bc FINANCIAL STATEMENTS For the year ended 31 July 2005 Middlesex University Financial Statements for the year ended 31 July 2005 ________________________________________________________________________ CONTENTS Page Report from the Chair 1-2 Middlesex in Profile 3-4 Membership of the Board of Governors 5 Corporate Governance 6-8 Statement of the Responsibilities of the Board 9 Independent Auditor’s Report to the Board of Governors 10-11 Accounting Policies (Notes A-N) 12-13 Consolidated Income and Expenditure Account 14 Consolidated Statement of Historical Cost Surpluses and Deficits 14 Consolidated Statement of Total Recognised Gains and Losses 15 Balance Sheets 16 Consolidated Cash Flow Statement 17 Notes to the accounts (Notes 1 – 40) 1. Funding Council Grants 18 2. Tuition Fees and Education Contracts 18 3. Research Grants and Contracts 18 4. Other Operating Income 19 5. Endowment Income and Interest Receivable 19 6. Staff 19-20 7. Other Operating Expenses 21 8. Interest Payable 21 9. Analysis of Expenditure by Activity 22 10. Taxation 22 11. Deficit on Continuing Operations 22 12. Consolidated Intangible Assets 22 13. Tangible Fixed Assets 23 14. Investments of the University 24 15. Stocks and Works in Progress 24 16. Debtors 24 17. Cash at Bank and in Hand 25 18. Creditors: Amounts falling due within One Year 25 19. Creditors: Amounts falling due after more than One Year 25-26 20. Provisions for Liabilities and Charges 26 21. Deferred Capital Grants 27 22. Endowments 27 23. Capital Reserve 27 24. Income and Expenditure Account 28 25. Reconciliation of Consolidated Operating Deficit to Net Cash Inflow from Operating Activities 28 26. Returns on Investments and Servicing of Finance 28 27. Capital Expenditure 29 28. Financing 29 29. Analysis of Changes in Net Debt 29 30. Capital Commitments 29 31. Financial Commitments 29 32. Pension Schemes 30-33 33. Contingent Liabilities 33 34. Post Balance Sheet Events 33 35. Related Party Transactions 33 36. HEFCE – Access and Hardship Funds 33 37. TTA – Teacher Training Bursaries 34 38. TTA – Secondary Subject Shortage Scheme 34 39. TTA – Graduate Teacher Programme 34 40. CMU – Campaigning for Mainstream Universities 34 Middlesex University Report from the Chair A YEAR OF TRANSITION This year was one of new initiatives, change and consolidation. It will be remembered particularly as the year in which we opened our first non-UK campus and the year when the largest ever number of Middlesex students moved their base campus and the largest ever number of staff moved their place of work. The fifth year of our Campus Development Strategy was logistically and physically the most demanding. Within the financial year we closed our Tottenham Campus. Humanities students and staff moved to Trent Park; computing students and staff moved to Hendon. At the same time, work was being completed on the second phase of the Hendon redevelopment. The Sheppard Library opened in Autumn 2004; from Autumn 2005 Hendon students can enjoy a magnificent glazed quadrangle, offering new teaching and social space. Hendon has been completely transformed over a four year period. The only remaining work is to landscape and remove a number of temporary buildings. In Autumn 2004 we were forced to abandon our ambitious plan to substantially change our Trent Park campus. This plan envisaged a large expansion at Trent Park and a consolidation of all Education, Performing Arts and Art and Design programmes there over time (with the subsequent closure of Cat Hill). Following objections to the initial plans, the University reworked its proposals for the development of the site, with major input from the community and from a range of expert bodies and organisations. We applied again for planning permission from Enfield Council. A decision will be made in January 2006. During the year, the opportunity arose to improve our presence at New Southgate, where administrative activities are based. The University decided to move out of Building 4 and take over the whole of the adjacent Building 2. This move allowed the bringing together in one building all administrative functions not required to be on campuses and delivered an appropriate, high quality headquarters worthy of a global university. The University also took the opportunity to create its own International Foundation Centre at New Southgate. The first cohort began their studies in September. A key element of a simplified estates portfolio is the project to outsource our halls of residence accommodation and free ourselves of associated financial restriction. This project now nears completion. Our academic quality and reputation remained at its highest ever level. The year saw the Quality Assurance Agency’s review of our Collaborative Audit provision; the ‘broad outcome’ attainment means that Middlesex now holds the best possible outcomes in all categories of QAA audits. Everyone at Middlesex – or who chooses Middlesex – can be secure that every aspect of our teaching quality is the very best that it can be. Explicit in our international ambitions is growth in the number of Middlesex students who study either in their own countries on partner campuses or at new campuses outside the UK which bear the Middlesex name. In January 2005 the first cohort of students enrolled at a non-UK Middlesex University campus. Middlesex University Dubai is already the model and inspiration for other future campuses, resting as it does on a partnership model where Middlesex does not fund building costs. We expect to open the second non-UK campus in 2006. The year saw an improvement, over the previous year, in student recruitment. International recruitment was particularly buoyant, with significant increases in students from Pakistan and Africa. 1 2 Middlesex University Report from the Chair A YEAR OF TRANSITION Research continues to develop at Middlesex. In the past it has played a useful part in supporting our postgraduate academic credentials. A new level of commitment, coinciding with the appointment of our new Director of Research Professor Waqar Ahmad, has seen considerable improvement during 2004-05. A mock RAE has established where the increased funding will be invested; our programme of funding research student tutors is bearing fruit; a number of the University’s ‘research stars’ are beginning to gain themselves, and Middlesex, an international profile. The consolidation of our campuses continues to allow us cost-effectively to upgrade our IT and communication capability. This year saw the completion of a complete academic cycle using our MISIS student system. The system continues to provide the University with better student data than ever before. During the year a new Enquiry and Recruitment module gave the University a modern, effective, communication tool to ensure that prospective students are communicated with regularly and individually. Having invested, and seen the return on that investment, in fewer, better campuses with appropriate technology and other facilities, the year ended with the University’s Executive agreeing to seek significant cost savings to ensure two things: that the University is in the best possible financial situation before the September 2006 sector changes; and that the University will always have the ability to invest appropriately for the future. FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2005 I am pleased to present the University’s Financial Statements for the year ended 31 July 2005. Additional copies can be downloaded from the University’s website: www.mdx.ac.uk The University’s funding council grants fell by a further 9% this year following reductions in student recruitment in prior years. This decrease was offset by another strong year of overseas fees growth and increases in research and commercial activities but the net effect was only a 1% increase in income. During the year the University has begun to benefit from the cost efficiencies of a smaller estate and this, together, with controls on all areas of expenditure enabled us to restrict the increase in expenditure to under 4% despite inflationary pressures (notably a further 30% increase in local government pension scheme contribution rates). In this peak year of Estates change the University also incurred costs of £5.7m which, together with the above mismatch in income and expenditure growth, has led to the University recording a deficit on continuing operations after depreciation of £11.3m. The University has been able to fund this deficit through the disposal, at substantial profit, of its underutilised Halls at the Tottenham campus, a year ahead of that campus closure, and of its site in the Lee Valley which it decided not to develop. The University has, therefore, recorded a surplus for the first time in 5 years. The University invested a further £22m in its revitalised estate and IT facilities in the year, bringing the total investment to £60m in the last 3 years. This investment has been funded through asset disposals, grants and a re-structuring of the University’s debt. The University’s balance sheet is thus stronger than it has been for some time with net current assets of £9m, total funds of £59m and revenue reserves increasing to £23m, their highest ever level. Lorna Cocking Chair of the Board of Governors 28 November 2005 3 Middlesex University Middlesex in Profile A WORLD OF LEARNING Middlesex University is an international university based in London. We are the most popular UK University with international students – and we are committed to creating opportunities for everyone with the potential to benefit from higher education. Modern Study Opportunities Some 22,000 students from a wide variety of backgrounds study undergraduate programmes, postgraduate programmes, research degrees, professional short courses and work based learning – while innovations in e-learning and our Global Campus partnerships are taking Middlesex learning around the world. As well as offering modern undergraduate learning we are one of the UK's largest providers of postgraduate study.