london.ac.uk
Financial
Statements
2015–16
Contents
4 Strategic Report
28 Public Benet Statement
29 Corporate Governance Statement
31 Membership and Responsibilities of the Board of Trustees
33 Statement of Internal Control by the Board of Trustees
34 Independent Auditor’s Report to the Board of Trustees
of the University of London
35 Statement of the University’s Principal Accounting Policies
40 Consolidated Statement of Comprehensive Income
41 Consolidated and University Statement of Changes in Reserves
42 Consolidated and University Balance Sheet
43 Consolidated Cash Flow Statement
44 Notes to the Financial Statements
Financial Statements 2015–16 london.ac.uk2
Established by Royal Charter in 1836, the
University of London is one of the oldest,
largest and most diverse universities in the
UK. It consists of 18 independent member
institutions of outstanding reputation
together with a number of prestigious
academic bodies based at Senate House.
Together with the central professional
services, the University of London strives to
deliver highly effective, value-added services
to its independent member institutions
and to enhance academic excellence, while
at the same time ensuring the nancial
sustainability of all its operations. These
serve and support both the interests of
the member institutions and the broader
achievements of UK higher education.
Preface
Preface
Financial Statements 2015–16 london.ac.uk3 Financial Statements 2015–16 london.ac.uk3
The University Strategy is one for growth and
development underpinned by a renewed confidence,
purpose and momentum. It outlines an ambitious
programme of investment and development capable
of fulfilling our future plans and ambitions. The
strategic vision of the University is:
To make a unique contribution to learning
and research-led scholarship through our
unrivalled network of member institutions,
our global reach and reputation, and the
breadth of our high-quality innovative
academic services and infrastructure.
As has been the case throughout our 180 year
history, the University continues to undergo a period
of significant change. To ensure that we realise our
ambitions and meet the needs of our stakeholders
across the world, we are creating innovative solutions
and making a series of key investments to respond
to the changing needs of students, support our
academic mission and manage our extensive
property portfolio.
Overview
Strategic Report
University Strategy 2014–19
We are creating innovative
solutions and a series of key
investments to realise our
ambitions.
The University Strategy
is one for growth and
development, underpinned
by a renewed condence,
purpose and momentum.
The University Strategy 2014-19 is one of investment
and growth, and sees the development and
investment of all areas across the University, in
our academic mission, growing the future of our
services, the development of our estates and the
provision of quality student accommodation. The
2015-16 financial year sees an increase in the level of
underlying investment to support the delivery of the
strategy, with the University reporting a deficit before
other gains/losses and tax of £3.7 million. In line with
the rest of the higher education sector, the 2015-16
financial year is the first time that the University is
required to publish results in line with FRS 102. This
has a significant impact on the format and scope of
the Financial Statements and the accounting policies.
An explanation of the differences in detail can be
found within Note 31 of the Financial Statements.
This will be delivered through a number of
strategic aims:
Aim 1: deliver academic excellence
Invest in our academic excellence to widen
student access through flexible learning and
fulfil an ambitious programme of research
promotion and facilitation in the humanities
Aim 2: provide innovative high-quality academic
support and professional services
Develop, augment and commercialise our portfolio
of services for the University’s members and the
education sector, with the aim to be the “go to”
provider of student and academic support services
Aim 3: property that is valued and relevant
Create a vibrant academic hub, through a property
portfolio which balances the needs of the
University’s members with maximising income
opportunities
Aim 4: manage a high-performing organisation
Increase our investment in staff development,
encourage a common purpose across our diverse
activities and enhance our capacity where gaps
exist, in order to deliver our plans
Financial Statements 2015–16 london.ac.uk4
The University of London is unlike many other
universities. It is a loose federation of 18 autonomous
member institutions of outstanding reputation, and a
number of highly acclaimed central academic bodies
and activities. These Financial Statements cover
the activities of the central University. The central
academic bodies include the University of London
International Academy which offers distance learning
courses to over 50,000 students in 180 countries;
the School of Advanced Study (SAS), the UK’s only
national centre for the support and facilitation of
research in the humanities; Senate House Library and
the University of London Institute in Paris. The central
University also provides a suite of innovative, high-
quality academic support and professional services,
and manages a valuable property portfolio providing
academic space, student halls of residence and
conference facilities.
It has been an eventful year for the University. The
implications of the EU referendum vote are uncertain
at this point. As a globally connected university,
the University of London has a long tradition of
welcoming students and staff from the European
Union and across the world. The outcome of the
referendum will not alter this and we will continue
to welcome students, staff and visitors from the EU
and beyond. At this stage it is impossible to gauge
the longer term impact on our EU connections in
the fields of research or other collaborations. We
are completely committed to working with other
universities and with national bodies to do all we can
to ensure continued interaction with Europe as fully
as possible in the challenging times ahead.
The new higher education and research bill will have
implications for the University, particularly in relation
to changes in the Teaching Excellence Framework
(TEF) and the University of London International
Academy.
We continued work on the necessary arrangements
for City’s accession to the University, which took
place on 1 September 2016. The new member
institution is now formally known as City, University
of London and its distinctive academic profile, its
commitment to practice-based research and its deep
interconnectedness with the City of London will bring
a new element to the University.
Internally the University’s visual identity project
commenced to ensure of more coherent presentation
of the University across all departments. This includes
a refresh of the visual identity for all uses and will be
rolled out in autumn 2016.
Legal form of the University
The University of London is a company established by
Royal Charter in the United Kingdom in 1836. The
registered office of the University and its subsidiary
undertakings is Senate House, Malet Street, London,
WC1E 7HU.
Our activities
Strategic Report
Financial Statements 2015–16 london.ac.uk5
Aim 1: deliver academic excellence
Th
e School of Advanced Study continues to grow
and develop. The benefit of the investment in the
academic base of the School over the last two years
is being realised with several new initiatives taking
off as a result this year.
Cities@SAS was developed and launched aiming
to promote and facilitate new and interdisciplinary
work on cities initially drawing on the work of two
established SAS research centres – the Centre for
Cultural Memory and the Centre for Metropolitan
History. SAS has played a particularly valuable role
in bringing together policy-makers, planners, and
contemporary commentators to complement the
work of all of its institutes in debating Renaissance
cities, law in urban contexts, human rights, material
culture and the urban built environment.
Following another highly successful Being
Human Festival in November, the School’s public
engagement activity is thriving and was followed in
May by the launch of the first in its ‘Living Literature’
series featuring the 'Great Gatsby' portraying the
history of F. Scott Fitzgerald and Prohibition-era New
York. The event included an array of historical food
and drink inspired by the period, bootleggers, live
1920s jazz, archive material from the period and
special performances. It generated extensive media
coverage including BBC Radio 4.
School of Advanced Study
One of the most anticipated events of the year
was the international conference to celebrate Aby
Warburg’s 150th anniversary convened by the
Warburg Institute. The conference attracted an
all-time SAS record of delegates filling UCL’s Logan
Hall to capacity. The occasion launched the Warburg
Institute’s ambition to be the foremost place in the
UK and Europe to study art, history and culture.
The School was particularly pleased that the
collaborative distance learning programme with the
International Programmes on Refugee Law Protection
yielding an increase in student numbers of 83%.
Additionally the Institute of Advanced Legal Studies
secured prestigious Erasmus Mundus funding for a
joint Master’s in parliamentary procedures and legal
drafting, working collaboratively with Complutense
University (Madrid) and LUISS (Rome).
Following another highly
successful Being Human Festival
in November, the School’s public
engagement activity is thriving
and was followed in May by the
launch of the rst in its ‘Living
Literature’ series.
Events continue to be one of the most significant
activities of the School, and 2015-16 was no exception
with 2,325 events held bringing together over 65,000
attendees from all over the world.
The Institutes were awarded a number of grants
during the year, notably an AHRC funded Open World
Research Initiative grant to the Institute of Modern
Languages Research, a HEFCE Catalyst grant to the
Human Mind Project, a Templeton Trust grant to fund
an experimental project entitled ‘New Directions of
the Study of the Mind’ and a Nomis Foundation award
to the Warburg Institute for a project on Body and
Image in Art and Science. Work on these projects
mostly commenced in the current academic year.
Last but not least, the year saw the successful
negotiation of an agreement between the Institute
of Classical Studies and the Combined Library of the
Roman and Hellenic Societies which ensures the co-
existence of the collections of these great institutions
in Senate House for another 25 years.
The School was particularly
pleased that the collaborative
distance learning programme
with the International
Programmes on Refugee Law
Protection yielding an increase
in student numbers of 83%.
Strategic Report
Financial Statements 2015–16 london.ac.uk6
During the course of the year Senate House
Library upgraded its Library Management System,
introduced a new website and held its largest ever
events and exhibition programme to commemorate
the 400th anniversary of Shakespeare’s death. The
exhibition comprised an installation artwork – the
‘Shakespeare staircase’ (pictured on the front cover);
an exhibition on two floors of Senate House exploring
Metamorphosis: the seven ages of Shakespeare; a
microsite featuring a promotional film presented
by actor Paterson Joseph; and a full programme
of events. In total, just under 30,000 users visited
the microsite, with 1,066 new visitors entering the
Library to see the main exhibition and a further 783
attendees at the events. Highlights included an
evening exploring the sonnets, hosted by Sir Brian
Vickers with performances by Edward Fox, Joanna
David and Dominic West, with keynotes by leading
Shakespearean scholars Professor Sir Jonathan Bate
and Professor Sir Stanley Wells.
In total, just under 30,000 users
visited the microsite, with 1,066
new visitors entering the Library
to see the main exhibition and
a further 783 attendees at the
events.
Senate House Library
Senate House Library held its
largest ever events and exhibition
programme to commemorate
the 400th anniversary of
Shakespeare’s death.
Visits to the Library continue to grow steadily with
158,495 recorded visits over the course of the past
year. According to a recent user survey, satisfaction
rates are running at 83% with 75% of users claiming
that the Library holds resources not readily
available elsewhere. In 2016, the Library re-located
approximately 11,000 linear metres of modern
collections, special collections and research archives
equating to approximately 400,000 items to free
up space and to enable the delivery of Programme
Beveridge, the University’s flexible working
programme.
Strategic Report
Financial Statements 2015–16 london.ac.uk7
International Programmes is the University’s largest
academic activity in terms of student numbers,
operating as a collaboration between the member
institutions of the University and the University
of London International Academy. International
Programmes provides distance and flexible learning
programmes at foundation, undergraduate and
postgraduate levels. It currently has 51,000 registered
students (2014-15: 52,000) across approximately
180 countries and a portfolio of over 100 academic
programmes and awards.
Existing programmes continue to recruit students
in high volumes each year though competition is
intense. The University is continuing to invest in
developing new and existing programmes and
infrastructure, working with member institutions to
ensure that the International Academy maintains its
position as a world-leader in distance and flexible
learning. During the year, a Master’s in Professional
Accountancy programme (MPAcc) was launched in
collaboration with UCL providing academic direction
and also working with ACCA, the global body for
professional accountants. The programme recruited
over 1,300 students in this, its year of launch. It is
a unique partnership between an accountancy
body and a university to enable students across the
globe to gain a Master’s degree and a professional
accountancy qualification at the same time.
The International Academy began development of
a Global MBA during the year in collaboration with
Queen Mary University of London (QMUL) building
on the MPAcc programme model. Total development
expenditure of £1.4 million was capitalised in 2015-
16 in relation to this programme and the MPAcc
programme development (2014-15: £0.5 million).
In line with the University’s overarching strategic
aims, investment in programme development is also
being supported by additional resources in marketing
and global engagement. The aim is to build global
networks to recruit students, develop networks of
high quality teaching institutions, engage with the
corporate sector and promote other relationships
for growth. This resulted in some expected increases
in overheads during the year and an overall surplus
outcome marginally ahead of the 2014-15 result.
In April 2016, a memorandum of understanding was
signed between the University and the Singapore
Institute of Management (SIM) to support greater
collaboration on new student recruitment within
Singapore, the largest single territory for International
Programmes students, and the surrounding region.
International Academy
The MSc in Professional
Accountancy recruited
over 1,300 students and
is a unique partnership
between an accountancy
body and a university.
Strategic Report
Financial Statements 2015–16 london.ac.uk8
The University of London in Paris (ULIP) continues
its strategy of partnership, in particular with Queen
Mary University of London (QMUL).
University of London Institute in Paris
The cooperation between
QMUL and ULIP heralds the
creation of new international
relations programmes.
There are also new programmes being developed
jointly with QMUL in business analytics and new
modules for the undergraduate French studies in
international relations and business. The successful
European politics public lecture series ‘Challenging
Europe’ will continue this year and contributes to
the reputation of the University of London in Paris.
In 2015-16 three events were held covering the EU
referendum, reform in border states of the EU and
the interplay between security, migration and
terrorism with an average audience of 60. The
announcement of Britain’s intention to leave
the EU increases the relevance of the University’s
outreach to mainland Europe.
The announcement of Britain’s
intention to leave the EU increases
the relevance of the University’s
outreach to mainland Europe.
The cooperation between QMUL and ULIP
heralds the creation of new international relations
programmes. Already offering a Master’s in
international relations, the partnership will
now develop an undergraduate programme in
international relations, benefiting from the insight
of Professor Engin Isin, internationally renowned
scholar specialising on questions of citizenship.
Strategic Report
Financial Statements 2015–16 london.ac.uk9
It has been a significant year of change and growth
for The Careers Group, reflecting the continued
importance of the employability agenda within
higher education and the constant drive to innovate
amongst our talented and committed staff.
The Careers Group operates on a membership
based not-for-profit model focused on higher
education institutional careers and employability
services. The Careers Group’s mission is to enable
each member’s service to be the best that it can
be within the context of its institution and to be a
clearly recognised thought and practice leader in
the field of graduate employability.
In some of our member institutions there have been
large scale investments in careers services this year,
growing the size and capacity of the service to meet
the increasing demands of students, graduates and
employers. Other services have demonstrated their
capacity for innovation without investment. The
power of the collective has enabled us to develop
and re-purpose materials for maximum benefit, such
as the use of our award-winning MOOC materials to
develop similar online learning provision for college-
based student cohorts.
Aim 2: provide innovative high-quality academic support and professional services
The Careers Group
It has been a signicant year
of change and growth for The
Careers Group, reecting the
continued importance of the
employability agenda within
higher education and the
constant drive to innovate
amongst our talented and
committed staff.
In the last few months we have been part of a
successful Development Office bid to the Sir John
Cass Foundation to support widening participation
students on University programmes, we have started
to develop provision for students on International
Programmes in Singapore and also made a successful
bid to the University Convocation Trust to deliver
the ‘Living History of Job Hunting’ project which
will benefit students across the Group.
The Careers Group is the only higher education
careers service in the UK with its own professional
development and research units. The Group’s in-
house Professional Development Unit was able to
offer over £24,000 worth of bespoke training and
development to The Careers Group staff employed
by member institutions, as well as making over
40 hours of online learning available through
recorded webinars.
In 2015-16 the Research Unit initiated a three year
HEFCE funded research project in Learning Gain,
leading a consortium of universities to investigate
how Careers registration data could be used to
measure aspects of learning gain amongst student
cohorts. The project will deliver practical support
for evidence-based practice in our member services,
whilst also ensuring that The Careers Group is an
acknowledged leader in a crucial higher education
policy arena closely linked to the Teaching Excellence
Framework.
Strategic Report
Financial Statements 2015–16 london.ac.uk10
CoSector was formed in 2015 by the University
amalgamating its three shared service departments
together into one organisation. As one of the key
aims within the University Strategy, we will continue
to develop and invest in Cosector to deliver world
leading academic support and professional services.
Housing Services
There has been further expansion of the services
offered with an increased portfolio of Student Homes,
and further growth in the number of member
institutions subscribing to the private housing and
advice service. Two new external institutions have
also joined meaning a total of six new customers
have been recruited in the last 18 months.
CoSector
Careers & Events
The CoSector recruitment team has undergone
a managerial restructure in early 2016, bringing
together the management of internships and the
Temporary Agency. This restructure, and subsequent
lean process work, has identified process efficiencies
particularly in administration which have been
successfully implemented. These systems are being
replaced in early 2016-17 and should reinforce the
process efficiencies. The focus for 2016-17 is the
challenge of growing the external business but
the tools and the management are now in place
to deliver this.
CoSector continues to expand its professional
development consultancy services to other
universities and professional bodies through the
use of highly trained associate consultants who
will supplement the existing team. During 2015-
16 the Careers Professional Development team
trained over 3,300 employees and members of
the University’s customers.
It has been another busy and successful year for
the Careers Events team in CoSector which saw
an increase in traffic from 9,000 to over 12,000
visitors and 327 exhibitors across the six events
spanning graduate recruitment, postgraduate
study and undergraduate study. JobOnline, the
UK’s largest student and graduate job board
advertised 28,938 jobs which all met national
minimum wage requirements. After last year’s
record breaking number, there were again increased
numbers for the University Taster Courses, with over
250 courses being offered and over 12,000 students
attending those courses.
The CoSector Careers Events team have hit record
numbers this year, with 24,000 students attending
seven different Careers courses and events at
Senate House.
During 2015-16 the team has
taken on over 750 student advice
cases and arranged 60 central
and college-based housing events
with 2,500 students attending
this year's May Housing Fair.
During 2015-16 the team has taken on over 750
student advice cases and arranged 60 central and
college-based housing events with 2,500 students
attending this year's May Housing Fair. There were in
excess of 30,000 student users of the private housing
database and over 7,000 personal callers receiving
assistance with housing enquiries.
These outputs will continue to play a key role in the
shaping of the affordable student housing element
of the Mayor's London Plan.
Strategic Report
Financial Statements 2015–16 london.ac.uk11
Graduate Research
The graduate research team has had a very successful
year carrying out the DLHE survey for 13 member
institutions and a further 16 external HE institutions. It
also carried out the survey for 130 FE colleges in 2015-
16. The team is focused on the 2016-17 collection and
analytics, also closely monitoring consultation and
proposed changes to the survey in future to capitalise
on the opportunities those changes may offer.
University of London Computer Centre (ULCC)
In 2015-16 ULCC started to provide a range of new
services, including cybersecurity products – cyber-
monitoring and cyber-phishing to help organisations
reduce their vulnerability to attacks and to raise staff
awareness. We have blocked over a 100,000 malware
attacks and blocked several DDoS attacks without any
noticeable effect on our systems.
The graduate research team
has had a very successful year
carrying out the DLHE survey
for 13 member institutions
and a further 16 external
HE institutions.
In 2015-16 ULCC started to provide
a range of new services, including
cybersecurity products – cyber-
monitoring and cyber-phishing
to help organisations reduce their
vulnerability to attacks and to
raise staff awareness.
ULCC continues to support over 100 customers with
their Bloom Virtual Learning Environments (VLE)
enabling 3 million students to have uninterrupted
access to their academic learning online. Extensive
user research led to a roadmap for the Bloom product,
the first release of which was launched at the ALT
Conference in September. A new website has been
built to underscore the significant transformation
of the service provision in recent years. The team
continues to acquire high-profile customers. The
coursework module for Moodle built by the team
to add double blind marking capability has been
released publicly as open-source and has generated
significant interest and acclaim in the wider Moodle
community.
The ULCC Digital Preservation team continues to
provide a centre of excellence at the University of
London for digital preservation for HEIs, NGOs and
commercial organisations.
Strategic Report
Financial Statements 2015–16 london.ac.uk12
Estates Masterplan
During the year the University has developed an
Estates Masterplan, with the aim to set out the
core strategy that will guide decisions and growth
in the next 10-20 years. We are approaching the
Bloomsbury site as a whole, looking at the short-,
medium- and long-term space and growth
requirements to ensure that we plan properly for
the future needs of the University, its member
institutions, institutes and students.
Aim 3: property that is valued and relevant
Property and Facilities Management
Facilities Services
During the year new contracts have been procured
for the provision of building and engineering
maintenance with Bouygues, for cleaning, security,
logistics and front of house services with Cordant
Services, and for grounds maintenance with
Nurture Landscapes.
All the above contracts have been thoroughly
reviewed and include enhanced specifications to
ensure high quality services are delivered to all
University clients and that costs are apportioned
accurately.
With the involvement of the University’s member
institutions a garden improvement fund has been
established across the precinct to develop a five year
plan to invest in improving the University’s gardens
for the benefit of students, staff and visitors.
The Masterplan also gives us an
opportunity to develop the most
environmentally sustainable
educational estate in London.
The Masterplan also gives us an opportunity to
develop the most environmentally sustainable
educational estate in London. We intend to use
low- and no-carbon technologies to help to reduce
emissions. The developments and refurbishments that
form this Masterplan will be undertaken using high
quality materials designed to last, evolve and adapt
with the future trends of education and learning.
The Masterplan will provide an improved public,
green and open space for all with clearer ways to
walk and cycle. It will also include enhanced lighting
and better east-west connections.
Biodiversity will be greatly enhanced through the
improvement of public and green spaces. We will
reduce car parking, giving priority to pedestrians
and cyclists across the campus.
Student satisfaction levels have
once again risen to 80% from
68% and 76% in 2013-14 and
2014-15 respectively.
Halls
Student satisfaction levels have once again risen
to 80% from 68% and 76% in 2013-14 and 2014-15
respectively. A new student-facing website for the
Halls was launched in 2015-16 resulting in increased
site traffic.
Successful marketing led to a 99% occupation rate,
despite being direct-let rather than through the
normal College quota system.
Strategic Report
Financial Statements 2015–16 london.ac.uk13
The University of London
appeared as the 14th most
successful university in the UK
for reducing carbon emissions
in a recent report by Brite Green.
Construction works on the lower
ground oor of Senate House
started in October 2016 following
a detailed design process.
Space & Workplace
Construction works on the lower ground floor of
Senate House started in October 2016 following a
detailed design process. The space will be home
to the central administrative departments of the
University, and will free up additional space in
Senate House for teaching and learning.
The department has continued to rationalise
the amount of space the University occupies
and continues to lease excess space to member
institutions, with an additional three leases being
agreed this year.
Conference services
Highlights from the Conferences team include the
hosting of HRH Princess Maha Chakri Sirindhorn’s
(Thailand) 60th birthday party, the International
James Joyce Symposium and the Consortium of
Humanities Centers and Institutes (CHCI) Conference.
UCL took over Senate House for its two week long
graduation ceremonies. Foundation Day was held in
Senate House after a year’s absence and the building
was used for filming TV series including The Crown,
Black Mirror and War Machine.
The catering contract with Aramark is set to be
renewed and the team maintained its Bronze Food
for Life accreditation.
Sustainability
The University of London has continued to build
upon the successes surrounding sustainability, carbon
and waste reduction. The University appeared as
the 14th most successful university in the UK for
reducing carbon emissions in a recent report by Brite
Green. It is now supporting five universities to deliver
sustainability in halls of residence through the ‘Reduce
the Juice’ programme which encourages students
living in halls to reduce their energy and water
consumption and recycle more.
Sustainability and energy services have now been
embedded into the new facilities management
contracts and will deliver a programme of energy
saving measures alongside the day-to-day
maintenance of the estate.
The Freshers’ Fair in September
2015 set records with over 5,000
visitors, most of them students
from member institutions.
Student Central
Student Central continues to provide student
services, the University of London clubs and societies,
fitness opportunities and social outlets. In 2015-16,
a second successive year of record numbers joined
clubs and societies. The Freshers’ Fair in September
2015 set records with over 5,000 visitors, most
of them students from member institutions. The
fitness facilities in Energybase achieved their highest
membership number, and conference space for
teaching and events was highly sought after. The
entertainments areas hosted a large number of
bespoke events and parties.
Strategic Report
Financial Statements 2015–16 london.ac.uk14
In its first year of operating, the ICT Department has
created and embedded a new ICT governance policy
across the University and designed and agreed a three
year ICT strategy in line with the strategic aims and
objectives of the University. Appropriate investment
in ICT has been secured to deliver this strategy.
Aim 4: manage a high-performing organisation
ICT
In its rst year of operating,
the ICT Department has
created and embedded a
new ICT governance policy.
The Development Ofce has
organised and delivered events
in London, Singapore, Mauritius,
Delhi and Hong Kong and has
met around 50 prospective
donors, engaging directly
with more than 500 alumni.
Development Ofce
The Senator database will be launched in December
2016, containing over 1 million records. Senator’s
online content management system was already
launched in March 2016, allowing supporters to
make online donations to the University of London.
Additionally the University’s Case for Support has
been finalised. The University of London raised £1m
in philanthropic income in the financial year 2015-16,
over £350,000 of which has come as a direct result
of the work of the Development Office. A highlight
was the £150,000 worth of support from the Sir
John Cass’s Foundation to provide 18 scholarships
to be delivered over three years for young people
living in London to study for a University of London
undergraduate degree with the University of London
International Programmes, with built-in careers
support and guidance from The Careers Group. The
support will also provide an application fee waiver for
300 young people living in London studying with the
University of London International Programmes.
In 2016-17 the team will continue to grow its
engagement operation with a view to creating
sustainable philanthropic income for the University
of London in the coming years.
The Development Office has organised and
delivered events in London, Singapore, Mauritius,
Delhi and Hong Kong and has met around 50
prospective donors, engaging directly with
more than 500 alumni.
Strategic Report
Financial Statements 2015–16 london.ac.uk15
The University Strategy 2014-19 is founded on the
sustainability of its financial position underpinned
by robust financial management. As with any
organisation, it is vital to refresh the University in
order to make it fit for the future. The investment
that underpins the University Strategy is evident in
the financial position of the University in 2015-16.
This investment is across all areas of the University
and is in people and operational projects as well as
on the estate and other capital projects. In order to
meet the ambitions of the Strategy, the University
will need to deliver an operating surplus of c.5% of
turnover on an ongoing basis in order to generate
the investment funds required. For many years the
University’s business model did not generate this level
of surplus, although through management actions
and developments the financial performance had
by 2013-14 improved to generate a surplus of £7.4
million. This enabled the University to embark on the
current strategy from a solid financial position and
to undertake the required investment programme
with confidence.
Financial Strategy
The Financial Statements comprise the consolidated
results of the University and its trading subsidiaries,
which undertake activities that, for legal and
commercial reasons, are more appropriately
channelled through a limited company.
This is the first year that the University has produced
results under FRS 102. This has a significant impact
on the format and scope of the Financial Statements
and the accounting policies. An explanation of the
differences in detail and the adjustments to the
published results for 2014-15 can be found within
Note 31 of the Financial Statements.
As with any organisation, it is
vital to refresh the University in
order to make it t for the future.
Under the University Strategy, a planned programme
of investment is now being implemented which is
reflected in the University deficit budget position in
2015-16. This investment builds upon the investment
undertaken in the 2014-15 financial year and is taking
place across all areas: in the academic capacity in the
School of Advanced Study, in the development of
new programmes in the International Academy, in
the development of our academic and professional
services, in the redevelopment of the Garden Halls
of residence, and improvements across the estates
and the development of Student Central on Malet
Street. These investments are the primary reason for
the deficit in this year. Further, the University plans
to continue this level of investment in the coming
years with the benefits and associated financial
returns expected to be seen towards the end of
the planning period.
Scope of Financial Statements
Strategic Report
Financial Statements 2015–16 london.ac.uk16
The results for the 2015-16 financial year directly
reflect the increased investment undertaken by the
University as part of the 2014-19 University Strategy.
The key highlights for the year are:
• Total Income rose by 5% to £151.4 million.
• Total Expenditure increased by 4% to
£155.1 million.
• The deficit before other gains / losses reduced to
£3.7 million from £4.8 million in the prior year. This
is the nearest measure to the previously called
surplus on continuing operations. However under
FRS 102 this includes a number of new items
including the provision for the University’s share
of the past service deficit on the USS and SAUL
pension schemes. The impact of this provision on
the deficit was that in 2014-15 it was reduced by
£6.9 million, and in 2015-16 it was reduced by £2.2
million. The pension provision itself stood at £13.2
million at July 2015 and had increased to £16.1m
at July 2016.
• The retained surplus for the year has reduced to
£9.1 million, down from £14.0 million in 2014-15.
Under FRS 102 the retained surplus now includes
the unrealised gain on investments (which
was previously included in the Statement of
Consolidated Total Recognised Gains and Losses)
which was £19 million in 2014-15 and £13 million
this year.
• Net cash inflow from operating activities was £2.5
million, compared to a cash outflow of £1.8 million
in 2014-15.
• Total cash and liquid resources (which comprises
cash, cash equivalents as well as deposits of the
University, its subsidiaries and endowment with
terms over 3 months) has increased by £0.9m over
the course of the year to £56.1m
• Capital investment in the year totalled £3.9 million
Transition to FRS 102 and the 2015 Higher
Education Statement of Recognised (accounting)
Practice (“SORP”)
The University, along with the rest of the UK Higher
Education sector is producing financial statements
under FRS 102 for the first time. This has a significant
impact on the format and scope of the Financial
Statements and the accounting policies. An
explanation of the differences in detail can be
found within Note 31 of the financial statements.
Financial Highlights
Strategic Report
Financial Statements 2015–16 london.ac.uk17
£M
HEFCE SORP 2015 2015-16
2014-15
(restated)
Income 151.4 144.1
Expenditure (155.1) (148.9)
Operating surplus / (deficit) for the year (3.7) (4.8)
(Loss) / Surplus on disposal of assets (0.7) (0.1)
(Loss) / Gain on investments 13.0 19.0
Surplus before tax (rounded) 8.6 14.1
Additional key financial figures
Operating Surplus / (Deficit) as percentage of income -2.44% -3.33%
Cash generated from operating activities 2.5 (1.8)
Capital expenditure 3.9 7.6
Cash balance (including endowment cash and near cash equivalents) 56.1 55.3
Net Funds / (Debt) balance 5.8 5.0
Reconciliation of surplus / (deficit) before tax under 2015 SORP to that under 2007 SORP
Surplus before tax under 2015 SORP (rounded) 8.6 14.1
Performance model for capital grants (0.1) 0.3
Excluding student societies income 0.0 0.1
Movement in pension deficit provision 2.2 6.9
Change in depreciation following valuation uplift (0.4) (0.5)
Holiday accrual 0.0 (0.1)
Other movements 0.3 (0.2)
Gain on investments previously shown in STRGL (13.0) (19.0)
Effect on surplus / (deficit) (11.0) (12.5)
Surplus / (Deficit) before tax under SORP 2007 (2.4) 1.6
£M
HEFCE SORP 2007 2014-15 2013-14 2012-13 2011-12
Income 144.3 151 145.5 141.5
Expenditure (142.6) (143.6) (140.6) (137.0)
Operating surplus for the year 1.6 7.4 4.9 4.6
(Loss) / Surplus on disposal of assets (0.1) (0.1) 1.9 2.3
Surplus after disposal of assets 1.6 7.3 6.9 6.9
Additional key financial figures
Operating Surplus as percentage of income 1.13% 4.90% 3.40% 3.20%
Cash generated from operating activities 1.9 12.6 7.5 16.3
Capital expenditure 7.6 32.9 5.5 6
Cash balance (including endowment cash
and near cash equivalents)
55.3 59.7 50.1 44.4
Net Funds / (Debt) balance 5.0 9.4 (10.1) (10.1)
Strategic Report
Transition to FRS 102 continued
Financial Statements 2015–16 london.ac.uk18
There are two elements to the change:
1. The format of the financial statements
are changed.
a. There is no longer a separate Income and
Expenditure Account and a Statement of
Consolidated Total Recognised Gains and
Losses. Instead these have been merged into
a combined Statement of Comprehensive
Income. The implication is that items of
other gains and loss that were not previously
included in the Income and Expenditure
account are now included within the
Statement of Comprehensive Income and so
form part of the total comprehensive income.
b. Within the balance sheet the major change
is that endowment assets are no longer
separately disclosed on the face of the
balance sheet but are included within
non-current investments.
2. As part of the adoption of FRS 102 we have
changed our accounting policies, either amending
policies or adding new ones, to bring our
accounting in line with the new standard. For the
University of London the two largest changes are:
a. The requirement to include the University’s
share of the past service deficit on the USS
and SAUL pension schemes. This number
will change in future years to reflect both
the total level of deficit or surplus of these
schemes and also our share of these, which
is a relative measure as this will reflect our size
compared to the size of all other members of
both scheme.
b. The University has taken the opportunity to
revalue our land and buildings to their fair
value at 1 August 2014.
There are a number of other changes which
include the recognition of donations on
entitlement to income, grants recognised in line
with the performance model, and an accrual is
made at each year end for staff holiday accrued
but not taken at the end of each financial year.
These changes are reported in detail in Note 31 to
the financial statements. The updated accounting
policies are all within the Statement of the University’s
principal accounting policies.
Strategic Report
Transition to FRS 102 continued
Financial Statements 2015–16 london.ac.uk19
The decision to make a deficit at the ‘operating level’
in 2015-16 is a direct consequence of the University
Strategy, and was made against the backdrop of
sound financial performance which has enabled the
University to undertake the investment programme
with confidence. The investment underpins the four
strategic aims of the University and so is undertaken
across the University, and further builds upon the new
investment undertaken in 2014-15. Within SAS, there
has been a large and complex recruitment campaign
of Institute Directors and senior academic staff. In the
International Academy there has been investment in
new programmes; the first intake of students on the
new Masters in Professional Accounting, launched
in conjunction with the Association of Chartered
Certified Accountants (ACCA), started in January
2016. There has also been investment in additional
marketing and infrastructure worldwide. There
are further new programmes under development
for launch in the coming years. There has been
investment in our Services businesses, CoSector,
particularly in their capability and capacity as we
look to grow in future years and some rationalisation
of products and services in the year. There has
been a number of projects within Estates, the most
significant of which is the redevelopment of the
Garden Halls of residence in partnership with the
University Partnership Programme (UPP), which
opened in September 2016.
Summary
However, the confidence within the University to
undertake these planned investments needs to be
viewed against the ongoing uncertainty surrounding
the future funding background for the higher
education sector in the UK and the implications of
the Brexit vote in June 2016. Direct HEFCE funding
represents a smaller proportion of revenue for the
University compared to most other UK HE institutions,
but it still represents a crucial source of revenue
particularly in relation to the School of Advanced
Study. The implications of Brexit are emerging and the
University will continue to monitor and review. We do
expect this to present opportunities, particularly with
the weakening of sterling, as well as threats, that may
require action as they emerge.
The financial strategy is to use our assets and
operations to generate income, diversify our income
sources where we are able, and to use this to support
the ongoing investment in our academic operations.
The University is committed to maintaining and
improving its financial sustainability and will take the
required actions to do so in the coming years. There
continues to be much work to do to provide the
University with this increased income.
Strategic Report
Financial Statements 2015–16 london.ac.uk20
Total income for the year grew to £151.4 million, a 5.0% increase compared to the prior year.
The main highlights are:
Funding body grants, primarily from the Higher
Education Funding Council for England (HEFCE)
were £9.4 million, the same as the prior year.
Tuition fees and education contracts, which represent
the University’s largest source of income, increased
by 2.6% to £56.2 million. The largest element relates
to the University’s International Programmes where
income grew. The International Programmes currently
has 51,000 continuing students (2014-15: 52,000)
across approximately 180 countries and a portfolio
of over 100 academic programmes and awards
Research grants and contracts income decreased
from £1.9 million to £1.6 million.
Other income has increased to £78.8 million from
£73.5 million in the prior year. There are a number
of components:
• Income from College subscriptions and charges
has increased by £0.5 million from the prior year
to £9.5 million. These payments are primarily for
services provided to our member institutions
and reflects an increase in the volume of services
provided by the University to members.
• The income generated from the University's
Residences, Catering and Conferences operations,
which includes the intercollegiate student halls
of residence, has grown by £0.5 million to
£27.7 million.
• Estates income has risen to £4.8 million from
£3.9 million in the prior year reflecting the growth
in rental income secured from our estate.
• Other general income, which includes income
generated from services provided to education
establishments outside of the member institutions
of the University has increased to £19.0 million
from £15.6 million last year.
• Income in relation to arrangements with Health
Education England increased by £0.5 million to
£17.2 million.
Investment income, which relates to income
generated from our endowments and our other
investments, rose from £3.7 million in the prior
year to £4.0 million this year.
Donation and Endowment income totalled
£1.3 million up from £0.7 million received in
the previous year.
Income
0
40
80
120
160
Analysis of income
2014–15 2015-16
Endowment and investment income
Other income
Research grants and contracts
Tuition fees and educational contracts
Funding body grants
Strategic Report
Financial Statements 2015–16 london.ac.uk21
Expenditure
Total expenditure increased by 4.1% compared to
the prior year to £155.1 million.
Staff costs are the largest individual component
of expenditure (as other operating costs include a
number of separate elements) and have risen by £0.8
million since the prior year to £63.0 million. However,
in addition to salaries and associated pension and
social security costs, with the conversion to FRS 102
the movement on the University’s share of the past
service deficit on the pension schemes is included
within staff costs. If this is excluded staff costs have
risen by £5.7 million since last year to £61.2 million.
University average FTE staff numbers increased to 801
(1,078 if Health Education England staff are included).
Other operating expenditure has increased to
£84.2 million from £78.3 million in the prior year. This
comprises the costs, other than staff costs, in relation
to the academic activities, residences and catering
services and other activities across the University.
0
50
100
150
200
Analysis of expenditure
2014–15 2015-16
Depreciation
Interest payable
Other operating costs (including restructuring costs)
Staff costs (excluding pension deficit)
Strategic Report
Financial Statements 2015–16 london.ac.uk22
The University has continued to invest in
improving and upgrading its teaching and research
infrastructure as well as its student facilities, halls of
residences and its estate generally. In addition the
University is investing in the development of new
International Academy programmes.
Net assets at July 2016 totalled £630.6 million, rising
from £621.4 million at July 2015.
Intangible assets have increased to £1.8 million
during the year, reflecting the investment by the
International Academy in the development of new
programmes. Fixed assets reduced slightly during the
year by £3.6 million to £509.8 million as the annual
depreciation charge was larger than new additions
in the year. Heritage assets have remained at their
brought forward value of £13.0 million. Investments
have increased by £13.4 million to £176.6 million
due primarily to the increase in market value of the
University's Investment Properties and the market
value of the underlying asset portfolio within the
University endowment.
Cash and cash equivalents have reduced during
the year by £4.5 million to £12.3 million. However
including cash held in the form of current asset
investments, within endowment assets and other
investments, total cash held has increased by £0.8
million over the year to £56.1 million. This reflects the
net cash inflow from operations, the net cash outflow
on capital expenditure and the inflow generated
from investment income. This represents 132 days of
expenditure. The University generated £2.5 million
from operating activities during the year.
The long term borrowings, at £50.3 million, are
unchanged over the year. Hence the University
continues in a net cash position of £5.9 million at
31 July 2016, which has increased by £0.9 million
from 31 July 2015.
There are relatively small movements across other
balance sheet items.
Capital Expenditure
Balance Sheet
Strategic Report
Financial Statements 2015–16 london.ac.uk23
As in prior years, the University has continued to
pursue a conservative treasury management policy
with appropriate counterparty limits and security
criteria in place. The treasury management policy,
which is agreed by the University’s Investments
Committee, accords priority to security and liquidity
with yield considerations being subordinated to
these.
The endowment funds are invested in the Unified
Trust Fund (“UTF”). The funds within the UTF are
invested in line with the agreed Investment Strategy,
which provides for a balance between income and
capital growth with a medium level of risk over the
longer term. The primary objective is to achieve a
total return, including dividends, interest, rent or other
income, and capital appreciation, of inflation +4%
per annum, gross of fees, over a rolling 5 year period.
The new Strategy has split the fund into three distinct
portfolios; Equity, which represents the largest of
the three portfolios at approx. 72% of the fund and
is managed by Newton Investment Management
Limited; 11% in Absolute Return funds; and 17% in
Property and which is invested in a property fund
rather than direct specific property investments.
On a total return basis the performance of the UTF for
2015-16 saw a return of 13.3%, compared to the UTF’s
benchmark return of 10.1%. The benchmarks for the
fund represent the asset holdings within the Strategy
and the associated market conditions.
The University investment properties have been
subject to a professional valuation as at 31 July 2016
undertaken by Knight Frank LLP, Chartered Surveyors.
The valuation has resulted in their carrying value
being increased by £6.4 million to £81.6 million, an
increase of 8.5% reflecting the current buoyant state
of the London property market.
Investment
2014–15 2015–16
(20)
Net Cash / (Net Debt)
(15)
(10)
(5)
0
5
10
2013–142012–132011–12
Net Debt
Net Cash
The University's total cash position (comprising cash,
current asset investments and endowment asset
cash) increased by £0.8 million across the year to
£56.1 million at the 31 July 2016. This reflects the net
cash inflow from operations, the net cash outflow
on capital expenditure and the inflow generated
from investment income. This represents 132 days
of expenditure.
The long term borrowings, at £50.3 million, are
unchanged over the year. Hence the University
continues in a net cash position of £5.9 million at
31 July 2016, which has increased by £0.9 million
from 31 July 2015.
Cash Flow
Strategic Report
Financial Statements 2015–16 london.ac.uk24
The University of London is a unique institution. Our
operations centre on our academic bodies as well as
the support activities provided to the autonomous
institutions that comprise the members of the
University. The University also supplies services
to other HEIs in the sector. The University’s Estate
comprises sizeable property assets in Bloomsbury and
a number of other mainly central London locations.
Whilst the University’s Collegiate Council determines
and advises the Board of Trustees on the collective
member institutions view, it is the Board of Trustees
which is responsible for managing the risks and
opportunities faced by the University. The University
maintains a Strategic Risk Register which is regularly
reviewed by the Board and a number of issues are
identified as priorities.
The UK university sector continues to experience a
period of unprecedented change with the backdrop
of the uncertain level of public sector finances
and funding for higher education. This has led
to reductions in the level of central funding and
increasing competition as universities vie for the best
students and new providers enter the market. Initial
inspection of our accounts reveal that the University’s
dependency on public funding is less than most
other UK universities; these financial statements
show that funding from HEFCE accounted for 6.0%
of total income.
However the University does receive specific HEFCE
funding for the national role that SAS has to promote
and facilitate research in the Arts and Humanities.
The funding is on the basis of a rolling grant with an
annual contestable percentage which is subject to
the School meeting the objectives set by its Strategic
Advisory Board. Aside from this, the University
continues to increase its investment in SAS to realise
our own strategic objectives which underpin the
University Strategy. It is not the University’s intention
that this ongoing investment should be used as a
substitute for the loss of funding for SAS’s national role.
A related risk is that of the future financial
sustainability of Senate House Library, whose work
is in part linked to SAS as well as providing a service
to our member institutions and the wider research
community. The University commenced a review of
its strategy and operations for libraries in the summer
of 2015, working with representatives from our
member Institutions, which will also include looking
to set an appropriate level of charges and fees.
The International Academy is a major source
of income for the University. There are both
opportunities and threats for this activity. The market
for distance education is increasingly competitive
with new institutions, new learning technologies and
private capital all accelerating the pace of change. The
University is investing in developing new and existing
programmes and infrastructure to ensure it continues
to be a world-leading institution in this area.
As a key part of the University Strategy the University
is seeking to develop and grow our Shared Services
activities in the coming years. The University has
commenced a period of investment to grow our
capability and capacity across these activities. We
have established a new organisation, CoSector, and
brought all of the service departments together
within CoSector and given it the objective to deliver
a surplus. The impact of potential government
funding cuts across the sector could also serve as an
opportunity as institutions seek to share the delivery
of services.
Risks and Opportunities
Strategic Report
Financial Statements 2015–16 london.ac.uk25
Th
e University is a significant provider of student
residential services with its main focus on meeting
the needs of the students of our member Institutions.
The University’s halls of residence accommodated
approximated 2,000 students during the year
ended 31 July 2016 as Garden Halls was still being
redeveloped. The redevelopment of Garden Halls,
completed in Autumn 2016, has given a significant
modernisation to our residence provision and
increased the number of available rooms by 1,200.
We regard the expansion of our halls as offering an
important growth opportunity, because residential
accommodation is of such importance to present
and future students. In addition to our halls of
residence, the University through its Housing
Services team provides students with the
opportunity to access 20,000 beds in the private
rental sector. The provision of first class student
services, including residential services,
is of critical importance to the University.
The University will look to ensure that the activities
and services provided at Student Central are
undertaken in a manner sustainable over the long
term. A number of changes being made, including
the streamlining of facilities management contracts
and the release of space for additional commercial
activity on the ground floor of the building.
As part of the strategy the University will seek to use
its estate, where feasible and practical, to provide
additional income sources.
The University will monitor and review the emerging
impact of Brexit. There will be opportunities as well
as threats. In the International Programmes, where
students are studying at distance in their home
country, we expect our revenue to benefit from the
impact of the weakening of sterling. Student numbers
in the School of Advanced Study are small. We will
continue to support our staff and monitor the impact
on future recruitment. For our other activities, we are
providing services to our member institutions and so
are potentially less directly impacted initially; we will
continue to monitor and review the emerging picture.
Strategic Report
Financial Statements 2015–16 london.ac.uk26
The University conducts regular reviews of its financial
performance and prospective medium-term financial
position annually or more frequently if required. This
enables us to respond, should the need arise, to
changes in our operations and to ensure that financial
sustainability is unimpaired. The University Strategy
has set out the plans through to 2019.
Forming a key component of the University Strategy,
financial sustainability is essential and the University
will be required to generate sufficient surpluses
from its activities to meet its current and future
business needs. The University will continue to review
all activities to ensure that they are sustainable,
affordable and fit for purpose. If the situation requires,
the University will take the necessary actions in the
coming years to ensure that it remains financially
sustainable.
The financial strategy is to use our assets and
operations to generate income, diversify our income
sources where we are able, and to use this to support
the ongoing investment in our academic operations.
This will see the University seek to grow existing
revenue sources and diversity and grow into
new areas.
The University Strategy proposes to increase the
financial operating surplus by 2020 through the
following areas:
Academic
• Widening the offering in the International
Programmes via a range of business models
offering different levels of collaboration
and involvement.
• Raising additional income for our academic work
through fundraising activities and extra research
income arising from our academic investment.
Services
• Additional income from new customers and
new markets, and possibly investment from
new partners.
• Addressing areas of cost under-recovery and
inefficiency within the existing service offer.
Property
• Greater return on property assets, through
realising new development opportunities and
an increased income from rents and leases as
opportunities arise.
Organisation
• Savings through better procurement, space
utilisation and operational efficiencies.
• Grow the operation of the Development office,
with its focus on fundraising with the expectation
of increased donations from alumni, trusts and
foundations and other sources in the future.
Looking Forward
The University is in a sound financial position with
financial sustainability as a key part of the University
Strategy. We continue to build upon the work
undertaken in recent years and plan to grow and
diversify to provide the further investment capacity
that will allow the University to further enhance
its position.
Summary
Strategic Report
Financial Statements 2015–16 london.ac.uk27
The University is an exempt charity under the terms
of the Charities Act 2011. The Charity Commission
has issued guidance on public benefit to which the
Trustees have had regard. This guidance requires that
there must be clearly identified benefits related to the
aims of the charity; that the benefits must be to the
public, or to a section of the public; that where the
benefit is to a section of the public, the opportunity
to benefit must not be unreasonably restricted by
geographical or other restrictions or by the ability
to pay fees; and that people in poverty must not be
excluded from the opportunity to benefit.
The objects of the University of London, carried out
through the Colleges primarily, and also through its
Central Academic Bodies and Central Activities (to
which these financial statements specifically relate),
are, for the public benefit, to promote education
of a university standard and the advancement of
knowledge and learning by teaching and research;
and to encourage the achievement and maintenance
of the highest academic standards.
The University makes a significant contribution, not
just to the advancement of education, but also in a
variety of ways to all of the other specific categories of
charitable purposes set out in the Charities Act 2011.
The Colleges of the University, which are all
themselves exempt charities, have included within
their respective financial statements for 2015-16
Public Benefit statements in conformity with the
reporting requirements of the HEFCE Accounts
Direction for 2015-16 and reference thereto should
be made in considering the public benefits delivered
by the University, given that its primary purpose is to
serve and further the interests of its Colleges.
The ways in which the central University advances the
categories of charitable purposes are in many cases
self-evident from the variety of academic disciplines
associated with its Institutes and Colleges.
To provide an example, the University of London
International Academy (UoLIA), through its associated
International Programmes, delivers programmes
in a wide range of disciplines and subject areas.
These include MScs/MAs in Poverty Reduction;
Applied Educational Leadership and Management;
Environmental Management; Livestock Health and
Production; Clinical Trials; Epidemiology and Infectious
Diseases, BAs in Theology; English; History; Philosophy
and Classics and the LLM and LLB degrees. The
International Programmes are priced competitively
to enable students, both in the UK and overseas, to
access them. Thus the cost of a typical three-year
undergraduate programme is some £3,500 to £5,500
whilst postgraduate programmes are available from
£3,000 to £15,000.
The University, on behalf of the federation, manages
a range of trust funds and endowments. The
endowment funds as shown in the balance sheet
at 31 July 2016 were carried at their market value
which was £79.9 million and the sums expended
during the year from these funds amounted to £3.4
million (see Note 22 of the Financial Statements).
This expenditure represents payments in respect of
fellowships and scholarships, prizes, and chairs and
lectureship funds as well as a range of other awards
to assist students and researchers within the Colleges
and the University thereby providing opportunities
to those whose means may otherwise inhibit them
from participating in teaching and research activities.
The University’s trust funds are also utilised to fund an
ongoing series of prestigious public lectures, recitals
and readings generally in areas connected with the
arts and humanities.
The School of Advanced Study is unique as the only
institution in the UK nationally funded to promote
and facilitate research in the humanities and social
sciences. The School’s events programme which
comprises a wide range of seminars, workshops,
lectures and conferences is unrivalled in scale,
focus and quality. During 2015-16 approximately
2,325 events were organised attracting almost over
65,000 audience members drawn from the UK,
internationally and the London area. The majority of
the events are free and open to the public and all are
welcomed and encouraged to take advantage of the
access to the current research and interdisciplinary
cross-fertilisation that these events afford.
Student Central’s mission is to provide: student-led
clubs and societies, events, services and facilities to
University of London students and the wider London
student community. The facilities include a gym, the
largest swimming pool in central London and a venue
for live music events. Students of the University of
London Colleges and Central Activities are entitled
to free membership and, in addition to its other
activities, Student Central organises University-wide
student sports competitions. During 2015-16 Student
Central attracted a membership of nearly 15,000.
Public Benet Statement
Public Benet Statement
Financial Statements 2015–16 london.ac.uk28
The following statement is given to assist
readers of the financial statements to obtain an
understanding of the governance procedures
of the University. The University endeavours to
conduct its business:
• in accordance with the seven principles
identified by the Committee on Standards in
Public Life (selflessness, integrity, objectivity,
accountability, openness, honesty and
leadership) and,
• in full accordance with the guidance to the
University which has been provided by the
Committee of University Chairmen in its
“Higher Education Code of Governance”.
The Board of Trustees, as the charity trustees of
the University, confirm that they have complied
with the duty in section 17 of the Charities Act
2011, to have due regard to the public benefit
guidance published by the Charity Commission
for England and Wales.
The University is an independent corporation which
was incorporated originally by Royal Charter in 1836
and is, at present, incorporated by Royal Charter
granted in 1863. It is now governed by the University
of London Act 1994 and by the Statutes made in
2008 under that Act, which set out its objectives,
powers and framework of governance. Following
extensive consultation, amendments to the Statutes
to widen representation on the governing body were
approved by the Privy Council on 9 October 2015
1
.
The University of London is a federal university and,
as well as the Central Academic Bodies and activities
included in these financial statements, comprises a
further 18
2
autonomous Colleges each of which is
an HEI and a self-governing incorporated body with
its own legal identity and which receives its funding
from the Higher Education Funding Council for
England (HEFCE) independently from the
University itself.
The University’s Board of Trustees, the governing
and executive body of the University, comprises
eleven appointed independent persons
3
– all of
whom are non-executive – the Vice-Chancellor, the
Deputy Vice-Chancellor
4
and four Heads of Colleges,
appointed by the Collegiate Council. The role of
the Chair of Board of Trustees is separated from the
role of the University’s chief executive, the Vice-
Chancellor. The powers of the Board of Trustees are
set out in the Statutes of the University and under
the Memorandum of Assurance and Accountability
between HEFCE and Institutions. The Board of
Trustees, which normally meets six times a year,
holds to itself, inter alia, responsibility for the ongoing
strategic direction of the University, approval of major
developments and the receipt of regular reports from
its committees on the day-to-day operations of its
business and of its subsidiary undertakings.
The Board of Trustees is supported by the Collegiate
Council, which comprises the Heads of the Colleges
of the University, the Deputy Vice-Chancellor
5
, the
Dean and Chief Executive of the School of Advanced
Study, the Chief Executive of the University of London
International Programmes
6
and the Collegiate
Council’s Chair, the Vice-Chancellor. The Collegiate
Council is responsible for determining, and advising
the Board of Trustees on, the collective view of
the Colleges in respect of all matters concerning
the University of London as an incorporated body,
including its strategic direction. It is also responsible
for ensuring the proper discharge of the University‘s
academic affairs.
The Collegiate Council, inter alia, approves the
strategic plans of the University’s constituent
academic bodies and activities, and recommends
to the Board of Trustees the University’s annual
budgets for these bodies and activities. It monitors
performance against these plans and budgets, and
makes proposals and recommendations to the Board
of Trustees regarding the resources and services
provided by the University to the Colleges, and
on the funding of those services.
Corporate Governance Statement
1
Following resolutions of the Board of Trustees on 27 May 2015 and 15 July 2015.
2
City, University of London became part of the University of London with effect from 1 September 2016.
3
The number of independent persons on the Board of Trustees was increased from nine to eleven on 9 October 2015.
4
The Deputy Vice-Chancellor was added to the Membership of the Board of Trustees on 9 October 2015.
5
The Deputy Vice-Chancellor was added to the Membership of the Collegiate Council on 9 October 2015.
6
The Chief Executive of the University of London International Programmes was added to the Membership of the Collegiate Council on 9 October 2015.
Corporate Governance Statement
Financial Statements 2015–16 london.ac.uk29
The University’s Statutes provide that the Board of
Trustees shall appoint an Audit and Risk Assurance
Committee and that the Board of Trustees and the
Collegiate Council may from time to time establish
additional standing, special and advisory committees,
sub-committees or boards. The committees which
the Board of Trustees has established, in addition to
the Audit and Risk Assurance Committee, include
Nominations, Remuneration, Investments, Safety,
and Trust Funds. Additionally, the Board has recently
established, with effect from 1 August 2016, an
Estates Committee (which succeeds the previously
established Estates Sub-Group) and an Equality and
Diversity Committee. All of these committees are
formally constituted with terms of reference and
include members drawn from the independent
membership of the Board of Trustees.
The Audit and Risk Assurance Committee, which
meets at least four times a year, is responsible
for meeting with the external auditors to discuss
audit findings, and with the internal auditors to
consider their detailed internal audit reports and
recommendations for the improvement of the
University’s systems of internal control, together with
management’s responses and implementation plans.
The Committee also receives reports on value for
money, monitors adherence to the regulatory
requirements and considers reports from HEFCE as
they affect the University’s business. The Committee
advises the Board of Trustees on the appointment and
remuneration of the external and internal auditors
with whom it meets for independent discussions.
Whilst senior executives attend the meetings of the
Committee as necessary, they are not members
of the Committee. The Committee considers, and
recommends to the Board of Trustees, comprehensive
Financial Regulations for the conduct of the financial
affairs of the University, and reviews the University’s
annual financial statements together with the
accounting policies.
The Nominations Committee considers nominations
for independent vacancies on the Board of Trustees. In
line with the University’s commitment to access and
equal opportunities, the Committee seeks to achieve
a balance of membership on the Board of Trustees in
terms of gender, age, ethnicity and disability, and this
is an important consideration for the Committee in
selecting members of the Board of Trustees. Vacancies
are advertised openly and appropriately. Additionally,
details of vacancies are circulated to Heads of
Colleges and College Secretaries.
The Remuneration Committee determines the
remuneration of the Vice-Chancellor and other
senior staff and the Investments Committee is
responsible for matters relating to the investments
of the University, including recommending to the
Board of Trustees the appointment of investment
managers. The Safety Committee is responsible
for reviewing and taking action as appropriate on
the University's safety policies which ensure the
health and safety of employees, students, visitors
and others who may be affected by the University’s
activities. The Trust Funds Committee makes
allocations from the University’s endowment funds
to support educational activities at the University
and at the Colleges. It also acts as an oversight
Committee ensuring that allocated monies are spent
in accordance with the terms of each trust fund. The
Estates Committee is responsible for a number of
estates-related matters and also advises the Board of
Trustees on matters relating to the University’s estate,
including specific projects and wider estates strategy.
The Equality and Diversity Committee seeks to
promote equality and diversity among staff and
students. Its responsibilities include: developing and
ensuring implementation of the University’s Equality
Strategy and related policies; monitoring and making
recommendations in response to developments in
legislation; and reporting to the Board of Trustees on
equal opportunities monitoring and developments in
equality and diversity.
The principal academic and administrative officer
of the University is the Vice-Chancellor, who is
responsible to the Board of Trustees for securing the
implementation of the decisions of the Board, and
maintaining and promoting the efficiency and good
order of the University. The Vice-Chancellor is also,
under the terms of the Memorandum of Assurance
and Accountability between HEFCE and Institutions,
the designated Accountable Officer of the University
and in that capacity, can be summoned to appear
before the Public Accounts Committee of the House
of Commons.
Corporate Governance Statement
Corporate Governance Statement continued
Financial Statements 2015–16 london.ac.uk30
Membership
Period 1 August 2015 to 30 November 2016 (unless otherwise stated):
7
Professor Webley sadly passed away on 2 March 2016.
Membership and Responsibilities of the Board of Trustees
Independent Members Period of Office
Ms Jane Andrewartha From 1 August 2016
Ms Stella Beaumont
Mr Abdul Bhanji
Ms Emma Burns
Mr Philip Clark
Sir Richard Dearlove
(Chair)
Mr Steven Fogel Until 31 July 2016
Mr Andrew Halper From 1 August 2016
Mr Gerard Lemos Until 31 July 2016
Mrs Suzanne McCarthy Until 31 July 2016
Mr Kieran Murphy From 1 August 2016
Mr Malcolm Roberts
Mr Mark Storey From 1 February 2016
Mrs Rosalyn Wilton From 1 February 2016
Vice-Chancellor
Professor Sir Adrian Smith
Pe
riod of Office
Deputy Vice-Chancellor
Professor Paul Webley From 9 October 2015
to 2 March 2016
7
Representative Head of Colleges
Professor Simon Gaskell, Principal of Queen Mary,
University of London
Professor David Latchman, Master of Birkbeck,
University of London
Professor Paul Layzell, Principal of Royal Holloway,
University of London
Professor Stuart Reid, Principal of the Royal,
Veterinary College
Membership and Responsibilities of the Board of Trustees
Responsibilities
In accordance with the Charter and Statutes of
the University of London, the Board of Trustees of
the University is responsible for the administration
and management of the affairs of the University,
including ensuring that an effective system of internal
control is maintained, and is also required to present
consolidated audited financial statements each
financial year.
The Board is responsible for keeping proper
accounting records, which disclose with reasonable
accuracy at any time the financial position of the
University, and which enable it to ensure that the
financial statements are prepared in accordance
with the University’s Statutes, the Statement of
Recommended Practice on Accounting for Further
and Higher Education and all other relevant
accounting and financial reporting standards.
In addition, in the terms and conditions of the
Memorandum of Assurance and Accountability
between HEFCE and Institutions and the University,
the Board, through its Head of Institution and
Accountable Officer (the Vice-Chancellor), is required
to prepare financial statements for each financial year
which give a true and fair view of the state of affairs of
the University, and of the surplus or deficit and cash
flows for the year.
Financial Statements 2015–16 london.ac.uk31
In preparing the consolidated financial statements
the Board has ensured that:
• suitable accounting policies are selected and
applied consistently;
• judgements and estimates are made that are
reasonable and prudent;
• applicable accounting standards have been
followed, subject to any material departures
disclosed and explained in the financial
statements; and
• financial statements are prepared on the going
concern basis, unless it is inappropriate to presume
that the University will continue in operation. The
Board is satisfied that the University has adequate
resources to continue in operation for the
foreseeable future, and for this reason, the going
concern basis continues to be adopted in the
preparation of the financial statements.
The Board has taken reasonable steps to:
• ensure that funds from HEFCE are used only for the
purposes for which they have been given and in
accordance with the financial memorandum with
HEFCE and any other conditions which it has from
time to time prescribed;
• ensure that there are appropriate financial and
management controls in place to safeguard public
funds, and funds from other sources;
• safeguard the assets of the University and to
prevent and detect fraud; and
• secure the economical, efficient and effective
management of the University’s resources
and expenditure.
The key elements of the University’s system of internal
financial control, which is designed to discharge the
responsibilities set out above, include the following:
• clear definitions of the responsibilities of, and the
authority delegated to, heads of academic and
administrative units;
• a comprehensive medium and short-term
planning process, supplemented by detailed
annual income, expenditure, capital and cash
flow budgets;
• regular reviews of academic performance and
monthly reviews of financial results involving
variance reporting and updates of forecast
outturns;
• clearly defined and formalised requirements
for approval and control of expenditure, with
investment decisions involving capital or revenue
expenditure being subject to formal detailed
appraisal and review according to approval levels
set by the Board;
• a formalised treasury management policy;
• comprehensive financial regulations, detailing
financial controls and procedures, approved
by the Audit and Risk Assurance Committee
and the Board;
• a professional Internal Audit Provider, whose
annual programme is approved by the Audit
and Risk Assurance Committee; and
• an ongoing process designed to identify the
principal risks (whether business, operational,
compliance or financial) to the achievement of
policies, aims and objectives, and to evaluate the
nature and extent of those risks and to manage
them efficiently, effectively and economically. The
reporting method uses a system whereby risks are
ranked in terms of likelihood and impact, and are
reviewed and periodically reported to the Board
to ensure that procedures are in place for the
identified risks to be managed.
Membership and Responsibilities of the Board of Trustees
Responsibilities of the Board of Trustees continued
Financial Statements 2015–16 london.ac.uk32
As the governing body of the University, we have
responsibility for maintaining a sound system of
internal control that supports the achievement of
policies, aims and objectives, while safeguarding
the public and other funds and assets for which
we are responsible, in accordance with the
responsibilities assigned to the Board in the
University of London 1994 Act and Statutes, and
Memorandum of Assurance and Accountability
between HEFCE and Institutions.
The system of internal control is designed to manage
rather than eliminate the risk of failure to achieve
policies, aims and objectives. It can, therefore,
provide only reasonable, and not absolute,
assurance of effectiveness.
The system of internal control is based on an ongoing
process designed to identify the principal risks to
the achievement of policies, aims and objectives,
to evaluate the nature and extent of those risks,
and to manage them efficiently, effectively and
economically. This process has been in place for
the year ended 31 July 2016 and up to the date of
approval of the financial statements, and accords
with HEFCE guidance.
As the governing body, we have responsibility
for reviewing the effectiveness of the system of
internal control. The following processes have
been established:
• We meet regularly (usually on six occasions a
year) to consider the plans and strategic direction
of the University.
• We receive periodic reports concerning internal
control from the Chair of the Audit and Risk
Assurance Committee, and we require regular
reports from managers on the steps they are taking
to manage risks in their areas of responsibility,
including progress reports on key projects.
• The Audit and Risk Assurance Committee
receives regular reports from the internal audit
service, including its independent opinion on the
adequacy and effectiveness of the University’s
system of internal control, together with
recommendations for improvement.
• A robust risk prioritisation methodology based
on risk ranking and cost-benefit analysis has
been established.
• An organisation-wide risk register is maintained.
• Reports are received from budget holders,
department heads and project managers on
internal control activities.
The review by the Board of the effectiveness of the
system of internal control is informed by the work
of the internal auditors, Uniac. They operate to the
standards defined in the HEFCE Accountability
and Audit: Code of Practice. Our review of the
effectiveness of the system of internal control is also
informed by the work of the executive managers
within the University, who have responsibility for the
development and maintenance of the internal control
framework, and by comments made by the external
auditors in their management letter and other reports.
Statement of Internal Control by the Board of Trustees
Statement of Internal Control by the Board of Trustees
Financial Statements 2015–16 london.ac.uk33
INDEPENDENT AUDITOR’S REPORT TO THE
BOARD OF TRUSTEES OF THE UNIVERSITY
OF LONDON
adequately disclosed; the reasonableness of significant
accounting estimates made by the governing
body; and the overall presentation of the financial
statements. In addition, we read all the financial and
non-financial information in the annual report to
identify material inconsistencies with the audited
financial statements and to identify any information
that is apparently materially incorrect based on,
or materially inconsistent with, the knowledge
acquired by us in the course of performing the
audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the group’s
and the University’s affairs as at 31 July 2016 and of
the group’s surplus for the year then ended; and
• have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice and the Statement of Recommended
Practice: Accounting for Further and Higher
Education.
Opinion on other matters prescribed by the
Higher Education Funding Council for England
Audit Code of Practice
In our opinion, in all material respects:
• income from the funding council, grants and
income for specific purposes and from other
restricted funds administered by the University
during the year ended 31 July 2016 have been
applied for the purposes for which they were
received; and
• income during the year ended 31 July 2016 has
been applied in accordance with the University’s
statutes and, where appropriate, with the
memorandum of assurance and accountability,
with the funding council; and
• the requirements of HEFCE’s accounts direction
have been met.
Deloitte LLP
Chartered Accountants and Statutory Auditor
St Albans, UK
30 November 2016
Independent Auditor’s Report
Independent Auditor’s Report to the Board of Trustees of the University of London
We have audited the financial statements of the
University of London for the year ended 31 July 2016
which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated Balance
Sheet, the Consolidated Statement of Changes in
Reserves, the Consolidated Cash Flow Statement,
and the related Notes 1 to 31. The financial reporting
framework that has been applied in their preparation
is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted
Accounting Practice), including FRS 102 “The Financial
Reporting Standard applicable in the UK and Republic
of Ireland” and the Statement of Recommended
Practice: Accounting for Further and Higher Education.
This report is made solely to the governing body in
accordance with the memorandum of assurance and
accountability effective August 2013. Our audit work
has been undertaken so that we might state to the
governing body those matters we are required to state
to it in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the
Board of Trustees as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of the governing
body and auditor
As explained more fully in the governing body’s
responsibilities statement, the governing body
is responsible for the preparation of the financial
statements that give a true and fair view. Our
responsibility is to audit and express an opinion
on the financial statements in accordance with
applicable law and International Standards on
Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the
amounts and disclosures in the financial statements
sufficient to give reasonable assurance that
the financial statements are free from material
misstatement, whether caused by fraud or error.
This includes an assessment of: whether the
accounting policies are appropriate to the University’s
circumstances and have been consistently applied and
Financial Statements 2015–16
london.ac.uk
34
Basis of preparation
These financial statements have been prepared in
accordance with the Statement of Recommended
Practice (SORP): Accounting for Further and Higher
Education 2015 and in accordance with Financial
Reporting Standards (FRS) 102. The University is a public
benefit entity and therefore has applied the relevant
public benefit requirement of FRS 102. The financial
statements conform to guidance published by the
Higher Education Funding Council for England.
The activities of the University, together with the
factors likely to affect their future performance and
position are as set out in the Strategic Report on pages
4–27. Having regard to the University’s considerable
assets and financial resources, its Board of Trustees
believes it is well placed to manage its risks successfully
notwithstanding the current economic conditions
and future uncertainties associated therewith. The
Board of Trustees has a reasonable expectation that
the University has adequate resources to continue
in operational existence for the foreseeable future.
Thus it continues to adopt the going concern basis of
accounting in preparing the financial statements.
Basis of accounting
The financial statements are prepared under the
historical cost convention modified by the revaluation
of certain fixed assets and derivative financial
instruments.
Basis of consolidation
The consolidated financial statements include the
University and subsidiary undertakings. Intra-group
sales and profits are eliminated fully on consolidation.
Related party transactions
The University is partly funded by subscriptions from
the Colleges within the federation and by charges for
specific services supplied by the University to Colleges.
Heads of Colleges within the federation are ex officio
members of the Collegiate Council. The Colleges are
not related parties because of their autonomy as
independent higher education institutions.
Taxation
The University is an exempt charity under section 22
and Schedule 3 to the Charities Act 2011 and as such
is a charitable company within the meaning of Part
11 of the Corporation Tax Act 2010 (CTA). Accordingly,
the University is potentially exempt from taxation in
respect of income or capital gains received within
categories covered by Chapter 3 of Part 11 of the CTA
1990 or section 256 of the Taxation of Chargeable Gains
Act 1992 to the extent that such income or gains are
applied only to charitable purposes.
The University receives no similar exemption in
respect of Value Added Tax.
The University’s subsidiary companies are subject
to corporation tax and VAT in the same way as any
commercial organisation.
Foreign currencies
Transactions made in foreign currency are recorded
at the rate of exchange ruling at the date of the
transaction.
Monetary assets and liabilities denominated in foreign
currency are translated into sterling at the year-end rate,
and gains and losses arising on conversion are dealt
with in the statement of comprehensive income.
Intangible assets
Course development expenditure is charged to the
statement of comprehensive income in the year
incurred unless it meets the recognition criteria for
capitalisation as set out in FRS 102 18.4 and 18.8H.
When the recognition criteria have been met then
such expenditure on course development is capitalised
as an intangible asset under construction. When the
asset becomes available for use, it is amortised on a
straight line basis over the expected economic life of
the course, with amortisation being an expense in the
statement of comprehensive income. An impairment
test is carried out annually and where it is judged that
the carrying value of the intangible asset exceeds
the likely future economic benefit, then it is written
down appropriately. The useful economic life of a new
course is five years. Once the original intangible asset
has started being amortised, if there is subsequent
development work capitalised on that course, this will
be assessed by management. If it is deemed to be
intrinsically related to the original development work
capitalised, it will be amortised over the remaining life of
the original intangible asset. If it is deemed to represent
future economic benefit separate to that of the original
development work, it will be capitalised separately and
amortised over five years.
Statement of the University’s Principal Accounting Policies
Statement of the University’s principal accounting policies
Financial Statements 2015–16 london.ac.uk35
Tangible fixed assets
Tangible fixed assets are operational assets whose
risks and rewards belong to the University of London.
This consists of both assets owned by the University
and assets held by the University on a finance lease
where the University is the lessee. Refurbishment
costs incurred in relation to buildings after initial
measurement are capitalised to the extent that they
increase the expected future economic benefits of the
asset in question to the University. Assets which are let
out on finance leases where the University is the lessor
and investment property are excluded.
Property
The University has the following classes of property
assets and bases of recognition:
• Freehold land: recognised at fair value as deemed
cost (ie. fair value at 1 August 2014) and not
depreciated due to its infinite useful economic life
• Freehold buildings & refurbishment: Buildings,
including any refurbishment prior to 1 August 2014,
are recognised at fair value as deemed cost (ie. fair
value at 1 August 2014) and depreciated to their
estimated residual value over the useful economic
life of the asset. Building additions subsequent to 1
August 2014 are recognised at cost and depreciated
over the useful economic life of the building. Capital
refurbishment subsequent to 1 August 2014 other
than separately identifiable items of plant and
equipment, to the extent that it increases future
economic benefit to the University, is recognised at
cost and depreciated over the useful economic life
of the refurbishment asset.
• Long leasehold buildings & refurbishment: Buildings
held on a finance lease where the University is the
lessee are recognised at inception of the lease as
the lower of (i) the fair value of the building and (ii)
the present value of the minimum lease payments.
This is depreciated over the lower of the useful
economic life of the asset and the lease term. Capital
refurbishment other than separately identifiable
items of plant and equipment, to the extent that it
increases future economic benefit to the University,
is recognised at cost and depreciated over the useful
economic life of the refurbishment asset.
The useful economic lives of the property assets are
as follows:
• Land: infinite
• Buildings: 100 years
• Refurbishment costs: 7-20 years
Assets under construction
Assets under construction are not depreciated.
A quarterly review of assets under construction
is undertaken to assess whether the assets under
construction are available for use, at which point
they become depreciable assets and are reclassified
appropriately.
Plant and equipment
Single items of plant and equipment costing £10,000
or more, or multiple items of plant and equipment
whose functionality is intrinsically linked and which
together cost £10,000 or more, are capitalised as
plant and equipment assets. Capitalised assets are
depreciated over their useful economic life. Single items
under £10,000 are written off in the year of acquisition.
Groups of items purchased together which individually
cost under £10,000 and together cost £10,000 or more,
but whose functionality is not intrinsically linked, are
also written off in the year of acquisition.
The useful economic lives of the plant and equipment
assets are as follows:
• Motor vehicles: 3 years
• Computing equipment: 5 years
• Boats and boating equipment: 10-25 years
• Other plant and machinery: 5-20 years
In cases where the asset class has a potential range of
useful economic lives, the assets are assessed on an
individual basis and assigned the most appropriate
useful economic life from within that range.
Assets of all categories did not commence depreciation
until 1990. Prior to this date no assets were depreciated.
Leases: University as lessee
When the University enters into any lease agreements
as lessee, the lease is reviewed. If there are any indicators
of a finance lease implicit in the lease as set out in FRS
102: 20, a management decision is made over whether
the lease is a finance lease or an operating lease.
Statement of the University’s principal accounting policies
Statement of the University’s Principal Accounting Policies continued
Financial Statements 2015–16 london.ac.uk36
Finance lease
When a lease is deemed to be a finance lease, the
associated asset is recognised as an asset of the
University of London. The amount recognised is
the lower of the fair value and the present value of
minimum lease payments at the time of inception of
the lease. This is then depreciated over the lower of the
life of the lease and the UEL of the asset class to which
it belongs.
Operating lease
When a lease is deemed to be an operating lease, the
cost of lease payments and the reduction of cost of
any lease incentives are recognised on a straight-line
basis over the life of the lease. The leased asset is not
recognised as the University’s asset.
Leases: University as lessor
When an asset owned by the University of London is let
out, the lease is reviewed. If there are any indicators of a
finance lease implicit in the lease as set out in FRS 102:
20, a management decision is made over whether the
lease is a finance lease or an operating lease.
Finance lease
When a lease is deemed to be a finance lease, the
associated tangible fixed asset is derecognised, and a
finance lease receivable is recognised. The finance lease
receivable consists of the present value of the residual
value of the asset on reversion to the University at the
end of the lease, and the present value of any rental
income receivable throughout the life of the lease. A
rate deemed to be appropriate is used to calculate the
finance income, and equivalent increase in finance
lease receivable, during the life of the lease. Any
rental income received is recognised as a reduction in
finance lease receivable. The finance lease receivable is
reviewed annually for impairment.
Operating lease
When a lease is deemed to be an operating lease,
income from lease payments and reduction of income
of any lease incentives are recognised on a straight-line
basis over the life of the lease. The leased asset remains
the University’s asset, and depreciation and any other
costs associated with the asset are recognised as an
expense.
Heritage assets
The University has received gifts and bequests of
works of art, library collections and other decorative
items. The University has also purchased works of art,
rare books and manuscripts with funds from specific
benefactions and public grants. All of these assets are
held and maintained principally for their contribution
to knowledge and culture.
Heritage assets are recognised at cost of acquisition or,
in the case of donated assets, valuation at the date of
donation. Where a valuation cannot be obtained at a
cost which is commensurate with the benefits to users
of the financial statements, the donated asset is not
recognised but is disclosed in the note to the accounts.
Historic assets which are used by the University are
accounted for as tangible fixed assets.
Heritage assets are not depreciated since their long
economic life and high residual value mean that any
depreciation would not be material. Heritage assets
are assessed annually for impairment.
Investments
Investment properties
Investment properties are land and buildings owned
by the University of London which are held for capital
appreciation or rental income. All assets let out under
finance leases are excluded.
Investment properties are held at fair value, and are
revalued annually with the assistance of qualified
external valuers. Any revaluation gain or loss is taken
to income or expenditure. No depreciation is provided
in respect of investment properties.
Subsidiaries
Investment in subsidiaries is held at the carrying
amount which is deemed to be the net asset value
of the subsidiary, less any impairment.
Other non-current investments
Other non-current investments are held at fair value
and revalued at the end of each reporting period, with
changes in fair value being recognised in the statement
of comprehensive income.
Current asset investments
Current asset investments comprise money on term
deposits of longer than three months which is stated
at the lower cost and net realisable value, and money
market funds which are shown at market value in the
balance sheet.
Statement of the University’s principal accounting policies
Statement of the University’s Principal Accounting Policies continued
Financial Statements 2015–16 london.ac.uk37
Stocks
Stocks, which principally comprise study materials for
resale, are valued at the lower of cost and net realisable
value, after making due provision for obsolete and slow-
moving items.
Financial instruments
Basic financial instruments comprise cash, demand
and fixed-term deposits, loans receivable and payable
and bonds. Such instruments are recognised at the
transaction price and held at amortised cost using the
effective interest rate method or cost. They are subject
to an annual impairment review.
Investments in non-convertible preference shares
and non-puttable ordinary and preference shares are
measured at fair value where publicly traded or their
value can otherwise be reliably measured. Otherwise
they are measured at cost less impairment.
Complex financial instruments include options, rights,
warrants, futures and forward contracts and interest
rate swaps that can be settled in cash or by exchanging
another financial instruments, hedging instruments and
asset-back securities. Complex financial instruments
are recognised initially and held at fair value with
changes in fair value taken directly to the statement
of comprehensive income.
Cash flows and liquid resources
Cash flows comprise increases or decreases in cash.
Cash includes cash in hand and deposits repayable
within three months. Deposits repayable in more than
three months are held as current asset investments.
Provisions and contingent liabilities
Provisions are recognised when the University has a
present legal or constructive obligation as a result of
a past event, it is probable that a transfer of economic
benefit will be required to settle the obligation and a
reliable estimate can be made of the amount of the
obligation.
Contingent liabilities are disclosed by way of note,
when the definition of a provision is not met and
include three scenarios: a possible rather than a present
obligation; a possible rather than a probable outflow
of economic benefits; and an inability to measure the
economic outflow.
Pensions
The University participates in the University
Superannuation Scheme (USS) and the Superannuation
Arrangements of the University of London (SAUL).
These are externally funded defined benefits schemes
which are contracted out of the State Second Pension.
The liabilities of both these schemes are valued every
three years by professionally qualified independent
actuaries using the projected unit method, the rates of
contribution payable being determined by the trustees
on the advice of the actuaries. In the intervening years,
the actuaries review the progress of the schemes.
The University contributes to the National Health
Service Pension Scheme (NHSPS), an unfunded defined
benefit scheme for the academic and non-academic
staff at the Local Education and Training Boards (LETBs),
which replaced the London and Kent, Surrey and Sussex
(KSS) Deaneries in April 2013.
The University contributes to the French State Social
Security System, an unfunded defined contribution
scheme for the academic and non-academic staff at
the University of London Institute in Paris.
The University complies with FRS 102 28.11. Its defined
benefit schemes (USS, SAUL and NHSPS) are all multi-
employer schemes and, accordingly, given that it is not
possible to identify the University’s underlying share of
their assets and liabilities, are accounted for as if they
were defined contribution schemes. Contributions
to defined contribution schemes, or schemes treated
as defined contribution schemes, are recognised as
an expense where already paid by year end, or are
recognised as a liability where not paid by year end.
The University also complies with FRS 28.11A. The
University has entered into agreements with USS and
SAUL to fund their deficits, and recognises a liability
for the contributions payable that arise from these
agreements. The expense resulting from this liability
and any movements in this liability are recognised in
the statement of comprehensive income. NHSPS does
not meet the criteria of FRS 102 28.11A so no liability
is recognised.
Grants
All grants are accounted for under the performance
model.
Statement of the University’s principal accounting policies
Statement of the University’s Principal Accounting Policies continued
Financial Statements 2015–16 london.ac.uk38
Capital grants with performance conditions for
both land and buildings, and revenue grants with
performance conditions, from both Funding Bodies
and from other sources, are recognised initially as
deferred income, and then released to the statement
of comprehensive income on entitlement.
Capital grants with restrictions but without
performance conditions for both land and buildings,
and revenue grants with restrictions but without
performance conditions, from both Funding Bodies
and from other sources, are recognised in the statement
of comprehensive income on entitlement, and are
subsequently recorded within restricted reserves.
Donations and endowments
Donations with performance conditions are recognised
as deferred income, and recognised in the statements
of comprehensive income on entitlement to income
when the performance conditions are met.
Unrestricted donations are recognised in the statement
of comprehensive income on entitlement to income
and form part of the movement of unrestricted reserves.
Restricted donations which can be spent on the
specified activity within a short period of time are
recognised in the statement of comprehensive
income on entitlement to income and form part of the
movement of restricted reserves. Expenditure incurred
on the activity to which the donation was restricted,
to the value of that donation, also forms part of the
movement of restricted reserves.
Restricted donations which could not be spent
within a short period of time are recognised as
expendable endowments.
Expendable endowments comprise restricted
donations to the University which could not be
spent within a short period of time and Trusts of
which the University is a Trustee with no permanent
restrictions on capital. Income is recognised in the
statement of comprehensive income on entitlement.
Donation income, any investment income arising from
investment of the funds, and expenditure incurred in
line with the purpose of the donation or Trust, form
part of the creation of, and movement in, expendable
endowment reserves. Endowment assets may be held
as non-current investments or cash.
Permanently restricted endowments comprise
donations to the University and Trusts of which
the University is a Trustee where the donor has
specified that the fund is to be permanently invested
to generate an income stream to be applied to a
particular objective. Income is recognised in the
statement of comprehensive income on entitlement.
Donation income, any investment income arising from
investment of the funds, and expenditure incurred in
line with the purpose of the donation or Trust, form
part of the creation of, and movement in, permanent
endowment reserves.
Other items of total comprehensive income
Fee income is stated gross and credited to the
statement of comprehensive income over the period
the students are studying. Bursaries and scholarships are
accounted for gross as expenditure and not deducted
from income.
All income from short-term deposits is credited to the
statement of comprehensive income in the period in
which it is earned.
Service concessions
Where the University is the grantor in a service
concession arrangement, infrastructure assets are
recognised on the Balance Sheet at the present value
of the minimum lease payments when the assets are
bought into use with a corresponding financial liability.
Payments under the service concession arrangement
are allocated between service costs, finance charges
and financial liability repayments to reduce the financial
liability to nil over the life of the arrangement. Where
the University does not recognise a liability to make
payments, it does not recognise an infrastructure asset.
Transition to FRS 102
The University is preparing its financial statements
in accordance with FRS 102 for the first time and
consequently has applied the first time adoption
requirements. An explanation of how the transition
to the 2015 SORP has affected the reported financial
position, financial performance and cash flows of the
consolidated results of the University is provided in
Note 31.
Application of first time adoption grants certain
exemption from the full requirements of the 2015 SORP
in the transition period. The following exemptions have
been taken into these financial statements:
• Fair value at 1 August 2014 has been used
as deemed cost at 1 August 2014 for land
and buildings
Statement of the University’s principal accounting policies
Statement of the University’s Principal Accounting Policies continued
Financial Statements 2015–16 london.ac.uk39
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2016
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
Notes £’000 £’000 £’000 £’000
Income
1 Tuition fees and education contracts 56,220 56,220 54,821 54,821
2 Funding body grants 9,385 9,377 9,395 9,395
3 Research grants and contracts 1,619 1,619 1,937 1,937
4 Other income 78,787 68,494 73,497 64,670
5 Investment income 4,031 7,519 3,703 6,372
6 Donations and endowments 1,326 1,326 745 745
Total income 151,368 144,555 144,098 137,940
Expenditure
7 Staff costs 62,967 60,079 62,158 59,720
9 Other operating expenses 84,185 81,037 78,346 75,535
12 Depreciation 4,998 4,204 5,699 4,866
8 Interest and other finance costs 2,904 2,900 2,710 2,710
9 Total expenditure 155,054 148,220 148,913 142,831
Deficit before other gains and losses (3,686) (3,665) (4,815) (4,891)
Loss on disposal of fixed assets (671) (671) (77) (77)
15 Gain on investments 13,029 13,483 18,995 18,995
Surplus before tax 8,672 9,147 14,103 14,027
10 Taxation 475 – (72) 4
Total comprehensive income for the year 9,147 9,147 14,031 14,031
Represented by:
Endowment comprehensive income for the year 5,431 5,431 5,857 5,857
Restricted comprehensive income for the year 32 32 123 123
Unrestricted comprehensive income for the year 3,684 3,684 8,051 8,051
9,147 9,147 14,031 14,031
All surplus for the year is attributable to the University
All comprehensive income for the year is attributable to the University
All items of income and expenditure relate to continuing activities
Financial Statements 2015–16 london.ac.uk40
Consolidated and University Statement of Changes in Reserves
For the year ended 31 July 2016
Consolidated Income and expenditure account
Total Endowment Restricted Unrestricted
£’000 £’000 £’000 £’000
Balance at 1 August 2014 68,617 68 538,714 607,399
Surplus from the income and expenditure statement 8,344 237 5,450 14,031
Release of restricted funds spent in year (2,487) (114) 2,601 –
Total comprehensive income for the year 5,857 123 8,051 14,031
Balance at 1 August 2015 74,474 191 546,765 621,430
Surplus / (deficit) from the income and expenditure
statement
8,831 646 (330) 9,147
Release of restricted funds spent in year (3,400) (614) 4,014 –
Total comprehensive income for the year 5,431 32 3,684 9,147
Balance at 31 July 2016 79,905 223 550,449 630,577
University Income and expenditure account
Total Endowment Restricted Unrestricted
£’000 £’000 £’000 £’000
Balance at 1 August 2014 68,617 68 538,714 607,399
Surplus from the income and expenditure statement 8,344 237 5,450 14,031
Release of restricted funds spent in year (2,487) (114) 2,601 –
Total comprehensive income for the year 5,857 123 8,051 14,031
Balance at 1 August 2015 74,474 191 546,765 621,430
Surplus / (deficit) from the income and
expenditure statement
8,831 646 (330) 9,147
Release of restricted funds spent in year (3,400) (614) 4,014 –
Total comprehensive income for the year 5,431 32 3,684 9,147
Balance at 31 July 2016 79,905 223 550,449 630,577
Financial Statements 2015–16 london.ac.uk41
Consolidated and University Balance Sheet
For the year ended 31 July 2016
As at 31 July 2016 As at 31 July 2015
Consolidated University Consolidated University
Notes £’000 £’000 £’000 £’000
Non–current assets
11 Intangible assets 1,817 1,817 491 491
12 Fixed assets 509,823 509,479 513,390 510,652
12, 13 Heritage assets 12,961 12,961 12,961 12,961
15 Non– current investments 176,625 177,514 163,254 163,089
701,226 701,771 690,096 687,193
Current assets
16 Stock 1,133 1,133 1,503 1,503
17 Trade and other receivables 14,428 14,147 13,759 15,938
18 Current investments 39,792 39,792 34,727 34,727
24 Cash and cash equivalents 12,259 10,077 16,772 14,629
67,612 65,149 66,761 66,797
Creditors: amounts falling
19 due within one year (35,300) (33,382) (33,801) (31,024)
Net current assets 32,312 31,767 32,960 35,773
Total assets less current liabilities 733,538 733,538 723,056 722,966
20 Creditors: amounts falling due after more
than one year
(86,897) (86,897) (87,646) (87,646)
Provisions
21 Pension provisions (16,064) (16,064) (13,890) (13,890)
21 Other provisions – – (90) –
Total net assets 630,577 630,577 621,430 621,430
Restricted reserves
22 Income and expenditure reserve
– endowment reserve
79,905 79,905 74,474 74,474
23 Income and expenditure reserve
– restricted reserve
223 223 191 191
Unrestricted reserves
Income and expenditure reserve
– unrestricted
550,449 550,449 546,765 546,765
Total reserves 630,577 630,577 621,430 621,430
The financial statements were approved by the Board of Trustees on 30 November 2016 and were signed on its behalf
on that date by:
Sir Richard Dearlove,
Chairman, Board of Trustees
Andrew Murphy,
Chief Financial Officer
Professor Sir Adrian Smith,
Vice-Chancellor
Financial Statements 2015–16 london.ac.uk42
Consolidated Cash Flow Statement
For the year ended 31 July 2016
Year ended 31
July 2016
Year ended
31 July 2015
Notes £’000 £’000
Cash flow from operating activities
Surplus for the year 9,147 14,031
Adjustment for non–cash items
12 Depreciation 4,998 5,699
11 Amortisation of intangibles 115 34
15 (Loss) / gain on non-current investments (13,328) (22,767)
16 Decrease / (increase) in stock 370 (151)
17 Decrease / (increase) in debtors (669) 813
19, 20 Increase / (decrease) in creditors 750 (5,215)
21 Increase / (decrease) in pension provision 2,174 6,888
21 Increase / (decrease) in other provisions (90) 76
Adjustment for investing or financing activities
5 Investment income (4,031) (3,703)
8 Interest payable 2,573 2,541
(Profit) / loss on the sale of fixed assets 671 77
Capital grant income (178) (128)
Net cash inflow from operating activities 2,502 (1,805)
Cash flows from investing activities
Proceeds from sales of fixed assets 300 –
Capital grants receipts 178 128
Withdrawal of deposits – 2,783
Investment income 4,031 3,703
Payments made to acquire fixed assets (2,402) (3,314)
Payments made to acquire intangible assets (1,441) (491)
New non-current investments (43) (3,856)
New deposits (5,065) –
(4,442) (1,047)
Cash flows from financing activities
Interest paid (2,573) (2,541)
(2,573) (2,541)
(Decrease) / increase in cash and cash equivalents in the year (4,513) (5,393)
24 Cash and cash equivalents at beginning of the year 16,772 22,165
24 Cash and cash equivalents at end of the year 12,259 16,772
Financial Statements 2015–16 london.ac.uk43
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
Notes £’000 £’000 £’000 £’000
1 Tuition fees and education contracts
Full–time home and EU students 319 319 489 489
Full–time international students 54,562 54,562 53,427 53,427
Part–time students 1,339 1,339 905 905
56,220 56,220 54,821 54,821
2 Funding body grants
Recurrent grant
Higher Education Funding Council 9,207 9,199 9,267 9,267
Capital grant 178 178 128 128
9,385 9,377 9,395 9,395
3 Research grants and contracts
Research councils 1,027 1,027 1,359 1,359
Research charities 266 266 187 187
Government (UK and overseas) 325 325 391 391
Other 1 1 – –
1,619 1,619 1,937 1,937
4 Other income
Colleges: Subscriptions and charges 9,541 9,541 8,956 8,956
Residences, catering and conferences 27,719 25,666 27,232 23,141
Estates revenue 4,762 4,762 3,934 3,934
Other revenue grants 533 533 1,015 1,015
Other income 18,989 10,749 15,605 10,869
Arrangements with HEE 17,243 17,243 16,755 16,755
78,787 68,494 73,497 64,670
5 Investment income
22 Investment income on endowments 2,644 2,644 2,557 2,557
Other investment income 1,387 4,875 1,146 3,815
4,031 7,519 3,703 6,372
6 Donations and endowments
22,23 Donations with restrictions 999 999 405 405
Unrestricted donations 327 327 340 340
1,326 1,326 745 745
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk44
Notes to the Financial Statements
For the year ended 31 July 2016
7 Staff costs
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Staff costs :
Salaries 46,809 44,039 42,745 40,896
Other staff costs 685 660 473 473
Social security costs 4,145 4,097 3,719 3,558
Movement on USS provision 554 554 6,675 6,675
Movement on SAUL provision 1,196 1,196 – –
Other pension costs 9,578 9,533 8,546 8,118
Total 62,967 60,079 62,158 59,720
The above is analysed as follows:
University and Subsidiaries 46,809 43,921 46,299 43,861
HEE 16,158 16,158 15,859 15,859
Total 62,967 60,079 62,158 59,720
2016 2015
£ £
Emoluments of the Vice–Chancellor:
Salary 173,400 171,683
173,400 171,683
Remuneration of other higher paid staff, excluding employer’s pension contributions:
2016 No. 2015 No.
£100,000 to £109,999 4 6
£110,000 to £119,999 3 2
£120,000 to £129,999 4 2
£130,000 to £139,999 3 1
£140,000 to £149,999 3 2
£150,000 to £159,999 2 1
£160,000 to £169,999 – 1
£170,000 to £179,999 1 1
£200,000 to £209,999 1 –
21 16
Financial Statements 2015–16 london.ac.uk45
Key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the University. Staff costs includes compensation paid to key management personnel and employer’s pension
contributions.
Key management personnel are deemed to be the six members of staff who, along with the Vice–Chancellor, are members of
the Vice Chancellor’s Executive Group.
Year ended 31 July 2016 Year ended 31 July 2015
£’000 £’000
Key management personnel compensation 966 895
8 Interest and other finance costs
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
Notes £’000 £’000 £’000 £’000
Loan interest 2,573 2,573 2,541 2,541
Exchange differences (93) (97) (45) (45)
29 Net charge on pension scheme 424 424 214 214
2,904 2,900 2,710 2,710
Notes to the Financial Statements
For the year ended 31 July 2016
7 Staff costs continued
2016 No. 2015 No.
Average full time equivalent staff numbers:
University and Subsidiary 801 746
HEE 277 331
1,078 1,077
Compensation for loss of office payable to a senior post–holder:
£’000 £’000
Compensation payable recorded within staff costs – –
Financial Statements 2015–16 london.ac.uk46
9 Analysis of total expenditure by activity
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Academic and related expenditure 21,509 21,509 19,083 19,083
University of London International Academy 48,666 48,666 47,358 47,358
Administration and central services 12,412 14,809 16,373 19,383
Premises 17,736 17,736 14,413 14,390
Residences, catering and conferences 16,925 15,587 16,505 14,936
Research grants and contracts 1,474 1,474 1,711 1,711
Other expenses 19,089 11,196 16,715 9,215
Arrangements with HEE 17,243 17,243 16,755 16,755
155,054 148,220 148,913 142,831
Other operating expenses include:
External auditors remuneration in respect of audit services 68 74
External auditors remuneration in respect of
non–audit services
79 139
Operating lease rentals
Land and buildings 1,447 1,204
Other 182 129
Notes to the Financial Statements
For the year ended 31 July 2016
Analysis of total consolidated expenditure by activity and by nature
Staff
costs
Other
operating
expenses Depreciation
Finance
costs
Total
expenditure
Total
expenditure
2016 2016 2016 2016 2016 2015
£’000 £’000 £’000 £’000 £’000 £’000
Academic and related expenditure 12,861 8,543 105 – 21,509 19,083
University of London International
Academy
10,974 37,692 – – 48,666 47,358
Administration and central services 8,887 2,895 – 630 12,412 16,373
Premises 1,429 14,314 1,993 – 17,736 14,413
Residences, catering and
conferences
1,676 10,829 2,150 2,270 16,925 16,505
Research grants and contracts 675 799 – – 1,474 1,711
Other expenses 10,307 8,028 750 4 19,089 16,715
Arrangements with HEE 16,158 1,085 – – 17,243 16,755
62,967 84,185 4,998 2,904 155,054 148,913
Financial Statements 2015–16 london.ac.uk47
11 Intangible assets
UoLIA course development Year ended 31 July 2016
Consolidated University
£’000 £’000
Opening balance 491 491
Additions in the year 1,441 1,441
Amortisation charge for the year (115) (115)
Closing balance 1,817 1,817
The addition during the year relates to the capitalisation of UoLIA course development.
The amortisation period is 5 years.
Notes to the Financial Statements
For the year ended 31 July 2016
10 Taxation
Recognised in the statement of comprehensive income 2016 2015
Consolidated Consolidated
£’000 £’000
Current tax
Current tax expense – 25
Research and Development tax credits – (29)
Current tax expense – (4)
Deferred tax
Origination and reversal of timing differences (475) 76
Deferred tax (credit) / expense (475) 76
Total tax (credit) / expense (475) 72
Financial Statements 2015–16 london.ac.uk48
12 Fixed assets
Freehold
land
Freehold
buildings
Leasehold
land and
buildings
Assets in the
course of
construction
Plant and
equipment
Heritage
assets Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Consolidated
Cost or valuation
At 1 August 2015 143,691 344,288 24,677 1,627 13,418 12,961 540,662
Additions – – 76 2,527 384 – 2,987
Transfers – 538 68 (971) 365 – –
Disposals – (400) – (585) (5,515) – (6,500)
At 31 July 2016 143,691 344,426 24,821 2,598 8,652 12,961 537,149
Depreciation
At 1 August 2015 – (3,541) (1,890) – (8,880) – (14,311)
Charge for the year – (3,511) (446) – (1,041) – (4,998)
Disposals – 100 – – 4,844 – 4,944
At 31 July 2016 – (6,952) (2,336) – (5,077) – (14,365)
Net book value
At 31 July 2016 143,691 337,474 22,485 2,598 3,575 12,961 522,784
At 31 July 2015 143,691 340,747 22,787 1,627 4,538 12,961 526,351
University
Cost and valuation
At 1 August 2015 143,691 344,188 24,677 1,262 6,996 12,961 533,775
Additions – – 76 2,422 1,619 – 4,117
Transfers – 538 68 (971) 365 – –
Disposals – (300) – (115) (671) – (1,086)
At 31 July 2016 143,691 344,426 24,821 2,598 8,309 12,961 536,806
Depreciation
At 1 August 2015 – (3,444) (1,890) – (4,828) – (10,162)
Charge for the year – (3,511) (446) – (247) – (4,204)
Disposals – – – – – – –
At 31 July 2016 – (6,955) (2,336) – (5,075) – (14,366)
Net book value
At 31 July 2016 143,691 337,471 22,485 2,598 3,234 12,961 522,440
At 31 July 2015 143,691 340,744 22,787 1,262 2,168 12,961 523,613
As part of the transition to FRS 102 the freehold land and buildings were restated at their fair value as at 1 August 2014 as
deemed cost brought forward. The valuation of these properties as at 1 August 2014 was carried out by Knight Frank LLP,
Chartered Surveyors during 2016, with the final valuation report delivered in October 2016.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk49
1
3 Heritage assets
The University has a large collection of heritage assets that are held and maintained principally for their contribution to
knowledge and culture.
The University of London Artworks Collection includes historic paintings, prints, drawings, photographs, silverware, ceramics,
textiles, sculptures and artefacts in various materials. Many items illustrate the history and development of the University of
London and prominent individuals. This collection numbers over 400 pieces and is a mixture of acquired and donated artwork.
Coram James valued this collection during the year ended 31 July 2016 as worth £2,441,300. The collection is normally on display
at various locations on the University’s premises, or in the case of some of the more delicate items, viewable by appointment.
More details can be found at http://www.senatehouselibrary.ac.uk/our-collections/special-collections/university-london-
artworks-collection
The University of London Senate House Library holds the highest proportion of special collections, manuscripts and archives
of any UK University Library. There are c.12 million items managed by the Historical Collections Department. The Collections are
open to all Library members and available to view on request in the Special Collections Reading Room. The diverse nature of the
assets held, the number of assets held and the lack of comparable market values, means the University considers that the costs
of valuing each item in the special collection would be onerous and not commensurate with the benefits to users of the financial
statements. More details can be found at http://www.senatehouselibrary.ac.uk/our-collections/special-collections/
For insurance purposes, 19 of the books and manuscripts considered by the Historical Collections Department to be the most
cultural significant or rarest, were valued by Dominic Winter during the year ended 31 July 2016. Total value of this collection
according to Dominic Winter’ valuation is £10.545m.
No new heritage assets have been purchased or donated during the year or in the previous four accounting periods. Heritage
Assets are assessed annually to consider whether there are indicators of impairment in the years where no professional valuation
has taken place. In the years, where a professional valuation has taken place, the new valuations are compared to the carrying
amounts to identify any indications of impairment. It has been determined that there is no need for impairment.
14 Service concession arrangements
The University has one service concession arrangement where service delivery has commenced.
On 4 July 2014 the University entered into a 52–year contract with a third party provider for the provision and maintenance of
Cartwright Gardens Halls of Residence providing accommodation to 1,200 students.
The halls were brought into use in October 2016 and the contract will finish on 31 August 2056.
At the end of the concession period, the University will retain beneficial ownership of the halls of residence.
Under the arrangement, the University has no minimum guaranteed payment and therefore no asset and liability to recognise
on the Balance Sheet.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk50
15 Non-current investments
Subsidiary
companies
University
investment in
Unified Trust
Fund
Investment
properties
Other
non-current
investments Endowments Total
£’000 £’000 £’000 £’000 £’000 £’000
Consolidated
At 1 August 2015 8,244 75,185 4,033 72,020 159,482
Additions 1,357 – 315 – 1,672
Disposals – – – (1,629) (1,629)
Impairment – – – – –
Revaluation 815 6,380 – 5,834 13,029
At 31 July 2016 10,416 81,565 4,348 76,225 172,554
Short term deposits
and cash
391 3,680 4,071
10,807 81,565 4,348 79,905 176,625
University
At 1 August 2015 (165) 8,244 75,185 4,033 72,020 159,317
Additions 600 1,357 – 315 – 2,272
Disposals – – – – (1,629) (1,629)
Impairment – – – – – –
Revaluation – 815 6,380 – 5,834 13,029
Subsidiaries’ net assets
movement
454 – – – – 454
At 31 July 2016 889 10,416 81,565 4,348 76,225 173,443
Short term deposits
and cash
391 3,680 4,071
889 10,807 81,565 4,348 79,905 177,514
The holdings in the Unified Trust Fund are held at market value.
Other non–current investments consist of : Consolidated and University
£’000
211
UPP (Cartwright Gardens) Holdings Limited share capital and premium
UPP (Cartwright Gardens) Holdings Limited subordinated loan
4,137
4,348
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk51
1
5 Non-current investments continued
Investment in subsidiary companies
The University of London owns 100% of the issued share capital (one £1 Ordinary Share) of Senate House Services Limited, a
company registered in England and Wales. The principal activity of the company is the provision of operational services to the
University of London and its Colleges. At 31 July 2016 Senate House Services Limited had net assets of £261,000 and accordingly,
in the balance sheet of the University at this date, the value of Investments, including the subsidiary, is increased by this amount.
CoSector Limited is a company registered in England and has an issued share capital of £600,001, with the University of London
as its sole shareholder. The principal activity of the company during the year was the provision of operational services to the
University of London. At 31 July 2016 CoSector Limited had net assets of £628,000 and accordingly, in the balance sheet of the
University at this date, the value of Investments, including the subsidiary, is increased by this amount.
Senate House Services One Limited is a company registered in England and has an issued share capital of £1, with the University
of London as its sole shareholder. The company was incorporated on 16 June 2016 and was dormant during the year.
Prosum Shared Services Limited is a company registered in England and has an issued share capital of £1, with the University of
London as its sole shareholder. The company has not traded in the year.
Investment properties
The investment properties were valued at 31 July 2016 by Knight Frank LLP, Chartered Surveyors. The valuation method
adopted has been to capitalise both the term at passing rent and the reversionary interest at market rent. Appropriate yields
have been applied to the term and reversion respectively in order to provide an investment value of the University’s interest in
the land and buildings after making allowance for purchaser’s costs.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk52
16 Stock
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Finished goods 1,133 1,133 1,503 1,503
1,133 1,133 1,503 1,503
17 Trade and other receivables
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Amounts falling due within one year:
Research grants receivables 185 185 – –
Other trade receivables 7,082 5,759 8,183 5,909
Other receivables 900 462 28 28
Prepayments and accrued income 6,261 5,274 5,548 4,593
Amounts due from subsidiary companies – 2,467 – 5,408
14,428 14,147 13,759 15,938
18 Current investments
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Short term deposits 39,792 39,792 34,727 34,727
39,792 39,792 34,727 34,727
Deposits are held with banks and building societies operating in the London market and licensed by the Financial Services
Authority with more than three months maturity at the balance sheet date. The interest rates for these deposits are fixed for
the duration of the deposit at time of placement.
At 31 July 2016 the weighted average interest rate of these fixed rate deposits was 1.23% per annum and the remaining
weighted average period for which the interest rate is fixed on these deposits was 215 days. The fair value of these deposits
was not materially different from the book value.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk53
19 Creditors: amounts falling due within one year
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Trade payables 1,470 1,366 1,397 1,049
Social security and other taxation payable 1,918 1,389 1,721 1,721
Accruals and deferred income 28,469 26,663 28,470 26,348
Other payables 3,443 3,350 2,213 1,906
Amounts due to subsidiary companies – 614 – –
35,300 33,382 33,801 31,024
Deferred income
Included with accruals and deferred income are the following items of income which have been deferred until specific
performance related conditions have been met.
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Grant income 211 211 602 602
211 211 602 602
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk54
20 Creditors: amounts falling due after more than one year
Year ended 31 July 2016 Year ended 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Deferred income 36,647 36,647 37,396 37,396
Unsecured loans 50,250 50,250 50,250 50,250
86,897 86,897 87,646 87,646
Analysis of unsecured loans:
Due between one and two years 263 263 – –
Due between two and five years 1,898 1,898 1,595 1,595
Due in five years or more 48,089 48,089 48,655 48,655
Due after more than one year 50,250 50,250 50,250 50,250
Total unsecured loans 50,250 50,250 50,250 50,250
Included in loans are the following:
Lender Amount Interest rate
£’000 Term % Borrower
RBS (unsecured) 50,000 2047 5.10 University
The first repayment on the RBS unsecured loan is due in 2018.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk55
21 Provisions for liabilities
Consolidated Obligation to
fund deficit on
USS pension
Obligation to
fund deficit on
SAUL pension
Total
pensions
provisions
Deferred
tax
Total
other
£’000 £’000 £’000 £’000 £’000
At 1 August 2015 13,890 – 13,890 90 90
Additions in 2015–16 978 1,196 2,174 (90) (90)
At 31 July 2016 14,868 1,196 16,064 – –
University Obligation to
fund deficit on
USS pension
Obligation to
fund deficit on
SAUL pension
Total
pensions
provisions
Deferred
tax
Total
other
£’000 £’000 £’000 £’000 £’000
At 1 August 2015 13,890 – 13,890 – –
Additions in 2015–16 978 1,196 2,174 – –
At 31 July 2016 14,868 1,196 16,064 – –
USS deficit
The obligation to fund the past deficit on the University’s 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. The USS deficit recovery plan extends to 2031, the period over which outflow related to this provision
is expected.
SAUL deficit
The obligation to fund the past deficit on the Superannuation Arrangements of the University of London 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 SAUL scheme and salary payment over the period of the contracted
obligation in assessing the value of this provision. The SAUL deficit recovery plan extends to 2018, the period over which outflow
related to this provision is expected.
Deferred tax
Deferred taxation arises from the additional capital allowances available in assessing corporation tax liability to the depreciation
rates used by the business. There is no deferred tax provision at year end.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk56
22 Endowment reserves
Restricted net assets relating to endowments are as follows:
Restricted
permanent
endowments
Expendable
endowments
2016
Total
2015
Total
£’000 £’000 £’000 £’000
Balances at 1 August 2015
Capital 59,065 9,959 69,024 61,280
Accumulated income 4,620 830 5,450 7,337
63,685 10,789 74,474 68,617
New endowments – – – –
Donations 10 343 353 281
Investment income 2,257 387 2,644 2,557
Expenditure (2,674) (726) (3,400) (2,487)
(Decrease) / increase in market value of investments 5,002 832 5,834 5,506
Total endowment comprehensive income for the year 4,595 836 5,431 5,857
At 31 July 2016 68,280 11,625 79,905 74,474
Transfers from accumulated income to capital in the year 1,282 85 1,367 2,238
Represented by:
Capital 65,349 10,876 76,225 69,024
Accumulated income 2,931 749 3,680 5,450
68,280 11,625 79,905 74,474
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk57
22 Endowment reserves continued
Note
Connected
Institutions
Number
of Trusts
Opening
Fund
Balance Income
Capital
Appreciation Expenditure
Transfers
between
funds
Closing
Fund
Balance
£’000 £’000 £’000 £’000 £’000 £’000
Individual
Charities
a
Scholarship
Studentship Fund
6,195 235 530 – 90 7,050
Research Fund 4,443 165 372 (4) (47) 4,929
Prize Fund 491 18 41 (4) (1) 545
b Convocation 2,634 164 223 (99) 180 3,102
c Chadburn Lectures 9,681 357 828 (148) 313 11,031
d Teachers of
Anatomy
157 270 – (377) – 50
e Maplethorpe 5,365 200 447 – (4) 6,008
f Perren 3,229 120 270 – 24 3,643
g Frost Chair 2,904 98 219 – 60 3,281
Summarised
Charities
Research Support: 85 31,004 1,105 2,306 (2,562) 255 32,108
Bursary /
Scholarship
19 5,508 197 442 (81) (108) 5,958
General central
University support:
15 1,184 9 13 (25) (872) 309
Prize funds 9 1,679 59 143 (100) 110 1,891
74,474 2,997 5,834 (3,400) – 79,905
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk58
22 Endowment reserves continued
a University of London Scholarship Fund
The Charity Commission approved a new scheme on 9 February 2011 for the use of these combined charitable trusts. The
income is to be distributed to the Colleges of the University of London for three purposes; by awarding prizes, to undertake
research, to provide studentships.
b Convocation
This trust receives donations from University of London alumni and is used to support federal student services.
c Chadburn Lectureship in Medicine
This trust is to support up to two Lectureships on a part time basis to provide opportunities for Doctors in training whose
personal circumstances preclude a full time commitment to their careers.
d Teachers of Anatomy
This trust is to promote the study of anatomy within institutions of medical education in South East England by providing
cadavers for the purpose of teaching and research in anatomy.
e Maplethorpe
This trust is to support up to two annual Lectureships in the study of pharmacy.
f Perren
This trust is for the furtherance of astronomical knowledge and the study of astronomy.
g Frost Chair
This trust is to support an academic Chair in Ophthalmology.
h Warburg Institute
The Warburg Institute is a constituent part of the School of Advanced Study specialising in cultural history, art history and
history of ideas in the Renaissance. The Warburg Institute operates as an integral part of the operation of the University
of London and therefore the income and expenditure of the Warburg Institute are included within the main income and
expenditure account. The designated reserves of the Warburg Institute are included within the main reserves.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk59
23 Restricted reserves
Reserves with restrictions are as follows:
Donations
2016
Total
2015
Total
£’000 £’000 £’000
Balances at 1 August 2015 191 191 68
New donations 646 646 237
Expenditure (614) (614) (114)
Total restricted comprehensive income for the year 32 32 123
At 31 July 2016 223 223 191
Analysis of other restricted funds /donations by type of purpose: 2016
Total
2015
Total
£’000 £’000
Scholarships and bursaries 11 –
Research support 92 191
General 120 –
223 191
24 Cash and cash equivalents
At 1 August
2015
Cash
flows
At 31 July
2016
Consolidated £’000 £’000 £’000
Cash and cash equivalents 16,772 (4,513) 12,259
16,772 (4,513) 12,259
Analysis of changes in net funds At 1 August
2015
Cash
flows
Non–cash
items
At 31 July
2016
Consolidated £’000 £’000 £’000 £’000
Cash and cash equivalents 16,772 (4,513) – 12,259
Endowment assets – short term deposits and cash 3,608 72 – 3,680
Other investments – short term deposits and cash 164 227 – 391
20,544 (4,214) – 16,330
Current asset investments 34,727 5,065 – 39,792
Debt due after one year (50,250) – – (50,250)
5,021 851 – 5,872
Management of liquid resources comprises endowment assets–short term deposits and current asset investments.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk60
25 Capital and other commitments
Provision has not been made for the following capital commitments at 31 July 2016:
31 July 2016 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Commitments contracted for 1,413 1,413 442 442
1,413 1,413 442 442
26 Lease obligations
Total rentals payable under operating leases:
31 July 2016 31 July 2015
Land and
buildings
Other
leases Total Total
£’000 £’000 £’000 £’000
Payable during the year 1,447 182 1,629 1,333
Future minimum lease payments due:
Not later than 1 year 1,237 150 1,387 1,009
Later than 1 year and not later than 5 years 103 117 220 77
Later than 5 years 16 – 16 12
Total lease payments due 1,356 267 1,623 1,098
27 Related parties
Due to the nature of the University’s operations and the composition of the Board of Trustees and the Collegiate Council it is
inevitable that transactions will take place with organisations in which a member of the Board or Council may have an interest.
The Corporate Governance Statement (pages 29 and 30) sets out in more detail the relationship between the University and its
Colleges. All transactions involving organisations in which a member of the Board or Council may have an interest are conducted
at arm’s length in accordance with the University’s financial regulations and normal procurement procedures and none of these
transactions fall to being disclosed as being with related parties. In line with the Committee of University Chairman guidance, all
members of the Board and the Collegiate Council are required to complete a register of interests to record any areas of potential
conflict with the interests of the University.
Trustees are not entitled to and did not receive any remuneration for their services. Five Trustees received a total of £10,080
(2014–15: Three Trustees £3,344) representing the reimbursement of travel and subsistence expenses incurred in attending
Board of Trustees and Committee meetings and events in their official capacity.
28 Events after the reporting period
On 1 September 2016 City University acceded to the Federation. The new member institution is now formally known as City,
University of London and its distinctive academic profile will bring a new element to the University.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk61
29 Pension schemes
Different categories of staff were eligible to join one of three principle different schemes:
• Universities’ Superannuation Scheme (USS)
• Superannuation Arrangements of the University of London (SAUL)
• National Health Service Pension Scheme (NHSPS)
The two main schemes, being USS and SAUL, are both defined–benefit schemes contracted out of the State Second Pension
(S2P) the assets of which are held in separate trustee administered funds.
Year ended 31 July 2016 Year ended 31 July 2015
£’000 £’000
USS 6,296 5,679
SAUL 2,778 2,380
NHSPS 459 426
Other pension schemes 45 61
9,578 8,546
(i) The Universities Superannuation Scheme
The total cost charged to the profit and loss account is £6,296k (2015: £5,679k).
The latest available full actuarial valuation of the scheme was at 31 March 2014 (“the valuation date”), which was carried out
using the projected unit method.
Since the institution cannot identify its share of scheme assets and liabilities, the following disclosures reflect those relevant for
the scheme as a whole.
The 2014 valuation was the third valuation for USS under the scheme–specific funding regime introduced by the Pensions Act
2004, which requires schemes to adopt a statutory funding objective, which is to have sufficient and appropriate assets to cover
their technical provisions. At the valuation date, the value of the assets of the scheme was £41.6 billion and the value of the
scheme’s technical provisions was £46.9 billion indicating a shortfall of £5.3 billion. The assets therefore were sufficient to cover
89% of the benefits which had accrued to members after allowing for expected future increases in earnings.
Defined benefit liability numbers for the scheme have been produced using the following assumptions:
2016 2015
Discount rate 3.6% 3.3%
Pensionable salary growth N/A 3.5% in the first year
and 4.0% thereafter
Pension increases (CPI) 2.2% 2.2%
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk62
29 Pension schemes continued
The main demographic assumption used relates to the mortality assumptions. Mortality in retirement is assumed to be in line
with the Continuous Mortality Investigation’s (CMI) S1NA tables as follows:
Male members’ mortality 98% of S1NA [“light”] YoB tables – no age rating
Female members’ mortality 99% of S1NA [“light”] YoB tables – rated down 1 year
Use of these mortality tables reasonably reflects the actual USS experience. To allow for further improvements in mortality rates the
CMI 2014 projections with a 1.5% pa long term rate were also adopted. The current life expectancies on retirement at age 65 are:
2016 2015
Males currently aged 65 (years) 24.3 24.2
Females currently aged 65 (years) 26.5 26.4
Males currently aged 45 (years) 26.4 26.3
Females currently aged 45 (years) 28.8 28.7
2016 2015
Scheme assets £49.8bn £49.1bn
Total scheme liabilities £58.3bn £60.2bn
FRS 102 total scheme deficit £8.5bn £11.1bn
FRS 102 total funding level 85% 82%
(ii) Superannuation Arrangements of the University of London
The Superannuation Arrangements of the University of London (“SAUL”) is a centralised defined benefit scheme within the
United Kingdom and is contracted–out of the Second State Pension (prior to April 2016). SAUL is an independently–managed
pension scheme for the non–academic staff of over 50 colleges and institutions with links to higher education.
The total cost charged to the profit and loss account is £2,778k (2015: £2,380k).
Since the institution cannot identify its share of scheme assets and liabilities, the following disclosures reflect those relevant
for the scheme as a whole.
Under Section 222 of the Pensions Act 2004, every scheme is subject to the Statutory Funding Objective, which is to have
sufficient and appropriate assets to cover its Technical Provisions, which represent the current value of benefits to which
members are entitled based on pensionable service to the valuation date. The latest available full actuarial valuation of the
scheme was at 31 March 2014. At the valuation date, the value of the assets of the scheme was £1,927 million and the value of
the scheme’s technical provisions was £1,986 million indicating a shortfall of £59 million. The assets therefore were sufficient
to cover 97% of the benefits which had accrued to members after allowing for expected future increases in earnings. Informal
reviews of SAUL’s position, reflecting changes in market conditions, cash flow information and new accrual of benefits, are
carried out between formal valuations.
2015 2014
Scheme assets £2,371m £1,927m
Total scheme liabilities £2,562m £1,986m
FRS 102 total scheme deficit £60m £59m
FRS 102 total funding level 93% 97%
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk63
29 Pension schemes continued
Defined benefit liability numbers for the scheme have been produced using the following assumptions:
Investment return assumptions
These are derived from the yield available on notional portfolios of conventional and index–linked UK Government bonds
whose cash flows approximately match SAUL’s estimated benefit cash flows.
The past service (i.e. Technical Provisions) assumptions are derived from the estimated cash flows from SAUL’s total
membership. The assumptions used to determine the cost of future benefit accrual are based on the projected cash flows
from SAUL’s active membership only. This results in a different underlying gilt yield for past and future service assumptions.
Investment return pre–retirement (discount rate)
An additional 2.45% per annum is added to the gilt yield described above to reflect the allowance the Trustee has made for
the additional investment returns based on the investment strategy as set out in the Statement of Investment Principles.
Investment return post–retirement (discount rate)
An additional 0.35% per annum is added to the gilt yield described above to reflect the allowance the Trustee has made for
the additional investment returns based on the investment strategy as set out in the Statement of Investment Principles.
Inflation (RPI)
The assumption for the rate of increase in the Retail Price Index (RPI) will be taken to be the difference between an estimate
of the yields available on notional portfolios of conventional and index–linked UK Government bonds whose cash flows
approximately match SAUL’s estimated benefit cash flows less 0.05% per annum.
Inflation (CPI)
The assumption for the rate of increase in the Consumer Price Index (CPI) will be derived from the RPI inflation assumption with
an appropriate adjustment to recognise the difference between expectations of future RPI increases and future CPI increases.
The adjustment will be reviewed at each valuation; at the 31 March 2014 valuation the adjustment was a deduction of 0.85%
per annum.
Pension increases
For the purposes of the Technical Provisions, SAUL’s inflation linked benefits have been assumed to increase in payment in line
with the relevant RPI or CPI inflation assumptions described above.
General salary increases
The assumption for the real salary increases (salary increases in excess of increases in the CPI) has been determined to be 1.00%
per annum.
Promotional salary scale
Allowance for promotional salary increases has been made in line with the standard LG59/60 M and LG59/60 F tables for
males and females respectively
Mortality
The mortality assumptions are based on up–to–date information published by the Continuous Mortality Investigation
(CMI) and National Statistics, making allowance for future improvements in longevity and the experience of SAUL.
The mortality tables are S2PA Year of Birth tables with improvements based on the CMI 2013 model with a long term
improvement rate of 1.5% with male Members being treated as though they were 0.4 years older and female members
being treated as if they were 0.4 years younger than their actual age.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk64
29 Pension schemes continued
The Trustee and Employers have agreed that the Technical Provisions deficit at the 31 March 2014 valuation will be addressed by
employer contributions of 3% of Salaries between 1 April 2016 and 31 March 2018 (inclusive). The overall level of the Employers’
contributions will, therefore, increase from 13% of Salaries to 16% of Salaries with effect from 1 April 2016.
Pension benefits accrued within SAUL currently build up on either a Final Salary basis or a Career Average Revalued Earnings
(“CARE”) basis. Following a consultation with Members, the SAUL Final Salary Section closed from 31 March 2016 and all
Members have built up benefits on a CARE basis from 1 April 2016.
The University is not expected to be liable to SAUL for any other current participating employer’s obligations under the Rules
of SAUL, but in the event of an insolvency event of any participating employer within SAUL, an amount of any pension shortfall
(which cannot otherwise be recovered) in respect of that employer, may be spread across the remaining participating employers
and reflected in the next actuarial valuation.
(iii) National Health Service Pension Scheme
The NHS Pension Scheme (NHSPS) is an unfunded defined benefit scheme that covers NHS employers, General Practices and
other bodies, allowed under the direction of the Secretary of State, in England and Wales. As a consequence it is not possible
for the University to identify its share of the underlying scheme assets and liabilities. The University therefore accounts for its
pension costs in respect of the scheme on a defined contribution basis, as permitted by FRS 102 Section 28, thereby charging to
its accounts the contributions payable to the scheme for the year. The NHS Pension Scheme is funded centrally by the Treasury
on a current cost basis. The University has no contractual obligation to fund any deficit of the NHSPS and therefore recognises no
related liability.
30 Accounting estimates and judgements
Treatment of pension schemes
FRS 102 makes the distinction between a Group Plan and a multi–employer scheme. A Group Plan consists of a collection of
entities under common control typically with a sponsoring employer. A multi–employer scheme is a scheme for entities not
under common control and represents (typically) an industry–wide scheme such as those provided by USS and SAUL. The
accounting for a multi–employer scheme where the employer has entered into an agreement with the scheme that determines
how the employer will fund a deficit results in the recognition of a liability for the contributions payable that arise from the
agreement (to the extent that they relate to the deficit) and the resulting expense is recognised in profit or loss. The University
is satisfied that the schemes provided by USS and SAUL meet the definition of a multi–employer scheme and has therefore
recognised the discounted fair value of the contractual contributions under the funding plan in existence at the date of
approving the financial statements.
Estimates used to calculate pension deficit liability
The changes in salary costs and staff numbers have been assessed using the forecast impact of the University’s strategic plans
on the number of staff employed, and known statutory and other increases to pay. The discount rate used is considered to be
the equivalent of that of a high quality corporate bond.
Useful lives of fixed assets
Items of plant and equipment are assessed on purchase to establish their useful life. Considerations include past experience of
similar assets, supplier warranties and projected replacement dates.
Refurbishment assets are assessed on completion to establish their useful life. Considerations include the time elapsed since the
last refurbishment of that underlying asset, and its projected future refurbishment dates.
Freehold buildings were assessed to have a useful life of 100 years at 1 August 2014. This is based on the nature of the buildings,
which are in conservation areas, and many of which are listed. It is also based on the age and condition of the buildings, many
of which have existed for over 100 years, and most of which have existed for a significant period of time. The buildings are
reassessed annually and the remaining useful life updated, if applicable.
Impairment of assets
Assets are considered annually for indicators of impairment. If any indicators are identified, the value of the impairment is
assessed and the asset in question is impaired. Indicators of impairment include physical deterioration, reductions in projected
income streams, reductions in the market value of the asset and changes in use of the asset.
Valuation of assets
The University has employed professional valuers to provide valuations for various assets. Knight Frank have valued investment
properties at fair value at year end and also operational land and buildings for the purpose of including their brought forward fair
values as deemed cost. Within heritage assets, manuscripts and books have been valued by Dominic Winter, and the University
Artworks Collection has been valued by Coram James. The value of the UTF units held by the University and by the Endowments
is derived from valuations provided by the UTF’s investment managers, Newton, Ruffer and Mayfair. Management have judged
these valuations to be appropriate for use in determining the fair value, where appropriate, of the University’s assets.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk65
31 Transition to FRS 102 and the 2015 SORP
As explained in the accounting policies, these are the University’s first financial statements prepared in accordance with FRS 102
and the 2015 SORP. The accounting policies have been applied in preparing the financial statements for the year ended 2016, the
comparative information presented in these financial statements for the year ended 2015 and in the preparation of an opening
FRS 102 Statement of Financial Position at 1 August 2014. In preparing its FRS 102, 2015 SORP based Balance Sheet, the University
has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting
(2007 SORP). An explanation of how the transition to FRS 102 and the 2015 SORP has affected the University’s financial position,
financial performance and cash flows is set out in the following tables.
Financial Position 1 August 2014 31 July 2015
Consolidated University Consolidated University
£’000 £’000 £’000 £’000
Total reserves under 2007 SORP 244,619 244,619 267,418 267,418
Fixed assets at brought forward fair value 357,142 357,142 357,613 357,613
USS pension provision (7,001) (7,001) (13,890) (13,890)
Employee leave accrual (555) (555) (442) (442)
Capital grants under performance conditions 9,512 9,512 9,214 9,214
Total effect of transition to FRS 102 359,098 359,098 352,495 352,495
Reclassification of assets 3,935 3,935 1,775 1,775
Donations (132) (132) (6) (6)
Elimination of Student Societies from consolidation – – (135) (135)
Inclusion of all University and Subsidiary tax charges and credits (121) (121) (117) (117)
Reclassifications identified as part of transition 3,682 3,682 1,517 1,517
Total reserves under 2015 SORP 607,399 607,399 621,430 621,430
Financial performance Year ended 31 July 2015
Consolidated University
£’000 £’000
Surplus for the year under 2007 SORP 1,555 1,555
Fixed assets at brought forward fair value, reclassification of assets 471 471
USS pension provision (6,888) (6,888)
Employee leave accrual 113 113
Capital grants under performance conditions (298) (298)
Items previously in the STRGL now in the SOCI:
Appreciation of endowment asset investments 5,792 5,792
Appreciation of fixed asset investments 359 359
Appreciation of investment properties 15,004 15,004
New student societies’ reserves 88 88
Total effect of transition to FRS 102 14,641 14,641
Reclassification of assets (2,160) (2,160)
Donations 126 126
Elimination of Student Societies from consolidation (135) (135)
Inclusion of all University and Subsidiary tax charges and credits 4 4
Reclassifications identified as part of transition (2,165) (2,165)
Total comprehensive income for the year under 2015 SORP 14,031 14,031
Cash Flows
The only impact of the transition to FRS 102 on the cash flows of the University or the Group is the reclassification of some short
term investments to cash and cash equivalents as shown above.
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk66
Consolidated Balance Sheet 1 August 2014
Notes
2007
SORP
Effect of
transition to
2015 SORP
Reclassifications
identified as part
of transition
2015
SORP
£’000 £’000 £’000 £’000
Non–current assets
Intangible assets and goodwill 34 – – 34
f Fixed assets 169,731 346,121 – 515,852
f Heritage assets 1,940 11,021 – 12,961
f, g Investments 62,908 – 8,280 71,188
234,613 357,142 8,280 600,035
g Endowment assets 72,962 – (4,345) 68,617
Current assets
Stock 1,352 – – 1,352
e Trade and other receivables 14,771 – (199) 14,572
Investments 37,510 – – 37,510
Cash and cash equivalents 18,991 – – 18,991
72,624 – (199) 72,425
Creditors: amounts falling
c, e due within one year (37,674) (555) 36 (38,193)
Net current (liabilities)/assets 34,950 (555) (163) 34,232
Total assets less current liabilities 342,525 356,587 3,772 702,884
Creditors: amounts falling due after more
than one year
(88,394) – – (88,394)
Provisions
b Pension liability – (7,001) – (7,001)
l Other provision – – (90) (90)
Total net assets 254,131 349,586 3,682 607,399
a Deferred capital grants 9,512 (9,512) – –
Restricted reserves
Income and expenditure reserve
– endowment reserve
72,961 – (4,344) 68,617
d Income and expenditure reserve
– restricted reserve
– – 68 68
Unrestricted reserves
a-g, k, l Income and expenditure reserve unrestricted 115,496 415,260 7,958 538,714
k Revaluation reserve 56,162 (56,162) – –
244,619 359,098 3,682 607,399
Total reserves 254,131 349,586 3,682 607,399
31 Transition to FRS 102 and the 2015 SORP continued
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk67
31 Transition to FRS 102 and the 2015 SORP continued
Consolidated Balance Sheet 31 July 2015
Notes
2007
SORP
Effect of
transition to
2015 SORP
Reclassifications
identified as part
of transition
2015
SORP
£’000 £’000 £’000 £’000
Non–current assets
Intangible assets and goodwill 491 – – 491
f Fixed assets 166,798 346,592 – 513,390
f Heritage assets 1,940 11,021 – 12,961
f, g Investments 82,291 – 6,489 88,780
251,520 357,613 6,489 615,622
g Endowment assets 79,188 – (4,714) 74,474
Current assets
Stock 1,503 – – 1,503
e Trade and other receivables 13,951 – (192) 13,759
Investments 34,727 – – 34,727
Cash and cash equivalents 16,772 – – 16,772
66,953 – (192) 66,761
Creditors: amounts falling
c, e due within one year (33,383) (442) 24 (33,801)
Net current (liabilities)/assets 33,570 (442) (168) 32,960
Total assets less current liabilities 364,278 357,171 1,607 723,056
Creditors: amounts falling due after
more than one year
(87,646) – – (87,646)
Provisions
b Pension liability – (13,890) – (13,890)
l Other provision – – (90) (90)
Total net assets 276,632 343,281 1,517 621,430
a Deferred capital grants 9,214 (9,214) – –
Restricted reserves
Income and expenditure reserve
– endowment reserve
79,188 – (4,714) 74,474
d Income and expenditure reserve
– restricted reserve
– – 191 191
Unrestricted reserves
a-g, k, l Income and expenditure reserve unrestricted 116,705 424,020 6,040 546,765
k Revaluation reserve 71,525 (71,525) – –
267,418 352,495 1,517 621,430
Total reserves 276,632 343,281 1,517 621,430
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk68
31 Transition to FRS 102 and the 2015 SORP continued
University Balance Sheet 1 August 2014
Notes
2007
SORP
Effect of
transition to
2015 SORP
Reclassifications
identified as part
of transition
2015
SORP
£’000 £’000 £’000 £’000
Non–current assets
Intangible assets and goodwill 34 – – 34
f Fixed assets 167,359 346,121 – 513,480
f Heritage assets 1,940 11,021 – 12,961
f, g, l Investments 62,419 – 8,190 70,609
231,752 357,142 8,190 597,084
g Endowment assets 72,962 – (4,345) 68,617
Current assets
Stock 1,352 – – 1,352
e Trade and other receivables 16,906 – (199) 16,707
Investments 37,510 – – 37,510
Cash and cash equivalents 16,306 – – 16,306
72,074 – (199) 71,875
Creditors: amounts falling
c, e due within one year (34,263) (555) 36 (34,782)
Net current (liabilities)/assets 37,811 (555) (163) 37,093
Total assets less current liabilities 342,525 356,587 3,682 702,794
Creditors: amounts falling due after
more than one year
(88,394) – – (88,394)
Provisions
b Pension liability – (7,001) – (7,001)
Total net assets 254,131 349,586 3,682 607,399
a Deferred capital grants 9,512 (9,512) – –
Restricted reserves
Income and expenditure reserve
– endowment reserve
72,961 – (4,344) 68,617
d Income and expenditure reserve
– restricted reserve
– – 68 68
Unrestricted reserves
a-g, k, l Income and expenditure reserve unrestricted 115,496 415,260 7,958 538,714
k Revaluation reserve 56,162 (56,162) – –
244,619 359,098 3,682 607,399
Total reserves 254,131 349,586 3,682 607,399
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk69
31 Transition to FRS 102 and the 2015 SORP continued
University Balance Sheet 31 July 2015
Notes
2007
SORP
Effect of
transition to
2015 SORP
Reclassifications
identified as part
of transition
2015
SORP
£’000 £’000 £’000 £’000
Non–current assets
Intangible assets and goodwill 491 – – 491
f Fixed assets 164,060 346,592 – 510,652
f Heritage assets 1,940 11,021 – 12,961
f, g, l Investments 82,217 – 6,398 88,615
248,708 357,613 6,398 612,719
g Endowment assets 79,188 – (4,714) 74,474
Current assets
Stock 1,503 – – 1,503
e Trade and other receivables 16,130 – (192) 15,938
Investments 34,727 – – 34,727
Cash and cash equivalents 14,629 – – 14,629
66,989 – (192) 66,797
Creditors: amounts falling
c, e due within one year (30,607) (442) 25 (31,024)
Net current (liabilities)/assets 36,382 (442) (167) 35,773
Total assets less current liabilities 364,278 357,171 1,517 722,966
recorded within other Comprehensive
Income.
Creditors: amounts falling due after
more than one year
(87,646) – – (87,646)
Provisions
b Pension liability – (13,890) – (13,890)
Total net assets 276,632 343,281 1,517 621,430
a Deferred capital grants 9,214 (9,214) – –
Restricted reserves
Income and expenditure reserve
– endowment reserve
79,188 – (4,714) 74,474
d Income and expenditure reserve
– restricted reserve
– – 191 191
Unrestricted reserves
a-g, k, l Income and expenditure reserve unrestricted 116,705 424,020 6,040 546,765
k Revaluation reserve 71,525 (71,525) – –
267,418 352,495 1,517 621,430
Total reserves 276,632 343,281 1,517 621,430
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk70
Notes
Consolidated Statement
of Comprehensive income
2007
SORP STRGL Items*
Effect of
transition to
2015 SORP
Reclassifications
identified
as part of
transition
2015
SORP
£’000 £’000 £’000 £’000 £’000
Income
m Tuition fees and education
contracts
54,137 – – 684 54,821
a Funding body grants 9,440 – (45) – 9,395
Research grants and contracts 1,937 – – 1,937
a, i, j, m Other income 74,593 88 (109) (1,075) 73,497
f, j Investment income 3,820 – – (117) 3,703
Total income before donations
and endowments
143,927 88 (154) (508) 143,353
d, e Donations and endowments 337 – – 408 745
Total income 144,264 88 (154) (100) 144,098
Expenditure
b, c, n Staff costs (55,123) – (6,562) (473) (62,158)
a, h, i, n Other operating expenses (78,716) – (270) 640 (78,346)
f Depreciation (6,252) – 553 – (5,699)
b, h Interest and other finance costs (2,541) – (169) – (2,710)
Total expenditure (142,632) – (6,448) 167 (148,913)
Loss on disposal of fixed assets (77) – – – (77)
f Gain/(loss) on investments – 21,155 – (2,160) 18,995
Surplus before tax 1,555 21,243 (6,602) (2,093) 14,103
l Taxation – – – (72) (72)
Total comprehensive income
for the year
1,555 21,243 (6,602) (2,165) 14,031
* This column represents items that were previously recorded within the Statement of Total Recognised Gains and Losses
(STRGL) and are now recorded within the Statement of Comprehensive Income (SOCI). This column should not include
recognition of valuation changes arising from the adoption of the 2015 SORP. These are included within the effect of
transition to 2015 SORP column.
Notes to the reconciliations
a Capital grants are now recognised under the performance model
b A provision for pension scheme deficits brought forward has been made; movement during the year has been recognised
c An accrual for staff holiday accrued but not taken at the year end has been made
d Donations which have restrictions, and the expenditure related to these donations, are now accounted for via a restricted reserve
e Donations are recognised on entitlement to income
f Land, freehold buildings and heritage assets are now recognised at cost represented by brought forward fair value at
1 August 2014, individual buildings’ statuses have been assessed
g Funds which have been accounted for as Endowments are now accounted for as University Investments
h Foreign exchange gains or losses are included as other finance costs
i Student Societies’ income and expenditure is not consolidated
j University investments in the UTF have been remapped to investment income (previously included within other income)
k Gains and losses on revaluation of investments are now within unrestricted reserves
l All University and Subsidiary tax charges and credits are included
m Academic short course fees are included within tuition fees
n Staff redundancy costs are included within staff costs
31 Transition to FRS 102 and the 2015 SORP continued
Notes to the Financial Statements
For the year ended 31 July 2016
Financial Statements 2015–16 london.ac.uk71
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