Annual Report and Financial Statements for the Year Ended 31 July 2012
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LONDON‟S GLOBAL UNIVERSITY Annual Report and Financial Statements for the year ended 31 July 2012 UNIVERSITY COLLEGE LONDON ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2012 MISSION STATEMENT UCL is London's Global University OUR VISION An outstanding institution, recognised as one of the world‟s most advanced universities and valued highly by its community of staff, students, alumni, donors and partners and by the wider community; Providing an outstanding education to students from across the globe that imparts the knowledge, wisdom and skills needed by them to thrive as global citizens; Committed to leadership in the advancement, dissemination and application of knowledge within and across disciplines; Committed to achieving maximum positive social, environmental and economic benefit through its achievements in education, scholarship, research, discovery and collaboration; Developing future generations of leaders in scholarship, research, the learned professions, the public sector, business and innovation; Tackling global challenges with confidence; As London‟s global university, leading through collaboration across London and worldwide in the advancement of knowledge, research, opportunity and sustainable economic prosperity; Operating ethically and at the highest standards of efficiency, and investing sufficiently today to sustain the vision for future generations. OUR VALUES Commitment to excellence and advancement on merit Fairness and equality Diversity Collegiality and community-building Inclusiveness Openness Ethically acceptable standards of conduct Fostering innovation and creativity Developing leadership Environmental sustainability. UNIVERSITY COLLEGE LONDON ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2012 CONTENTS Page 1 Committee Membership 2 Financial Summary 3 Operating and Financial Review 14 Corporate Governance 16 Responsibilities of the Council of UCL 18 Independent Auditor‟s Report to the Members of the Council of UCL 20 Statement of Principal Accounting Polices 25 Consolidated Income and Expenditure Account 26 Statement of Group Historical Cost Surpluses and Deficits 26 Statement of Total Recognised Gains and Losses 27 Consolidated Balance Sheet 28 UCL Balance Sheet 29 Consolidated Cash Flow Statement 30 Notes to the Accounts 63 Financial Summaries (unaudited) UNIVERSITY COLLEGE LONDON ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2012 FINANCIAL SUMMARY Council (Trustees) Lay Members: Ms Anne Bulford(Treasurer to Ms Vivienne Parry*(Vice-Chair) 30/09/12) Ms Katharine Roseveare* Ms Philippa Foster-Back* Dr Gill Samuels Mr Rob Holden (to 30/9/12) Professor Chris Thompson Mr Mark Knight Sir Stephen Wall*(Chair) Mr Simon Melliss (from 01/01/12, Baroness (Diana) Warwick Treasurer from 01/10/12) Lord Clement Jones (from Ms Catherine Newman (to 30/09/11) 01/01/12) Mr Ven Balakrishnan (from 01/01/12) Academic Professor David Attwell Dr Stephanie Schorge* Members: Dr Robert Barber Professor Nick Tyler Professor Malcolm Grant*(Provost) Professor Maria Wyke Dr Benet Salway* (to 30/9/12) Dr Sarah Snyder (from 01/01/12) UCL Union: Mr Luke Durigan (to 31/07/12) Mr Timothy Rees Jones (to Mr Edwin Clifford-Coupe (from 31/07/12) 01/08/12) Ms Natasha Gorodnitski (from 01/08/12) Finance Committee Lay Members: Ms Anne Bulford (Chair to 30/09/12) Ms Susannah Lloyd (30/09/12) Mr Ven Balakrishnan Mr John Morgan Dr Ben Booth Dr Gill Samuels (from 01/03/12) Mr Mark Clarke Sir Stephen Wall Mr Simon Melliss (Chair from 01/10/12) Academic Professor Malcolm Grant (Provost) Professor David Ingram (to Members: Dr Robert Barber 30/09/12) Professor Dame Hazel Genn (to Dr Andrea Townsend-Nicholson 30/09/12) Professor Jonathan Wolff Professor Alan Thompson (from Professor Sue Hamilton (from 01/10/12) 01/10/12) Audit Committee Lay Members: Mr Rob Holden (to 30/09/12) Mr Mark Knight (Chair) Mr John Hustler (to 30/09/12) Mr Nigel Smith Lord Clement-Jones (from 01/10/12) Mr Patrick Reeve (from 01/10/12) Investments Committee Lay Members: Ms Anne Bulford (Chair to 30/09/12) Ms Susannah Lloyd Mr Simon Melliss (Chair from Mr Nigel Thomas 01/10/12) Mr Mark Clarke Mr Ven Balakrishnan (to 30/09/12) denotes also member of Remuneration Committee * denotes also member of Nominations Committee 1 UNIVERSITY COLLEGE LONDON ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2012 FINANCIAL SUMMARY 2012 2011 £m £m CONSOLIDATED INCOME & EXPENDITURE ACCOUNT Funding Council grants 198.3 203.3 Academic fees and support grants 208.5 172.2 Research grants and contracts 300.7 283.4 Other operating income 156.8 138.3 Endowment income and interest receivable 6.9 5.2 Total income 871.2 802.4 Less: Share of income from joint ventures (2.5) (0.8) NET INCOME 868.7 801.6 TOTAL EXPENDITURE 843.4 777.4 Share of operating loss in joint ventures and associates (1.5) (0.6) Gain on acquisition 4.8 - (Loss)/profit on disposal of tangible fixed assets (1.0) 5.8 Loss on disposal of fixed asset investments (0.3) - Minority interest (0.1) - Transfer to accumulated income within specific endowments (0.9) (0.5) SURPLUS FOR THE YEAR 26.4 28.9 CONSOLIDATED BALANCE SHEET Fixed assets 686.5 660.7 Endowment asset investments 72.4 72.7 Net current assets 67.5 55.3 Total assets less current liabilities 826.4 788.7 Non-current liabilities and provisions (75.4) (77.3) Provision for liabilities and charges (0.6) - Net pension liability - (4.7) TOTAL NET ASSETS 750.4 706.7 Represented by: Deferred grants 394.5 374.1 Endowments 72.4 72.7 Reserves 283.5 260.1 Minority interest - (0.2) OTHER KEY STATISTICS Consolidated recognised gains 23.1 40.6 Increase in cash in the year 29.0 3.2 2012 2011 No. No. Student numbers* 24,859 24,077 Average payroll numbers 10,097 9,783 * excludes School of Pharmacy students 2 UNIVERSITY COLLEGE LONDON ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2012 OPERATING AND FINANCIAL REVIEW The financial statements of UCL are prepared in accordance with the “Statement of Recommended Practice: Accounting for Further and Higher Education” and with reference to the Financial Memorandum which regulates the formal relationship between the Higher Education Funding Council for England (HEFCE) and UCL. HEFCE also acts on behalf of the Charity Commission as the principal regulator of UCL as an exempt charity, in accordance with the Charities Act 2006. The financial statements include the consolidated results of UCL‟s subsidiary companies, details of which are shown at Note 39. These accounts have been prepared on a going concern basis as described in Note 1 of the Accounting Policies. Strategy and long term objectives The White Paper published in 2011 by the UCL Council sets out the vision and strategy for UCL for the period through to the end of this decade. UCL is committed to the following aims: maintaining the qualities of a comprehensive university, committed to excellence in the arts, humanities, social sciences, physical, biological and medical sciences, engineering and the built environment; maintaining its openness as an institution, attracting wholly on merit the most talented students from the United Kingdom and from around the world; providing education of the highest academic quality, rigorous in its demands, distinctive in its character, imbued with UCL's world-leading research and delivered by academic staff at the top of their field; enhancing its position as one of the world‟s leading research institutions with a continued focus on single and multi-disciplinary research and a commitment to the application of new knowledge to addressing major societal challenges; becoming a global leader in enterprise and open innovation, supporting and promoting effective knowledge exchange, innovation, entrepreneurship and collaboration with commercial and social enterprises; attracting, rewarding and retaining outstanding staff from diverse backgrounds; securing long-term financial sustainability and sustaining the level of capital investment necessary to achieve its academic objectives; operating at the highest levels of efficiency, reducing overheads and eliminating waste; improving the quality, accessibility and sustainability of its estate and its use, upgrading its built environment and making optimal use of space. Financial results for the year ended 31 July 2012 UCL‟s summary consolidated Income and Expenditure results for the year ended 31 July 2012 are shown in the table overleaf. The results for the year show a continuation of improved financial performance with the university achieving a retained surplus of £26m or 3.0% of total income. This surplus was slightly lower than in 2011, with income up 8.4% and expenditure up 8.5%. The operating surplus (after depreciation but before tax) is a little higher than last year in absolute terms, £25.3m compared to £24.1m, but lower as a percentage of total income at 2.9% compared to 3.0% last year. This is below the target declared in our current financial strategy of 3%, being the level previously determined as necessary to support future investment and ensure our reserves provide adequate contingency against future events. The principal exceptional item is a gain of £4.8m being the value of net monetary assets transferred to UCL on its combination with the School of Pharmacy from January 2012. 3 UNIVERSITY COLLEGE LONDON ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2012 OPERATING AND FINANCIAL REVIEW Summary Consolidated Income and Expenditure 2012 2011 £m £m Operating income 839.6 775.8 Deferred grants released 29.1 25.7 Total income 868.7 801.5 Operating expenditure (803.2) (736.6) Depreciation (40.2) (40.8) Total expenditure (843.4) (777.4) Surplus after depreciation and before tax 25.3 24.1 Net share in joint ventures, associates, minority interests (1.6) (0.5) and tax Exceptional items 3.6 5.9 Surplus on continuing operations 27.3 29.5 Transfer to accumulated income within specific (0.9) (0.5) endowments Surplus retained within general reserves 26.4 29.0 Income from the Funding Council fell, as expected, by £5m in the year (2%) to £198m.