the 'equity method'). restrictions on expenditure, both or The University is a public benefit entity Associated undertakings are those neither applies. The income is recognised and has applied the public benefit entity in which the Group has a significant, in the Statement of Comprehensive requirements of FRS102. The functional but not dominant, influence over their Income as follows: currency of the University is Pounds commercial and financial policy decisions. ■■ Where performance related conditions Sterling, as the United Kingdom is the The consolidated financial statements exist income is recognised in line with primary economic environment in which do not include those of the University the performance criteria being met. the University operates. of Nottingham Students’ Union as it is ■■ Where restrictions exist income is These policies have been reviewed by a separate body in which the University recognised when it is receivable and the Audit Committee and are considered has no financial interest and no control or taken to a temporarily restricted appropriate to the University’s activities. significant influence over policy decisions. reserve, expenditure is then recognised They have been applied consistently in the As permitted under FRS102 the University as restricted expenditure and charged current and prior year. has taken advantage of the disclosure to the restricted reserve over time to Having made appropriate enquiries, exemptions available to it in respect of a reduce it to nil as the fund is fully used. Council considers that the University and university only cashflow statement. Endowments where the donor has group has adequate financial resources to specified that the capital sum can be continue in operational existence for the 3. Recognition of Income spent are treated in this way. foreseeable future, being not less than Transactions with commercial substance ■■ Where there are neither performance 12 months from the date of signing the are credited to income at the fair value related conditions nor restrictions financial statements. Accordingly, they of consideration receivable net of any income is recognised when it is continue to adopt the going concern basis discounts. Where the provision of services receivable. Endowments are recognised in preparing the financial statements. In is incomplete at the financial year end the as income on entitlement and then held doing so, the University has regard to the percentage completion will be determined in the permanently restricted reserve elements of current assets and current in a way appropriate to each contract, where the donor has specified that the liabilities, the availability of cash via the and any funds received in advance held capital sum cannot be spent. University’s banking arrangements and the as deferred income. Tuition fee income expectation that grants will continue to be ■ is therefore credited to income over the ■ Endowment and investment income is received into the foreseeable future. period in which students are studying and credited to the income and expenditure Funding Council grants are accounted for account on a receivable basis. Gains or in the period to which they relate. losses on investment are recorded in the capital element of the fund to which Other key income streams of this type are it relates and recognised in income as consultancy, accommodation, catering ‘gain or loss on investments’.
45 46 Global Review and Financial Statements 2017
Statement of Principal Accounting Policies Continued
4. Employee Benefits Non monetary items held at historical acquired is capitalised and written off on a cost are translated into sterling using straight line basis over its useful economic The three principal pension schemes for the exchange rate of the date of the life. Useful economic life is assessed the University’s staff are the Universities transaction. Non monetary items held separately for each business acquired, Superannuation Scheme (USS), the at fair value are translated into sterling depending on the nature of that business. University of Nottingham Contributory at the exchange rates on the date the Where a reliable estimate of the useful life Pension and Assurance Scheme (CPAS) fair value was determined. The resulting of goodwill cannot be made, the life shall and the University of Nottingham exchange differences are dealt with in the not exceed five years. Provision is made Contributory Retirement Savings Plan Statement of Comprehensive Income for for any impairment. (CRSP). USS and CPAS are defined benefit the financial year. schemes, which are externally funded and contracted out of the State Second 9. Land and Buildings Pension. 6. Leases Land is stated at deemed cost using the The Funds are valued every three years A lease is treated as a finance lease if the valuation as at 31 July 2014 and will no by professionally qualified independent substance of the lease is that it transfers longer be revalued. The valuation of land actuaries using the projected unit method, substantially all the risks and rewards of was undertaken during the 2012/13 by the rates of contribution payable being ownership of the asset. Fixed assets held Fisher Hargreaves Proctor Ltd, Property determined by the trustees on the advice under finance leases and the related lease Consultants. Commercially held land of the actuaries. In the intervening years, obligations are recorded in the Balance is valued on an annual basis by suitably the actuaries review the progress of the Sheet at the lower of the fair value of qualified chartered surveyors. The basis schemes. Pension costs are assessed the leased assets at the inception of the of valuation being open market value in accordance with the advice of the lease or the present value of the minimum on an existing use basis. Land, with the actuaries, based on the latest actuarial lease payments. The excess of lease exception of the Arts Centre and DH valuations of the schemes. A small number payments over recorded lease obligations Lawrence Pavilion land, which are held of staff remain in other pension schemes. are treated as finance charges which are on a long lease, is held freehold and is not amortised over each lease term to give a depreciated as it is considered to have an The USS is a multi-employer scheme and constant rate of charge on the remaining indefinite useful life. is accounted for on a defined contribution balance of the obligations. Assets held Buildings are stated at cost, other than basis as it is not possible to identify the under finance leases are depreciated those held as investments. Buildings are assets and liabilities of the scheme which over their useful economic lives in the depreciated over their expected useful are attributable to the group. A liability same way as other property, plant and lives generally between 50 and 100 years, is recorded within provisions for the equipment. Where there is no certainty with certain specific buildings depreciated University’s contractual commitment to that ownership of the asset will pass to the over a longer period where appropriate. fund past deficits as determined by the University at the end of the lease the asset Major refurbishments are depreciated scheme management. Movements in the will be fully depreciated by the end of the over their estimated life, normally 15 provision are charged / credited to the lease term. Statement of Comprehensive Income. years. Leasehold land is depreciated over Rental costs under operating leases are the life of the lease. CRSP is a defined contribution scheme charged to expenditure in equal annual Assets in the Course of Construction are and the amount charged to Staff Costs amounts over the periods of the leases. not depreciated. is the contributions payable in the year. Lease incentives are similarly spread on a Differences between contributions straight line basis over the lease term. At each reporting date all property is payable in the year and contributions reviewed for indications of impairment. actually paid are shown as either accruals 7. Carbon Reduction Commitment or prepayments in the balance sheet. Borrowing costs are recognised as Allowances an expense within the Statement of CPAS is accounted for as a defined Carbon Reduction Commitment Comprehensive income and are not benefit scheme. For the defined benefit Allowances are recognised as an asset separately identified and capitalised. scheme the amounts charged to Staff at cost until such time as prescribed by Costs are the current service costs and Government policy that the allowances gains and losses on settlements and 10. Plant and Equipment are offset against carbon emitted or curtailments. The interest cost and the Plant and equipment, including sold. Liabilities are accrued during the expected return on assets are shown computers and software, costing less year as energy is consumed. This is a than £30,000 per individual item or multiyear scheme and as such all activity 5. Foreign Currencies group of related items is written off in the is appropriately recognised in the balance year of acquisition (unless specified by a Transactions denominated in foreign sheet and amortised accordingly. grant condition). All other equipment is currencies are recorded at the rate capitalised. of exchange ruling at the dates of 8. Goodwill the transactions. Monetary assets Capitalised equipment is stated at cost Goodwill arising on the acquisition of and liabilities denominated in foreign and depreciated over its expected useful subsidiary undertakings and businesses, currencies are translated into sterling life, as follows: representing any excess of the fair value either at year end rates or, where of the consideration over the fair value ■■ IT Equipment – 3-5 years there are related forward foreign of the identifiable assets and liabilities ■ Researchers working in a Tissue Culture Laboratory, exchange contracts, at contract rates. ■ IT Software – 3 years Nottingham Medical School, Queens Medical Centre
47 48 Global Review and Financial Statements 2017
Statement of Principal Accounting Policies Continued
■■ Configured IT systems – useful 13. Investments and Endowments 17. Maintenance of Premises economic life up to a maximum of 10 Fixed asset investments are shown The University has a five year rolling years at historical cost less any provision maintenance plan, which is reviewed on ■■ Telephone equipment - 7 years for impairment in their value except an annual basis. The costs of maintenance where there is a ready market for the are charged to the Statement of ■■ Motor vehicles and other general investments when they are shown at fair Comprehensive Income as incurred. equipment - 3-10 years value with and changes in value being Expenditure that is expected to provide ■■ Equipment acquired for specific taken to the Statement of Comprehensive incremental future benefits to the research projects - project life Income. University is capitalised and added to the carrying value of the premises. If (generally 3 years) Endowment Asset Investments are it is a replacement item the carrying included in the Balance Sheet at fair value, Each major component of capitalised amount relating to those parts replaced is with changes taken to the Statement of plant and equipment is reviewed derecognised and debited to expenditure Comprehensive Income. Cash held as separately. Where major components at the date of disposal. have a significantly different useful part of the endowment portfolio is treated economic life they are depreciated as an investment, as it is held as part separately. of the portfolio in accordance with the 18. Taxation Status University’s strategy and is therefore not The Institution is an exempt charity Heritage Assets are recorded at cost and considered as free cash. within the meaning of schedule 3 of the not depreciated. Investments in subsidiaries and associates Charities Act 2011 (formerly schedule 2 of At each reporting date all plant and in the University's separate financial the Charities Act 1993) and is considered equipment is reviewed for indications of statements are recorded at cost less to pass the tests set out in Paragraph impairment. impairment. 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a Borrowing costs are recognised as Current Asset Investments are valued at charitable company for UK corporation an expense within the Statement of the lower of cost and selling price less tax purposes. Accordingly, the Institution Comprehensive income and are not costs to sell. is potentially exempt from taxation separately identified and capitalised. in respect of income or capital gains 14. Financial Instruments received within categories covered by 11. Government Grants section 287 CTA2009 and sections 471, The provisions of both section 11 and and 478-488 CTA 2010 (formerly s505 of Government grants are recognised based 12 of FRS102 will be applied in full. on the accrual model and are measured ICTA 1988) or section 256 of the Taxation Basic financial instruments are held at of Chargeable Gains Act 1992, to the at the fair value of the asset received or amortised cost using the effective interest receivable. Grants are classified as either extent that such income or gains are rate method or cost and are subject to an applied to exclusively charitable purposes. capital or revenue in nature. annual impairment review. Capital grants are recognised over the Certain activities undertaken by the Complex financial instruments are Institution are subject to Corporation expected useful life of the asset, and held at fair value, with changes in fair revenue grants are recognised in income Tax. These are primarily handled through value taken directly to the Statement of subsidiary companies with taxable profits over the period in which the related costs Comprehensive Income. are recognised. gift aided to the University or off-set against taxation losses. Where part of a grant is deferred, it is held 15. Stocks as deferred income on the Balance Sheet. The Institution receives no similar The inventories are stores, coal and oil exemption in respect of Value Added Tax. held by the estates office, stores held Irrecoverable VAT on inputs is included in 12. Investment Properties centrally for some academic schools, food the costs of such inputs. Any irrecoverable Investment properties are initially and catering supplies, and farm livestock, VAT allocated to tangible fixed assets is included in the Balance Sheet at their fair produce and consumables. They are included in their cost. value at the balance sheet date on the valued at the lower of cost and selling basis of an triennial professional valuation. price less costs to sell. Mixed use investment property is separated between investment properties 16. Short Term Investments and property, plant and equipment. Short Term Investments comprise money Changes in the fair value of investment on short-term deposit with a maturity properties are recognised immediately date less than 90 days at the date of within the Statement of Comprehensive inception. Investments that are short- Income. term and readily convertible to cash at an Investment property owned by one group insignificant risk of changes in value will company which is leased to another group be reported as ‘cash equivalents’ in the company is treated as an investment cashflow statement. property in the owner's individual financial statements.
Student celebrating graduation 49 50 Global Review and Financial Statements 2017
Consolidated and University Statement Consolidated and University Balance Sheet of Comprehensive Income and Expenditure
Consolidated University Consolidated University 2017 2016 2017 2016 2017 2016 2017 2016 Note £m £m £m £m Note £m £m £m £m Income Fixed assets Tuition fees and education contracts 2 309.3 298.3 309.3 298.3 Intangible assets 12 1.4 3.0 1.4 3.0 Funding body grants 3 90.1 93.2 90.1 93.2 Goodwill 13 0.0 0.0 0.0 0.0 Research grants and contracts 4 123.7 124.6 123.7 124.6 Fixed assets 14 881.2 815.1 87 7.6 811.4 Other income 5 111.7 110.4 103.1 103.6 Heritage assets 14 0.5 0.5 0.5 0.5 Investment income 6 5.0 1.4 5.1 1.5 Investments 15 72.0 60.1 71.8 59.9 Donations and endowments 7 6.3 7.5 6.3 7.4 Investments in associates 16 33.7 34.3 9.5 9.8 Total income 646.1 635.4 6 3 7.6 628.6 988.8 913.0 960.8 884.6
Expenditure Current assets Staff costs 8 341.4 324.0 33 7.4 321.1 Stock 1.8 1.8 1.3 1.5 Other operating expenses 9 243.1 235.9 238.8 234.2 Trade and other receivables 17 87.8 86.5 90.0 89.5 Depreciation 14 31.1 27.7 30.8 27.6 Short term investments 0.2 0.2 0.2 0.2 Interest and other finance costs 10 5.0 5.7 5.0 5.7 Cash and cash equivalents 5.8 16.5 1.9 12.5 Total expenditure 620.6 593.3 612.0 588.6 95.6 105.0 93.4 103.7
Surplus before other gains/(losses) and share of operating Creditors: amounts falling due surplus/(deficit) in associates 25.5 42.1 25.6 40.0 Within one year 18 (239.5) (209.9) (236.7) (207.8) Gain/(loss) on disposal of fixed assets 3.3 8.3 3.3 8.3 Net current liabilities (143.9) (104.9) (143.3) (104.1) Gain/(loss) on investments 3.4 1.6 4.2 2.5 Total assets less current liabilities 844.9 808.1 81 7.5 780.5 Share of profits/(losses) in associated companies 16 0.5 1.8 (0.2) (0.2) Creditors: amounts falling due after Surplus (deficit) for the year 32.7 53.8 32.9 50.6 More than one year 19 (213.4) (208.4) (213.4) (208.4) Actuarial gain/(loss) in respect of pension schemes 27 0.0 (35.5) (0.0) (35.5) Pension provisions 20 (198.6) (199.5) (198.6) (199.5) Total comprehensive income for the year 32.7 18.3 32.9 15.1 Total net assets 432.9 400.2 405.5 372.6 Represented by: Restricted reserves Endowment comprehensive income for the year 5.2 6.0 5.2 6.0 Income and expenditure reserve – endowment reserve 21 55.1 49.9 55.1 49.9 Restricted comprehensive income for the year 1.1 0.0 1.1 0.0 Income and expenditure reserve – restricted reserve 22 6.5 5.4 6.5 5.4 Revaluation reserves comprehensive income for the year (0.0) (1.3) (0.0) (1.3) 61.6 55.3 61.6 55.3 Unrestricted comprehensive income for the year 26.4 13.6 26.6 10.4 32.7 18.3 32.9 15.1 Unrestricted reserves Income and expenditure reserve – unrestricted 36 7.1 340.7 339.7 313.1 Revaluation reserve 4.2 4.2 4.2 4.2 The consolidated income is attributable to the University and its subsidiaries, there is no non controlling interest. All income and expenditure of the University and its subsidiaries relate to continuing operations. 371.3 344.9 343.9 317.3 Total reserves 432.9 400.2 405.5 372.6
The financial statements on pages 51–80 were approved by Council on 21 November 2017 and signed on its behalf by:
Professor Shearer West Stephen Walton President and Vice-Chancellor Treasurer and Chairman of Finance Committee
51 52 Global Review and Financial Statements 2017
Consolidated and University Statement of Changes in Reserves For the year ended 31 July 2017
Consolidated University Income and expenditure account Reserve Total Income and expenditure account Reserve Total Endowment Restricted Unrestricted Unrestricted Endowment Restricted Unrestricted Unrestricted £m £m £m £m £m £m £m £m £m £m Balance at 1 August 2015 43.9 5.4 327.1 5.5 381.9 Balance at 1 August 2015 43.9 5.4 302.7 5.5 357.5 Unrestricted surplus/(deficit) from the income and Unrestricted surplus/(deficit) from the income and 0.0 0.0 9.7 0.0 9.7 0.0 0.0 6.5 0.0 6.5 expenditure statement expenditure statement Income from investment of the endowment portfolio 1.3 0.0 0.0 0.0 1.3 Income from investment of the endowment portfolio 1.3 0.0 0.0 0.0 1.3 New endowments, donations and grants (including research) 2.3 2.8 0.0 0.0 5.1 New endowments, donations and grants (including research) 2.3 2.8 0.0 0.0 5.1 Release of restricted funds spent in year (1.1) (2.8) 3.9 0.0 0.0 Release of restricted funds spent in year (1.1) (2.8) 3.9 0.0 0.0 Unrealised appreciation of endowments, investments Unrealised appreciation of endowments, investments and investment properties 3.5 0.0 0.0 (1.3) 2.2 and investment properties 3.5 0.0 0.0 (1.3) 2.2
Transfers between revaluation and income and Transfers between revaluation and income and 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 expenditure reserve expenditure reserve Total comprehensive income for the year 6.0 (0.0) 13.6 (1.3) 18.3 Total comprehensive income for the year 6.0 0.0 10.4 (1.3) 15.1
Balance at 31 July 2016 49.9 5.4 340.7 4.2 400.2 Balance at 31 July 2016 49.9 5.4 313.1 4.2 372.6 Unrestricted surplus/(deficit) from the income and Unrestricted surplus/(deficit) from the income and 0.0 0.0 22.6 0.0 22.6 0.0 0.0 22.8 0.0 22.8 expenditure statement expenditure statement Income from investment of the endowment portfolio 4.9 0.0 0.0 0.0 4.9 Income from investment of the endowment portfolio 4.9 0.0 0.0 0.0 4.9 New endowments, donations and grants (including research) 0.5 3.5 0.0 0.0 4.0 New endowments, donations and grants (including research) 0.5 3.5 0.0 0.0 4.0 Release of restricted funds spent in year (1.4) (2.4) 3.8 0.0 0.0 Release of restricted funds spent in year (1.4) (2.4) 3.8 0.0 0.0 Unrealised appreciation of endowments, investments Unrealised appreciation of endowments, investments and investment properties 1.2 0.0 0.0 0.0 1.2 and investment properties 1.2 0.0 0.0 0.0 1.2
Transfers between revaluation and income and Transfers between revaluation and income and 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 expenditure reserve expenditure reserve Total comprehensive income for the year 5.2 1.1 26.4 0.0 32.7 Total comprehensive income for the year 5.2 1.1 26.6 0.0 32.9
Balance at 31 July 2017 55.1 6.5 36 7.1 4.2 432.9 Balance at 31 July 2017 55.1 6.5 339.7 4.2 405.5
53 54 Global Review and Financial Statements 2017
Consolidated Cashflow Statement For the year ended 31 July 2017
2017 2016 2017 2016 Note £m £m £m £m Cash flow from operating activities Cash flows from investing activities Surplus / (deficit) for the year 32.7 53.8 Proceeds from sales of fixed assets 4.1 0.1 Capital grants receipts 1 7.3 16.2 Adjustment for non-cash items Proceeds on sale of endowment investments 3.8 8.5 Depreciation 14 31.1 27.7 Endowment investment income 4.9 1.3 Amortisation of intangibles 12 0.0 0.0 Investment income 0.1 0.1 Amortisation of goodwill 13 0.0 0.1 Payments made to acquire fixed assets (97.2) (100.8) Loss/(gain) on investments (3.4) (6.6) Payments to acquire endowment asset investments (11.0) (12.2) Decrease/(increase) in stock 0.0 (0.0) Purchase of carbon dioxide emission allowances 0.0 (2.2) Decrease/(increase) in debtors (2.3) (3.4) New non-current asset investments (2.2) (2.3) Increase/(decrease) in creditors 16.3 (8.4) New deposits of short term investments (0.0) 0.0 Increase/(decrease) in pension provision 20 (0.8) (1.5) New deposits of endowment investments (0.5) (1.2) Share of operating (surplus)/deficit in associate 16 (0.5) (1.8) Total cash flows from investing activities (80.7) (92.5) Surrender of carbon dioxide emission allowances 1.6 0.9 Cash flows from financing activities Adjustment for investing or financing activities Interest paid (0.3) (0.1) Investment income 6 (0.1) (0.1) Endowment cash received 0.5 1.2 Investment income – endowments 6 (4.9) (1.3) New secured loans 189.0 193.4 Interest payable 10 0.3 0.2 Repayments of amounts borrowed (178.2) (136.5) Endowment income (0.5) (2.3) Capital element of finance lease and service concession payments 0.0 0.0 (Profit)/Loss on the sale of fixed assets (3.3) 0.2 Total cash flows from financing activities 11.0 58.0 Capital grants released to income ( 7.2) (12.3) Effect of retranslation of foreign currency cash balances 0.0 0.0 Net cash inflow from operating activities 59.0 45.2 Increase in cash and cash equivalents in the year (10.7) 10.7
Cash and cash equivalents at beginning of the year 16.5 5.8 Cash and cash equivalents at end of the year 5.8 16.5
As permitted under FRS102 the university has taken advantage of the disclosure exemptions available to it in respect of a university only cashflow statement.
55 56 Global Review and Financial Statements 2017
Notes to the Financial Statements For the year ended 31 July 2017
1. Critical accounting judgements and key areas of estimation uncertainty Consolidated University In the application of the University's accounting policies judgements, estimations and assumptions are required about the carrying 2017 2016 2017 2016 value of assets and liabilities that are not readily apparent from other sources. These estimates and assumptions are applied £m £m £m £m consistently in both the current and prior year, and are reviewed on an ongoing basis, taking into account historical experience and 5. Other operating income other relevant factors. The judgements and estimations which are considered to have the most significant effect on the financial statements relate to the incorporation of the University's commitments to the USS recovery plan, the CPAS pension scheme and to Residences, catering and conferences 44.1 40.8 34.3 32.0 the estimation of the value of the accrual for holiday pay. In addition estimates and material judgements are used in assessing the Other services rendered 22.1 18.2 20.8 17.1 recoverability of debtors, the recognition and calculation of provisions and taxation accounting. Health authorities 10.1 9.8 10.1 9.8 To determine the appropriate values for the USS recovery plan the University has applied an accounting model and suggested discount Released from deferred capital grants 0.3 12.6 0.3 12.6 rate developed by the British Universities Finance Director's Group (BUFDG) in conjunction with USS after conducting appropriate Other income 35.1 29.0 3 7.6 32.1 review of the recovery plan documentation and the bond market to ensure the model and rates were reasonable and appropriate. The liability for the plan is £60m (2016 £59.8m). 111.7 110.4 103.1 103.6
To determine an appropriate accrual for holiday pay contractually earned but not yet taken a sample of data was taken from holiday 6. Investment Income records using data within an internally-developed recording system. This data was used to generate a percentage value of staff costs which was then extrapolated to cover all staff. The detailed estimation technique will be periodically re-run. The accrual stands at Investment income on endowments (Note 21) 4.9 1.3 4.9 1.3 £10.8m (2016 £12.4m). Other interest receivable 0.1 0.1 0.2 0.2 5.0 1.4 5.1 1.5
Consolidated University 7. Donations and endowments 2017 2016 2017 2016 New endowments (Note 21) 0.5 2.3 0.5 2.3 £m £m £m £m Donations with performance conditions 0.6 0.8 0.6 0.7 2. Tuition fees and education contracts Donations with restrictions (Note 22) 2.3 2.0 2.3 2.0 Full-time credit bearing courses – home fees 175.5 166.7 175.5 166.7 Unrestricted donations 2.9 2.4 2.9 2.4 Full-time credit bearing courses – international fees 95.3 93.3 95.3 93.3 6.3 7.5 6.3 7.4 Part-time credit bearing courses 5.0 4.6 5.0 4.6 Other teaching contracts 14.6 13.9 14.6 13.9 Non credit bearing courses and other fees 18.9 19.8 18.9 19.8 309.3 298.3 309.3 298.3
3. Funding body grants Recurrent grants from HEFCE 82.6 81.7 82.6 81.7 Specific grants from HEFCE 0.2 2.8 0.2 2.8 Grants from TA 1.1 1.9 1.1 1.9 Deferred capital grants Released in year Building 5.7 6.7 5.7 6.7 Equipment 0.5 0.1 0.5 0.1 90.1 93.2 90.1 93.2
4. Research grants and contracts Research councils 53.2 51.3 53.2 51.3 UK based charities 14.3 11.5 14.3 11.5 UK central/local government, health and health authorities 23.2 23.9 23.2 23.9 UK industry, commerce and public corporations 8.9 8.9 8.9 8.9 EU government and other sources 16.4 18.8 16.4 18.8 Other grants and contracts 6.3 10.2 6.3 10.2 RDEC income 1.4 0.0 1.4 0.0 123.7 124.6 123.7 124.6
57 58 Global Review and Financial Statements 2017
Notes to the Financial Statements continued
Consolidated University Remuneration of other higher paid staff, excluding employer's pension contributions but including payments made on behalf of 2017 2016 2017 2016 the NHS in respect of its contractual obligations to University staff under separate NHS contracts of employment and which are excluded from the University's income and expenditure account: £m £m £m £m 8. Staff 2017 2016 Staff costs: Number Number Gross pay 274.7 266.3 271.1 263.7 £100,000 – £109,999 29 33 Social security costs 26.5 22.6 26.1 22.4 £110,000 – £119,999 26 22 Other pension costs (Note 27) 41.1 37.1 41.1 37.0 £120,000 – £129,999 9 15 Movement on USS pension provision (Note 20) (0.9) (2.0) (0.9) (2.0) £130,000 – £139,999 14 13 341.4 324.0 33 7.4 321.1 £140,000 – £149,999 11 12 £150,000 – £159,999 13 12 £160,000 – £169,999 13 9 2017 2016 £170,000 – £179,999 14 10 £000 £000 £180,000 – £189,999 4 6 Emoluments of the Vice Chancellor £190,000 – £199,999 5 6 Basic salary 295 295 £200,000 – £209,999 2 1 Accommodation allowance 42 42 £210,000 – £219,999 2 1 Taxable expenses and private health policy 3 3 £220,000 – £229,999 1 1 340 340 £230,000 – £239,999 0 0 £240,000 – £249,999 0 0 In lieu of pension contributions 41 41 £250,000 – £259,999 0 0 Remuneration 381 381 £260,000 – £269,999 0 0
Employers pension contributions 0 0 £270,000 – £279,999 0 0 £280,000 – £289,999 1 0 Total cost 381 381 £290,000 – £299,999 1 1
University Council University pension contributions to USS are paid at the same rate as for other academic staff. Expenses paid to Council members who are not staff or students (as listed within these financial statements) totalled £12,281 (2016 £2,847). Pension contributions have reduced due to lifetime tax allowance issues. A specific contractual clause means that additional emoluments equivalent to the pension contributions Members of the University’s Council are the University’s Trustees. The University does not remunerate its external lay members of the foregone is included within remuneration. University Council. Reasonable travel and subsistence expenses incurred in attending meetings relating to the work of the Council Compensation for loss of office paid (or payable) to employees earning in excess of £100,000 and associated charitable events in members’ official capacity are reimbursed upon request, as supported by appropriate evidence per annum, this value principally represents the early retirement funding charge paid to the USS of expenditure. The salaries of members of the staff of the University who serve on the Council do not include any element specific to pension scheme. 0.0 0.0 their trusteeship, but are determined following an agreed process. 2017 2016 Number Number Average Staff Numbers by Major Category: Teaching and Research 3,189 3,188 Technical 612 595 Administrative, Professional and Managerial 2,225 2,106 Other, including Manual 951 926
6,977 6,815
59 60 Global Review and Financial Statements 2017
Notes to the Financial Statements continued
Key management personnel Consolidated Key management personnel have authority and responsibility for planning, directing and controlling the activities of the University. Other The University's Executive Board are determined as having the appropriate level of authority to meet this definition. Staff costs Operating Interest 2017 2016 includes compensation paid to key management personnel. Compensation consists of salary and benefits excluding employer's Staff costs Dep’n Expenses Payable Total Total pension contribution. The Vice Chancellor sits as part of the Executive Board. His remuneration is disclosed separately above and is thus excluded here. £m £m £m £m £m £m 11. Analysis of Expenditure By Activity The University's Executive Board was significantly expanded in the 2015/16 financial year following a re-shape in the 2014/15 financial year. At 31 July 2017 there were 20 members (2016: 21 members). Academic departments 186.4 4.4 64.0 0.0 254.8 253.4 Research grants and contracts 51.8 5.2 39.1 0.0 96.1 96.0 2017 2016 £m £m Total teaching and research 238.2 9.6 103.1 0.0 350.9 349.4 Academic services 22.5 2.3 24.8 0.0 49.6 49.1 Compensation paid to key management personnel 3.1 2.9 Administration 50.4 0.2 53.4 0.0 104.0 89.4 Premises 10.8 16.8 30.3 0.0 5 7.9 54.4 Residences, catering and conferences 12.5 1.6 18.4 0.0 32.5 28.5 Consolidated University Other expenses 7.0 0.6 13.1 5.0 25.7 22.5 2017 2016 2017 2016 Total per income and expenditure account 341.4 31.1 243.1 5.0 620.6 593.3 £m £m £m £m 9. Other Operating Expenses Auditor’s remuneration includes; Consolidated University Purchase, hire and repair of equipment 30.6 37.6 30.5 37.4 2017 2016 2017 2016 Consumables and laboratory expenditure 1 7.9 18.0 1 7.7 17.8 £m £m £m £m Published materials 8.0 6.9 7.9 6.9 Audit Services 0.12 0.12 0.08 0.08 Travel and subsistence 14.5 13.2 14.4 13.1 FRS102 Transition Work 0.00 0.02 0.00 0.02 Professional and other fees 52.2 45.1 49.7 42.6 Other Assurance Services 0.02 0.02 0.02 0.01 Fellowships, scholarships and prizes 53.9 55.0 53.9 55.0 Non audit services (Tax advisory) 0.00 0.13 0.00 0.13 Catering supplies 7.5 7.3 6.3 6.3 0.14 0.29 0.10 0.24 Repairs and general maintenance 14.8 13.6 13.0 12.1 Heat, light, water and power 14.7 13.0 15.1 13.7 Rent, rates and insurance 5.2 5.2 5.5 5.6 Grants to University of Nottingham Students' Union 2.7 2.7 2.7 2.7 Auditor’s remuneration 0.1 0.3 0.1 0.3 University Training 2.2 2.4 2.1 2.4 Other Advertising 1.6 1.4 1.6 1.4 Operating Interest 2017 2016 Amortisation of goodwill arising on consolidation 0.0 0.1 0.0 0.0 Staff costs Dep’n Expenses Payable Total Total Other expenses 1 7.2 14.1 18.3 16.9 £m £m £m £m £m £m 243.1 235.9 238.8 234.2 Academic departments 186.4 4.4 64.1 0.0 254.9 253.4 Research grants and contracts 51.8 5.2 39.1 0.0 96.1 96.0
Total teaching and research 238.2 9.6 103.2 0.0 351.0 349.5 Consolidated University 2017 2016 2017 2016 Academic services 22.5 2.3 24.9 0.0 49.7 49.3 £m £m £m £m Administration 50.4 0.2 53.4 0.0 104.0 89.5 10. Interest and Other Finance Costs Premises 10.8 16.5 32.6 0.0 59.9 56.2 Loans not wholly repayable within five years 0.3 0.2 0.3 0.2 Residences, catering and conferences 8.8 1.6 13.3 0.0 23.7 22.0 Finance costs for CPAS pension scheme (Note 27) 3.6 3.9 3.6 3.9 Other expenses 6.7 0.6 11.4 5.0 23.7 22.2 Finance costs in relation to USS pension scheme provision 1.1 1.6 1.1 1.6 Total per income and expenditure account 337.4 30.8 238.8 5.0 612.0 588.6 5.0 5.7 5.0 5.7 Other operating expenses include Operating lease rentals – other 232.0 296.0
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Consolidated and University Consolidated 2017 2016 Land and buildings £m £m Assets in 12. Intangible assets Long Investment course of Heritage Carbon dioxide emission allowances purchased in year 1.4 3.0 Freehold leasehold properties Equipment construction Total assets 1.4 3.0 £m £m £m £m £m £m £m 14. Tangible fixed assets and heritage assets Carbon allowances are purchased annually from the Department of Energy and Climate Change. They may be redeemed against Cost / deemed cost the internal production of carbon, with additional allowances purchasable at a higher price should emissions exceed the allowances At 1 August 2016 777.7 15.0 4.2 179.7 93.9 1,070.5 0.5 purchased. The redemption is an annual process in April each year, with April 2012 to April 2013 being the first year of the scheme. The University has accrued for the carbon generated in the months August 2016 to July 2017 and the liability is included within accruals and Additions at cost 25.4 0.0 0.0 21.1 51.5 98.0 0.0 deferred income in note 18. Transfers 59.4 0.0 0.0 5.7 (65.1) 0.0 0.0 Disposals (1.1) 0.0 0.0 (7.0) 0.0 (8.1) 0.0 Consolidated At 31 July 2017 861.4 15.0 4.2 199.5 80.3 1,160.4 0.5 £m 13. Goodwill Depreciation Cost At 1 August 2016 124.5 3.2 0.0 127.8 0.0 255.5 0.0 At 1 August 2016 and at 31 July 2017 2.1 Charge for year 15.4 0.1 0.0 15.6 0.0 31.1 0.0 Transfers 0.0 0.0 0.0 (0.0) 0.0 (0.0) 0.0 Amortisation Eliminated on disposals (0.7) 0.0 0.0 (6.7) 0.0 ( 7.4) 0.0 At 1 August 2016 2.1 At 31 July 2017 139.2 3.3 0.0 136.7 0.0 279.2 0.0 Charge for the year 0.0 At 31 July 2017 2.1 Net book value At 31 July 2017 722.2 11.7 4.2 62.8 80.3 881.2 0.5 Net book value At 31 July 2017 0.0 At 31 July 2016 653.2 11.8 4.2 51.9 93.9 815.1 0.5
At 31 July 2016 0.0
Goodwill arises on consolidation and does not exist within the Balance Sheet of the University.
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University Consolidated University Land and building Restated Restated 2017 2016 2017 2016 Assets in Long Investment course of Heritage £m £m £m £m Freehold leasehold properties Equipment construction Total assets 15. Investments
£m £m £m £m £m £m £m Subsidiary companies 0.0 0.0 0.4 1.9 Investments 16.9 11.3 16.2 9.2 14. Tangible fixed assets and heritage assets Investments as part of the endowment asset portfolio 55.1 48.8 55.1 48.8 60.1 59.9 Cost / deemed cost 72.0 71.8 At 1 August 2016 777.7 15.0 4.2 176.3 93.4 1,066.7 0.5 Additions at cost 25.4 0.0 0.0 21.1 51.3 97.8 0.0 Included within investments are amounts invested in University collaborations and spin out companies. The majority of the investments Transfers 59.4 0.0 0.0 5.4 (64.7) 0.0 0.0 have been written down to nil. The total cost of such investments was £13.6m (2016 £11.1m) with an impairment provision of £3.5m Disposals (1.1) 0.0 0.0 ( 7.1) 0.0 (8.2) 0.0 (2016 £3.9m). The total amount invested in the year was £0.1m (2016 £9.0m) and the impairment charge in the year was £0.1m (2016 At 31 July 2017 861.4 15.0 4.2 195.7 80.0 1,156.3 0.5 £0.3m). The University is also a member of EMMAN Limited, The Manufacturing Technology Centre Limited, CIELivestock Limited, all of which are companies limited by guarantee for which the University's potential liability is limited to £1 each.
Depreciation The University is also a member of the Lachesis Fund, a Limited Liability Partnership, where the University’s potential liability stands at At 1 August 2016 124.5 3.2 0.0 127.6 0.0 255.3 0.0 £150k. Charge for year 15.4 0.1 0.0 15.3 0.0 30.8 0.0 2017 Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 £m Eliminated on disposals (0.7) 0.0 0.0 (6.7) 0.0 ( 7.4) 0.0 Cost / deemed cost At 31 July 2017 139.2 3.3 0.0 136.2 0.0 278.7 0.0 At 1 August 2016 11.1 Net book value Additions at cost 0.0 At 31 July 2017 722.2 11.7 4.2 59.5 80.0 87 7.6 0.5 Revaluation 3.0 At 31 July 2016 653.2 11.8 4.2 48.7 93.4 811.4 0.5 Disposals (0.5) At 31 July 2017 13.6
Provisions for impairment At 1 August 2016 3.9 Included in both consolidated and University within freehold land and buildings is £225.8m (2016 £225.8m) of land which is not being depreciated. Impairment 0.1 Reversal of past impairment (0.5) Property valuations as at 31 July 2017 were made by senior management using the July 2014 report of Savills (L&P) Ltd and Disposals (0.5) commercial land has been valued by Shouler and Son as at 31 July 2017, both firms of Chartered Surveyors, the basis of valuation being open market value taking groups of properties together for this purpose. At 31 July 2017 3.0
The opening valuation has been designated as deemed cost and valuations will be updated every three years. Carrying Value 10.6
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The University Group owns 100% of the issued share capital of the following companies which are registered in England and operating Country of in the UK: Investment Type of business Incorporation % holding Accommodation (biotechnology Company Name No of £1 Ordinary Shares BioCity Nottingham Limited UK 50% Limited by Guarantee and health companies) Nottingham University Industrial and Commercial Enterprise Limited (NOTICE) 100,000 Staff Roster Solutions Limited Software development and application UK 48% Private Limited by Shares East Midlands Conference Centre Limited 100 Platelet Solutions Limited Platelet function testing UK 44% Private Limited by Shares UNIP Management Limited 2 Nottingham University Architecture Architectural and design activities UK 37% Private Limited by Shares Ambitious Futures Limited 1 and Urban Design Limited Eminate Limited 1 N U Vision Biotherapies Limited Human health activities UK 32% Private Limited by Shares Inorganic nanoparticle dispersion Promeathean Particles Limited UK 26% Private Limited by Shares manufacture NOTICE is a provider of services, such as consultancy and power supplies. UNIP Management provides rental and property services. Eminate develops and manufactures products for the food and pharmaceutical sectors. East Midlands Conference Centre Limited is a Ticketing Network East Midlands Ticket services UK 25% Private Limited by Shares provider of facilities for conference and other events. Ambitious Futures Limited operates a training programme for graduates in the M4 Technologies Limited Research and development UK 24% Private Limited by Shares Higher Education sector. Surepulse Systems Limited Heart rate measuring technology UK 23% Private Limited by Shares The consolidated results of the Group incorporate the above 100% owned companies and the results of Nottingham University Locate Therapeutics Limited Research and development UK 20% Private Limited by Shares Foundation Limited, a company granted charitable status in April 2003, and Nottingham Technologies Asia Limited (a company Added Scientific Limited 3D printing UK 20% Private Limited by Shares registered and operating in Hong Kong), both wholly owned subsidiaries. PBD Biotech Limited Diagnosis of Bacterial Infections UK 20% Private Limited by Shares The University acts as a guarantor and provides financial support, by the way of loans on an arms length basis and by formal FAHRAS Limited Health related software UK 19% Private Limited by Shares agreement, to the subsidiary and associate companies in order that they can meet their financial obligations. Oncimmune Holdings plc Specialist Pharmaceutical UK 13% Private Limited by Shares Evocell Limited Research and development UK 12% Public Limited by Shares Exonate Limited Specialist Pharmaceutical UK 12% Private Limited by Shares Consolidated University Footfalls and Heartbeats (UK) Limited Research and development UK 11% Private Limited by Shares £m £m Azotic Technologies Limited Research and development UK 9% Private Limited by Shares 16. Investment in Associated companies Critical Pharmaceuticals Limited Novel drug delivery devices UK 9% Private Limited by Shares At 1 August 2016 34.3 9.8 EventMAP Software development and application UK 4% Private Limited by Shares Share of retained profits/(losses) 0.5 (0.2) Translational platforms and drug Exchange movements (1.1) (0.1) Crown Bioscience Inc USA 1% Private Limited by Shares discovery solutions At 31 July 2017 33.7 9.5 Pharminox Limited Human health activities UK 1% Private Limited by Shares Juniper Pharmaceuticals Inc Research and development USA 1% Public Limited by Shares Scancell Holdings plc Research and development UK 1% Public Limited by Shares The University owns 37.5% (2016 37.5%) of the University of Nottingham Ningbo, China, a co-operative joint venture established Crown Bioscience Therapeutics Biopharmaceutical USA 1% Private Limited by Shares in China. It has a financial year end of 31 December in accordance with Chinese regulations. The consolidated Financial Statements of the University reflects a carrying value of £27.7m (2016 £28.0m) equal to 37.5% of the net assets, excluding Novacyt SA Research and development France 0% Public Limited by Shares intellectual property, as at 31 July.
The University owns 29.9% (2016 29.9%) of the ordinary share capital of the University of Nottingham, Malaysia, a company incorporated in Malaysia. It has a financial year end of 31 December in common with its majority shareholder. The consolidated Financial Statements of the University reflects a carrying value of £6m (2016 £6.3m) equal to 29.9% (2016 29.9%) of the net assets, excluding intellectual property, as at 31 July.
Academic quality in both China and Malaysia is controlled by the University of Nottingham.
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Consolidated University Consolidated University Restated Restated Restated Restated 2017 2016 2017 2016 2017 2016 2017 2016 £m £m £m £m £m £m £m £m 17. Trade and other receivables 19. Creditors: amounts falling due after more than one year Amounts falling due within one year: Bank loans 76.7 65.6 76.7 65.6 Trade receivables 30.3 26.3 29.6 25.5 Hefce loans 1.8 2.0 1.8 2.0 Amounts due from Subsidiaries 0.0 0.0 3.5 4.0 Deferred capital grants 134.9 140.8 134.9 140.8 Amounts due from associates (Note 25) 6.4 10.3 6.4 10.3 213.4 208.4 213.4 208.4 Prepayments and accrued income relating to research grants 29.5 32.4 29.5 32.4 Prepayments and accrued income 21.6 17.5 21.0 17.3 The bank loans are with the Royal Bank of Scotland at a rate which is 0.20% above LIBOR. The total facility is for £91m and is a 20 year revolving credit facility with straight line amortisation of £0.8m per quarter over 25 years which commenced October 2010 Total trade and other receivables 87.8 86.5 90.0 89.5 with a £30m bullet repayment at the end. The University has the ability to repay and redraw against the facility over the period of the loans and utilises this facility to manage its cash requirements. In addition the University has a multi-option facility for £15m. The HEFCE loan does not have a fixed repayment profile, repayments being dependent on the individual project. The University does not currently hold any finance lease arrangements.
Consolidated University At the balance sheet date the University had two loans in place with the Royal Bank of Scotland totalling £124m. The University has the ability to repay and redraew against the facilities over the period of the loans and utilise this facility to manage its cash Restated Restated requirements. In addition the University has a multi-option facility for £15m. The HEFCE loan does not have a fixed repayment 2017 2016 2017 2016 profile, repayments being dependant on the individual project. The University does not currently hold any finance lease £m £m £m £m arrangements. 18. Creditors: amounts falling due within one year Bank loans (see 19) 3.2 3.2 3.2 3.2 Consolidated and University Payments received in advance 7.4 2.3 6.9 1.7 Obligation CPAS Trade payables 18.9 14.0 18.4 13.6 to fund Total deficit Social security and other taxation payable 13.3 13.4 13.2 13.3 USS deficit Amounts due to subsidiaries 0.0 0.0 1.1 1.5 £m £m £m Accruals and deferred Income 196.7 17 7.0 193.9 174.5 20. Pension provisions 239.5 209.9 236.7 207.8 At 1 August 2016 59.8 139.7 199.5 Utilised in year (3.0) (1.0) (4.0) Included within accruals and deferred income are the following items of Additions in year 3.2 0.0 3.2 income which have been deferred until specific performance related conditions have been met. At 31 July 2017 60.0 138.7 198.6
Donations 0.7 0.8 0.7 0.8 The obligation to fund the past deficit on the University's Superannuation Scheme (USS) arises from the contracual obligation Research grants received in advance 76.1 72.5 76.1 72.5 with the pension scheme for payments to be made in accordance with the scheme's recovery plan. This plan began in March 2015 and covers the period to 31 March 2031. Management have assessed future employees within the scheme and inflation Deferred capital grants 11.4 10.2 11.4 10.2 on salary payments (3.3%) over the contractual period in assessing the value of the provision. The discount rate for the 88.2 83.5 88.2 83.5 calculation is based on an average of the yields from AA Corporate Bonds over the relevant period, 1.85%.
The University of Nottingham Contributory Pension and Assurance Scheme (CPAS) is a closed scheme. The detail behind the assessment of the deficit is described in Note 27.
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Consolidated and University Consolidated and University 2017 2017 2017 2016 2017 2017 2017 2016 Restricted Restricted Restricted Restricted Expendable Permanent Total Total Research Donations total Total £m £m £m £m £m £m £m £’000 21. Endowments 22. Restricted reserves Balance as at 1 August 2016 2.5 47.4 49.9 43.9 Balance as at 1 August 2016 1.0 4.4 5.4 5.4
Additions 0.0 0.5 0.5 2.3 New grants 1.2 0.0 1.2 0.6 Transfers 1.7 (1.7) 0.0 0.0 New donations 0.0 2.3 2.3 2.0 Appreciation of Endowment Asset Investments 0.0 1.2 1.2 3.5 Expenditure (0.6) (1.8) (2.4) (2.6) Income for the Year 1.5 3.4 4.9 1.3 Balance as at 31 July 2017 1.6 4.9 6.5 5.4 Expenditure for the Year (0.4) (1.0) (1.4) (1.1) Analysis by type of purpose Balance as at 31 July 2017 5.3 49.8 55.1 49.9 Prizes, scholarships and student support 2.4 2.2 Represented by: Subject specific 2.4 2.2 Research 1.6 1.0 Capital value 5.3 45.4 50.7 45.7 Other 0.1 0.0 Accumulated income 0.0 4.4 4.4 4.2 6.5 5.4 5.3 49.8 55.1 49.9
Analysis by type of purpose: Consolidated University Academic staff 0.4 28.1 28.5 26.5 2017 2016 2017 2016 Prizes, scholarships and student support 3.2 12.1 15.3 12.7 £’000 £’000 £’000 £’000 Subject specific 1.7 1.1 2.8 2.6 23. Operating lease commitments Research 0.0 2.4 2.4 2.5 Other 0.0 6.1 6.1 5.6 Total rentals payable under operating leases in respect of equipment: 5.3 49.8 55.1 49.9 Within one year 0.2 0.3 0.2 0.3 Between two and five years 0.4 0.9 0.4 0.9 Analysis by asset: 2017 2016 Over five years 0.1 0.1 0.1 0.1 Fixed assets 0.7 1.3 0.7 1.3 Current and non-current asset investments 55.1 49.9 Cash and cash equivalents 55.1 49.9 Consolidated University 2017 2016 2017 2016 £m £m £m £m The University has no unrestricted permanent endowments. All endowments are recorded within investments, including holdings of endowment cash in accordance with the accounting policy. 24. Capital Commitments Commitments contracted at 31 July 35 37 35 37
The University is undergoing a period of significant infrastructure development. The University's Innovation Park was added to with significant buildings, a new sports village and student, teaching and research facilities were extended and upgraded to benefit a number of faculties. The University plans to make significant investment going forward, but in so will change the emphasis of that investment. Investments in research and digital will be made as well continued investment on the estate.
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25. Related party transactions 27. Pension schemes Due to the nature of the University’s operations and the composition of the Council (being drawn from commerce, industry and the The two principal pension schemes for the University's staff are the To calculate the technical provisions, it was assumed that the public sector) and senior management team, it is inevitable that transactions will take place with organisations in which a member Universities Superannuation Scheme (USS) and the University of valuation rate of interest would be 6.1% per annum, salary increases of the Council or the senior management team may have an interest. All transactions involving organisations in which a member of Nottingham Contributory Pension and Assurance Scheme (CPAS). would be 4.4% per annum (with short-term general pay growth at Council or the senior management team may have an interest are conducted at arm’s length and in accordance with the University’s USS provides benefits for academic and related employees of 3.65% per annum and an additional allowance for increases in financial regulations and usual procurement procedures. Total expenses paid direct to members of the University’s Council, who are some UK universities and some other employers. CPAS provides salaries due to age and promotion reflecting historic scheme also the University’s Trustees, are shown at note 7. Transactions with wholly owned subsidiaries which have been consolidated in the similar benefits for other staff of the University. The University also experience, with a further cautionary reserve on top for past service Group accounts are not disclosed below, in accordance with the exemption given in FRS102 Section 33 (Related Party Disclosures). operates a defined contribution scheme, The University of liabilities) and pensions would increase by 3.4% per annum for three Nottingham Contributory Retirement Savings Plan (CRSP). years following the valuation then 2.6% per annum thereafter. Relevant significant relationships held by members of Council are: USS Standard mortality tables were used as follows: 1. Until his resignation of 1st April 2017, Mr John Mills was a Company Director of NUSA (Nottingham University Samworth Academy), The institution participates in the Universities Superannuation which provides education to 11 to 18 year olds, of which the University is a sponsor. In 2016/17 there was a donation by the University Scheme (USS), a defined benefit scheme which is contracted out Male members mortality S1NA light YoB tables – no age rating of £NIL (2015/16 £60k). of the State Second Pension (S2P). The assets of the scheme are Female members mortality S1NA light YoB tables – rated down 1 year held in a separate fund administered by the trustee, Universities 2. Mr Chris Jagger is a Company Director of NUSA (Nottingham University Samworth Academy) which provides education to 11 to 18 Superannuation Scheme Limited. The appointment of directors Use of these mortality tables reasonably reflects the actual USS year olds, of which the University is a sponsor, in 2016/17 there was a donation by the University of £NILk (2015/16 £60K). Mr Chris to the Board of the trustee is determined by the company's experience but also provides an element of conservatism to allow Jagger is also a Company Director of Nottingham Contemporary Trading limited, which in 2016/17 received a donation from the Articles of Association. Four of the directors are appointed by for further small improvements in mortality rates the CMI 2009 University of £NIL (2015/16 £57k). Universities UK; three are appointed by the University and projections with a 1.25% pa long term rate were also adopted. College Union of whom at least one must be a USS pensioner The assumed life expectations on retirement at age 65 are: 3. Mr David Ross has donated £NIL 2016/17 (£0.3m 2015/16) to the University of Nottingham to support Nottingham Potential, an member; and a minimum of three and a maximum of five are outreach programme to support young people from lower socio-economic backgrounds in reaching their academic potential. independent directors appointed by the board. Under the scheme Males (females) currently aged 65 24.2 (26.3) years trust deed and rules, the employer contribution rate is Males (females) currently aged 45 26.2 (28.6) years The University of Nottingham owns a 29.9% (2016 29.9%) stake in the University of Nottingham, Malaysia, a 37.5% (2016 37.5%) stake in determined by the trustee, acting on actuarial advice. the University of Nottingham, Ningbo China both of which are accounted for as associated entities (see note 15). At the valuation date, the value of the assets of the scheme was Because of the mutual nature of the scheme, the scheme's assets £41.6 billion and the value of the scheme's technical provisions Academic quality in both China and Malaysia is controlled by The University of Nottingham, for which it receives management fees are not hypothecated to individual institutions and a scheme-wide was £46.9 billion indicating a shortfall of £5.3 billion. The assets and certain members of staff are seconded to both overseas campuses for periods of up to 3 years. In addition certain costs incurred contribution rate is set. The institution is therefore exposed to therefore were sufficient to cover 89% of the benefits which had by the University are rechargeable between each associate and the University in accordance with signed agreements. actuarial risks associated with other institutions' employees and is accrued to members after allowing for expected future increases unable to identify its share of the underlying assets and liabilities in earnings. of the scheme on a consistent and reasonable basis and therefore, as required by FRS17 "Retirement benefits"and FRS102 Section 28 The technical provisions relate essentially to the past service 2017 2017 2016 2016 'Employee Benefits', accounts for the scheme as if it were a liabilities and funding levels, but it is also necessary to assess the Malaysia China Malaysia China defined contribution scheme. As a result, the amount charged to ongoing cost of newly accruing benefits. The cost of future £m £m £m £m the income and expenditure account represents the contributions accrual was calculated using the same assumptions as those used payable to the scheme in respect of the accounting period. to calculate the technical provisions but the allowance for Net charges by the University: promotional salary increases was not as high. Analysis has shown Costs (0.1) 0.7 1.4 (0.5) The latest triennial actuarial valuation of the scheme was at 31 very variable levels of growth over and above general pay Management fee 1.6 5.2 1.6 4.9 March 2017, which was carried out using the projected unit increases in recent years, and the salary growth assumption built method. The outcome of this valuation is yet to be received and into the cost of future accrual is based on more stable, historic, Owed to the University at 31 July 0.4 6.0 2.2 8.1 therefore the 2014 valuation continues to be used. salary experience. However, when calculating the past service Additional share capital acquired liabilities of the scheme, a cautionary reserve has been included, The 2014 valuation was the third valuation for USS under the new in addition, on account of the variability mentioned above. scheme-specific funding regime introduced by the Pensions Act All transactions with spin out companies are undertaken on a commercial basis and are not material to the Group. 2004, which requires schemes to adopt a statutory funding Following UK government legislation, from 2011 statutory pension objective, which is to have sufficient and appropriate assets to Note 8 sets out the grants paid to the University of Nottingham Student's Union. Two senior elected Officers of the Students' increases or revaluations are based on the Consumer Prices Index cover their technical provisions. The actuary also carries out Union are also members of the University Council.are also members of the University Council. measure of price inflation. Historically these increases had been regular reviews of the funding levels. In particular, he carries out based on the Retail Prices Index measure of price inflation. a review of the funding level each year between triennial valuation and details his estimate of the funding level at 31 March Since the previous valuation as at 31 March 2008 there have been At 1 August Cash At 31 July 2015 are also included in this note. a number of changes to the benefits provided by the scheme 2016 Flows 2017 although these became effective from October 2011. £m £m £m The assumptions which have the most significant effect on the result of the valuation are those relating to the rate of return on New entrants 26. Cash and cash equivalents investments (i.e. the valuation rate of interest), the rates of Other than in specific, limited, circumstances new entrants are Consolidated 16.5 (10.7) 5.8 increase in salary and pensions and the assumed rates of now provided on a Career Revalued Benefits (CRB) basis rather Cash and cash equivalents 16.5 (10.7) 5.8 mortality. The financial assumptions were derived from market than a Final Salary (FS) basis. yields prevailing at the valuation date. An 'inflation risk premium' adjustment was also included by deducting 0.3% from the Normal pension age market-implied inflation on account of the historically high level The Normal pension age was increased for future services and At 31 July 2017, total cash and cash equivalents included cash amounting to £nil (2016: £12.3m) that was held in an escrow of inflation implied by government bonds (particularly when new entrants, to age 65. account in relation to the purchase of the National College building which took place on 1st August 2016 and was therefore not compared to the Bank of England's target of 2% for CPI which available for immediate use by the Group. corresponds broadly to 2.75% for RPI per annum).
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27. Pension schemes continued Flexible retirement The trustees believe that over the long-term equity investment between 3.3% and 3.6% per annum. The market value of the Flexible retirement options were introduced. and investment in selected alternative asset classes will provide assets of the scheme was £164.6m with past service liabilities of superior returns to other investment classes. The management £269.8m. The valuation was carried out using the projected unit Member contributions increased structure and targets set are designed to give the fund a major method. Contributions were uplifted to 7.5% per annum and 6.5% per annum exposure to equities through portfolios that are diversified both for FS Section members and CRB Section members respectively. geographically and by sector. The trustee recognises that it The 31 July 2014 valuation was almost complete at the balance would be theoretically possible to select investments producing sheet date and has resulted in a deficit of £95.4m at the valuation Cost sharing income flows broadly similar to the estimated liability cash flows. date compared to a £80.1m deficit at the 31 July 2011 valuation. If the total contribution level exceeds 23.5% of Salaries per annum, The increase results mainly from the effect that low bond yields the employers will pay 65% or the excess over 23.5% and members However, in order to meet the long-term funding objective within are having on the way the scheme’s liabilities are calculated. A would pay the remaining 35% to the fund as additional contributions. a level of contributions that it considers the employers would be low expected bond yield means that more money has to be put willing to make, the trustee needs to take on a degree of aside now to cover the expected future costs of paying out Pension increase cap investment risk relative to the liabilities. This taking of investment pensions when they fall due. For service derived after 30 September 2011, USS will match risk seeks to target a greater return than the matching assets increases in official pensions for the first 5%. If official pensions would provide whilst maintaining a prudent approach to meeting The total pension charge for the University and its subsidiaries was: increase by more than 5% then USS will pay half of the difference the fund's liabilities. Before deciding what degree of investment up to a maximum increase of 10%. risk to take relative to the liabilities, the trustee receives advice from its internal investment team, its investment consultant and The actuary has estimated that the funding level as at 31 March the scheme actuary, and importantly considers the ability of the 2017 2016 2015 under the scheme specific funding regime has fallen from employers to support the scheme if the investment strategy does £m £m not deliver the expected returns. The positive cash flow of the 75% to 72%. This estimate is based on the funding level at 31 Contributions to USS 33.9 30.9 March 2014, allowing primarily for investment returns and scheme means that it is not necessary to realise investments to changes to market conditions. These are cited as the two most meet liabilities, and the scheme actuary has confirmed that this is Charge to I&E account re CPAS 3.5 2.9 significant factors affecting the funding positions which have likely to be the position for the next ten years or more. The Contributions to Other 3.7 3.3 been taken into account for the 31 March 2015 estimation. trustee believes that this, together with the ongoing flow of new Pension Schemes entrants into the scheme and most critically the ability of the On the FRS102 basis, using an AA bond discount rate of 3.3% per employers to provide additional support to the scheme should Total Pensions Cost (Note 7) 41.1 37.1 annum based on spot yields, the actuary estimated that the additional contributions be required, enables it to take a long funding level at 31 March 2015 was 72%. term view of its investments. Short-term volatility of returns can be tolerated and need not feed through immediately to the Surpluses or deficits which arise at future valuations may impact contribution rate. However, the trustee is mindful of the difficult 2017 2016 on the institution's future contribution commitment. A deficit economic climate which exists for defined benefit schemes £m £m may require additional funding in the form of higher contribution currently, and the need to be clear about the responses that are CPAS – FRS102 Disclosure requirements, where a surplus could, perhaps, be used to available should the deficits persist and a revised recovery plan becomes necessary following the valuation of the scheme as at similarly reduce contribution requirements. The sensitivities The amounts recognised in the balance sheet are as follows: regarding the principle assumptions used to measure the scheme March 2014. liabilities on a technical provisions basis as at the date of the last Present value of funded obligations (340.3) (326.2) triennial valuation are set out below: CPAS Fair value of Plan assets 201.7 186.6 The University operates a defined benefit scheme in the UK, Deficit (138.6) (139.6) which is externally funded and contracted out of the State Change in Impact Assumption Second Pension (S2P). The assets of the scheme are held in a assumption on shortfall separate trustee-administered fund. The scheme was closed to The amounts recognised in staff costs and comprehensive income are as follows: Increase by new entrants from 1 September 2006. A full actuarial valuation Investment return Decrease by 0.25% Service cost (recognised in staff costs) £1.6 billion was carried out at 31 July 2011. For 2012 employer contributions were 12.4% of pensionable pay plus £395,500 per month and Current service cost 4.0 3.3 The gap between Increase by Decrease by 0.25% active members paid in at the rate of 6.0% of pensionable pay. Net interest expense/(credit) 3.6 3.9 RPI and CPI £1 billion Following the 31 July 2011 valuation employer contributions have Operating charge/(credit) 7.6 7.2 been agreed at the rate of 16.9% of pensionable pay plus Increase by Rate of salary growth Increase by 0.25% £419,500 per month from 1 August 2012. The monthly lump sum £0.6 billion Actual return less expected return on pension scheme assets 0.0 0.0 payment is to pay for the past-service shortfall over a 15 year Experience gains and losses 10.6 50.4 Members live longer Increase by period and will increase by 4.8% each August. The results of the 1 year longer than assumed £0.8 billion actuarial valuation at 31 July 2011 have been updated to 31 July Expected return on plan assets (10.6) (14.9) 2015 for the purposes of FRS17 valuation. Actuarial loss recognised as comprehensive income 0.0 35.5 Equity markets Increase by Fall by 25% in isolation £4.6 billion The assumptions which have the most significant effect on the Total defined benefit cost/(credit) 7.7 42.7 result of the valuation are those relating to the rate of return on USS is a "last man standing" scheme so that in the event of the investments (i.e. the valuation rate of interest) and the rates of insolvency of any of the participating employers in USS, the increase in salary and pensions. In relation to the past service The return on plan assets was: amount of any pension funding shortfall (which cannot otherwise liabilities, the financial assumptions were derived from market Interest income 4.9 6.3 yields prevailing at the valuation date. It was assumed that the be recovered) in respect of that employer will be spread across Return on plan asset (excluding amount included in net interest) 10.6 14.9 the remaining participant employers and reflected in the next discount rate of interest would be 3.8% per annum, salary actuarial valuation of the scheme. increases would be 3.3% per annum and pensions would increase Actual return on plan assets 15.5 21.2
75 76 Global Review and Financial Statements 2017
Notes to the Financial Statements continued
27. Pension schemes continued Principal actuarial assumptions at the balance sheet date (expressed as weighted averages): Reconciliation of scheme assets and liabilities 2017 2016 2017 2017 2017 Discount rate at end of year 2.50% 2.65% Assets Liabilities Total Expected return on plan assets at end of year 2.50% 2.65% £m £m £m Future salary increases 3.15% 2.90% At 1 August 2016 186.7 (326.2) (139.5) Future pension increases (pensions in payment pre 2003) 3.45% 3.35% Benefits paid (9.5) 9.5 0.0 Future pension increases (pensions in payment post 2003) 3.15% 2.90% Administration expenses (0.2) 0.0 (0.2) Proportion of employees opting for early retirement 0.00% 0.00% Current service cost 0.0 (4.0) (4.0) Proportion of employees commuting pension for cash 100.00% 100.00% Employer contribution 8.8 0.0 8.8 Future expected lifetime of pensioner at age 65: Employee contribution 0.4 (0.4) 0.0 Male (born 1948 (2012: 1947): 23.7 23.7 Interest income/(expense) 4.9 (8.5) (3.6) Male (born 1968 (2012: 1967): 25.7 25.7 Return on assets (excluding amount included in net interest) 10.6 0.0 10.6 Female (born 1948 (2012: 1947): 26 26 Actuarial gains/(losses) 0.0 (10.7) (10.7) Female (born 1968 (2012: 1967): 28 28 At 31st July 2017 201.6 (340.4) (138.6)
31 July 31 July 31 July 31 July 31 July 2016 2016 2016 2017 2016 2015 2014 2013 Assets Liabilities Total £m £m £m £m £m £m £m £m Amounts for the current and previous four At 1 August 2015 164.6 (269.9) (105.3) periods are as follows: Benefits paid (8.3) 8.3 0.0 Defined benefit obligation (340.3) (326.2) (269.8) (239.2) (218.2) Administration expenses (0.1) 0.0 (0.1) Plan assets 201.7 186.6 164.6 148.5 140.8 Current service cost 0.0 (3.3) (3.3) Deficit (138.6) (139.6) (105.3) (90.7) ( 7 7.4) Employer contribution 8.9 0.0 8.9 Experience adjustments on plan liabilities (10.7) 50.4 27.3 13.6 (9.2) Employee contribution 0.4 (0.4) 0.0 Experience adjustments on plan assets 10.6 14.9 6.0 (3.4) 10.6 Interest income/(expense) 6.3 (10.2) (3.9) Return on assets (excluding amount included in net interest) 14.9 0.0 14.9 Actuarial gains/(losses) 0.0 (50.4) (50.4) CRSP Following the closure of CPAS to new entrants on 1 September 2006, the University engaged Legal & General to operate a defined Gain/(Loss) on plan introductions and changes 0.0 (0.3) (0.3) contribution pension scheme for the benefit of members. The Contributory Retirement Savings Plan (CRSP) is designed as the At 31 July 2016 186.7 (326.2) (139.5) primary pension plan for members of staff who are not already in another pension scheme, but all members of staff can join CRSP. The University makes contributions equivalent to twice the employee's contribution, up to a maximum of 10%. As at 31 July 2017 the University owed £307,247 in respect of contributions to the scheme (2016: £289,906). See note 20 for reference to the total balance sheet position. The major categories of plan assets as a percentage of total plan assets are as follows: 2017 2016 Equities 75% 75% Bonds 25% 24% Property 0% 0% Cash 0 1%
77 78 Global Review and Financial Statements 2017
Notes to the Financial Statements continued
Consolidated University 29. Access Funds 2017 2016 2017 2016 Funding Council grants are available solely for students: the University acts only as paying agent. The grants and related £m £m £m £m disbursements are therefore excluded from the Income and Expenditure Account. 28. Financial instruments Measured at fair value through profit and loss 2017 2016 Investments (including endowments) (Note 15) 72.0 60.1 71.8 59.9 £m £m £m £k £k Short term investments 0.2 0.2 0.2 0.2 Balance at 1 August 2016 (1.0) (1.0) Funding Council Grants 0.0 0.0 Measured at undiscounted amount receivable Interest earned 0.0 0.0 Trade and other receivables (Note 17) 87.8 86.5 90.0 89.5 (1.0) (1.0)
Disbursed to Students 0.0 0.0 Measured at cost less impairment Balance Unspent at 31 July 2017 (1.0) (1.0) Intangible assets (Note 12) 1.4 3.0 1.4 3.0 Heritage assets (Note 14) 0.5 0.5 0.5 0.5 Investment in associates (Note 16) 33.7 34.3 9.5 9.8 30. Connected Charitable Institutions Measured at amortised cost The following charities are linked to the University and fall within paragraph (w) of Schedule 2 of the Goodwill (Note 13) 0.0 0.0 0.0 0.0 Charities Act 1993, and are consolidated within the Group.
195.6 184.6 173.4 162.9 £m £m £m 2017 2016 Measured at undiscounted amount payable £m £m Payments received in advance (Note 18) ( 7.4) (2.3) (6.9) (1.7) Children’s Play Activities Trust Fund
Trade payables (Note 18) (18.9) (14.0) (18.4) (13.6) Reserves Social security and other taxation payable (Note 18) (13.3) (13.4) (13.2) (13.3) Balance at 1 August 2016 0.3 0.3 Amounts due to subsidiaries (Note 18) 0.0 0.0 (1.1) (1.5) Balance at 31 July 2017 0.3 0.3 Accruals and deferred Income (Note 18) (196.7) (177.0) (193.9) (174.5)
Bank loans (Note 18,19) (79.9) (68.8) (79.9) (68.8) Non-Operating Charities HEFCE loan (Note 19) (1.8) (2.0) (1.8) (2.0) JH Tomlin Scholarship Fund (318.0) (277.5) (315.2) (275.4) The Dean Moore Scholarship Fund The AF Bird Memorial Award
The financial statements have been prepared on the historical cost basis, except for certain financial assets and liabilities which are carried at fair value or amortised cost as appropriate. 31. Sport England grant Fair value measurements are, to the extent possible, based on are quoted prices in active markets for identical assets or liabilities that Sport England has granted the University funds to provide opportunities for students to take part in sport and activity. £46,392 the entity can access, where quoted prices are not available the university then, also to the extent possible, uses observable market (2016 £174,093) has been spent, in collaboration with Nottingham Trent University. data for the asset or liability, either directly or indirectly. All other fair value measurements and based on unobservable inputs for the asset or liability. Further details are provided in the accounting policies.
79 80 Global Review and Financial Statements 2017
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