ReportReport andand FinancialFinancial StatementsStatements 2017/2018 2017/2018 2 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 3
Contents
Members of the Board of Governors 04
Advisors to the University 04
Foreword by the Vice-Chancellor and Chief Executive 06
Foreword by the Chair of the Board of Governors 08
Highlights 2017/18 10
Public Benefit Statement 12
Ambitions and achievements 2017/18 16
Strategic Report 28
Corporate Governance Statement 34
Annual Remuneration Statement 38
Statement of the Board of Governors’ responsibilities in respect of the 40 Annual Report and the Financial Statements
Independent Auditor’s Report to the Board of Governors 42 and the University of Sunderland
Consolidated and University Statement of Comprehensive Income and Expenditure 44
Consolidated and University Balance Sheet 46
Consolidated and University Statement of Changes in Reserves 47
Consolidated Statement of Cash Flows 48
Notes to the Financial Statements 49 4 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 5
Members of the Board of Governors The members of the Board of Governors who held office during the year and subsequent to the year-end are shown below.
Independent members Teaching staff nominees J Mowbray OBE DL (Chair) M Winter (Term ended September 2017) M Fay CBE DL (Deputy Chair) D Stevens (Term commenced October 2017) S Forster (Deputy Chair) D Curtis Student nominees P Feechan H Chirnside (Term commenced July 2017, F Hakim term ended October 2017) I Kershaw D Jam (Term commenced November 2017, D Land (Term commenced October 2017) term ended May 2018) P McGowan (Term ended July 2018) R Sisson (Term commenced November 2017, U Patel MBE DL term ended July 2018) A Thain OBE D Tretjak (Term commenced July 2018) S Walton (Term commenced October 2017) J Goodfellow (Term commenced October 2018)
Co-opted members Vice-Chancellor and Chief Executive E Thinnesen (Term ended March 2018) S A Atkinson (Term ended 31 July 2018) Cllr C Gofton (Term ended May 2018) Sir D Bell KCB (Term commenced 24 September 2018) Cllr L Williams (Term commenced August 2018) S Percival Clerk to the Board of Governors S Knight D Fraser
Advisors to the University
Bankers: Barclays Bank PLC 53 Fawcett Street Sunderland SR1 1SD
Independent Auditor: KPMG LLP Quayside House 110 Quayside Newcastle Upon Tyne NE1 3DX
Legal Advisors: Watson Burton LLP 1 St James’ Gate Newcastle Upon Tyne NE99 1YQ 6 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 7
In relation to the year under review, Shirley Atkinson was Vice-Chancellor and Chief Executive until 31 July 2018, when she handed over the leadership of the institution to Sir David Bell KCB, who joined the University on 24 September 2018. During her ten years at the University of Sunderland, Shirley made a huge contribution. In her time as Vice- Chancellor and Chief Executive the institution grew in confidence, stature and reputation. She leaves behind an outstanding legacy.
Foreword by the Vice-Chancellor and Chief Executive
I am delighted to have joined the University of Sunderland. Our new School of Medicine is on track to open in In doing so, I have become part of a highly regarded, September 2019, under the highly able leadership of ambitious and student-centric institution. It is one that is Professor Scott Wilkes. Our first nursing and paramedic proud of its rich heritage and the transformative impact it practice students will graduate over the next year and has on students, the city and wider region. we are making significant investment in engineering and I have been very fortunate indeed to follow Shirley technology to support the needs of the local economy. Atkinson as Vice-Chancellor and Chief Executive. I pay The University’s work in culture is recognised nationally, tribute to Shirley for all that she achieved during her time not least because it has a positive impact on urban at the University. It is an honour and privilege to follow in regeneration and social change, at the same time as her footsteps. enhancing all of our lives. At the University of Sunderland, we place our students Higher education is rapidly-changing and other external at the heart of everything we do, providing life-changing factors, such as Brexit, have generated some uncertainty. opportunities for our diverse and vibrant learning However, I firmly believe that our destiny is in our own community. Our widening participation record is testimony hands. Our approach to recruitment, our robust financial to the work we do in raising aspirations and promoting modelling and our ability to make change as required, social inclusion within the region. put us in a good position as we reflect on our institutional Our research-informed curriculum and exceptional achievements and financial position over the past twelve student support enable learners to develop the skills and months. flexibility required by employers. At the same, we develop Our Strategic Plan 2016 - 2021 sets out a compelling attitudes and attributes that contribute towards social vision and stretching ambitions for the University. We have mobility and citizenship, not just here in the UK at our made progress but our continuing focus has to be on Sunderland and London campuses, but worldwide. the implementation of our plans, both current and future. We are global in our outlook. As well as a large There is much to do but it is a great privilege to have the international student community in Sunderland, almost opportunity to lead this wonderful institution at this crucial 7,000 students study for Sunderland degrees with our point in its history. partner institutions in 14 countries overseas. In 2017, we opened a campus in Hong Kong, which also serves as our South-East Asia hub. We have offices in China, Malaysia, India, Vietnam, and Nigeria – meaning the University of Sunderland is at the forefront of international student recruitment and transnational education expansion. This global strategy offers tremendous Sir David Bell KCB opportunities for our locally recruited students to broaden Vice-Chancellor and Chief Executive their horizons by studying part of their programme overseas. Our relationships with employers are collaborative and fruitful. Our centre for enterprise and innovation - Hope Street Xchange - supports commercial and community entrepreneurship and offers an inspirational space for business-to-business engagement and innovative fledgling enterprises. We engage with employers in the development of higher and degree apprenticeships, and our research is world-leading, relevant and impactful. 8 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 9
Foreword by the Chair of the Board of Governors
My first full year as Chair of the Board of Governors has been highly eventful. From the rollercoaster of emotion in being involved with Sunderland’s bid to be UK City of Culture, to the excitement of securing our School of Medicine, there has certainly been plenty to keep the University in the headlines. It was with deep regret that we bid farewell to Shirley Atkinson when she stepped down from her role as Vice-Chancellor and Chief Executive. Under her tenure, the University moved into a significant new phase of development as it established a compelling vision for the future. We could not have been more delighted to appoint Sir David Bell to become our new Vice-Chancellor and Chief Executive. David joins us with an incredible record of success and experience in higher education and beyond. But even more importantly, he shares our values. We are a successful educational institution, in these highly competitive times, and continue to play a crucial role in supporting social mobility. We want to give all with talent, regardless of background or status, the opportunity to excel and reach their full potential. We also have to operate in a business-like manner and we do. I would like to commend all of the staff at the University and thank them for all that they do to maintain and enhance our position. I would also thank my fellow Governors for the support they have given during the year. The University of Sunderland is at the heart of the city’s transformation. From investment in sectors such as engineering, advanced manufacturing and computer science, through developments in health sciences, education and business, to the role we play in enhancing culture and heritage, we are central to Sunderland’s success. However, our reach is now much greater with our international partnerships and our campuses in London and Hong Kong. This University is truly global but rooted in its home city and giving students transformational opportunities.
John Mowbray OBE, DL Chair of the Board of Governors 10 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 11
Highlights 2017/2018 SEPTEMBER JANUARY JUNE We were delighted to be shortlisted for two Times Higher We announced our membership of the Institute of Coding The University of Sunderland was praised for its role in Education Awards - Most Improved Student Experience (IoC) consortium of universities and employers, closely helping the city to become one of the fastest-growing and Technological Innovation of the Year. Focused linked to our mission to develop the next generation of digital technology sectors in the UK. Figures from the on the Living Lab, our submission detailed the major digital talent. Working as part of the IoC partnership, the Tech Nation Report showed Sunderland to be one of the impact that this unique space has had on the teaching University will bring together the worlds of academia and top places for job creation within the industry. The role of health professionals including nurses, paramedics and industry with a remit to spread digital skills across the UK. of the University was highlighted as key to the success pharmacists. of the sector, with Tech Nation singling out praise for the FEBRUARY University of Sunderland for continuously investing in the NOVEMBER city and helping drive the sector forward. We announced our links to Arts and Humanities Research Council (AHRC) funding that will benefit Arts JULY and Humanities PhD students based in the north east and Northern Ireland. The Faculty of Arts and Creative Industries cited Sunderland’s early innovation in art and design practice-led PhDs in the 1990s in its bid, which Recognition Scheme award. This prestigious badge of has resulted in a network of expert supervisors and honour recognises and rewards UK employers who have doctoral graduates now working at the highest level from gone above and beyond the call of duty in their efforts the USA to India. to provide support to the wider principles of the Armed Forces Covenant. MARCH Our nursing students were awarded a prestigious prize at the Student Nursing Times Awards, the only national awards to celebrate the very best in student nurses and nurse education. The School of Nursing saw off opposition from across the UK to be named Post– registration Education Provider of the Year. We were also In July, following a week of summer academic awards shortlisted for Pre-registration Provider of the year, and As well as celebrating the success of hundreds of ceremonies, the Tall Ships Races came to the River Wear. had two nominations for Partnership of the Year and graduates, we awarded Professor Tom Shakespeare with To support the event our Sir Tom Cowie Campus at St Educator of the Year. an Honorary Doctorate of Science and Lieutenant Colonel Peter’s became a welcoming space complete with stages, Mordaunt Cohen with an Honorary Fellowship at our marquees, street theatre, craft market, activity tent for winter academic awards. Also honoured was Charlotte MAY school visits and the University’s own marquee. It was Knill, who was named Alumni Achiever of the Year, a We were for shortlisted for four national HEIST (Higher a great opportunity for us to show off our campus and little over a year after graduating with a BSc Computer Education Information Services Trust) awards, which engage with thousands of visitors over a packed week. Forensics degree. celebrate excellence and innovation in education Professor Lawrence Bellamy, Dean of the Faculty of The Rt Hon Sir Vince Cable, Leader of the Liberal marketing. The University went on to win in three Business, Law and Tourism commented on the city’s Democrats, toured our City Campus facilities including categories receiving Gold for Best Website, Gold for Best new Northern Spire bridge, which opened in 2018, and Hope Street Xchange and the Living Lab. Mr Cable met Postgraduate Student Recruitment Initiative and Silver for the significant role it will play in the city’s future economic small business holders and visited the FabLab at Hope HEIST Awards’ Marketing Team of the Year. We were successful in our bid to establish a new School prosperity. Street Xchange and in the Living Lab discovered how the of Medicine. We are one of only five new medical schools, advanced simulation equipment, interactive spaces and which are being established to address the regional realistic settings are impacting on teaching and learning imbalance of medical education places across England for students of nursing, paramedics, pharmacy and and to widen access, ensuring the profession reflects psychology. the communities it serves. With our record of excellence in medical education spanning almost 100 years, we are now well-placed to address the chronic shortage of doctors in the north east.
APRIL We signed the Armed Forces Covenant. As part of this, we pledged to establish employment opportunities for those leaving the armed services, recognising the unique skills many possess, and directing them to suitable education programmes and courses. This was followed later in the year when our support of the Armed Forces was recognised with a silver Employer 12 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 13
Public Benefit Statement
The University of Sunderland is a Higher Education In its Strategic Plan the University states: Corporation established by Order of the Secretary of “We will develop our research, knowledge, skills and State under Section 121 of the Educational Reform Act, expertise in order to continue to make significant social, 1988. This University, and all other Higher Education economic and cultural contributions to our environment. Corporations created by the 1988 Act, were granted the status of ‘Exempt Charities’ (as now defined in the “We will engage with key partners and support areas Charities Act 2011, Section 22). Under the 1988 Act, such as health, wellbeing and enterprise. We will promote the statutory purpose of the University is “to provide culture in all its forms, sustainability and social cohesion. higher education and further education, and to carry out We will build partner relations with key stakeholders and research, and to publish the results of the research or any provide leadership in support of regional objectives. other material arising out of or connected with it in such “We will continue to encourage our staff and students a manner as the corporation shall think fit”. This therefore to engage with and support our communities. We will represents the charitable objects of the University. promote volunteering and a range of supportive initiatives. The Trustees of the exempt charity, the University of “We will be recognised as an organisation that excels in Sunderland, are the Members of its Board of Governors, innovation and entrepreneurship, and which is significantly as listed on page 4 of the Financial Statements, which enhancing the culture of enterprise across the region. We includes the Vice-Chancellor and Chief Executive, and will develop this agenda through our centre for enterprise staff and student members. They have oversight of and innovation, which is the gateway to expertise across the management of the University and ensure that in the University. Our academic programmes will include achieving its charitable objects the University establishes enterprise and innovation. strategic aims and objectives and performs such aims and objectives in ways which are consistent with the “We will collaborate with key partners in the health Charity Commission’s guidance on the general principles sector as we focus our expertise and support on the of public benefit. Regard has been made to the Charity drive towards providing a healthier city. Innovative Commission’s guidance on public benefit for this purpose. initiatives such as the University’s Living Lab will provide These primary principles state that there must be an a significant contribution in this area, while making identifiable benefit and that the benefit must be to the Sunderland the leading University in the UK in integrated public, or section of the public. working practices in health. The charitable beneficiaries clearly need to include the “In culture, we will continue to lead on existing University’s undergraduate and postgraduate students developments, such as Sunderland Cultural Partnership, but these are not exclusive classes (as the University the Cultural Spring, while continuing to enhance iconic believes sections of the wider public will also benefit from attractions like the University owned National Glass its activities). Research undertaken at the University also Centre.” benefits the public. The University further demonstrated its commitment, The Strategic Plan for the period 2016 – 2021 was playing a lead role in the bid for Sunderland to be named approved by the Board of Governors in early 2016 and UK City of Culture 2021 and hosting part of the Tall Ships launched in July 2016. The Plan acknowledges the Races event in July 2018 on its Sir Tom Cowie Campus at University’s moral and financial responsibility to provide an St Peters. exceptional personalised experience to students, noting Included in the following section are a number that the Strategic Plan embodies real opportunities to of examples, which demonstrate the University’s access work-integrated and relevant learning, and strong commitment to public benefit, as set out in its six engagement with employers; it acts as an agent of social Strategic Ambitions. Any private benefit is incidental in change and opportunity for its students. The introduction comparison. to the Strategic Plan also sets out that the University will continue to have a significant impact on its communities. One of the six Strategic Ambitions is to be “A leading anchor institution in the north east making significant social, economic and cultural contributions to our locality, displaying innovation, entrepreneurship, financial stability, efficiency and sustainability in our approach and delivery.” 14 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 15
Vision and Strategic Ambitions
The Strategic Plan 2016 - 2021 sets out a clear statement Our Vision of intent that builds on the University of Sunderland’s To be bold and inspirational in providing education, research and creative strengths - and is ambitious and relevant for a 21st century practice, which offers transformative experiences to students, staff, global university. communities and business partners in the UK and across the world. 16 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 17
Ambitions and achievements 2017/18 Life Changers: A world leading contemporary University that is distinctive in Case study – A life-changing story supporting learning at all stages in life Keiran Cull, 20, is studying for a BSc Physiological “At the start of my degree I was working just as hard in The University of Sunderland is proud to be one of the part of the North East Collaborative Outreach Programme Sciences at the University of Sunderland. Originally from my job to support myself, but the financial support I now highest performing institutions in terms of attracting (NECOP) consortia and the North East Raising Aspirations Portsmouth, Keiran has pursued her studies, with the receive has allowed me to reduce my hours and really students from under-represented groups. Almost 90% Partnership. We continue to deliver a comprehensive eventual aim of becoming a neuroscientist – despite a focus more on my studies, and hopefully get my grades of our student community can be classed as widening range of activities and interventions to raise aspirations difficult childhood and a life spent independent from her up a little higher. family. participation students. Our University is recognised for its in students from hard to reach groups and will continue “I want to be a neuroscientist. When I was in college I long-standing public commitment to social mobility, which to target, in particular, young white males from low- “I’ve been estranged from my family for three years,” she supported myself by working in a dementia care home, is explicit in our Strategic Plan. We are regarded as a participation neighbourhoods. Having recently signed says. “My dad died when I was fourteen, and my mum’s and I became fascinated with the human brain. I also pioneer in terms of supporting care leavers and students the Armed Forces Covenant, the University will support mental health declined and she became an alcoholic. She worked as a funeral director when I was seventeen – and estranged from their families and have received many the aspirations of students from military families, and we decided she didn’t want any relationship with me or the I became interested in the human body. I want to learn accolades for our work in widening access. will continue our exemplary work with care leavers and rest of the family. more about dementia, and try to help people. students estranged from their families. As detailed in our Access Agreement, the University of “I chose to come to university because I always thought I “Having the financial support is very important, but the Sunderland performs better than other similar institutions, Meanwhile, our approach to attracting applications for the could do more. I was always told I couldn’t, but I want to thing that really matters to me is having someone there and well above the average for all institutions, in attracting new Sunderland School of Medicine, opening September prove I am intelligent, though people have told me all my offering me support. Having someone to talk to is so both young and mature students from neighbourhoods 2019, is potentially a ‘game-changer’, enabling bright, life that I’m not. I’m here, and I’m still going, and after my important to me. Knowing that there’s someone there where low numbers of people go on to higher education. high-achieving students from non-traditional backgrounds undergraduate degree I’m going to study for a Masters. when I feel down, or I’m doubting myself, or I’m struggling This is due to the University’s experience over many years to fulfil their potential and train to be a doctor. with work, it means everything to me.” in working with schools, colleges and community groups “I believe I can do it, and I’m going to prove that I can. We are building social capital and confidence in our to raise aspirations and attainment. students through exemplary tailored support for each “Throughout college I worked 36 hours a week. I lived in a The University has an exceptional record in providing individual. Access to career-ready programmes, relevant shared house when I was seventeen. There was nothing outreach activity to raise attainment levels in schools and work experience, established links with business and the to support people like me. I had £6 housing benefit and colleges with a comprehensive and innovative portfolio of promotion of international opportunities through student my rent was £400 a month, so I had to work. access activities. The University works collaboratively as exchange, all contribute to our life-changing experiences. “It was a very difficult decision to come away from home to go to university. Though I don’t have parental support, I’m very close to my sister, and it was hard to leave her behind. We drove up to Sunderland together, an eight hour car drive, with everything I owned in the car.” Every estranged student has unique issues and challenges, so the Estranged Student Support Team works closely with each one to create a personalised support package, ensuring that they make informed study choices, settle quickly into university life, enjoy their student experience and achieve their potential. Several new initiatives were introduced in 2017. These included an extended accommodation offer, guaranteeing estranged students accommodation for 52 weeks a year, crucially including the holiday period. The University introduced a new ‘We Care’ scholarship of £1,500 for each year of study, and offers support with student finance, employment and mental health and wellbeing. Keiran struggled financially in her first year at university, unaware that help was available, but a phone call to the team changed everything. “I met with the team and they just said, ‘We can help you with everything’ and it wasn’t until they said that that I actually realised I really needed their help. “It has taken a lot of worry off my mind. I thought I would have to move out in July, and they said they would help me with that. 18 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 19
Knowledge Creators: An institution that is acknowledged globally as an exemplar in Case study – Wired for success the creation of knowledge, skills and learning that is work relevant in the 21st century Sunderland is part of a select group of UK higher-level She added: “One of the great things about the staff at At the University of Sunderland, we do things differently, welcome advice and an employer’s perspective to the teaching institutions, working directly with businesses Sunderland is their willingness to listen to what we are ensuring we make good on our promise to equip student experience. Placement and work experience on the Government-supported Higher Degree interested in, what’s useful for us and what will really help graduates with the skills, knowledge and behaviours they opportunities are widely available via our Sunderland Apprenticeships. These programmes are designed by develop apprentices in the workplace. It’s an amazing need to be relevant to employers and the workplace – Futures programme and masterclasses delivered by universities and professional bodies to deliver high-end way to develop entry level opportunities for people who across a range of sectors. employers offer insight into the skills they seek when skills and offer a tailored alternative to a traditional degree might never have had that chance. These are young appointing graduates. course. Degree apprentices spend part of their time at people who didn’t have a degree when they came to As a result, 93.4% of our graduates are in work or further university and part with their employer. us, and now they are graduating and doing really well, study within six months following graduation, according to We are supporting students and graduate entrepreneurs they are excelling in work and some of them have been In summer 2018, a dozen students graduated at data collected for the Destinations of Leavers from Higher through the ERDF-funded Enterprise Place in Hope Street promoted already.” Education survey (2018), which is testimony to the work Xchange, our specially created centre for enterprise the Stadium of Light, during our Academic Awards we do in preparing students for employment after they and innovation and the front door to the University for ceremonies. The graduates were celebrating after With a shortage of coding and software development graduate. businesses seeking graduates, academic support and completing the three-year Digital and Technology skills widely acknowledged as a significant problem facing access to facilities. Solutions Professional Degree Apprenticeship, the digital economy, the University believes investing in In the Teaching Excellence Framework (TEF), the specialising in software engineering while also working these skills is crucial to the future economic success of University received a coveted ‘Silver’ award, ranking it Our expertise in collaborating with businesses to develop full-time at Accenture - a world leading management the region and the country. alongside other high-performing Universities such as and deliver degree apprenticeships to meet their needs consulting and technology services company. Warwick, Sheffield, Manchester, Bristol and Reading. means our offer continues to expand. We recently Professor Alastair Irons, Academic Dean in the Faculty The assessors highlighted the University’s strengths in added a Master of Business Administration, and have Test Engineer Lucy Sarginson, 21, from Whitley Bay of Technology, explained: “We developed this new study embedding professional practice in the curriculum and just announced a trailblazing, employer-led approach said: “I have been lucky enough to be a part of the opportunity as a result of our work with businesses, to the collaborative work we do with employers to ensure to Nursing Degree Apprenticeships – by applying fresh- Degree Apprenticeship Scheme, which has opened so support skills growth - we continually align our courses to our programmes are relevant. thinking and collaborating with Health Trusts, we have many doors in my career. Balancing a full-time job and the current and future needs of employers. created a continuous professional development degree completing a degree is challenging, however, the sense of Students are exposed to professional engagement “Our Digital and Technology Solutions degree provides a apprenticeship model that could save the NHS £millions achievement I have felt upon completion is amazing.” throughout their learning. Professional mentors give route for employed apprentices to develop their skills and and meet the skills needs of the regional health sector. Application Development Associate, Jimmy Brown, 33, knowledge in computing and IT to Honours degree level, from Sunderland, said: “The Degree Apprenticeship has at the same time as contributing to the workload and been a huge learning curve, but gaining experience in operation of their employer. a real-world environment while studying, has certainly “Higher and Degree Apprenticeships enable both large helped. Don’t get me wrong, it’s not easy. You have to and small organisations to transform their performance adapt quickly to organise your time and your workload.” by enhancing the skills of existing employees as well as Sunderland has been praised and highlighted as a attracting fresh talent, using the apprenticeship levy and trailblazing institution for its delivery of the Degree government funding.” Apprenticeships scheme, which has developed Sunderland is one of only 18 universities to receive a bespoke modules for the programme in partnership share of up to £250k in a £4.5m Government fund, to with Accenture, rather than incorporating students develop the Degree Apprenticeship programmes. into courses already running. So successful has the programme been that Accenture has continued its partnership with Sunderland, with 80 of their apprentices now studying with the University. Other companies to partner with the programme include Sage, Newcastle Building Society, Tombola and regional NHS Foundation Trusts. Karen Marshall, Apprentice Education and Engagement Lead at Accenture in Newcastle, said: “The University and Accenture developed the degree together from the start to ensure it could be delivered within three years, which was very important to the business. It’s been a great learning curve and we’re delighted at how well it has gone. In those three years the students have shown how focused they really are during their day release from work. Working full-time, I think they really understand the value of that degree in the workplace and understand that it’s important to try their best.” 20 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 21
Tomorrow Makers: A University whose graduates are adaptive creative thinkers with Case study – We are the tomorrow makers the personal attributes to become the leaders and tomorrow makers of our societies and economies Two young people with a passion for education were “I’ve always wanted to become an engineer because I selected to continue the legacy of a champion of north have a keen interest in learning how things work, and east enterprise and learning. trying to improve and develop things.” At the University of Sunderland we are training the change. We encourage and strengthen our collaborations professionals that our communities rely on, pharmacists, with business, industry, professions, government, Mechanical Engineering student Robin Watson, 24, and Robin completed a placement year working at Northern nurses, paramedics and teachers, as well as the educational partners, the wider public sector, the Primary Education student Alex Bowey, 23, were both Aerospace in Consett as a Manufacturing Engineer and engineers, designers, managers and computer scientists. community and other key stakeholders. awarded the Sir Tom Cowie Memorial Scholarship Award, graduated in summer 2018. receiving £10,000 each to support them in their final year In 2017/18 we further strengthened our teaching The University’s Strategic Plan highlights the institutional He added: “I would really like to work on projects that of study. excellence through the appointment of two new areas of academic strength – Technology (including would improve and make a difference to people’s lives.” Academic Deans. Professor Lawrence Bellamy joined Advanced Manufacturing, Engineering and Computer The award was set up in memory of the Wearside-born Alex Bowey was able to leave her part-time job and as Dean of the Faculty of Business, Law and Tourism Science); Health Sciences and Wellbeing (including entrepreneur who died in 2012. Sir Tom was a long-term volunteer one day a week in a local primary school, and Dr Lynne McKenna became Dean of the Faculty Nursing, Pharmacy and Paramedic Practice); Education supporter of the University and believed passionately in thanks to the Scholarship. “I was helping out at an after- of Education and Society. Both bring rich experience and Society; Business, Law and Tourism; and Arts and our principle of affording those with talent, regardless of school club too,” added Alex, “The money gave me the and a professional approach to the roles and this Creative Industries. background, the opportunity to enter higher education. freedom to gain some invaluable classroom experience.” professionalism cascades through the academic staff to Academic teams are working together to ensure that As part of his legacy, the Sir Tom Cowie Memorial students. content in these areas is rich and compelling and Scholarship Awards were established to support students Alex was inspired to take up teaching by her mother Our University is a leading anchor institution in the north taught in a variety of ways. Students are supported and to achieve their full potential. who graduated from the University of Sunderland with a east, making significant social, economic and cultural challenged at every stage of their time at the University. degree in Early Childhood Studies in 2006, and is now a The Scholarship, now in its fifth year, is awarded to a male contributions to our locality, displaying innovation, This ensures that our graduates are creative, adaptive teacher. and female student from the Sunderland area who have entrepreneurship and sustainability in our approach and resilient learners who value their investment in higher each demonstrated an excellent academic record at the Alex continued: “Teaching is something I’ve always and delivery. We are helping to shape the city and are a education. end of their penultimate year of study and are on track wanted to do. It’s something that I’ve aspired to from catalyst for, and facilitator of, positive economic and social to secure a First Class Honours or Upper-Second Class seeing the job satisfaction and pleasure my mam gets Honours Degree. from such a rewarding career.” Award-winning student, Robin Watson, said: “The Alex also graduated in summer 2018 and is now teaching scholarship helped me focus all of my time on my course in a school in Sunderland. meaning I will not have to work part-time to fund myself. 22 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 23
Boundary Breakers: An institution that fosters a sense of pride amongst its staff, Case study – Research into early whaling logs reveals secrets of the ice students and alumni as it makes a real difference to the world in which we live through its research, innovation and practice Matthew Ayre’s research at the University of Sunderland Baffin Island in 1902, stands to offer significant historical revealed that early 19th century ice fronts were more insight into life in an industry that dominated Canadian advanced around the Arctic than they are today. As a waters for centuries. This is believed to be the first of Research and innovative practice, with real-world impact, result of his work on the ARCdoc research project, led dozens of British whaling shipwrecks to be found in these has long been integral to the University’s vision. It is that by Sunderland, Matthew was offered a Post-Doctoral waters. vision which inspires our academic community, delivers Fellowship at the Arctic Institute of North America and is positive outcomes for our students and is influential in Matthew and Michael made their discovery in just now based there at the University of Calgary in Canada. developing economies, societies and cultures regionally eight hours using drone footage and SONAR imaging, and internationally. In 2017 we announced a new ARCdoc analysed historical logbooks recorded by deployed on a remote-operated underwater vehicle in a Research and Innovation Strategy with the launch of six explorers, whalers and merchants during epic expeditions targeted five-square-kilometer area. They identified the research institutes to lead and develop faculty research, between 1750 and 1850. The project was created to search area through months of historical research. working closely with business and public sector partners. increase our scientific understanding of climate change “We were thrilled by this discovery and it’s going to tell in this environmentally important region. The logbooks Our ever-growing alumni family stretches around the us a lot about what life was like aboard a whaler,” said include famous voyages such as Parry’s polar expedition world to form a web of connections, support and Michael, continuing: “This discovery was the culmination in HMS Hecla. opportunity for our students and graduates. Whether from of months of research and preparation; we can’t wait to our campuses in Sunderland, London and now Hong Some of the most significant data to emerge from continue working with all our partners to further explore Kong, or from our transnational partners across the globe. the project has come from painstaking analysis of 60 this site.” logbooks belonging to whaling vessels, which contain Our strong commitment to innovative practice is evident Matthew and Michael, received support for the expedition descriptions of sea ice advancing and retreating every in our teaching, facilities and learning options. Much of from the University of Calgary and the Royal Canadian summer, all of which were recorded by whalers who our research is impacting on our communities right now Geographical Society (RCGS). John Geiger, Chief ventured farther north than anyone else. and we have embraced our position, not only as an Executive Officer of the RCGS added: “This is a previously anchor institution for the north east, but also as a global For his PhD, Matthew mapped what the ice was doing unknown archaeological site, and the first High Arctic institution with deep-held ambitions for our students, during some of that 100-year period around the David whaling ship ever discovered. It is a remarkable story graduates and university as a whole. Straits area, and at a time pre-dating the emergence of of historical sleuthing supported by fieldwork and adds significant volumes of anthropogenic greenhouse gases in considerably to the historical record by shedding new the atmosphere. A comparison with satellite data from the light on that treacherous, once great industry.” last 30 years of this area shows the summer ice was then far more advanced than it is today. Now considered a leading expert on historical log book analysis, Matthew is continuing his research with historical logbooks as part of the Northern Seas project at the Arctic Institute. To understand how the data relates to today’s ice cover decline, Matthew had to translate the whaler’s archaic terminology into the first ever sea ice dictionary in standard 21st century observational vocabulary. To do this he has traced every sea ice definition in UK history from satellite data of the last three decades, to the accounts of renowned Arctic explorer, scientist and Whitby whaler William Scoresby Jnr (1789-1857). Scoresby wrote an account of the Arctic regions and also deciphered some of the log book’s terminology. Matthew was also able to validate his data and the accuracy of his dictionary on board the Coast Guard Cutter Healy, a research vessel and the US’s only operating polar ice breaker, where he spent five weeks recording what was happening to the ice. More recently, Matthew, alongside underwater archaeologist Michael Moloney, located the wreckage of a Scottish whaling ship in the Canadian High Arctic using historical documents and newspaper clippings connected to the 19th Century Arctic whaling trade. The Nova Zembla, which hit a reef off the east coast of 24 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 25
Learning Engagers: A University where students want to study due to the quality of Case study – London student exchange teaching, the relevance and accessibility of our programmes and the reputation we enjoy for partnering with students and personalising their experience Students and staff from the University’s Sunderland campus and the University of Sunderland in London teamed-up for a second summer in 2018, for the Student Our excellent teaching is informed by research and Overall student satisfaction at the University of Mobility Project. engagement with employers, ensuring our graduates Sunderland is 84% according to National Student Survey are equipped with the skills required to succeed in their (NSS) results. Meanwhile, 88% of our students feel their From the Stock Exchange to the London Eye, hundreds chosen career or path to further study. A number of experience has been valuable, which is 10% higher than of our students enjoyed a first-hand taste of life in the ‘Big our academics have been awarded National Teaching the average for England. Smoke’. Young entrepreneurs found themselves suddenly Fellowships in acknowledgment of their outstanding pitching ideas to big business, while budding artists went We saw record levels of participation in the NSS for impact on learning and teaching. Meanwhile we are behind the scenes of the capital’s theatres and museums. 2017/18, with four out of every five students completing supporting our academics in their continuous professional the survey and giving feedback on their satisfaction with The Student Mobility Project is designed to connect staff development, through the creation of our Centre for the the quality of their course, teaching excellence, support and students from Sunderland and London. It offers Enhancement of Learning and Teaching. they receive and their overall experience. students unique, life-changing opportunities to gain In 2017/18 we launched our Student Success Strategy. hands-on experience in the capital that will enhance their Students ranked many of the University of Sunderland’s Endorsed by our Board of Governors, the Strategy sets employability. subjects highly. Student satisfaction was 100% for out integrated initiatives to ensure the best possible programmes including BA (Hons) Education Studies; The project saw over 200 students and staff from success and progression outcomes for graduates. The BSc (Hons) Computer Science with Sandwich Year; BSc Sunderland spending two weeks in London during 2017 – strategy has specific objectives to improve student (Hons) International Tourism and Hospitality Management; with a further 500 taking part in 2018. retention and completion rates, the proportion of BSc (Hons) Psychology with Counselling; BSc (Hons) students achieving good honours, the levels of student Faculty of Business, Law and Tourism students enjoyed Social Sciences and BSc (Hons) Sports Coaching. engagement – which impacts on confidence – and further a range of high-level company visits, giving them real improve employability outcomes. A set of challenging key Additionally over 90% of students were satisfied with insight into the business world. This included hands-on performance indicators underpin the ambitions outlined in many additional programmes including: BSc (Hons) experience of pitching business ideas at the London the strategy. Psychology; BA (Hons) Fine Art; BA (Hons) Business Stock Exchange. and Financial Management; BEng (Hons) Mechanical Work has continued over the past year to support Tourism students saw first-hand many of the sites and Engineering; Master Pharmacy; BA (Hons) Primary student engagement, ensuring an individual’s journey at attractions that they have studied and the London Travel Education; BA (Hons) Photography Video and Digital Sunderland is personalised from first contact through to and Tourism Society gave them an ‘insider’ guide to the Imaging; BSc (Hons) Sociology and BA (Hons) Childhood graduation and a life-long connection. Successes this capital. Studies. year include higher levels of applicant conversion through Students from the Faculty of Arts and Creative Industries highly personalised communications and increased levels We continue to invest in new digital solutions to improve got the chance to use the city as the backdrop for of engagement with our graduate community. contact and engagement with our students to support sketching tours, gallery visits and behind-the-scenes trips satisfaction and retention. In Sciences, our General Pharmaceutical Council to theatres and design agencies - unique experiences that (GPhC) figures showed that students from our School of will make their CVs stand out to future employers. Pharmacy again received among the highest pass rates Ruth Wilson, Head of Services for Students and of any UK university in this summer’s pre-registration Marketing, who led the project in London, said: “It was assessment. a real thrill for me to host so many colleagues from Sunderland here in London. “Being from the north east and now based in Canary Wharf, it’s always a pleasure to be able to showcase the London offer to colleagues and students from Sunderland.” Professor Lawrence Bellamy, Academic Dean, Faculty of Business, Law and Tourism, said: “The University of Sunderland has a unique opportunity, through our satellite campus locations in London and Hong Kong and multiple international partnerships to give students a truly global experience. “The mobility programme has proven itself as an initiative which challenges students with exciting activities in fantastic locations. Taking students into a new zone really builds their confidence in dealing with new environments and inspires them to perform highly in their studies and in preparation for their careers ahead. We believe that these things can be life-changing.” 26 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 27
Future Shapers: A leading anchor institution in the north east making significant Case study – Sustainable advanced manufacturing social, economic and cultural contributions to our locality, displaying innovation, entrepreneurship, financial stability, efficiency and sustainability in our approach and The University secured £5.1m to deliver a Sustainable As well as providing access to platforms for testing, Advanced Manufacturing project, including £2.6m from developing and validating new technologies, the project delivery the European Regional Development Fund. The project is will have a significant emphasis on sustainability and set to create jobs and unlock growth in the region. digital manufacturing. In addition to providing access to The University’s reach and impact extends to meaningful Universities are uniquely placed to foster and lead such While the scheme is still at planning stage, it should the University’s facilities and expertise, the project should collaborations and partnerships across public and collaborations to ensure mutual gain. Businesses need enable the region’s manufacturing base of small and enable access to its wide range of academic, research private sectors, in areas from health sciences to sport, access to a skilled workforce, research expertise, facilities medium-sized enterprises (SMEs) to be more productive and technical networks. entrepreneurialism to manufacturing, and community and advice, all of which our University can provide. and sustainable by finding solutions to their research, Former Vice-Chancellor, Shirley Atkinson, commented: cohesion to culture. Meanwhile the north east needs graduate-level jobs to innovation and development challenges. In addition, it “Through the Sustainable Advanced Manufacturing retain talent within our region. The former Chair of Arts Council England, Sir Peter should help them to develop their products, processes project, our University’s highly experienced engineering Bazalgette, described our University as the “poster child Generating £432m GVA – our contribution to the and technology. team will support SMEs with research and help to for driving economic regeneration through creativity”. economy – per annum for the north east and supporting The project will deliver innovation support to develop solutions to the challenges and barriers they Thanks to the Cultural Strategy, led with partners by the 5,400 jobs, our University is a ‘place shaper’. We use manufacturing companies in the north east by working face. This project is the next step towards realising University, nowadays opportunities to enjoy culture are our international connections to open doors for regional closely with companies across the entire advanced our ambition to be the north east’s lead university for plentiful in Sunderland too. partners – be they economic, cultural or societal. manufacturing spectrum, to establish where innovation is Advanced Manufacturing and we’re excited to get started With our Sunderland Culture partners, we recently Investment and transformation on campus over the last most urgently needed. on unlocking the region’s latent growth potential.” launched an ambitious seven-year, £60m project to build year has resulted in the appointment of a new catering on the momentum and positivity generated over the last provider, Elior. They have brought with them a refreshed two years around culture, incorporating themes of light, catering offer and much-improved eating and leisure friendship and inventiveness. spaces at City and Sir Tom Cowie campuses, designed to The University encourages staff and students to meet the needs of the University community. engage with and support communities – changing lives, innovating and collaborating and shaping the world in which we live. At the institutional level, we work with businesses - from start-ups to small and medium-sized enterprises (SMEs) and multinational organisations. Our University is recognised as an anchor institution, supporting regional growth and working in partnership to attract inward investment. 28 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 29
Strategic Report
The Governors of the University of Sunderland present Our Ambitions their Report and Financial Statements for the year ended 31 July 2018. The Group Financial Statements Life Changers consolidate those of the University, its subsidiaries and A world leading contemporary University that is distinctive its Development Trust (together referred to as the Group). in supporting learning at all stages in life. The details of these undertakings are listed in note 25 of the Financial Statements. Knowledge Creators The University’s Strategic Plan was approved by the An institution that is acknowledged globally as an Board of Governors in March 2016 and sets out the exemplar in the creation of knowledge, skills and learning University’s vision and ambitions through to 2021. that is work relevant in the 21st century.
Our Vision Tomorrow Makers A University whose graduates are adaptive creative To be bold and inspirational in providing education, thinkers with the personal attributes to become the research and creative practice, which offers leaders and tomorrow makers of our societies and transformative experiences to students, staff, economies. communities and business partners in the UK and across the world. Boundary Breakers An institution that fosters a sense of pride amongst its Our Differentiators staff, students and alumni as it makes a real difference to the world in which we live through its research, innovation The University of Sunderland will be compelling and and practice. different because: • Our programmes will be distinctive and relevant with Learning Engagers work-integrated learning and professional practice A University where students want to study due to the embedded within. quality of teaching, the relevance and accessibility of our • Our research and creative practice will be programmes and the reputation we enjoy for partnering contemporary with immediate impact for our with students and personalising their experience. communities, business partners and students. • Our students will become lifelong partners in the Future Shapers institution, able to access career accelerators and A leading anchor institution in the north east making updated learning and practice throughout their significant social, economic and cultural contributions lifetime. to our locality, displaying innovation, entrepreneurship, financial stability, efficiency and sustainability in our approach and delivery. 30 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 31
Achievement of objectives Financial Review The achievement of the objectives in the Strategic Plan is when new data becomes available. The table below The University has delivered a strong financial to allow for investment in infrastructure and other measured against a suite of key performance indicators summarises the key areas of performance covered by performance in 2017/18. It has continued to build on the initiatives targeted at improving student experience, (KPIs) aligned to the Strategic Plan, using a traffic light KPIs for 2017/18. success of the previous year, delivering against ambitious and increased costs associated with the growth in system. Progress is reported to the Board of Governors financial targets for revenue, surplus and cash generation. student recruitment. The key highlights for the year include: • Driven by the success of its strategy to grow student • Fee income from tuition has increased by £9.4m income and to control expenditure, the University has Performance indicator 2017/18 Rating due to continued growth in student recruitment. This delivered an ‘underlying’ operating surplus of £3.7m, was driven by new intakes and the roll-through into an improvement of £1.3m on the previous year. Total student intake - Sunderland the latter years of new programmes at Sunderland, • Significant capital investment has transformed the particularly in the Faculty of Health Sciences and campus in Sunderland over the last two years and Total student intake - London Wellbeing, and through investments in London and this has continued in 2017/18, with £7.1m invested Hong Kong campuses which have delivered increased Total student body - Hong Kong in high-quality, student facing facilities and IT student numbers. infrastructure across the University’s Sunderland and Widening participation • Operating expenditure continued to be managed and London campuses. was below target for the year. The £5.9m growth in Transnational education income non-staff costs was a combination of planned growth, Sunderland Campus international student numbers
Sunderland Campus EU student numbers Income and expenditure in £m 2017/18 and 2016/17 actuals and key variances to prior year (∆PY) Graduate prospects
Student attainment 2017/18 2016/17 ∆PY Income Total research grants and contracts income, per academic FTE Tuition fees and education contracts 112.9 103.5 +9.4 Staff costs as % of total income Grants and contracts 11.2 11.2 - Other income 7.0 10.8 -3.8 Overall student satisfaction Less one-off capital grant income (0.7) (3.4) +2.7 Non-continuation Total operating income 130.4 122.1 +8.3 Learning outcomes
Achievement of Teaching Excellence Framework rating Silver Expenditure Staff costs (66.0) (66.0) - Operating surplus Non staff costs (63.3) (57.4) -5.9 Operating cash as % of total income Add back other pension liability movements * 2.6 3.7 -1.1 Overall performance against APR metrics Total operating expenditure (126.7) (119.7) -7.0
Total income Underlying operating surplus 3.7 2.4 +1.3
Key Impact of non-operational and exceptional items Capital grant income 0.7 3.4 -2.7 On track, low risk Other pension liability movements * (2.6) (3.7) +1.1 Severance expenses from transformation (0.2) (6.0) +5.8 Performance outside tolerance, however appropriate management action in place Gain / (loss) on disposal of assets and impairments (2.3) (2.2) -0.1 Deficit for the year (0.7) (6.1) +5.4 In general, performance has been on-target to achieve The University continued its sector-leading record of the expected levels of progress towards Strategic Plan widening participation, whilst non-continuation, student Actuarial gain on pension schemes 14.8 21.0 -6.2 objectives. Although some student recruitment metrics attainment and graduate employment show an improving Total comprehensive income 14.1 14.9 -0.8 were slightly below the ambitious targets set, numbers trajectory. Levels of student satisfaction outperformed were within the levels of income contingency built into the the sector as a whole. The University’s financial position * Other pension liability movements comprise FRS 102 pension charges to staff and interest costs, less pension budget for 2017/18. remains stable and sustainable. deficiency payments made in the period. 32 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 33
Financial operating performance Investment Through the introduction of more focused monitoring Over recent years, the University has invested £20m in of its financial performance, the University has identified its Sunderland and London campuses. This included and set targets for key measures of operating surplus, £7.1m in 2017/18 to support student growth and the operating cash generation and the availability of working development of student facing facilities. A sector-leading capital and cash balances. The University has delivered sciences complex has been developed that includes a sound, underlying financial operation and performance the Living Lab, which mimics the clinical settings and that is supporting and enabling its strategic priorities. equipment health sciences and wellbeing students will encounter in practice. This investment is delivering Cash management significant growth in Nursing, Pharmacy, Paramedic Practice and Sports Sciences and will underpin the Close control, management and reporting of the facilities required by the new School of Medicine. University’s cash position remains in place. This monitoring, combined with the success in income growth Financial outlook and cost control, has resulted in cash generated from operating activities of £11.5m in 2017/18. This has The University operates in a challenging environment and enabled the University to continue to repay its borrowings in a higher education market that is constantly evolving whilst funding the continued investment in the University locally, nationally and internationally. To respond to strategy required to enhance the delivery of its education this challenge the University has developed ambitious, provision and student experience. Cash holdings at investment-led student growth plans, supported by key £14.4m have remained stable in 2017/18, giving the strategic initiatives. These plans ensure that students University a sound base from which to plan future, remain at the heart of its activities, that student facing sustainable investment. activities are given priority, and that a sustainable financial model secures this necessary investment in the student Financial position experience. The University will open its School of Medicine in The University’s balance sheet position has improved September 2019. The new School has been assessed further in 2017/18. Net Assets excluding pension liabilities on the basis of a long-term business plan to ensure total £134.4m, an increase of £1.9m on 2016/17. The that it is a financially beneficial investment. This ensures impact of the Local Government Pension Scheme liability that the School of Medicine, like all new University is significant and reduces net assets to £57.5m, although, initiatives, contribute both to the delivery of the University the overall liability has reduced by £12.2m in 2017/18. strategy but also the University’s long term financial and operational sustainability.
Balance sheet and cash flow in £m 2017/18 and 2016/17 actuals and key variances to prior year (∆PY)
2017/18 2016/17 ∆PY Balance sheet Property, plant and equipment additions 7.1 10.5 -3.4 Cash at bank 14.4 15.7 -1.3 Bank loans (22.9) (24.5) +1.6 Finance leases (15.0) (16.2) +1.2 Net assets excluding pension liability 134.4 132.5 +1.9 Net assets including pension liability 57.5 43.4 +14.1
Cash flow Net cash inflows from operating activities 11.5 12.3 -0.8 Net cash (outflows) from investing activites (7.1) (6.2) -0.9 Net cash (outflows) from financing activities (5.7) (5.4) -0.3 (Decrease) / Increase in cash (1.3) 0.7 -2.0 34 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 35
Corporate Governance Statement
The University is committed to exhibiting best practice in The Finance, Development and Resources Committee all aspects of corporate governance. The University has recommends to the Board of Governors the University’s adopted the revised CUC Code of Governance (published annual revenue and capital budgets and monitors in December 2014) and in the opinion of the Governors performance in relation to the approved budgets. has applied the seven primary elements (supported by the An Academic Board provides regular updates to the “must’ statements) of the Code throughout the year. Board of Governors on all academic matters ensuring that It is the opinion of the Governors that they have acted in the Board can discharge its obligation to have assurance compliance with the principles set out by the Committee on the academic quality and standards of teaching at the on Standards in Public Life throughout the same period institution. in discharging their duties as Governors in respect of All Governors are able to take independent professional University business. advice in furtherance of their duties at the University’s expense and have access to the Clerk to the Board of Legal and charitable status Governors, who is responsible to the Board for ensuring that all applicable procedures and regulations are The University is a Higher Education Corporation complied with. The appointment and removal of the Clerk established by order of the Secretary of State under are matters for the Board of Governors as a whole. section 121 of the Education Reform Act 1988. It obtained exempt charitable status under the Act, as Formal agendas, papers and reports are supplied to now defined in Section 22 of the Charities Act 2011. Governors in a timely manner prior to Board meetings. Degree awarding powers and the right to use the title Briefings and workshops are provided on an ad-hoc “University” were granted by the Further and Higher basis. Education Act 1992. The Higher Education Funding The Board of Governors has a strong and independent Council for England became the principal regulator for the non-executive element and no individual or group University as an exempt charity on 1 June 2010 ending dominates its decision-making process. The Board of on 31 March 2018. The Office for Students became the Governors considers that each of its non-executive principal regulator for higher education institutions from 1 members is independent of management and free from April 2018 and the Office for Students confirmed to the any business or other relationship which could materially University on 17 July that it had decided to register the interfere with the exercise of their independent judgement. University in the new register of English higher education There is clear division of responsibility in that the roles providers. of the Chair of the Board of Governors and the Vice- The Education Reform Act 1988 lays down the powers Chancellor and Chief Executive are separate. of the University as being the provision of education and As noted above, the Board of Governors has adopted the research together with associated activities, and these CUC Code of Governance and also agreed a Statement represent the charitable objects of the University. of Primary Responsibilities. On an ongoing basis the Board of Governors will use these criteria to review The Board of Governors institutional performance and effectiveness, the results of which will be widely published. The Board undertakes an The Trustees of the exempt charity, the University of annual assurance exercise, through its Audit Committee, Sunderland, are the Members of its Board of Governors. to be assured of continued compliance with the CUC The membership of the Board of Governors is set Code of Governance or to be able to explain, as out on page 4. It is the Board’s responsibility to bring appropriate, where this was not the case. independent judgement to bear on issues of strategy, risk, performance, resources and standards of conduct. The Board follows the principles of the CUC Code of Governance in reviewing its effectiveness. A HEFCE During 2017/18, the University Board of Governors met Assurance Review was completed in June 2016 and six times. There were several other committees, including made no recommendations for changes to University a Finance, Development and Resources Committee governance. In accordance with CUC guidance, a and its sub-group, the Funding and Investment Working formal review of the effectiveness of the governing body Group; a Nominations Committee; a Remuneration with independent facilitation took place in 2014/15 and Committee; an Audit Committee and the University presented its findings to the Board of Governors. The Culture Committee. All of these Committees are formally Review’s findings stated that: “The overall standard of constituted with terms of reference. They comprise mainly governance in the University of Sunderland is, in our view, independent members of the Board of Governors, one of high.” The next independent review of the governing body whom chairs each Committee. is planned for 2019/20. 36 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 37
Appointments to the Board of Governors Equality and diversity The Nominations Committee considers and recommends The University’s senior executives receive regular reports The University of Sunderland values and celebrates the appointments of independent members to the Governing on the key performance and risk indicators and consider diversity of all its students and staff. Number of employees who Full time Body. In addition, three members of staff and two issues indicated by control mechanisms embedded were relevant union officials equivalent It is committed to providing an environment free from students are appointed by internal election. The Vice- within operational units and reinforced by risk awareness during the stated period employee number discrimination, bullying, harassment or victimisation, Chancellor is also a member of the Board. training. The senior leadership team and Audit Committee where all members of its community are treated with 11 employees UCU 2 FTE also receive regular reports from internal audit which respect and dignity. The University aims to create a include recommendations for improvement. The Board 10 employees Unison 0.9 FTE Remuneration Committee culture of diversity and inclusivity, providing a dynamic of Governors receives an annual report on strategic risk working and learning environment, where all members are The Remuneration Committee determines the management. An annual report is also provided to the Number of valued for their contribution and individuality. Percentage of time remuneration and terms and conditions of service of Board of Governors by Audit Committee which provides employees senior staff including the Vice-Chancellor and oversees an opinion on risk, control, governance and value for Through its policies and practices it works to ensure succession planning and arrangements for filling of money. that all students and staff are welcome and do not face 0% - vacancies within the Executive team. discrimination relating to any aspect of their identity, such 1-50% 20 Managing risk as age, disability, gender (including gender reassignment, Audit Committee marital status, pregnancy and maternity), ethnicity 51-99% 1 The University’s risk management processes continue (including race, colour or nationality), religion or belief The Audit Committee meets five times a year, with the to identify and manage the major strategic and financial (including non-belief) or sexual orientation. 100% - University’s internal and external auditors in attendance. risks. The strategic risks for the remainder of the current The University recognises that to be truly effective, The Committee considers detailed reports together with Strategic Plan period through to 2021 were considered by Total cost of facility time £139,382 equality, diversity and inclusivity should be considered recommendations for any improvement of the University’s Board, Audit Committee and Finance and Development across all facets of its delivery, from cleaning and catering Total pay bill £46,046,337 systems of internal control, management responses and Committee in June and July 2018. The Strategic Risk to lectures and library services. Mainstreaming starts with implementation plans. It also receives and considers Register was updated to ensure that it continues to reflect effective policies and procedures and goes beyond this to Percentage of total bill spent on reports in relation to the Office for Students, as they affect and enable the management of the key risks facing the 0.3% its culture, moving equality and diversity away from being facility time the University’s business, and monitors adherence to University. As a result of this exercise, five of the existing seen as a bolt-on activity to an integral part of the way the regulatory requirements. Whilst executive and senior risks were updated, one was restructured and two new students and staff think and behave. Time spent on paid trade union management attend Audit Committee meetings, they risks have been added. activities as a percentage of total 2.58% are not members of the Committee and at least once a The Board also reflects annually on its own composition Strategic risks at the corporate level include further paid facility time year the Committee meets with the internal and external at Nominations Committee. unforeseen changes in student recruitment and retention, auditors for independent discussion. failure to achieve student outcomes within Office for Students’ tolerances, failure to manage cash resource Environment and social responsibility Disclosure of information to auditor Internal control levels, the reliance on UK government regulated student The University is acutely aware of its social responsibilities The members of the governing body in office at the date sources of income, internal capacity against priorities, The University’s Board of Governors is responsible for the and is confident in stating that it already goes well beyond of approval of this report confirm that, so far as they are recruitment and retention of staff, national and global University’s system of internal control and for reviewing what is expected of similar organisations. each aware, there is no relevant information of which the policy environment, the new regulatory environment and its effectiveness. Such a system is designed to manage University’s auditor is unaware; and each member has failure to strategically plan and invest in infrastructure. Sunderland was the second university to create a rather than eliminate the risk of failure to achieve business taken all the steps that they ought to have taken as a Corporate Social Responsibility (CSR) statement. The objectives and can only provide reasonable and not member to make themselves aware of any relevant audit University has embraced CSR principles for many absolute assurance against material misstatement or loss. Equal opportunities and employment of information and to establish that the University’s auditor is years and its internal and external practices have been aware of that information. The Board of Governors has reviewed the key risks disabled persons externally recognised. to which the University is exposed together with the The University is committed to ensuring equality of operating, financial and compliance controls that have opportunity for all who learn and work within it. The Trade union facility time Going concern been implemented to mitigate those risks. The Board of University respects and values differences in race, gender, After making appropriate enquiries, the Board of Governors is of the view that there is an ongoing process The University has a number of employees who, during disability, religion or belief, sexual orientation and age. Governors considers that the University has adequate for identifying, evaluating and managing the University’s their paid working hours, undertake activities in their It strives to remove conditions which place people at a resources to continue in operational existence for the significant risks and that the process has been in place for capacity of trade union officials. In accordance with the disadvantage and has policies in place to ensure this foreseeable future. For this reason, they continue to adopt the year to 31 July 2018 and up to the date of approval of Trade Union (Facility Time Publication Requirements) commitment is implemented, resourced and monitored the going concern basis in preparation of the Financial the Annual Report and Financial Statements. This process Regulations 2017, the facility time arrangements for the on a regular basis. Statements. is regularly reviewed by the Audit Committee on behalf of University’s trade union officials, for the year ended 31 the Board of Governors and accords with the guidance The University considers all applications from disabled July 2018, is outlined below. on control set out in the CUC Code of Governance for persons and where an existing employee becomes Higher Education. disabled every effort is made to ensure their employment with the University can continue.
On behalf of the Board of Governors J D Mowbray, OBE DL Chair of the Board of Governors 22 November 2018 38 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 39
Annual Remuneration Statement
Introduction Approach to remuneration Data sources Notes on pay ratio In accordance with its Articles of Government, the Remuneration Committee is committed to full compliance The data used by Remuneration Committee to consider Basic salary includes basic pay / fees only. Board of Governors of the University of Sunderland (‘the with the HE Senior Staff Remuneration Code and its key the reward and remuneration of senior post-holders is Total remuneration includes: basic pay / fees; honoraria; Board’) oversees a Remuneration Committee which has principles of: drawn from a range of sources, including: market supplements; pay protection; recognition responsibility for determining or advising the Board on i. a fair, appropriate and justifiable level of remuneration i. the Universities and Colleges Employer Association payments; shift allowances; overtime; on-call; fire warden; matters set out within its terms of reference. ii. procedural fairness; and (UCEA) Annual Senior Staff Remuneration Survey; first aid; employer pension and lease car benefits in kind. The Remuneration Committee is responsible to the Board iii. transparency and accountability. ii. the Committee of University Chairs’ (CUC) Vice- Elements that were excluded from both pay ratio for: Chancellors’ Salary Survey; calculations are: holiday pay; statutory payments (e.g. These key principles guide all decisions related to • reviewing and determining the salaries, terms and Maternity Pay) replacing part of basic salary; unpaid leave remuneration. The context and environment within which iii. regional pay benchmarking surveys (private and public conditions and other employment benefits of the Vice- deductions, maternity, adoption, parental and sick pay; the University operates is a key consideration, with sector organisations); Chancellor and Chief Executive (the ‘Vice-Chancellor’), redundancy and ex gratia exit payments; travel expenses; decisions taken on remuneration balancing the need to iv. THES Vice-Chancellor Remuneration annual the Clerk to the Board of Governors and other senior enhanced pension payments to pensioners. attract, retain and fairly reward high-quality leadership, in publication (derived from published accounts). post-holders (the University Executive); order to deliver the best outcomes for students, society The median remuneration is based on the workforce • determining, where appropriate, terms of severance and the wider economy, while demonstrating effective use Policy on external work in post at 31 March 2018 including bank and agency for the Vice-Chancellor, the Clerk to the Board of of resources. staff and reflects the annualised full-time equivalent Governors and other senior post-holders; The University’s policy on paid or unpaid external work for remuneration. The median total remuneration includes The key factors that Remuneration Committee use senior post-holders permits such work to be undertaken staff on maternity leave at 31 March 2018 at their pre • reporting annually to the Board on the broad criteria to consider the reward and remuneration of the Vice- provided that it is not considered to conflict with the maternity remuneration level. and policies against which decisions have been made; Chancellor and other senior post-holders include: role and duties of the senior post-holder. Such work • overseeing succession planning and arrangements for For salaried staff, the full-time, full year salary was derived i. the size, complexity and global reach of the University; undertaken by the Vice-Chancellor requires the prior the filling of vacancies within the University Executive from their salary point, or their spot salary was factored ii. the University’s performance against its key strategic agreement and approval of Remuneration Committee and and for receiving advice from the Vice-Chancellor up using contractual hours and the proportion of the year objectives (measured through key performance the Chair of the Board of Governors. Any external activity in relation to the filling of vacancies in other senior worked. indicators); which generates additional income to be retained by the leadership posts within the University. For variable hours staff, including “atypical” fee and senior post-holder in a personal capacity is subject to iii. the calibre and personal attributes of the individual expenses claimants where hours are not held, pay disclosure. Remuneration Committee membership role-holder, including level of experience, skills, elements were grouped in combination with job family knowledge and reputation; 2017/18 to create groups of payments with characteristics in iv. individual performance, contribution and achievements Policy on expenses common, and the following methodology was applied, in Deputy Chair of Board Margaret Fay (Chair) in support of the University’s key strategic objectives; The University has a published Business (Travel) decreasing order of preference: Chair of Board John Mowbray v. the value and impact of the role (complexity, Expenses scheme that applies to all staff, including senior • If there was a valid salary point on the role that the Independent Member Sue Forster accountability, authority, and breadth of responsibility); post-holders. Remuneration Committee discharge its transaction was paid against, the FTE salary value responsibilities by having clear authority for, and oversight of that salary point was used. Independent Member Paul Feechan vi. external comparator salary/reward data, including: of, the Vice-Chancellor’s expenses. • If there were valid contractual hours on the role that Independent Member Paul McGowan • comparator HE institutions (by income / size / mission group); the transaction was paid against, these were used to factor up the amount claimed to a full week, and • comparator HE institutions (within the north east Pay multiple then to a full year. region); Basic salary ratio • If it was possible to calculate a credible hourly rate • regional comparator organisations (size / income / The basic salary of the University’s Vice-Chancellor and from the amount and units claimed, the hourly public sector). Chief Executive* is 6.6 (£205,637 ÷ £31,135) times the rate was factored up to a full year using a 37 hour median pay of staff. vii. pay multiple (Vice-Chancellor salary and the median working week. earnings of the University’s whole workforce) and • For pay elements where there is a standard salary comparator pay multiples in HE national benchmark Total remuneration ratio point, the relevant full-time salary was used. For data; The total remuneration salary of the University’s Vice- Chancellor and Chief Executive* is 7.9 (£244,697 ÷ pay elements where there is a standard grade, the viii. the current position of annual national pay bargaining £31,135) times the median total remuneration of staff. midpoint of the grade was used. for all other University staff, subject to the University • In the absence of any of the above, it was assumed participating in national collective pay bargaining. *Relating to S A Atkinson, Vice-Chancellor and Chief that the average claim for each group represented Executive until 31 July 2018. one week’s work, and this was multiplied by 52.143 weeks. 40 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 41
Statement of Board of Governors’ responsibilities in respect of the Annual Report and the Financial Statements
The Board of Governors is responsible for preparing The Board of Governors is responsible for keeping the Annual Report and the Financial Statements in adequate accounting records that are sufficient to accordance with the requirements of the Office for show and explain the parent University’s transactions Students’ terms and conditions of funding for higher and disclose with reasonable accuracy at any time the education institutions and Research England’s terms and financial position of the parent University and enable it to conditions of Research England grant and applicable law ensure that its Financial Statements comply with relevant and regulations. legislation and other relevant accounting standards. They The Board of Governors is required to prepare group and are responsible for such internal control as they determine parent University Financial Statements in accordance is necessary to enable the preparation of Financial with UK accounting standards and applicable law (UK Statements that are free from material misstatement, Generally Accepted Accounting Practice), including FRS whether due to fraud or error, and have general 102 The Financial Reporting Standard applicable in the responsibility for taking such steps as are reasonably UK and Republic of Ireland. The terms and conditions open to them to safeguard the assets of the group and to of funding further require the Financial Statements to prevent and detect fraud and other irregularities. be prepared in accordance with the 2015 Statement of The Board of Governors is also responsible for ensuring Recommended Practice – Accounting for Further and that: Higher Education - in accordance with the requirements • funds from whatever source administered by the of the Accounts Direction issued by the Office for Group or the University for specific purposes have Students. The Board of Governors is required to prepare been properly applied to those purposes and Financial Statements which give a true and fair view of managed in accordance with relevant legislation; the state of affairs of the group and parent University and • funds provided by the Office for Students and of their income and expenditure, gains and losses and Research England have been applied in accordance changes in reserves for that period. with the terms and conditions attached to them; In preparing each of the group and parent University • funds provided by HEFCE have been applied in Financial Statements, the Board of Governors is required accordance with the Memorandum of Assurance and to: Accountability and any other terms and conditions • select suitable accounting policies and then apply attached to them; them consistently; • there are appropriate financial and management • make judgements and estimates that are reasonable controls in place to safeguard public funds and funds and prudent; from other sources; and • state whether applicable UK accounting standards • the economical, efficient and effective management have been followed, subject to any material departures of the university’s resources and expenditure, are disclosed and explained in the Financial Statements; secured. • assess the group and parent University’s ability The Board of Governors is responsible for the to continue as a going concern, disclosing, as maintenance and integrity of the corporate and financial applicable, matters related to going concern; and information included on the University’s website. • use the going concern basis of accounting unless Legislation in the UK governing the preparation and they either intend to liquidate the group or the parent dissemination of Financial Statements may differ from University or to cease operations, or have no realistic legislation in other jurisdictions. alternative but to do so. 42 43
Independent Auditor’s Report to the Board of Governors of the University of Sunderland
Report on the audit of the Financial Statements Report on other legal and regulatory Opinion Other information requirements We have audited the Financial Statements of the The Board of Governors is responsible for the other We are required to report on the following matters under University of Sunderland (“the University”) for the year information, which comprises the Operating and Financial the Office for Students and Research England Audit ended 31 July 2018 which comprise the Consolidated Review of the Governors and Corporate Governance Codes of Practice issued under the Further and Higher Statement of Comprehensive Income and Expenditure, Statement. Our opinion on the Financial Statements does Education Act 1992. Consolidated and University Balance Sheet, Consolidated not cover the other information and, accordingly, we do In our opinion, in all material respects: and University Statement of Changes in Reserves, not express an audit opinion or any form of assurance Consolidated Statement of Cash Flows and related notes, conclusion thereon. • funds from whatever source administered by the including the accounting policies. Group or the University for specific purposes have Our responsibility is to read the other information and, been properly applied to those purposes and In our opinion the Financial Statements: in doing so, consider whether, based on our Financial managed in accordance with relevant legislation; Statements audit work, the information therein is • give a true and fair view of the state of the Group’s • income has been applied in accordance with the and the University’s affairs as at 31 July 2018, materially misstated or inconsistent with the Financial Statements or our audit knowledge. Based solely on that Memorandum of Assurance and Accountability and and of the Group’s and the University’s income any other terms and conditions attached to them; and expenditure, gains and losses and changes in work, we have not identified material misstatements in the reserves, and of the Group’s cash flows, for the year other information. • funds provided by the Office for Students and then ended; Research England have been applied in accordance with the terms and conditions attached to them; and • have been properly prepared in accordance with Board of Governors’ responsibilities UK accounting standards, including FRS 102 The • funds provided by HEFCE have been applied in As explained more fully in their statement set out on accordance with the Memorandum of Assurance and Financial Reporting Standard applicable in the UK and page 40, the Board of Governors is responsible for: the Republic of Ireland, and with the 2015 Statement of Accountability and any other terms and conditions preparation of the Financial Statements and for being attached to them. Recommended Practice – Accounting for Further and satisfied that they give a true and fair view; such internal Higher Education; and control as it determines is necessary to enable the • meet the requirements of the Accounts Direction preparation of Financial Statements that are free from The purpose of our audit work and to dated 19 June 2018 issued by the Office for Students. material misstatement, whether due to fraud or error; whom we owe our responsibilities assessing the group and parent University’s ability to This report is made solely to the Board of Governors, Basis for opinion continue as a going concern, disclosing, as applicable, in accordance with paragraph 13(2) of the University’s matters related to going concern; and using the going Articles of Government and section 124B of the We conducted our audit in accordance with International concern basis of accounting unless it either intends to Standards on Auditing (UK) (“ISAs (UK)”) and applicable Education Reform Act 1988. Our audit work has been liquidate the group or the parent University or to cease undertaken so that we might state to the Board of law. Our responsibilities are described below. We operations, or has no realistic alternative but to do so. have fulfilled our ethical responsibilities under, and are Governors those matters we are required to state to them in an auditor’s report and for no other purpose. To independent of the group in accordance with, UK ethical Auditor’s responsibilities requirements including the FRC Ethical Standard. We the fullest extent permitted by law, we do not accept or believe that the audit evidence we have obtained is a Our objectives are to obtain reasonable assurance about assume responsibility to anyone other than the University sufficient and appropriate basis for our opinion. whether the Financial Statements as a whole are free from and the Board of Governors for our audit work, for this material misstatement, whether due to fraud or error, and report, or for the opinions we have formed. Going concern to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not We are required to report to you if we have concluded guarantee that an audit conducted in accordance with that the use of the going concern basis of accounting ISAs (UK) will always detect a material misstatement is inappropriate or there is an undisclosed material when it exists. Misstatements can arise from fraud or error Rachel Fleming uncertainty that may cast significant doubt over the use and are considered material if, individually or in aggregate, for and on behalf of KPMG LLP, Statutory Auditor of that basis for a period of at least twelve months from they could reasonably be expected to influence the the date of approval of the Financial Statements. We have economic decisions of users taken on the basis of the Chartered Accountants nothing to report in these respects. Financial Statements. Quayside House A fuller description of our responsibilities is provided on 110 Quayside the FRC’s website at Newcastle upon Tyne www.frc.org.uk/auditorsresponsibilities. NE1 3DX 26 November 2018 44 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 45
Consolidated and University Statement of Comprehensive Income and Expenditure for the year ended 31 July 2018
Year ended 31 July 2018 Year ended 31 July 2017 Ref Consolidated University Consolidated University £’000 £’000 £’000 £’000 Income Tuition fees and education contracts 1 112,943 110,939 103,545 101,840 Funding body grants 2 9,659 9,659 9,734 9,734 Research grants and contracts 3 1,585 1,308 1,455 1,354 Other income 4 6,883 9,081 10,618 12,436 Donations, endowments and investment 5 145 38 147 25 income Total income 131,215 131,025 125,499 125,389
Expenditure Staff costs 6 65,959 60,239 65,964 61,109 Restructure costs 6 234 234 6,055 6,052 Other operating expenses 8 50,569 56,555 44,281 49,295 Depreciation and amortisation 10, 11 7,721 7,511 7,489 7,285 Impairment of fixed assets 10 2,316 2,316 2,135 2,135 Interest and other finance costs 7 5,146 5,146 5,505 5,505 Total expenditure 131,945 132,001 131,429 131,381
Deficit before other gains losses (730) (976) (5,930) (5,992) Realised gain / (loss) on disposal of fixed 4 4 (188) (108) asset investments Unrealised (loss) / gain on investments 12 (2) - 11 - Deficit before tax (728) (972) (6,107) (6,100) Taxation 9 9 - (2) - Deficit for the year (719) (972) (6,109) (6,100) Actuarial gain in respect of pension 17 14,854 14,854 20,990 20,990 schemes Total comprehensive income for the year 14,135 13,882 14,881 14,890 Represented by: Endowment comprehensive income / 18 6 6 (38) (38) (deficit) for the year Restricted comprehensive deficit for the 19 (51) - (27) - year Unrestricted comprehensive income for the 20 14,180 13,876 14,946 14,928 year 14,135 13,882 14,881 14,890
All items of income and expenditure relate to continuing activities 46 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 47
Consolidated and University Balance Sheet Consolidated and University Statement of Year ended 31 July 2018 Year ended 31 July 2017 Changes in Reserves Notes Consolidated University Consolidated University Endowment Restricted Unrestricted Total £’000 £’000 £’000 £’000 Reserve Reserve Reserves Reserves Non-current assets £’000 £’000 £’000 £’000 Goodwill 11 472 - 633 - Fixed assets 10 170,558 170,210 173,344 173,228 Consolidated Investments 12 704 33 593 33 Balance at 1 August 2016 1,043 750 26,725 28,518 171,734 170,243 174,570 173,261 Deficit from the income and expenditure statement (38) (27) (6,044) (6,109) Current assets Other comprehensive income - - 20,990 20,990 Stock 13 130 85 108 75 Trade and other receivables 14 15,315 15,187 12,133 12,478 (38) (27) 14,946 14,881 Cash and cash equivalents 21 14,407 12,886 15,727 14,057 29,852 28,158 27,968 26,610 Balance at 31 July 2017 1,005 723 41,671 43,399
Balance at 1 August 2017 1,005 723 41,671 43,399 Creditors: amounts falling due within one 15 (31,925) (30,232) (31,700) (30,272) year Deficit from the income and expenditure statement 6 (51) (674) (719) Net current liabilities (2,073) (2,074) (3,732) (3,662) Other comprehensive income - - 14,854 14,854
Total assets less current liabilities 169,661 168,169 170,838 169,599 6 (51) 14,180 14,135
Creditors: amounts falling due after more Balance at 31 July 2018 1,011 672 55,851 57,534 16 (35,251) (35,251) (38,340) (38,340) than one year University Balance at 1 August 2016 1,043 - 26,227 27,270 Provisions Pension provisions 17 (76,876) (76,876) (89,099) (89,099) Deficit from the income and expenditure statement (38) - (6,062) (6,100) Other comprehensive income - - 20,990 20,990 Total net assets including pension liability 57,534 56,042 43,399 42,160
(38) - 14,928 14,890 Endowment reserve 18 1,011 1,011 1,005 1,005 Restricted reserve 19 672 - 723 - Balance at 31 July 2017 1,005 - 41,155 42,160 Unrestricted reserve 20 55,851 55,031 41,671 41,155 Total Reserves 57,534 56,042 43,399 42,160 Balance at 1 August 2017 1,005 - 41,155 42,160 The financial statements were approved by the Governing Body on 22 November 2018 and were signed on its behalf by: Deficit from the income and expenditure statement 6 - (978) (972) Other comprehensive income - - 14,854 14,854
Sir D Bell KCB, Vice-Chancellor and Chief Executive J D Mowbray OBE DL, Chair of the Board of Governors 6 - 13,876 13,882
Balance at 31 July 2018 1,011 - 55,031 56,042 B Dale, Director of Finance 48 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 49
Consolidated Statement of Cash Flows Notes to the Financial Statements for the year Notes 31 July 2018 31 July 2017 ended 31 July 2018 £’000 £’000 Cash flow from operating activities Statement of principal accounting Basic financial instruments Deficit for the year (719) (6,109) policies and estimation techniques Trade and other debtors are recognised initially at Adjustment for non-cash items These Financial Statements have been prepared in transaction price less attributable transaction costs. Trade Depreciation, amortisation and impairments 10, 11, 12 10,037 9,624 accordance with the Statement of Recommended and other creditors are recognised initially at transaction price plus attributable transaction costs. (Profit) / loss on sale of fixed assets 10 (4) 188 Practice (SORP): Accounting for Further and Higher Education 2015 and in accordance with Financial Subsequent to initial recognition they are measured at Losses / (gains) on investments 12 2 (11) Reporting Standards (FRS 102). The University is a public amortised cost using the effective interest method, less (Increase) / decrease in stock (22) 79 benefit entity and therefore has applied the relevant public any impairment losses in the case of trade debtors. benefit requirement of FRS 102. Increase in debtors (3,178) (1,205) If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business Increase in creditors 554 6,350 Basis of Consolidation terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a Increase in pension provision 2,631 3,736 The consolidated Financial Statements include the similar debt instrument. Adjustment for investing or financing activities University and its subsidiary undertakings and associate Cash and cash equivalents comprise cash balances Investment income 5 (44) (31) undertakings for the financial year to 31 July 2018. The results of subsidiaries acquired or disposed of during and call deposits. Bank overdrafts that are repayable on Interest payable 7 2,883 3,062 the period are included in the consolidated statement demand and form an Integral part of the University’s cash management are included as a component of cash and Endowment income 5 (7) (7) of comprehensive income and expenditure from the date of acquisition or up to the date of disposal. Intra cash equivalents for the purpose only of the cash flow Capital grant income 4 (658) (3,366) group transactions are eliminated fully on consolidation. statement. Net cash inflow from operating activities 11,475 12,310 The financial year ends of the consolidated entities are coterminous with those of the University. Income recognition The consolidated Financial Statements do not include Cash flows from investing activities Income from the sale of goods or services is credited to those of the University of Sunderland Students’ Union the Consolidated Statement of Comprehensive Income Proceeds from sales of fixed assets 12 592 (USSU) because the University does not control its and Expenditure when the goods or services are supplied Capital grants receipts 658 3,755 activities or have significant influence over policy to the external customers or the terms of the contract decisions. While the University is a partner in the have been satisfied. Disposal of non-current asset investments 2 210 University Technical College, South Durham, this college Where the amount of the tuition fee is reduced by a is also not consolidated since the University does not Investment income 44 31 discount, either for a fee waiver scholarship or prompt control its activities or have significant influence over payment, income receivable is shown net of the discount. Payments made to acquire fixed assets (7,717) (10,527) policy decisions. Other bursaries and scholarships are accounted for gross New non-current asset investments (115) (223) as expenditure and not deducted from income. Going concern Net cash outflow from investing activities (7,116) (6,162) Investment income is credited to the Income and The activities of the University, together with the factors Expenditure Account on a receivable basis. likely to affect its future development and performance are Cash flows from financing activities set out in the Strategic Report. The financial position of Grant funding Interest paid (1,461) (1,392) the University, its cash flow, liquidity and borrowings are Grant funding including funding council block grant, Interest element of finance lease payments (1,422) (1,614) described in the Financial Statements and accompanying Notes. research grants from government sources, and grants Endowment cash received 7 7 (including research grants) from non-government sources The University’s forecasts and financial projections are recognised as income when the University is entitled Repayments of amounts borrowed (1,621) (1,546) indicate that it will be able to operate within the terms of to the income and performance related conditions have its borrowing facilities and covenants for the foreseeable Capital element of finance lease payments (1,170) (855) been met. Income received in advance of performance future. Net cash outflow from financing activities (5,667) (5,400) related conditions being met is recognised as deferred Accordingly the University has adequate resources to income within creditors on the balance sheet and continue in operational existence for the foreseeable released to income as the conditions are met. (Decrease) / increase in cash and cash equivalents in the year (1,308) 748 future, and for this reason will continue to adopt the going concern basis in the preparation of its Financial Statements. Existing overdraft facilities are due for Cash and cash equivalents at beginning of the year 21 15,705 14,957 renewal on 31 July 2019, the University anticipate that the Cash and cash equivalents at end of the year 21 14,397 15,705 facilities will be renewed if required. 50 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 51
Donations and endowments Fixed assets Investment property Non exchange transactions without performance related information provided in Note 27, no additional, separate Fixed assets are stated at deemed cost less accumulated Investment property is land and buildings held for conditions are endowments. Endowments with donor disclosure is required. depreciation and accumulated impairment losses. Certain rental income or capital appreciation rather than for imposed restrictions are recognised in income when The USS is also a multi-employer scheme and it is items of fixed assets that had been revalued to fair value use in delivering services. Investment properties are the University is entitled to the funds. Income is retained therefore again not possible to identify the assets of on or prior to the date of transition to the 2015 FE HE measured initially at cost and subsequently at fair value within the restricted reserve until such time that it is this scheme attributable to each institution. A liability SORP, are measured on the basis of deemed cost, being with movements recognised in the Surplus or Deficit. utilised in line with such restrictions at which point the is recorded within provisions for any contractual the revalued amount at the date of transition to FRS 102. Properties are not depreciated but are revalued or income is released to general reserves through a reserve commitment to fund past deficits within the USS scheme. reviewed annually according to market conditions as at transfer. 31 July each year. In accordance with FRS 102, both the TPS and USS Land and buildings Investment income and appreciation of endowments is schemes are accounted for on a defined contribution Costs incurred in relation to land and buildings after initial recorded in income in the year in which it arises, and as Impairment of tangible fixed assets basis and contributions to the schemes are included as purchase or construction, and prior to valuation, are either restricted or unrestricted income according to the expenditure in the period in which they are payable. capitalised to the extent that they increase the expected The carrying amounts of the Group’s assets are reviewed terms of restriction applied to the individual endowment The University is able to identify its shares of assets and future benefits to the University. for impairment when events or changes in circumstances fund. liabilities of the LGPS and thus this scheme is accounted Borrowing costs are recognised as expenditure in the indicate that the carrying amount of the fixed asset may There are three main types of donations and endowments for as a defined benefit scheme. period in which they are incurred. not be recoverable. If any such indication exists, the identified within reserves: Unrestricted permanent asset’s recoverable amount is estimated. endowments - the donor has specified that the fund is to Defined benefit plans An impairment loss is recognised whenever the carrying be permanently invested to generate an income stream Equipment amount of an asset or its cash-generating unit exceeds for the general benefit of the University. Defined benefit plans are post-employment benefit plans Equipment additions are stated at cost, unless they cost its recoverable amount. Impairment losses are recognised other than defined contribution plans. Under defined Restricted expendable endowments - the donor has less than £5,000 per individual item or group of related in the Consolidated Statement of Comprehensive Income benefit plans, the University’s obligation is to provide the specified a particular objective other than the purchase or items in which case they are written off in the year of and Expenditure. construction of tangible fixed assets, and the University agreed benefits to current and former employees, and acquisition. has the power to use the capital. actuarial risk (that benefits will cost more or less than expected) and investment risk (that returns on assets set Calculation of recoverable amount Restricted permanent endowments - the donor has Depreciation aside to fund the benefits will differ from expectations) specified that the fund is to be permanently invested to The recoverable amount of a fixed asset is the greater are borne, in substance, by the University. The Group Depreciation is not provided on freehold land. On other generate an income stream to be applied to a particular of its fair value less costs to sell and its value in use. In should recognise a liability for its obligations under defined assets it is provided in equal annual instalments over objective. assessing value in use, the expected future cash flows benefit plans net of plan assets. This net defined benefit the estimated useful lives of the assets. The rates of are discounted to their present value using a pre-tax liability is measured as the estimated amount of benefit depreciation are as follows: Capital grants discount rate that reflects current market assessments of that employees have earned in return for their service in the rate of return expected on an equally risky investment. Remaining life of each Capital grants are recognised in income when the the current and prior periods, discounted to determine Freehold buildings and For an asset that does not generate largely independent building between 3 and 40 University is entitled to the funds subject to any its present value, less the fair value (at bid price) of major improvements cashflows, the recoverable amount is determined for the years performance related conditions being met. plan assets. The calculation is performed by a qualified cash generating unit to which the asset belongs. actuary using the projected unit credit method. Where the Fixtures, fittings and Five years Agency arrangements calculation results in a net asset, recognition of the asset equipment Reversals of impairment is limited to the extent to which the University is able to If the estimated project life Funds the institution receives and disburses as paying recover the surplus either through reduced contributions For tangible fixed assets where the recoverable amount is two or more years at the agent on behalf of a funding body or other body, where in the future or through refunds from the plan. Equipment acquired for increases as a result of a change in economic conditions balance sheet date, over the institution is exposed to minimal risk or enjoys specific research projects or in the expected use of the asset then the resultant the project life, otherwise minimal benefit related to the receipt and subsequent reversal of the impairment loss should be recognised in Defined contribution plans and other written off as incurred disbursement of the funds, are excluded from the income long term employee benefits the current period. and expenditure of the institution. Depreciation is not provided on assets under An impairment loss is reversed only to the extent that the A defined contribution plan is a post-employment construction. asset’s carrying amount does not exceed the carrying Accounting for retirement benefits benefit plan under which the company pays fixed amount that would have been determined, net of Depreciation methods, useful lives and residual values contributions into a separate entity and will have no depreciation or amortisation, if no impairment loss had The University contributes to three defined benefit are reviewed at the date of preparation of each Balance legal or constructive obligation to pay further amounts. been recognised. schemes, the Local Government Pension Scheme Obligations for contributions to defined contribution Sheet. (LGPS), the Teachers Pension Scheme (TPS) and the pension plans are recognised as an expense in the profit Intangible assets and goodwill Universities Superannuation Scheme (USS), and three and loss account in the periods during which services are Heritage assets defined contribution schemes, the National Employment rendered by employees. Goodwill arises on consolidation and is based on the Items that meet the definition under FRS102 of a Heritage Savings Trust (NEST), the Mandatory Provident Fund difference between the fair value of the consideration Asset (a tangible asset with historical, artistic, scientific, retirement benefit scheme (the “MPF Scheme”), and the given for the undertaking acquired and the fair value of its Employment Benefits technological, geophysical or environmental qualities that Employees Provident the Employees Provident Fund separable net assets or liabilities at the date of acquisition. (KWSP) (the “EPF Scheme”) in the UK, Hong Kong and Short term employment benefits such as salaries and is held and maintained principally for its contribution to Goodwill and intangible assets are amortised on a straight Malaysia, respectively. compensated absences are recognised as an expense knowledge and culture) are capitalised if their acquisition line basis over the five year estimated economic life of the in the year in which the employees render service to cost exceeds £5,000. Any heritage assets owned by The TPS is an unfunded, multi-employer scheme and asset, being the rebuttable presumption under FRS 102. the University. Any unused benefits are accrued and the University will be held at cost or valuation where it is therefore not possible to identify the assets of this Goodwill and intangible assets are subject to periodic measured as the additional amount the University expects reasonably obtainable. scheme attributable to each institution and retirement and impairment reviews as appropriate. other pension benefits are paid from monies provided by to pay as a result of the unused entitlement. Parliament. As an unfunded scheme, other than for the 52 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 53
Stock Stock is stated at the lower of cost measured using an Reserves Year ended 31 July 2018 Year ended 31 July 2017 average cost formula and estimated selling price less Consolidated University Consolidated University costs to complete and sell. Reserves are classified as restricted or unrestricted. Restricted endowment reserves include balances which, Notes £’000 £’000 £’000 £’000 through endowment to the University, are held as a Provisions 1 Tuition fees and education contracts permanently restricted fund which the University must Provisions are recognised in the Financial Statements hold in perpetuity. Full-time home and EU students 70,854 70,854 62,457 62,457 when: Other restricted reserves include balances where the International students 36,618 34,873 36,708 35,307 (a) the University has a present obligation (legal or donor has designated a specific purpose and therefore Part-time students 3,685 3,685 3,274 3,274 constructive) as a result of a past event; the University is restricted in the use of these funds. Short courses 1,786 1,527 1,106 802 (b) it is probable that an outflow of economic benefits will be required to settle the obligation; and Leases 112,943 110,939 103,545 101,840 (c) a reliable estimate can be made of the amount of the Costs in respect of operating leases are charged on obligation. a straight-line basis over the lease term. Any lease 2 Funding body grants premiums or incentives are spread over the minimum The amount recognised as a provision is determined by Grants for HE Provision discounting the expected future cash flows at a pre-tax lease term. rate that reflects risks specific to the liability. Leasing agreements which transfer to the University Recurrent HEFCE / OFS teaching 5,511 5,511 6,356 6,356 substantially all the benefits and risks of ownership of Recurrent NCTL 121 121 92 92 Investments an asset are treated as if the asset had been purchased outright. The assets are included in fixed assets and the Recurrent HEFCE / OFS research 1,285 1,285 1,322 1,322 Investments in subsidiary undertakings and associates capital elements of the leasing commitments are shown Recurrent - other (including non-recurrent 2,161 2,161 1,826 1,826 are carried at cost less impairment in the University’s as obligations under finance leases. The lease rentals are special funding) accounts. treated as consisting of capital and interest elements. The Listed investments, are held at fair value with capital element is applied in order to reduce outstanding movements recognised in the consolidated statement of obligations and the interest element is charged to the Other grants comprehensive income and expenditure. Income and Expenditure Account in proportion to the Education & Skills Funding Agency 581 581 138 138 reducing capital element outstanding. Assets held under 9,659 9,659 9,734 9,734 Taxation finance leases are depreciated over the shorter of the lease term or the useful economic lives of equivalent The University is an exempt charity within the meaning of owned assets. Part 3 of the Charities Act 2011. It is therefore a charity 3 Research grants and contracts within the meaning of Para 1 of schedule 6 to the Finance Maintenance of premises Research councils and charities 704 701 573 573 Act 2010 and accordingly, the University is potentially Governmental 650 550 681 678 exempt from taxation in respect of income or capital gains Expenditure on routine corrective maintenance is charged received within categories covered by section 478-488 directly to the Consolidated Statement of Comprehensive Industry and commerce 231 57 201 103 of the Corporation Tax Act 2010 (CTA 2010) or section Income and Expenditure in the period in which it is 1,585 1,308 1,455 1,354 256 of the Taxation of Chargeable Gains Act 1992, to incurred. the extent that such income or gains are applied to Long term maintenance work is carried out on the basis exclusively charitable purposes. of a long term maintenance plan. Actual expenditure 4 Other income The University receives no similar exemption in respect of on long term maintenance is charged against the Residences, catering and conferences 2,728 2,704 3,341 3,325 Value Added Tax. Irrecoverable VAT on inputs is included Consolidated Statement of Comprehensive Income and income in the costs of such inputs. Any irrecoverable VAT Expenditure in the period in which it is incurred. allocated to tangible fixed assets is included in their cost. Other grants income 2,710 1,929 2,623 1,966 The University’s subsidiaries are liable to Corporation Tax Foreign currencies Capital grants 658 658 3,366 3,366 in the same way as any other commercial organisation. Transactions in foreign currencies are recorded using the Other income 787 3,790 1,288 3,779 Deferred tax is provided in full on timing differences which rate of exchange ruling at the date of the transaction. 6,883 9,081 10,618 12,436 result in an obligation at the balance sheet date to pay Monetary assets and liabilities denominated in foreign more tax, or a right to pay less tax, at a future date, at currencies are translated using the rate of exchange ruling rates expected to apply when they crystallise based on at the balance sheet date and the gains or losses on 5 Donations, endowments and investment income current rates and law. Timing differences arise from the translation are included in the Surplus or Deficit. Income from endowments 18 7 7 7 7 inclusion of items of income and expenditure in taxation computations in periods different from those in which they Investment income on restricted reserves 19 11 - 10 - Cashflows and liquid resources are included in Financial Statements. Deferred tax assets Income from investments 33 31 21 18 are more likely than not to be recovered. Deferred tax Cash and cash equivalents comprise cash balances and Donations with restrictions 94 - 109 - assets and liabilities are not discounted. deposits with an original maturity of three months or less. 145 38 147 25 54 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 55
Year ended 31 July 2018 Year ended 31 July 2017 6 Staff costs (continued) Consolidated University Consolidated University Year ended Year ended £’000 £’000 £’000 £’000 31 July 2018 31 July 2017 6 Staff costs FTE FTE Salaries 50,507 45,506 50,173 45,892 Average staff numbers by major category (FTE): No. No. Social security costs 5,347 4,882 5,217 4,822 Academic departments 628 602 Pension costs 10,031 9,777 10,574 10,395 Academic services 315 275 Severance payments 308 308 6,055 6,052 Administration and central services 371 342 66,193 60,473 72,019 67,161 Premises 97 106 The severance payments were made up of lump sum ex-gratia payments and pension benefits payable to 20 individuals Residences, catering and conferences 25 28 (2017: 174). Research grants and contracts 12 11 The reconciliation of the total staff costs, as presented in the Statement of Comprehensive Income and Expenditure, is: Other 14 25 Year ended 31 July 2018 Year ended 31 July 2017 1,462 1,389 Consolidated University Consolidated University Key management personnel £’000 £’000 £’000 £’000 Key management personnel are those persons having authority and responsibility for planning, directing and controlling Staff Costs 65,964 61,109 65,959 60,239 the activities of the University. Staff costs includes compensation paid to key management personnel. Restructure Costs 234 234 6,055 6,052 The key management personnel are defined as the University Executive - the Vice-Chancellor and Chief Executive, 66,193 60,473 72,019 67,161 Deputy Vice-Chancellor (Academic), and the Chief Operating Officer.
Year ended Year ended Year ended Year ended 31 July 2018 31 July 2017 31 July 2018 31 July 2017 £’000 £’000 £'000 £'000 Emoluments of the Vice-Chancellor: Key management personnel compensation 640 620 S. A. Atkinson Board members Salary 206 202 The members of the Board of Governors are the trustees for charitable law purposes. Due to the nature of the Benefits in kind 4 5 University’s operations and the composition of the Board, being drawn from local public and private sector 210 207 organisations, it is inevitable that transactions will take place with organisations in which a member of the Board may have an interest. All transactions involving organisations in which a member of the Board may have an interest, including Pension contributions 35 32 those identified below, are conducted at arms length and in accordance with the University’s Financial Regulations and 245 239 usual procurement procedures.
The Vice-Chancellor’s basic salary is 6.6 (£205,637 ÷ £31,135) times the median pay of staff, and 7.9 (£244,697 The following principal related party transactions with the Group were identified for disclosure: ÷ £31,135) times the median total remuneration of staff. Further information on the how the Vice Chancellor’s Year ended 31 July 2018 Year ended 31 July 2017 remuneration is set is detailed in the Remuneration Statement. £'000 £'000 £'000 £'000 S. A. Atkinson’s term as Vice-Chancellor ended on 31 July 2018. Debtor Creditor Debtor Creditor Basic salary of higher paid staff Academy 360 - 1 - - No. No. Cambridge English Language - - 48 - £140,000 to £144,999 2 2 City of Sunderland College 11 - 1 - £145,000 to £149,999 - 1 Northumbrian Water 30 - - - 2 3 Sunderland Business Limited - 2 - - No higher paid staff members in either 2017/18 or 2016/17 received compensation for loss of office. Sunderland City Council 32 1 204 1 Sunderland Culture Limited 6 - - - University of Sunderland Students' Union 4 7 5 - 56 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 57
6 Staff costs (continued) Year ended 31 July 2018 Year ended 31 July 2017 Consolidated University Consolidated University Year ended 31 July 2018 Year ended 31 July 2017 £’000 £’000 £’000 £’000 £'000 £'000 £'000 £'000 8 Analysis of other total expenditure by activity Sales Purchases Sales Purchases Academy 360 - 3 - - Academic departments 19,246 20,050 19,246 19,112 Accenture North East - - 41 - Academic services 9,387 8,914 5,302 4,971 BT - - - 80 Administration and central services 13,006 11,987 11,734 9,818 Cambridge English Language - - 292 - Premises 5,562 3,687 4,853 3,359 Cellular Solutions - - 5 2 Residences, catering and conferences 1,179 1,179 1,059 1,059 City of Sunderland College 68 862 18 926 Research grants and contracts 782 645 657 581 National Pharmacy Association Limited - 2 - - Other 1,407 10,093 1,430 10,395 NELEP - - 2,369 - 50,569 56,555 44,281 49,295 Northumbrian Water 33 117 30 246 PricewaterhouseCoopers LLP - 122 - - Other operating expenses include: Sunderland Business Limited - 31 - - External auditor’s remuneration in respect of audit 68 37 64 32 Sunderland City Council 252 602 602 491 services External auditor’s remuneration in respect of non- Sunderland Culture Limited 53 2 - - 92 81 36 25 audit services Sunderland Music Arts and Culture Trust 12 70 - - Operating lease rentals The Customs House Trust 1 - - - Land and buildings 590 - 590 - University of Sunderland Students' Union 49 95 78 96 Other 94 94 38 38 No council member has received any remuneration or waived payments from the group during the year (2017: none) Members of the Governing Body are not remunerated for their work, but are reimbursed for reasonable expenses. Year ended Year ended The total expenses paid to or on behalf of Governors was £1,572 for the year ended 2018 (2017: £517). This represents 31 July 2018 31 July 2017 travel and subsistence expenses incurred in attending Council, Committee meetings and Charity events in their official £’000 £’000 capacity. 9 Taxation The University also made a grant to the Students’ Union in the financial year of £1,058,000 (2017: £1,084,600)
Year ended 31 July 2018 Year ended 31 July 2017 Recognised in the statement of comprehensive income and expenditure Consolidated University Consolidated University £’000 £’000 £’000 £’000 Current tax 7 Interest and other finance costs Current tax expense 2 5 Adjustment in respect of previous years (13) (2)
Loan interest 1,384 1,384 1,393 1,393 Current tax (credit) / expense (11) 3 Finance lease interest 1,422 1,422 1,611 1,611 Other interest 77 77 58 58 Deferred tax Net charge on pension scheme 2,263 2,263 2,443 2,443 Origination and reversal of timing differences 2 (1) 5,146 5,146 5,505 5,505 Reduction in tax rate - - Recognition of previously unrecognised tax losses - - Deferred tax expense / (credit) 2 (1)
Total tax (credit) / expense (9) 2 58 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 59
10 Fixed Assets 10 Fixed Assets (continued)
Freehold At 31 July 2018, freehold land and buildings included £12,640k (2017: £12,965k) in respect of freehold land which is Freehold Land and Freehold Leasehold Fixtures, Assets not depreciated. Land and Buildings Investment Land and Fittings and under Buildings held for sale properties Buildings Equipment construction Total Included within freehold land and buildings are assets funded wholly or partly by finance leases with the net book value of £3,462k (2017: £3,644k). £’000 £’000 £’000 £’000 £’000 £’000 £’000 An impairment of £350k (2017: £2,135k) has been recognised, in relation to freehold land and buildings, which Consolidated were held for sale at the year end. The impairment has been incurred as a result of deemed cost taken on Cost transition to FRS 102, which was based on Depreciated Replacement Cost, rather than Open Market Value. An additional impairment of £1,966k (2017: £nil) has been charged in relation to a freehold property not currently in At 1 August 2017 184,887 7,150 420 14,278 26,933 399 234,067 use. Additions 2,130 - - 221 2,671 2,076 7,098 A transfer of £2,088k is shown in the detail of Unrestricted Reserve activity in Note 20, being the corresponding Transfers 134 - - - 258 (392) - impairment transfer from the revaluation reserve. The variance of £228k represents the excess of impairments over the amount held in the revaluation reserve, for those properties. Disposals - - - - (13,954) (8) (13,962) The University completed a review of the assets as a result of the introduction of FRS 102 in relation to Heritage At 31 July 2018 187,151 7,150 420 14,499 15,908 2,075 227,203 Assets. The University owns a number of works of art and artefacts which have been donated to the University. These amounts have not been capitalised as gaining external valuation would be prohibitive in terms of cost Depreciation relative to the anticipated value of these items. At 1 August 2017 22,205 5,157 - 13,813 19,548 - 60,723 Charge for the year 4,782 31 - 75 2,672 - 7,560 11 Goodwill arising from the acquisition of The University of Sunderland in Hong Kong Limited (Consolidated) Impairment 1,966 350 - - - - 2,316 Goodwill Disposals - - - - (13,954) - (13,954) £’000 At 31 July 2018 28,953 5,538 - 13,888 8,266 - 56,645 Cost At 1 August 2017 807 Net book value Recognition of goodwill on acquisition - At 31 July 2018 158,198 1,612 420 611 7,642 2,075 170,558 At 31 July 2018 807
At 31 July 2017 162,682 1,993 420 465 7,385 399 173,344 Amortisation
University At 1 August 2017 174 Cost Charge for year 161 At 1 August 2017 184,887 7,150 420 14,040 26,819 399 233,715 At 31 July 2018 335 Additions 2,130 - - - 2,611 2,076 6,817 Transfers 134 - - - 258 (392) - Net Book Value Disposals - - - - (13,910) (8) (13,918) At 31 July 2018 472 At 31 July 2018 187,151 7,150 420 14,040 15,778 2,075 226,614 At 1 August 2017 633 Depreciation At 1 August 2017 22,205 5,157 - 13,593 19,532 - 60,487 Charge for the year 4,782 31 - 62 2,636 - 7,511 Impairment 1,966 350 - - - - 2,316 Disposals - - - - (13,910) - (13,910) At 31 July 2018 28,953 5,538 - 13,655 8,258 - 56,404
Net book value At 31 July 2018 158,198 1,612 420 385 7,520 2,075 170,210
At 31 July 2017 162,682 1,993 420 447 7,287 399 173,228 60 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 61
12 Non-Current Investments 13 Stock Other fixed Year ended 31 July 2018 Year ended 31 July 2017 Subsidiary assets Consolidated University Consolidated University companies investments Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 Consolidation
Cost or valuation Finished goods 130 85 108 75 At 1 August 2017 - 643 643 130 85 108 75 Additions - 115 115 Disposals - (2) (2) 14 Trade and other receivables: amounts falling due within one year Unrealised loss - (2) (2) Trade receivables 9,655 9,256 6,918 6,458 At 31 July 2018 - 754 754 Other receivables 371 55 415 12 Provision for impairment Prepayments and accrued income 5,289 4,689 4,800 4,663 At 1 August 2017 - 50 50 Amounts due from subsidiary companies - 1,187 - 1,345 At 31 July 2018 - 50 50 15,315 15,187 12,133 12,478 Included in other receivables is the sum of £135k (2017: £Nil) in respect of amounts due after more than one year. Net book value At 31 July 2018 - 704 704 15 Creditors : amounts falling due within one year At 1 August 2017 - 593 593 Bank overdraft 10 10 22 22 University Secured bank loans 1,692 1,692 1,621 1,621 Cost or valuation Obligations under finance lease 1,244 1,244 1,045 1,045 At 1 August 2017 2,447 83 2,530 Payments received on account 15,592 15,298 14,435 14,435 At 31 July 2018 2,447 83 2,530 Trade payables 1,155 996 3,123 2,597 Social security and other taxation payable 1,519 1,294 1,359 1,182 Provision for impairment Accruals and deferred income 9,369 7,900 8,681 7,579 At 1 August 2017 2,447 50 2,497 Amounts due to subsidiary companies - 523 - 485 At 31 July 2018 2,447 50 2,497 Other payables 1,316 1,247 1,386 1,278
Net book value Amounts due to funding bodies 28 28 28 28 At 31 July 2018 - 33 33 31,925 30,232 31,700 30,272 At 1 August 2017 - 33 33
Year ended 31 July 2018 Year ended 31 July 2017 Consolidated University Consolidated University £'000 £'000 £'000 £'000 Other non-current investments consist of: CVCP Properties Limited 33 33 33 33 UBS Portfolio Investments: TMS UBS (UK) Global Yield 556 - 560 - Lloyds International - 95 Day Notice 115 - - - Account 704 33 593 33 62 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 63
16 Creditors : amounts falling due after more than one year 16 Creditors : amounts falling due after more than one year (continued) Year ended 31 July 2018 Year ended 31 July 2017 Analysis of finance leases Consolidated University Consolidated University £’000 £’000 £’000 £’000 31 July 2018 31 July 2017 Group and University £’000 £’000 Secured bank loans 21,221 21,221 22,913 22,913 Group and University Obligations under finance lease 13,787 13,787 15,156 15,156 Future minimum lease payments due: Other amounts due to funding bodies 243 243 271 271 Due within one year 2,648 2,602 35,251 35,251 38,340 38,340 Due between one and two years 2,796 2,655 Due between two and five years 9,310 8,836 2018 2017 Due in five years or more 8,373 11,612 £’000 £’000 Total lease payments due 23,127 25,705 Analysis of secured bank loans: Due within one year 1,692 1,621 Less: future finance charges (8,096) (9,504)
Due between one and two years 1,766 1,621 Obligations under finance leases held on the balance sheet 15,031 16,201 Due between two and five years 9,469 5,308 Due in five years or more 9,986 15,984 The finance lease obligations are secured on the specific fixed assets to which they relate. Due after more than one year 21,221 22,913 17 Provisions for liabilities Obligation to Teachers’ Defined Total Total secured and unsecured loans 22,913 24,534 fund deficit Pension Benefit Pensions on USS Scheme - Obligations Provisions Summary of Group and University bank loans at 31 July 2018 Pension Enhanced (Note 27) Pensions Lender Amount Start date Term Interest rate Borrower £’000 £’000 £’000 £’000 £’000 % Consolidated and University Barclays Bank 12,500 Apr 2008 25 years 6.30 University At 1 August 2017 429 1,950 86,720 89,099 Barclays Bank 6,500 Apr 2008 15 years 6.13 University Utilised in year - (145) (2,639) (2,784) Barclays Bank 3,640 Mar 2012 11½ years 4.01 University Additions in 2017/18 11 108 5,296 5,415 Barclays Bank 5,000 Mar 2009 14½ years 5.92 University Actuarial gain in respect of pension schemes - - (14,854) (14,854) Barclays Bank 6,000 Feb 2011 22 years 5.15 University At 31 July 2018 440 1,913 74,523 76,876 Total 33,640 Pension enhancements on termination All interest rates are fixed. The bank loans and overdraft are secured by means of a fixed and floating charge over the The assumptions for calculating the provision for pension enhancements on termination under FRS 102, are as follows: group assets. Year ended Year ended 31 July 2018 31 July 2017 Consolidated and University Discount rate 2.8% 2.6% Inflation 3.2% 3.1%
USS deficit The obligation to fund the past deficit on the Universities Superannuation Scheme (USS) arises from the contractual obligation with the pension scheme for total payments relating to benefits arising from past performance. Management have assessed future employees within the USS scheme and salary payment over the period of the contracted obligation in assessing the value of this provision. 64 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 65
18 Endowment Reserves 19 Restricted Reserves
Restricted net assets relating to endowments are as follows: Reserves with restrictions are as follows:
Restricted Donations University and Consolidated permanent Expendable 2018 2017 2018 2017 endowments endowments Total Total Total Total £’000 £’000 £’000 £’000 £’000 £’000 At 1 August Consolidated Capital 515 200 715 715 At 1 August 723 750 Accumulated income 269 21 290 328
784 221 1,005 1,043 New donations 94 109 Investment income 11 10 Investment income 5 2 7 7 (Decrease) / increase in market value of investments (2) 11 Expenditure - (1) (1) (45) Expenditure (154) (157) Movement for the year (51) (27) At 31 July 789 222 1,011 1,005
At 31 July 672 723 Represented by:
Capital 515 200 715 715 2018 Total 2017 Total Accumulated income 274 22 296 290 Analysis of other restricted funds /donations by type of purpose: £’000 £’000
789 222 1,011 1,005 Scholarships and bursaries 94 109 94 109 Analysis by type of purpose: University restricted reserves were £nil (2017: £nil) Scholarships and bursaries 789 155 944 438 Prize funds - 67 67 567
789 222 1,011 1,005
Analysis by asset: Cash & cash equivalents 1,011 1,005 1,011 1,005 66 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 67
20 Unrestricted Reserves 21 Reconciliation of statement of cash flows to balance sheet Total Notes At 1st August 2017 Cash Flows At 31st July 2018 Income and Pension Revaluation Unrestricted £’000 £’000 £’000 expenditure reserve reserve Reserves Consolidated £’000 £’000 £’000 £’000 Cash and cash equivalents 15,727 (1,320) 14,407 Consolidated Bank overdraft 15 (22) 12 (10) Balance at 1 August 2016 57,180 (106,353) 75,898 26,725 15,705 (1,308) 14,397
22 Capital and other commitments Deficit from the income and expenditure (6,044) - - (6,044) statement Provision has not been made for the following capital commitments: Other comprehensive income - 20,990 - 20,990 31 July 2018 31 July 2017 Transfer for pension scheme movements 3,736 (3,736) - - £’000 £’000 Transfer for historical cost 1,833 - (1,833) - Consolidated and University Transfer on disposal of assets 430 - (430) - Commitments contracted for 2,663 2,413 Transfer on impairment of assets 2,135 - (2,135) - 2,663 2,413 Balance at 31 July 2017 59,270 (89,099) 71,500 41,671 23 Lease obligations Total rentals payable under non-cancellable operating leases: Balance at 1 August 2017 59,270 (89,099) 71,500 41,671 31 July 2018 31 July 2017 Deficit from the income and expenditure (674) - - (674) statement Land and Buildings Plant and Machinery Total Total £’000 £’000 £’000 £’000 Other comprehensive income - 14,854 - 14,854 Payable during the year 590 94 684 628 Transfer for pension scheme movements 2,631 (2,631) - - Future minimum lease payments due: Transfer for historical cost 1,761 - (1,761) - Not later than 1 year 590 98 688 640 Transfer on impairment of assets 2,088 - (2,088) - Later than 1 year and not 246 223 469 1,530 Balance at 31 July 2018 65,076 (76,876) 67,651 55,851 later than 5 years Later than 5 years - - - - University Total lease payments due 836 321 1,157 2,170 Balance at 1 August 2016 56,682 (106,353) 75,898 26,227 Deficit from the income and expenditure 24 Amounts disbursed as agent (Consolidated and University) (6,062) - - (6,062) statement 31 July 2018 31 July 2017 Other comprehensive income - 20,990 - 20,990 £’000 £’000 £’000 £’000 Transfer for pension scheme movements 3,736 (3,736) - - NCTL TRAINING SALARIES Transfer for historical cost 1,833 - (1,833) - Income Transfer on disposal of assets 430 - (430) - Excess of income over 252 183 Transfer on impairment of assets 2,135 - (2,135) - expenditure at 1 August Balance at 31 July 2017 58,754 (89,099) 71,500 41,155 NCTL grants 1,922 2,104 2,174 2,287 Balance at 1 August 2017 58,754 (89,099) 71,500 41,155 Expenditure Deficit from the income and expenditure (978) - - (978) Disbursed to students (1,755) (1,842) statement Recovery of grant (272) (193) Other comprehensive income - 14,854 - 14,854 (2,027) (2,035) Transfer for pension scheme movements 2,631 (2,631) - - Excess of Income over 147 252 Transfer for historical cost 1,761 - (1,761) - expenditure at 31 July
Transfer on impairment of assets 2,088 - (2,088) - Funding Council grants are available solely to assist students, the University acts only as paying agent. The grants and Balance at 31 July 2018 64,256 (76,876) 67,651 55,031 related disbursements are therefore excluded from the consolidated statement of comprehensive income and expenditure. 68 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 69
25 Subsidiary undertakings 26 Connected charitable Institutions
The University wholly owns or effectively controls the following subsidiary companies and institutions: The University of Sunderland Development Trust is registered with the Charities Commission and administered by the University. It has been established for its general and special purposes. The activities of the charity are consolidated into Company Principal Activity Registration Status Note the group accounts, because the University and its students are the sole beneficiaries of the Trust. The movements in University of Sunderland the year on the total funds of the Trust, as reported in its own accounts, are as follows: Consultancy, non accredited courses England & Wales 100% owned Enterprises Limited Opening Change in Closing University of Sunderland Provision of fully serviced campus at Income Expenditure England & Wales 100% owned balance market value balance London Campus Limited Canary Wharf site £’000 £’000 £’000 £’000 £’000 University of Sunderland Providing employment opportunities England & Wales 100% owned Intern Factory Limited for graduates Consolidated University of Sunderland NGC Trading Limited Ceased trading England & Wales 100% owned 723 105 (154) (2) 672 Development Trust Learning North East University of Sunderland recruitment England & Wales 100% owned Limited operations in China 27 Pension Schemes University of Sunderland recruitment Learning World Limited England & Wales 100% owned The University’s employees belong to three main pension schemes operations in Malaysia and Hong Kong Sunderland Learning University of Sunderland recruitment • Universities Superannuation Scheme (USS) Malaysia 100% owned i. Malaysia Sdn Bhd operations in Malaysia • the Teachers’ Pension Scheme (TPS) Learning World Hong University of Sunderland recruitment • the Local Government Pension Scheme (LGPS) Hong Kong 100% owned i. Kong Limited operations in Hong Kong These are contracted out of the State Second Pension (S2P), the assets of which are held in separate trustee University of Sunderland in Provision of fully serviced campus in administered funds, and the University has accounted for the pension costs in accordance with FRS 102. Hong Kong 100% owned Hong Kong Limited Hong Kong Those not eligible to join the aforementioned schemes are enrolled with either the National Employment Savings University of Sunderland Trust (NEST), the Mandatory Provident Fund retirement benefit scheme (the “MPF Scheme”), or the Employees Hong Kong Campus Dormant Hong Kong 100% owned ii. Provident the Employees Provident Fund (KWSP) (the “EPF Scheme”) which all operate in accordance with the Limited laws of the UK, Hong Kong and Malaysia, respectively. University of Sunderland Dormant England & Wales 100% owned Analysis of pension liability by scheme Services Limited Year ended 31 Year ended 31 Usefine Limited Dormant England & Wales 100% owned July 2018 July 2017 Globalscreen Limited Dormant England & Wales 100% owned £’000 £’000 National Glass Centre Dormant England & Wales 100% owned LGPS pension scheme - Funded liabilities (70,713) (82,490) Charitable activities for the benefit of University of Sunderland Registered LGPS pension scheme - Unfunded liabilities (3,810) (4,230) the University of Sunderland and its England & Wales 26 Development Trust charity Teachers’ pension scheme - Enhanced pensions (1,913) (1,950) students USS pension scheme - Deficit obligation (440) (429) i. Indirectly owned through shareholding in Learning World Limited (76,876) (89,099) ii. 20% owned directly, and 80% owned indirectly through shareholding in University of Sunderland in Hong Kong Limited. The group pension charge to operating profit was as follows: The financial year end of all subsidiaries are co-terminous with the University. LGPS (including unfunded payments) 6,655 7,214 The entire reserves of University of Sunderland Development Trust are held as restricted within the group accounts on the basis that the Trust has a separate Board of Governors and so the University does not have full control. TPS 2,975 3,007 USS 282 267 NEST 78 41 Overseas subsidiary pensions 41 45 10,031 10,574
LGPS Pension scheme - part of restructure costs (Note 6) 177 2,387 10,208 12,961 70 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 71
27 Pension Schemes (continued) 27 Pension Schemes (continued)
(i) The Universities Superannuation Scheme Defined benefit liability numbers for the scheme have been produced using the following assumptions: The institution participates in Universities Superannuation Scheme. The scheme is a hybrid pension scheme, providing defined benefits (for all members), as well as defined contribution benefits. The assets of the scheme are held in a At 31 July At 31 July separate trustee-administered fund. Because of the mutual nature of the scheme, the assets are not attributed to 2018 2017 individual institutions and a scheme-wide contribution rate is set. The institution is therefore exposed to actuarial risks associated with other institutions’ employees and is unable to identify its share of the underlying assets and liabilities Discount rate 2.64% 2.57% of the scheme on a consistent and reasonable basis. As required by Section 28 of FRS 102 “Employee benefits”, the Pensionable salary growth N/A N/A institution therefore accounts for the scheme as if it were a wholly defined contribution scheme. Pension increases (CPI) 2.02% 2.41% As a result, the amount charged to the income and expenditure account represents the contributions payable to the scheme in respect of the accounting period. Since the institution has entered into an agreement (the Recovery Plan that The main demographic assumption used relates to the mortality assumptions. These assumptions have been updated determines how each employer within the scheme will fund the overall deficit), the institution recognises a liability for the for the 31 March 2018 accounting position, based on updated analysis of the Scheme’s experience carried out as part of contributions payable that arise from the agreement to the extent that they relate to the deficit and the resulting expense the 2017 actuarial valuation. The mortality assumptions used in these figures are as follows: in the income and expenditure account. 71% of AMC00 (duration 0) for males and 98% of S1NA [“light”] YoB Pre retirement FRS 102 makes the distinction between a Group Plan and a multi-employer scheme. A Group Plan consists of a 112% of AFC00 (duration 0) for females. tables – No age rating collection of entities under common control typically with a sponsoring employer. A multi-employer scheme is a scheme 99% of S1NA [“light”] YoB for entities not under common control and represents (typically) an industry-wide scheme such as that provided by USS. 96.5% of SAPS S1NMA “light” for males and Post retirement tables – rated down 1 The accounting for a multi-employer scheme where the employer has entered into an agreement with the scheme that 101.3% of RFV00 for females. determines how the employer will fund a deficit results in the recognition of a liability for the contributions payable that year for females arise from the agreement (to the extent that they relate to the deficit) and the resulting expense is recognised in profit or CMI_2016 with a smoothing parameter of 8.5 CMI_2014 with a long loss. The directors are satisfied that the scheme provided by USS meets the definition of a multi-employer scheme and Future improvements to mortality and a long term improvement rate of 1.8% pa term rate of 1.5% p.a. has therefore recognised the discounted fair value of the contractual contributions under the funding plan in existence at for males and 1.6% pa for females. the date of approving the Financial Statements. Males currently aged 65 (years) 24.5 24.4 Females currently aged 65 (years) 26.0 26.6 Calculation of liability and assumptions Males currently aged 45 (years) 26.5 26.5 The University has calculated the liability using a modelling tool released through the British Universities Finance Directors Group (BUFDG), and has determined that a provision of £440k (2017: £429k) should be recognised in the Females currently aged 45 (years) 27.8 29 balance sheet.
The assumptions inherent within the calculation include a discount rate of 2.8% (2017: 2.6%), increase in staff salaries Scheme assets £63.6bn £60.0bn of 3.6% (2017: 3.6%), and employer contributions of 18% (2017: 18%). Total scheme liabilities £72.0bn £77.5bn The total cost charged to the profit and loss account is £282k (2017: £267k) as shown in the table at the beginning of FRS 102 total scheme deficit £8.4bn £17.5bn this note. The latest available full actuarial valuation of the scheme was at 31 March 2014 (“the valuation date”), which was carried FRS 102 total funding level 88% 77% out using the projected unit method. The valuation as at 31 March 2017 is underway. Since the institution cannot As part of this valuation, the trustees determined, after consultation with the employers, a recovery plan to pay off the identify its share of scheme assets and liabilities, the following disclosures reflect those relevant for the scheme as a shortfall by 31 March 2031. The next formal triennial actuarial valuation is as at 31 March 2017. If experience up to that whole. date is in line with the assumptions made for this current actuarial valuation, and contributions are paid at the determined The 2014 valuation was the third valuation for USS under the scheme-specific funding regime introduced by the rates or amounts, the shortfall at 31 March 2017 is estimated to be £5.0 billion, equivalent to a funding level of 92%. The Pensions Act 2004, which requires schemes to adopt a statutory funding objective, which is to have sufficient and contribution rate will be reviewed as part of each valuation and may be reviewed more frequently. appropriate assets to cover their technical provisions. At the valuation date, the value of the assets of the scheme was The technical provisions relate essentially to the past service liabilities and funding levels, but it is also necessary £41.6 billion and the value of the scheme’s technical provisions was £46.9 billion indicating a shortfall of £5.3 billion. The to assess the ongoing cost of newly accruing benefits. The cost of future accrual was calculated using the same assets therefore were sufficient to cover 89% of the benefits which had accrued to members after allowing for expected assumptions as those used to calculate the technical provisions but the allowance for promotional salary increases was future increases in earnings. These figures will be revised once the 2017 Scheme Valuation is complete. not as high. Analysis has shown very variable levels of growth over and above general pay increases in recent years, and the salary growth assumption built into the cost of future accrual is based on more stable, historic, salary experience. However, when calculating the past service liabilities of the scheme, a cautionary reserve has been included, in addition, on account of the variability mentioned above. 72 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 73
27 Pension Schemes (continued) 27 Pension Schemes (continued)
(ii) Teachers’ Pension Scheme (TPS) (iii) Local Government Pension Scheme (LGPS) The Teachers’ Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers’ The LGPS is a defined benefit scheme, with the assets held in separate trustee administered funds. LGPSs are Pensions Regulations 2010, and the Teachers’ Pension Scheme Regulations 2014. These regulations apply to teachers regulated by statute, with separate regulations for (a) England and Wales and (b) Scotland. The benefits of the LGPSs in schools and other educational establishments, including academies, in England and Wales that are maintained by are determined nationally by regulation and meet the definition of a defined benefit scheme. The South Tyneside local authorities. In addition, teachers in many independent and voluntary-aided schools and teachers and lecturers Metropolitan Council is the administering authority for the Tyne & Wear Pension Fund (TWPF). The metropolitan councils in some establishments of further and higher education may be eligible for membership. Membership is automatic in Tyne & Wear, and other bodies, for example the University, are employing bodies within the TWPF. In the event that for full-time teachers and lecturers and, from 1 January 2007, automatic too for teachers and lecturers in part-time the University closes, and there is no successor establishment, the Secretary of State becomes the compensating employment following appointment or a change of contract. Teachers and lecturers are able to opt out of the TPS. authority. Although members may be employed by various bodies, their retirement and other pension benefits are set out in The disclosures below relate to the funded liabilities within the Tyne & Wear Pension Fund (the Fund) which is part of regulations made under the Superannuation Act 1972 and are paid by public funds provided by Parliament. The TPS is the Local Government Pension Scheme (LGPS) and certain related unfunded liabilities which have been separately an unfunded scheme and members contribute on a ‘pay as you go’ basis – these contributions, along with those made disclosed. by employers, are credited to the Exchequer under arrangements governed by the above Act. The LGPS is a funded defined benefit plan with benefits earned up to 31 March 2014 being linked to final salary. The Teachers’ Pensions Regulations require an annual account, the Teachers’ Pension Budgeting and Valuation Benefits after 31 March 2014 are based on a Career Average Revalued Earnings scheme. Details of the benefits earned Account, to be kept of receipts and expenditure (including the cost of pension increases). From 1 April 2001, the over the period covered by this disclosure are set out in ‘The Local Government Pension Scheme Regulations 2013’ Account has been credited with a real rate of return, which is equivalent to assuming that the balance in the Account is and ‘The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014’. invested in notional investments that produce that real rate of return. The unfunded pension arrangements relate to termination benefits made on a discretionary basis upon early retirement Not less than every four years the Government Actuary (GA), using normal actuarial principles, conducts a formal in respect of members of the Local Government Pension Scheme under the Local Government (Early Termination of actuarial review of the TPS. The aim of the review is to specify the level of future contributions. Employment) (Discretionary Compensation) (England and Wales) Regulations. The latest actuarial review of the TPS was carried out as at 31 March 2012 and in accordance with The Public Service The funded nature of the LGPS requires participating employers and its employees to pay contributions into the Fund, Pensions (Valuations and Employer Cost Cap) Direction 2014. The valuation report was published by the Department of calculated at a level intended to balance the pension liabilities with investment assets. Information on the framework for Education (the Department) on 9 June 2014. The key results of the valuation are: calculating contributions to be paid is set out in LGPS Regulations 2013 and the Fund’s Funding Strategy Statement. The last actuarial valuation was at 31 March 2016 and the contributions to be paid until 31 March 2020 resulting from • employer contribution rates were set at 16.4% of pensionable pay; in line with current regulations, not including the that valuation are set out in the Fund’s Rates and Adjustment Certificate. additional 0.08% employers pay for the cost of Scheme administration; On 26 October 2018, the High Court handed down a judgment involving the Lloyds Banking Group’s defined benefit • total scheme liabilities for service to the effective date of £191.5 billion, and notional assets of £176.6 billion, giving a pension schemes. The judgment concluded the schemes should be amended to equalise pension benefits for men notional past service deficit of £15.0 billion; and and women in relation to guaranteed minimum pension benefits, “GMP”. The Government will need to consider this • an employer cost cap of 10.9% of pensionable pay. outcome in conjunction with the Government’s recent consultation on GMP indexation in public sector schemes before The new employer contribution rate and administration levy for the TPS were implemented in September 2015. A full concluding on any changes required to LGPS schemes. copy of the valuation report and supporting documentation can be found on the Teachers Pension Scheme website at The Fund Administering Authority, South Tyneside Council, is responsible for the governance of the Fund. https://www.teacherspensions.co.uk/news/employers/2014/06/publication-of-the-valuation-report.aspx. Scheme Changes Assets Lord Hutton, who chaired the Independent Public Service Pensions Commission, published his final report in March The assets allocated to the Employer in the Fund are notional and are assumed to be invested in line with the 2011 and made recommendations about how pensions can be made sustainable and affordable, whilst remaining investments of the Fund for the purposes of calculating the return to be applied to those notional assets over the fair to the workforce and the taxpayer. The Government accepted Lord Hutton’s recommendations as the basis for accounting period. The Fund is large and holds a significant proportion of its assets in liquid investments. As a consultation and Ministers engaged in extensive discussions with trade unions and other representative bodies on consequence there will be no significant restriction on realising assets if a large payment is required to be paid from reform of the TPS. Those discussions concluded on 9 March 2012, and the Department published a Proposed Final the Fund in relation to an employer’s liabilities. The assets are invested in a diversified spread of investments and the Agreement, setting out the design for a reformed TPS to be implemented from 1 April 2015. approximate split of assets for the Fund as a whole (based on data supplied by the Administering Authority) is shown in The key provisions of the reformed scheme include: a pension based on career average earnings; an accrual rate of the disclosures. 1/57th; and a Normal Pension Age equal to State Pension Age, but with options to enable members to retire earlier or The Administering Authority may invest a small proportion of the Fund’s investments in the assets of some of the later than their Normal Pension Age. Importantly, pension benefits built up before 1 April 2015 will be fully protected. employers participating in the Fund if it forms part of their balanced investment strategy. In addition, the Proposed Final Agreement includes a Government commitment that those within 10 years of Normal Pension Age on 1 April 2012 will see no change to the age at which they can retire, and no decrease in the amount of Risks Associated with the Fund in relation to accounting pension they receive when they retire. There will also be further transitional protection, tapered over a three and a half year period, for people who would fall up to three and a half years outside of the 10 year protection. Asset volatility In his interim report of October 2010, Lord Hutton recommended that short-term savings were also required, and The liabilities used for accounting purposes are calculated using a discount rate set with reference to corporate bond that the only realistic way of achieving these was to increase member contributions. At the Spending Review 2010 yields. If assets underperform this yield will create a deficit in the accounts. The Fund holds a significant proportion of the Government announced an average increase of 3.2 percentage points on the contribution rates by 2014/15. The growth assets which while expected to outperform corporate bonds in the long term creates volatility and risk in the increases have been phased in since April 2012. short term in relation to the accounting figures. The arrangements for a reformed Teachers’ Pension Scheme, in line with the remainder of the recommendations Changes in bond yield made by Lord Hutton, have now been implemented. The Career Average Revalued Earnings (CARE) scheme was implemented from 1 April 2015, whereby benefits will accrue on a career average basis and there is a normal pension A decrease in corporate bond yields will increase the value placed on the liabilities for accounting purposes although age aligned to the state pension age. this will be marginally offset by the increase in the assets as a result. The next valuation of the TPS is currently underway based on April 2016 data, whereupon the employer contribution rate is expected to be reassessed and will be payable at some point in 2019. The total TPS pension cost for the institution was £2,975k (2017: £3,007k). The liability for unpaid contributions was £393k (2017: £399k) at the balance sheet date with respect to both employees’ and employers’ contributions. 74 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 75
27 Pension Schemes (continued) 27 Pension Schemes (continued)
Inflation risk The agreed contribution rate was set at 17% (2017: 17%) for employers and this rate is planned to continue for the next The majority of the pension liabilities are linked to either pay or price inflation. Higher inflation expectations will lead to year. The employee rate is dependent upon salary and ranges from 5.5% to 12.5% but averages around 6.5%. a higher liability value. The assets are wither unaffected or loosely correlated with inflation meaning than an increase in LGPS Deficit Contributions inflation will increase the deficit. A lump sum payment (with inflationary increases) is payable each year to address the pension scheme deficit. In Life expectancy 2017/18, the University was charged a total of £2,408k (2017: £2,087k) for the recovery of the scheme deficit identified in the 2014 valuation. The anticipated charge for 2018/19 is £2,432k. The majority of the Fund’s obligation are to provide benefits for the life of the member following retirement, so increases in life expectancy will result in an increase in liabilities. Assumptions The financial assumptions used to calculate scheme liabilities under FRS102 are: Exiting employers Employers who leave the Fund (or their guarantor) may have to make an exit payment to meet any shortfall in assets LGPS Ex-Gratia LGPS Ex-Gratia against their pension liabilities. If the employer (or guarantor) is not able to meet this exit payment the liability may in At 31 July At 31 July At 31 July At 31 July certain circumstances fall on other employers in the Fund. Further, the assets at exit in respect of ‹orphan liabilities’ may, in retrospect, not be sufficient to meet the liabilities. This risk may fall on other employers. ‹Orphan liabilities’ are 2018 2018 2017 2017 currently a small proportion of the overall liabilities in the Fund. %pa %pa %pa %pa Discount rate 2.8 2.8 2.6 2.6 Price Inflation (RPI) 3.2 3.2 3.1 3.1 Year ended 31 Year ended 31 July 2018 July 2017 Price Inflation (CPI) 2.1 2.1 2.0 2.0 £’000 £’000 Pension increases 2.1 2.1 2.0 2.0 Total contributions for the year Pension accounts revaluation rate 2.1 - 2.0 - Employer’s ordinary contributions 3,319 3,186 Salary increases 3.6 - 3.5 -
Additional lump sum payments for early retirement 330 1,690 The most significant non-financial assumption is the assumed level of longevity. The table below shows the life Additional employer’s contributions to recover the historic deficit 2,408 2,087 expectancy assumptions used in the accounting assessments based on the life expectancy of male and female members at age 65. Employer’s contribution in respect of unfunded benefits 280 277 At 31 July At 31 July 6,337 7,240 2018 2017 Males Employees’ contributions 1,452 1,530 Member aged 65 at accounting date 22.9 22.8 Member aged 45 at accounting date 25.1 25 7,789 8,770 Females Member aged 65 at accounting date 26.4 26.3 Member aged 45 at accounting date 28.7 28.6 76 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 77
27 Pension Schemes (continued) 27 Pension Schemes (continued)
Sensitivity The tables below include, where applicable, disclosures for the LGPS and Ex-gratia pensions combined to enable clear presentation. The Ex-gratia pensions account for £3,810k (2017: £4,309k) of the total liabilities of £74,523k, and £nil of The approximate impact on the present value of the funded defined benefit obligation, of changing key assumptions the total assets. as at 31 July 2018, and the projected service cost for the period ending 31 July 2019 is set out below. In each case, only the assumption mentioned is altered; all other assumptions remain the same and are summarised in the previous Year ended Year ended section. The sensitivity of unfunded benefits (where applicable) has not been included on materiality grounds. 31 July 2018 31 July 2017 Increase / (decrease) in Increase / (decrease) in £’000 £’000 present value of the total projected service cost obligation Analysis of the amount shown in the balance sheet for LGPS and ex-gratia pensions: % £’000 % £’000 Scheme assets 175,637 157,810 Scheme liabilities (250,160) (244,530) Deficit in the scheme – net pension liability recorded Discount rate increased by 0.1% (2.0) (5,010) (3.1) (203) (Note 17) (74,523) (86,720) within pension provisions Salary increase rate increased by 0.1% 0.6 1,479 0.0 - Pension increase rate increased by 0.1% 1.5 3,612 3.3 213 Current service cost (6,480) (6,900) Mortality age rating increased by 1 year * 2.9 7,059 3.6 233 Past service costs (330) (1,690) * A rating of +1 year means that members are assumed to follow the mortality pattern of the base table for an individual Total operating charge: (6,810) (8,590) that is 1 year than them. The sensitivities presented show the impact of increasing each rate. A decrease in each rate would have a similiar The total operating charge disclosed above of £6,810k (2017: 8,590k) excludes £22k (2017: £9k) increase in the impact upon the funded defined benefit obligation, in the opposite direction. employee benefits accrual required under FRS 102, and £nil (2017: £1,002k) with respect to amounts payable into the fund for early retirements which were settled in the next financial year. The total charge to the statement of comprehensive income and expenditure was therefore £6,832k (2017: £9,601k) Scheme assets The assets in the scheme were: Analysis of the amount charged to interest payable for LGPS and ex-gratia pensions Interest cost (2,184) (2,410) Fair value as at Net charge to other finance income (2,184) (2,410) At 31 July At 31 July At 31 July 2018 2017 2016 Analysis of other comprehensive income for LGPS and ex-gratia pensions: £’000 £’000 £’000 Gain on assets 12,230 13,180 Gain on liabilities 2,624 7,810 Equities 118,204 104,312 93,032 Total other comprehensive income before deduction for tax 14,854 20,990 Property 15,105 14,203 14,032 Government bonds 7,025 6,155 5,332 Corporate bonds 20,023 18,148 16,137 Cash 3,688 6,155 4,210 Other 11,592 8,837 7,577 Total 175,637 157,810 140,320 78 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 79
27 Pension Schemes (continued) 28 Financial Instruments At 31 July At 31 July The University is included in the consolidated financial statements, and is considered to be a qualifying entity under FRS 2018 2017 102 paragraphs 1.8 to 1.12. The following exemptions available under FRS 102 in respect of certain disclosures for the £’000 £’000 University only financial statements have been applied: Analysis of movement in deficit for LGPS and ex-gratia pensions 31 July 2018 31 July 2017 Deficit at beginning of year (86,720) (103,950) £’000 £’000 Contributions or benefits paid by the University 6,337 7,240 Current service cost (6,480) (6,900) Financial Assets Past service cost (330) (1,690) Cash and cash equivalents 14,407 15,727 Other finance charge (2,184) (2,410) Trade receivables 9,655 6,918 Gain recognised in other comprehensive income 14,854 20,990 Other receivables 371 378 Deficit at end of year (74,523) (86,720) Accrued income 251 777
Analysis of movement in the present value of LGPS and ex-gratia liabilities Present value of LGPS and ex-gratia liabilities at the start of the year 244,530 244,270 Financial Liabilities Current service cost (net of member contributions) 6,480 6,900 Bank overdraft 10 22 Past service cost 330 1,690 Secured bank loans 22,913 24,534 Interest expense 6,334 5,790 Obligations under finance leases 15,031 16,201 Actual member contributions (including notional contributions) 1,452 1,530 Payments received on account 15,592 14,435 Actuarial gain on liabilities (2,624) (7,810) Trade payables 1,155 3,123 Actual benefit payments (6,342) (7,840) Accruals 9,227 8,341 Present value of LGPS and ex-gratia liabilities at the end of the year 250,160 244,530 Other payables 1,316 1,386 Amounts due to funding bodies 271 299 Analysis of movement in the fair value of scheme assets There is no material difference between the book value of financial assets and liabilities noted above, and their fair value. Fair value of assets at the start of the year 157,810 140,320 The Group’s financial assets and liabilities comprise cash and liquid resources, and various items, such as trade Interest income on assets 4,150 3,380 receivables and trade payable which arise directly from its operations. The Group is not exposed to significant Actuarial gain on assets 12,230 13,180 foreign exchange or interest rate risk. Actual contributions paid by University 6,337 7,240 Actual member contributions (including notional contributions) 1,452 1,530 29 Accounting estimates and judgements Actual benefit payments (6,342) (7,840) Pension Provisions Fair value of scheme assets at the end of the year 175,637 157,810 The University recognises a significant liability in its balance sheet with respect to its employee pension obligations, most notably in relation to the LGPS scheme. The assumptions used in calculating these liabilities are outlined in detail in Note LGPS assets do not include any of the University’s own financial instruments, or any property occupied by the University. 27, and the University has not deviated from those advised by the actuary. (iv) National Employment Savings Trust (NEST) The liability decreased in the year ended 31 July 2018 by 14% (2017: 17%), largely as a result of continued changes to the discount rate used linked to the bond rates which fell in the immediate months following the UK’s vote to leave the EU in NEST is a qualifying pension scheme, established by law to support the introduction of pension auto-enrolment. It is June 2016. The discount rate remains the key area of uncertainty regarding future estimates and judgements around the a defined benefit scheme, regulated by The Pensions Regulator and administered by a corporate trustee, the NEST pension scheme liability, given that small movements in the discount rate can significantly impact on the estimate. Corporation, a non-departmental public body that operates at arm’s length from government but is accountable to the Department for Work and Pensions. Impairment of tangible fixed assets The total contribution for the year ended 31 July 2018 was £140k (2017: £70k) of which employers’ ordinary contributions The University is developing a residential strategy, in consultation with a number of key stakeholders. This is part of the totalled £78k (2017: £41k) and employees’ contributions totalled £62k (2017: £29k). No additional lump sum contributions development of a wider estates strategy that the University intends to bring to a conclusion in the next 18 to 24 months. It were made in the year, and the liability for unpaid contributions was £14k (2017: £8k) at the balance sheet date. is possible this could lead to changes in the University’s intentions for future use or sale of part of the existing estate assets, and indicate a requirement to review such assets for impairment. (v) Overseas Pension Schemes The University is satisfied that there are no material factors indicating impairment of assets at the balance sheet date, other The group operates defined contribution schemes for its employees in Hong Kong and Malaysia. than those already recognised in the Consolidated Statement of Comprehensive Income and Expenditure. The Mandatory Provident Fund retirement benefit scheme (the “MPF Scheme”), and the Employees Provident Fund (KWSP) (the “EPF Scheme”) operate in accordance with the laws of Hong Kong and Malaysia respectively. Provision for doubtful debts Contributions are made based on a percentage of the employees’ basic salaries and are charged to the consolidated profit The University has provided for aged debts using its best estimate of unrecoverable debts from historical experience and or loss as they become payable in accordance with the rules of the MPF and EPF Schemes. The assets of the schemes are known factors, and is satisfied that all unprovided debts are recoverable as reported in the balance sheet. held separately from those of the group in independently administered funds. The University is satisfied that all other operating and finance leases are appropriately recognised. 80 Report and Financial Statements 2017/2018 Report and Financial Statements 2017/2018 81
The University in numbers Academic Awards winter 2017
Lt Col Mordaunt Cohen Honorary Fellowship in recognition of his distinguished military service and contribution to the City of Sunderland and to our University.
Professor Tom Shakespeare Honorary Doctorate of Science in recognition of his outstanding academic % % career in social sciences and ethics, as well as his active campaigning for 93.4 67.3 disability rights. Academic Awards summer 2018
Alyson Dixon - Athlete and Olympian of graduates in work or further study of leavers in graduate level jobs Honorary Fellowship, in recognition of her outstanding record of achievement six months after graduating 125,000 six months after graduation in long-distance running in UK, European and international athletics. (Destination of Leavers from alumni contributing to (Destination of Leavers from Higher Education 2016/17) societies across the world Higher Education 2016/17) Professor Ian Fraser - Leading Authority in Reproductive Medicine, Obstetrics and Gynaecology Honorary Doctorate of Science, in recognition of his outstanding contribution to the disciplines of obstetrics and gynaecology. Alice Hall - Entrepreneur Named Alumni Achiever of the Year. Alice founded online retailer Pink Boutique in 2012. It is now one of the UK’s fastest-growing private fashion % % firms. 94 Kevin Maguire - Journalist and Broadcaster 84 Honorary Doctorate of Arts, in recognition his outstanding contribution to political journalism, and as an advocate of the social mobility agenda. 7,600 Lorna Moran OBE - Chair, NRG Honorary Doctorate of Business Administration, in recognition of her Overall Satisfaction TNE and independent of staff say the University is a good outstanding contribution to the north east business community, and her National Student Survey 2018 distance learning students place to work personal commitment to charitable causes.
Gareth Pugh - Fashion Designer Honorary Doctorate of Arts, in recognition of his outstanding contribution to the international fashion design industry.
Jill Scott - Footballer, England Lioness Honorary Fellowship, in recognition of her outstanding record of sporting achievement as both a national and international footballer.
Dr Chris Steele MBE - Doctor, Campaigner and Broadcaster Honorary Doctorate of Science, in recognition of his contribution to the medical profession and for his public health broadcasting role.
REF TEF Silver Karen Walker - Senior Vice-President and Chief Marketing Officer, Cisco 10 All areas of research submitted Honorary Doctorate of Business Administration, in recognition of her to the Research Excellence Award areas of world-leading research international profile in technology and marketing, and as a role model Framework classified as encouraging women into leadership. (Research Excellence Framework 2014) ‘internationally excellent’ (2014) 2017 University of Sunderland City Campus Chester Road Sunderland SR1 3SD T: 0191 515 2000 www.sunderland.ac.uk