university of plymouth higher education corporation · 3 board of governors external mrs barbara...

UNIVERSITY OF PLYMOUTH

HIGHER EDUCATION CORPORATION

Financial Statements

For the Year to

31 July 2009

The Enterprise University

Introduction

The University of Plymouth, the enterprise university,is an ambitious, world-class institution and one of thelargest university’s in the UK with over 30,000 studentsand 3,000 staff. Our commitment to embeddingenterprise at the University of Plymouth builds uponour heritage and reputation for scholarly endeavour.We have laid the foundations for an inclusive andproactive enterprise culture; one that nurtures andsupports the wealth of talent within the University,and works for the benefit of our students, alumni andstakeholders in the city and beyond. As we moveforward, our focus will be on delivering excellence in

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As an ambitious, world-class institution we look to add value in our work and bring out the best in everyonewith whom we engage. That way, we can empower both people and organisations so that they can realisetheir full potential, transforming lives through knowledge. As the enterprise university we will embedinnovation and creativity at the heart of all our activities and play a key role in leading the development of aneconomically, culturally and socially vibrant enterprise community.

ContentsOperating and Financial Review

IntroductionPage 2 ContentsPage 3 Board of GovernorsPage 4 Advisors to the University of PlymouthPage 5 ContextPage 6 Overview: Vision, mission and valuesPage 7 Overview: Challenges and RisksPage 8 Overview: OpportunitiesPage 9 Strategic partnershipsPage 11 The University in CornwallPage 12 Section 1 - Our peoplePage 16 Section 2 - Our UniversityPage 18 Section 3 - Our ambitionsPage 19 Section 4 - Corporate Social ResponsibilityPage 21 Section 5 – Financial

Page 27 Corporate Governance StatementPage 31 Independent auditors’ report to the Board of Governors of the

University of PlymouthPage 34 Statement of principal accounting policiesPage 39 Consolidated income and expenditure accountPage 40 Consolidated statement of historical cost surpluses and deficitsPage 40 Consolidated statement of total recognised gains and lossesPage 41 Balance Sheets as at 31 July 2009Page 42 Consolidated cash flow statementPage 43 Notes to the financial statements

all that we do.

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Board of Governors

ExternalMrs Barbara Bond MBE (Chair) term to 31.12.2008Mr Nick Buckland OBE (Chair) from 01.01.2009

(Vice Chair) term to 31.12.2008Mr Duncan CurrallMrs Helen DaviesProfessor Sir Martin Harris resigned 31.07.2009Mr Mike Leece OBEDr Noel OlsenMr Steve Pearce appointed 01.08.2008Mr Michael Pearson

(Vice Chair) from 01.01.2009Mr Stephen PryorMs Maggie van Reenen appointed 01.08.2008Mr Geoff Rees CBEMs Judith Reynolds appointed 01.08.2008Dr Ranulf Scarbrough appointed 01.08.2008Mr Mark TaylorJudge William TaylorMr Adrian Vinken OBEMrs Ellen Winser

InternalDr Maria Donkin (Academic Staff) term to 31.07.2009Mr Steve Monk (General Staff) resigned on retirement from the University

31.07.2009Mrs Corinne Farrell appointed 01.08.2009Mr Mike Sheaff appointed 01.08.2009

Teacher Members

Mr David Fallows resigned on retirement from the University31.07.2009

Student MemberMr Darren Jones appointed 01.08.2008

term to 31.07.2009Ms Aleshia Sampson appointed 01.08.2009Mr Kevin Blake appointed 01.08.2009

Vice-Chancellor and Chief Executive

Professor Wendy Purcell

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Advisors to the University of Plymouth

External AuditorsPricewaterhouseCoopers LLPPrincess Court23 Princess StreetPlymouth PL1 2EX

Internal AuditorsMazars LLPClifton Down HouseBeaufort BuildingsCliftonBristol BS8 4AN

BankersHSBC Bank plc4 Old Town StreetPlymouthDevon PL1 1DD

SolicitorsWolferstansDeptford Chambers60/64 North HillPlymouth PL4 8EP

Pinsent Masons3 Colmore CircusBirmingham B4 6BH

Martineau Johnson1 Colmore CircusBirmingham B4 6AA

VAT AdvisorsECA VAT Advisors Limited T/a Ellis Chapman & AssociatesCaledonian HouseTatton StreetKnutsford Cheshire WA16 6AG

Corporation Tax AdvisorsPricewaterhouseCoopers LLPPrincess Court23 Princess StreetPlymouth PL1 2EX

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Context

National environment

According to the Organisation for Economic Co-operation and Development (OECD) data, in 2008, the UKspent 0.9% of GDP on Higher Education. In the UK there are 166 publicly funded Higher Education Institutions(HEIs), of which 116 are universities.

In England, the sector is regulated primarily by the Higher Education Funding Council for England (HEFCE),with both the Training and Development Agency for Schools (TDA) and the Learning and Skills Councils (LSC)also maintaining an oversight of areas of activity which they fund directly.

All UK universities undertake research and teaching, although the mission focus and balance of activitiesvaries. Some institutions concentrate primarily on teaching while others are more research intensive.Universities are increasingly becoming aware of their responsibilities both regionally and nationally, workingwith their regions to develop the economic, social and cultural landscape.

In 2007-8, HEIs generated some £23.4 billion in income of which £8.4 billion comprises Funding Councils’grants.

Within the sector, the University of Plymouth is the fifth largest university in the UK. It is a member of theUniversity Alliance group, formally launched in 2007. Its member institutions have a balanced portfolio ofresearch and teaching with enterprise and innovation integral to their missions.

Strategic Plan

Throughout 2008/9, the University of Plymouth has been drafting its University Strategic Plan for launch inOctober 2009. This document has been developed in consultation with governors, staff and students.Alongside this vision is a list of key projects that will be implemented over the next three years. The UniversityPlan is supported by a family of strategies which demonstrate both direction and priorities in key areas of theUniversity’s activity.

Key Performance Indicators

Key Performance Indicators (KPIs) are a way of measuring performance and mapping the distance travelledtowards achieving the institutional vision and mission. These indicators build upon our existing strengths andambitions to create a first class and first choice university.

Key measures of success include:

maintaining Home student numbers

increasing Overseas enrolments

increasing the employability of our graduates

increasing our research income

increasing the levels of satisfaction from our students

sustainability targets

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Overview

Vision, Mission and Values

Vision – To be the Enterprise University

Our vision sets out the type of university we aspire to be. We are already an ambitious, world-class university.By placing enterprise at the heart of everything we do, we will develop an innovative and creative culture thatempowers people.

Mission

Our enterprising approach will further develop our reputation as a world-leading University and ourenterprise culture will deliver sustained innovation and international impact. We will use the knowledge wecreate to transform lives. We will achieve this through world-class research, excellence in teaching andlearning, and through our partnerships and collaborations. We will maintain our commitment to driving socialinclusion, economic prosperity, and environmental quality in our local community and beyond.

Values

Our core values define our university culture. They guide how we make our decisions, and how our staff,students and stakeholders work with each other.

• Transforming lives through knowledge, collaboration and partnership.

• Providing access to research-informed teaching and learning to all who can benefit.

• Undertaking world-class research of high-impact to society and the economy.

• Championing innovation, entrepreneurship and creativity.

• Using our scholarship to influence regional, national and international developments.

• Taking pride in our people and their achievements.

• Nurturing and rewarding skills and talent.

• Being transparent, open and inclusive.

• Encouraging sustainability through shared practice.

• Embracing diversity, promoting opportunity and social cohesion.

• Pursuing excellence in all that we do.

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Overview

Challenges and risks

The University has articulated the following risks, which it monitors on a regular basis through the ChiefExecutive’s Group, and is confident that the risks are managed or mitigated to ensure that the University’sambitions can be delivered.

Changes to Government policy could significantly affect the whole Higher Education sector, with theintroduction of private providers and greater employer involvement, and of course the University isstill significantly dependent on grant funding. The long term future of public funding is uncertain, withchanges to both research and teaching funding under consideration, and whether possible changes tothe fees policy could affect funding overall. The University has identified that one of the mostsignificant risks to its financial sustainability is its reliance on HEFCE funding. The level of HEFCErecurrent funding as a percentage of total income has fallen to 45% in 2009 (2008 – 46%) due tosignificant increases in tuition fee and other income. The University continues to work to diversifyincome streams from research, continuing professional development and external engagement withaim of keeping HEFCE recurrent income below 45% of total income.

The University is sensitive to changes in the numbers of students. The intention to achieve an increasein numbers overall, through growth in part time, overseas and postgraduate numbers also requiresstability in the University’s core full time undergraduate market. Demographic change shows thatthere will be fewer 18 year olds in the near future and unless participation rates continue to rise, therewill be a need to expand market share to maintain recruitment in a period when competition isincreasing. The introduction of new programmes and the continuous review of academic provision,supported by increased marketing activity in the overseas and postgraduate arenas will help mitigatethis risk.

The University is renowned for the success of its partnership arrangements with colleges in the SouthWest but the emphasis on increased provision of higher education in these colleges does present a riskfor the University in meeting its student numbers. The University has supported the increase infoundation degree programmes in its partner colleges and is now working with them to ensure thefuture sustainability of all parties, particularly in light of the possible withdrawal of premium fundingfor these programmes.

Staff costs have increased by only 3.5% in 2008/09. This reflects the tight budgetary control that wasexercised by the University and the impact of posts being held or given up as part of the StrategicReview. The University has taken steps to reduce its operating expenditure through the StrategicReview but any further increases in pension or pay costs will have to be managed carefully in thecontext of the University’s overall strategy.

The recent economic downturn has necessitated a review of the programme of property disposals.Significant cash receipts were expected at the beginning of 2008/09 and these have been only partiallyrealised. The remaining properties will continue to be marketed during 2009/10 and the decisionabout whether and when to sell will be made on strategic grounds. Cash flow and budgetarymanagement will be critical over the next twelve months but the University is confident that it willhave sufficient cash to meet its operating needs during this period.

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Reputational risk arises from virtually all of the University’s activities. Quality issues, league tablepositions and press coverage could all affect a University’s reputation, both positively and negatively.The University has an extremely strong brand, especially in the region. Over the next year we will bedeveloping our brand profile and promoting our presence in Cornwall and increasing our interaction inthe national and international HE scene.

Opportunities

The University of Plymouth is well placed to succeed in an ever changing Higher Education environment. Weare looking at ways to enhance our offer, create a more sustainable business model and continue to have apositive impact on our communities in the region and beyond. As the Enterprise University we will:

build a confident enterprise culture secured through collaboration and partnership where diversity,creativity and innovation are enabled, realised, valued and rewarded. Our enterprise culture is one ofentrepreneurship and creativity, where new ideas are tested and bravery and risk-taking encouraged.

ensure our systems and structures enable our vision and accelerate our enterprise-led approach. Alluniversity strategies, policies, systems and facilities will seek to empower our people to deliverexcellence in both the professional and academic environments, so we will continue to developenterprising structures that promote positive change. We will further develop our use of technologyand e-business, enhancing both our teaching and learning offer and our business capability, leadingthe sector in the use of new technologies and approaches to business critical issues.

Particular opportunities include:

strengthening our strategic partnerships in Devon, Cornwall and throughout the South West region

building on our reputation and excellence in teaching and learning to develop new approaches tolearning and attracting new types of student. Creating ‘The Plymouth student’, identifying want itmeans to study and graduate from the University of Plymouth.

using technology to transform our student offer, working with both academic and professional staff toensure we are leading developments in this arena.

driving the internationalisation agenda that includes increasing our percentage of overseas studentsstudying at the campus, exploring in-country delivery and increasing income secured via globalresearch networks.

further developing world-class research and translation of research findings into income generationvia links with innovation, business and knowledge agencies.

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Strategic Partnerships

The shape of HE in the Plymouth city region – a univerCity

-We are working with our partners inPlymouth to create a knowledge city withhigher skills development and knowledgetransfer at the heart of decision making.The University is well-represented in cityleadership positions such as the localstrategic partnership and CityDevelopment Company and iscollaborating with partners on projectssuch as Tamar Science Park, the NationalMarine Aquarium Learning ResourcesCentre and the Life Centre. The city ofPlymouth aspires to be an ‘ideopolis’,offering organisations access to highlyskilled workers, affluent consumers andthe opportunity to innovate and exchangeideas.

University of Plymouth Colleges (UPC)

University of Plymouth Colleges (UPC) is anexemplary partnership between local colleges ofFurther Education across the South West and theUniversity of Plymouth. The college network hadmodest beginnings in 1989 when the Universitycollaborated with its partners to provide off-campus provision for just over 450 students. Just 5years later, the partnership was recognised as anexcellent model of collaborative working bybringing high-quality, degree level education tolocal communities. This year we celebrated 20years of the partnership.

Plymouth Devon International College

In Spring 2009, the University entered into an agreement with Navitas Ltd for the establishment of an affiliatecollege, Plymouth Devon International College (PDIC), which will be based on the University campus andprovide pathways into university programmes for international students. PDIC will operate foundation–levelcertificates, Level 4 diploma pathways and pre-masters qualification programmes, developed with advicefrom university staff. The University will establish liaison tutor arrangements based on the successful UPC andGreenwich School of Management models.

Peninsula College of Medicine and Dentistry

The requirement to increase training capacity for dentists led to a successful bid to the Government that on26 January 2006 established Peninsula Dental School as a partnership between the Universities of Exeter andPlymouth and the NHS in Devon and Cornwall. The first cohort of 64 students joined the Dental School inSeptember 2007. Given the progress and success of the College, the Universities are undertaking a review ofthe Memorandum of Agreement to ensure that it is fit for purpose for the next phase of its development.

Britannia Royal Naval College

The Peninsula Medical Schoolwas established as a partnershipbetween the Universities ofExeter and Plymouth and theNHS in Devon and Cornwall on 1August 2000. Formed followinga successful bid to theGovernment, it is part of anational expansion of medicalstudent numbers in the UK.Peninsula Medical School is oneof five entirely new medicalschools and was one of the firstto be developed in the UK formore than 30 years.

The previous collaborative

agreement with Britannia Royal

Naval College (BRNC) was

superseded in 2008, when the

University won the contract to

take on all academic delivery at

the College. The collaboration

now takes the form of contracted-

out provision in relation to the use

of BRNC premises and facilities,

with the programmes validated by

the University and delivered by

University staff. The programmes

were re-validated in 2009. Under

the new arrangements, the

University is considering extending

its offer to include overseas naval

personnel and potential overseas

delivery.

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The University in Cornwall

Cornwall is strategically important to us, not only does it fit with our key priority to unlock and nurtureregional talent but we already have an established historical presence in Cornwall with Health, UPC and theCombined Universities in Cornwall (CUC). We are looking to promote our enterprise-led approach in theregion, develop Biomedical, Marine and Computer Science knowledge hubs and create a more physicalpresence in Cornwall

Combined Universities in Cornwall (CUC)

Combined Universities in Cornwall (CUC) is a partnershipof six universities and colleges working together to givemore people the chance to study in Cornwall, and to useuniversity level education to help our businesses andcommunities to thrive. The partners are: the University ofExeter, the University of Plymouth, University CollegeFalmouth, Peninsula College of Medicine and Dentistry,Cornwall College and Truro & Penwith College. Each ofthese partners brings something different to CUC, whichmeans more choice for the people and businesses ofCornwall.

Knowledge Spa, Truro

Peninsula Research Institute for M

wave energy test site 10 miles off the Cornish

The Knowledge Spa is the base for ourHealth Profession courses in Truro. Thisstate of the art facility located on thesite of the Royal Cornwall Hospital wasdeveloped in partnership with PCMDand the NHS with a multi million poundextension currently planned toincorporate the new Peninsula DentalSchool.

arine Renewable Energy (PRIMaRE)

The Peninsula Research Institute for Marine Renewable Energy (PRIMaRE), is a £12.6 million project setup two years ago with South West Regional Development Agency (SWRDA) funding by the Universitiesof Plymouth and Exeter. PRIMaRE brings together a unique team of world-class researchers to provideunparalleled expertise and research capacity to address the wider considerations of all aspects ofMarine Renewable Energy. PRIMaRE boasts 15 academic staff and 60 researchers dedicated to thesupport and development of the marine renewable energy sector. PRIMaRE supports and complementsthe South West RDA's pioneering £42 million Wave Hub project, which will create the world's largest

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coast and will be commissioned next year.

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Section 1 - Our people

Plymouth PeopleAt Plymouth, people are the reason we succeed.

We encourage all our people - academics, professional staff, students and alumni - to be innovative andentrepreneurial in their approach to work, research and indeed life in general. So we look to foster a spirit ofcreativity and enterprise in all those who can contribute to achieving our mission.

Plymouth people are proactive in their approach, enabled and rewarded when achieving outstanding resultsin line with our core values. We recognise and value the diversity of our people and consider that thePlymouth experience for both students and staff is enriched as a result this.

At Plymouth we adopt a friendly and collegiate approach to partnership working, where boundaries arediffuse and highly interactive, so that authentic knowledge sharing is enabled and competitive advantagesecured.

The average weekly number of persons (including senior post-holders) employed by the University during theyear, expressed as full-time equivalents (FTEs), was 2,496 (2007/08: 2,578). Staff were split by area as follows.

2008/09 2007/08Teaching 1507 1564Academic Support 298 333Administration & Central Services 357 333Premises 197 218Other Income-generating 79 61Catering & Residences 58 69

2496 2578

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The Plymouth Experience

The student experience at Plymouth draws inspiration from the spirit of discovery that marks our region’smaritime and industrial heritage, and from our strong network of partnerships …

Plymouth people make a major contribution to economies and societies around the world. We are committedto developing graduates who are ready to take their place as active and responsible citizens in society, inparticular, using their sustainability and cross-cultural skills in the local and global environment.

The student experience at Plymouth draws inspiration from the spirit of discovery that marks our region’smaritime and industrial heritage, and from our strong network of partnership …

Plymouth people make a major contribution to economies and societies around the world. We are committedto developing graduates who are ready to take their place as active and responsible citizens in society, inparticular, using their sustainability and cross-cultural skills in the local and global environment.

Plymouth students:

• are ambitious and autonomous learners who possess sound academic knowledge

• are critical, rational and innovative thinkers, who are confident, adaptable and capable of independentenquiry

• have a wide range of intellectual and key skills, and a reflective approach to learning

• are readily employable, and well-equipped, through direct work experience or volunteering, for lifelonglearning and the professional world

Employability

Student employability is extremely important to us; overwork-related, work-based and placement learning and extend its provision to better support students,employers and those in employment.

We recognise the value of work-based, workemployment. As we develop as the Enterprise University, workprominent, fulfilling professional imperatives and addressing business needs, as well as offering opportunitiesto enhance students’ future employability.

• We will continue to embed professional, employability and career management skills into universityprogrammes and curricula, contributing to the development of graduate skills and attributes.

• We will ensure each student has the opportunity to participate in accredited or supported worklearning and/or volunteering.

• We will encourage students to develop skills through learning outside the formal curriculum.

Student numbers

Student numbers have increased by 2.3

The following figures have been provided by the Corporate Information Department as backgroundinformation:

Within the University (including PeninsulaCollege of Medicine and Dentistry)

Further education college partnerships

Total

Analysis of Student Numbers

0

5,000

10,000

15,000

20,000

25,000

30,000

Student employability is extremely important to us; over the next three years we will consolidate existingbased and placement learning and extend its provision to better support students,

employers and those in employment.

based, work-related and placement learning for students and those inemployment. As we develop as the Enterprise University, work-based learning will become increasinglyprominent, fulfilling professional imperatives and addressing business needs, as well as offering opportunities

tudents’ future employability.


has the opportunity to participate in accredited or supported work


Student numbers have increased by 2.3% and FTEs by 4.1%.

The following figures have been provided by the Corporate Information Department as background

2008/09

Heads FTE

Within the University (including PeninsulaCollege of Medicine and Dentistry)

22,137 17,212

Further education college partnerships 10,204 7,200

32,341 24,412

Analysis of Student Numbers

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the next three years we will consolidate existingbased and placement learning and extend its provision to better support students,

ning for students and those inbased learning will become increasingly

prominent, fulfilling professional imperatives and addressing business needs, as well as offering opportunities


has the opportunity to participate in accredited or supported work-based


The following figures have been provided by the Corporate Information Department as background

2007/08

Heads FTE

21,735 16,798

9,866 6,652

31,601 23,450

2008/09

2007/08

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Equality & Diversity

The University recognises the real educational and business benefits of having a diverse community of staffand students who value one another and the different contributions they can make to achieve theUniversity’s mission to be open and accessible and to deliver teaching and research to world-class standards.

We are committed to providing equality for all irrespective of:

age

disability

ethnicity

gender

religion or belief

sexual orientation

We will work to ensure that all our students, employees and visitors, as well as those who apply to work orstudy with us, are fairly treated and not subjected to discrimination by the University on any of these grounds.

To support our equality and diversity policy aims and values, and to implement our legal commitments, theUniversity has a range of equality and diversity policies, schemes and action plans which complement andform part of the overall policy.

The University consistently performs at or above the Higher Education Funding Council for England (HEFCE)benchmarks on many widening participation and completion benchmarks.

Section 2 - Our University

Research excellence

One of our key ambitions is to promote world-classresearch and the University has developed acomprehensive Research Strategy in accordance with itsobjectives. The University’s performance in the 2008Research Assessment Exercise (RAE) established ourposition as a premier institution achieving world classstatus in 18 of the 25 units of assessment. The widelyaccepted and well respected Research Fortnight'sresearch power league table of the results of the 2008RAE, shows that Plymouth has risen 15 places to join thetop 50 universities. This is the greatest improvement ofany university in the UK in research performance since thelast RAE in 2001. This has resulted in allocation of QRfunds to the University in the order of £9m. We wish to

build upon our established world-class ratings across a range of subject areas, in particular marine,biomedicine, environment, robotics, psychology, arts and health and have created eight Research Centres tofacilitate the activities required to deliver this.

Academic excellence

At the University of Plymouth we areparticularly proud of our academicexcellence, our strong record and externalrecognition of excellence in both teachingand research. We are a national pilot fortwo-year degrees, have 12 National TeachingFellows, host the national subject centre forGeography, Earth and EnvironmentalSciences, and the Royal Statistical SocietyCentre for Statistical Education - as well asfour government-funded Centres forExcellence in Teaching & Learning.

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The University of Plymouth has recently revised its academic structure to fully reflect its enterprise vision.

Key developments include:

the creation of a dynamic new Business School dedicated to ethical, sustainable business skills, andsupporting the economic regeneration of our city and region

bringing together complementary subjects in a new combined Faculty of Science and Technologycreating the largest Marine Science and Engineering School in Europe.

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Capital expenditureThe University has invested over £100m in its estate and infrastructure over the last five years as part of itsstrategic vision to develop a single multi-faculty campus at the heart of the city of Plymouth.

The Roland Levinsky Building The Nancy Astor Building

The iconic Roland Levinsky Building is home to the Faculty of Arts and also houses Peninsula Arts and theJill Craigie cinema, as well as academic and public spaces.

The Rolle Building The Francis Drake Halls of Residence

The Rolle Building, which was completed in the summer of 2008, is home to the Faculty of Education and theUniversity of Plymouth Colleges. The Francis Drake halls of residence, which were part of the samedevelopment, provide high quality accommodation for students in the heart of the campus. Together with theNancy Astor Building, this completes the most recent new build developments on the campus.

During 2009 our focus has been on landscaping the campus and improving the quality of the existingacademic accommodation. The completion of the 'Southern spine' has brought us closer to achieving our goalof physically linking the University with the city, making it easier for the people of Plymouth to walk throughthe University straight into the city centre

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Section 3 – Our ambitions

Our University AmbitionsWe have developed five university ambitions that will focus our activities over the next three years and help usmake our vision a reality. Our staff, students and partners working together will guarantee our success, andmaximise the further opportunities that our ambitions present.

Ambition 1: Through-life learningTo further enhance our first-class student experience and develop people who are ambitious, entrepreneurialand autonomous learners. Through work experience and volunteering they will be well-equipped to buildtheir futures and to continue learning throughout their lives.

Ambition 2: World-class researchTo recognise, reward and celebrate world-class research and to further develop its impact throughmultidisciplinary and interdisciplinary working. We will support innovation and entrepreneurship, maximisingthe exchange and dissemination of knowledge with business, the community and policymakers.

Ambition 3: Plymouth and beyondTo be a dynamic leader within the region and beyond. We will champion opportunities through partnershipsboth national and international, and contribute to the development of a future-facing, knowledge-basedeconomy, and a vibrant, skilled community.

Ambition 4: SustainabilityTo move towards sustainability in all our activities. We will ensure that our graduates are aware of economic,environmental, social and ethical issues, and promote the importance of social enterprise, communityengagement and volunteering.

Ambition 5: Raising aspirationsTo work with key partners to raise people’s aspirations, encouraging participation, providing opportunities forprogression, and embracing social inclusion.

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Section 4 – Corporate Social Responsibility

As the Enterprise University we recognise our wider obligations to society. In this context our aim is tobecome an exemplar in sustainability, social responsibility and responsible business practice, engaging withour wider community and continually monitoring, improving and sharing our achievements. In 2008 with thesupport of our Centre for Sustainable Futures and membership of Business in the Community, we reviewedour performance against the Corporate Responsibility (CR) Index – a voluntary, business-led benchmark ofresponsible business practice. Through our development plan and key policies we have committed to:

conservation of natural resources used by the university

minimising adverse environmental effects of travelling

ethical and sustainable procurement

the well being of our people and employee relations

enhancing our community and public engagement

developing sustainability-literate graduates

During 2009 the University repeated this process as part of Universities that Count UK, allowing it to makecomparisons between its 2008 and 2009 results. Building on an already strong performance the University hassignificantly improved its performance, even allowing for some changes to the survey questions. TheUniversity has scored strongly compared to others in the sector, as well as compared to the corporate sector.

The University’s strong performance is reflected in:

its progress from a bronze to a silver banding in the CR Index and its overall position as 4th out of 25participating higher education institutions

its progress from a bronze to a silver banding in the Environmental Index and its overall position as 4th

out of 56 participating higher education institutions

gaining accreditation for the ISO14001 standard for Environmental Management; the only large highereducation institution to do so across all of its activities

gaining sixth place in the People and Planet “Green” League table

its Centre for Sustainable Futures - a Centre of Excellence in teaching and Learning

In terms of energy and water consumption and waste management, since 2004 the university has:

reduced carbon emissions by 17%, exceeding its 2009 target

achieved Carbon Trust accreditation under their Energy Efficiency Accreditation Scheme

reduced water consumption by 35%, exceeding its 2009 target

reduced the amount of waste it produced from 537 tonnes to 361 tonnes

increased the proportion of waste recycled from 11% to 49%

launched a Community Green Screen to communicate the health of the campus and its environmentalfootprint.

The University is also committed to resource efficiency in relation to transportation and travel associated withits day to day activities, and since 2004:

staff use of public transport has increased by 25%, exceeding its 2009 target

the university actively encourages use of city park and ride facilities during key events such as opendays and graduation ceremonies

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the university’s Centre for Sustainable Transport is working towards becoming “… a centre of nationaland international excellence in the field of sustainable transport”

For the first time the University has also sought to identify its levels of community investment, although thisfigure may well under-represent the actual amounts. As reported in the 2008 CR Index returns:

£1.23 million was invested including £811,000 through the University’s bursary scheme, £300,000 forthe development of the Drakes Garden area and £100,000 to support the SW Film and TelevisionArchive

In excess of an additional £89,000 was invested through staff time, including £40,000 through theCommunity Research Awards

In excess of 800 staff and student community volunteering opportunities were established

2298 members of the local community participated in campus events

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Section 5 – Financial

Key Financial Highlights

Surplus for the year before tax and exceptional items £2,300k (2007/08: £2,594

The historical cost surplus for the year was £2,549K (2007/08: £2,933k)

Key features contributing to the net result were:

- improved recruitment and retention

- additional student fee income

- tight budgetary control particularly over staff costs

- the impact of the nationally agreed pay award

Impact of FRS 17 pension scheme accounting

- charge to income and expenditure account of £2,150k (2007/08 - £970k)

- balance sheet liability of £66.2m (2007/08 - £43.5m)

Balance sheet

- net assets before pension scheme of £137.0m (2007/08 - £121.3m)

- fixed assets of £211.0m (2007/08 - £218.6m)

- long term creditors of £87.3m (2007/08 - £89.1m)

Cashflow

- net cash inflow from operating activities £9.9m (2007/08 – £38.8m)

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Scope of the Financial Statements

The financial statements comprise the consolidated results of the University and its wholly ownedsubsidiaries. The subsidiary companies undertake research, consultancy and technology transfer activities;nursing and allied healthcare training, together with the provision of conferences, car parking facilities andfacilities management. To minimise any corporation tax charges, any taxable profits are gifted to theuniversity by the subsidiaries.

At 31 July 2009 PEP Research and Consultancy Limited ceased trading. The assets and liabilities of UPTCLimited were transferred to the University of Plymouth Enterprise Limited and the assets and liabilities ofPlymouth Healthcare Education Limited transferred into the University of Plymouth. Intercompany balancesarising were waived. The businesses of UPTC Limited and Plymouth Healthcare Education Limited continue inthe entities indicated above.

Results for the year

The University's consolidated results for the year to 31 July 2009 are summarised as follows:-

2008/09£000

2007/08£000

Income 198,066 180,943

Expenditure (195,766) (178,349)

Surplus on continuing operations after depreciation of tangible fixedassets at valuation but before disposals of assets and taxation 2,300 2,594

Taxation (149) (253)

Exceptional items :

Surplus on disposal of fixed assets

Redundancy costs

868

(3,063)

1,402

(1,908)

Difference between historical cost depreciation and the actual charge forthe year calculated on the revalued amount, and release in respect ofdisposals, demolitions, and impairments 2,593 1,098

Historical cost surplus for the year after taxation 2,549 2,933

Overview

The University has recorded an operating surplus of £2.30m and a historical cost surplus of £2.55m. This is asignificantly better result than was originally forecast, arising from improved student recruitment and theconsequent increase in fee income and the impact of a release of HEFCE funding relating to the setting up ofthe Peninsula Medical and Dental School.

Performance indicator

Operating surplus/(deficit) for the

(before surplus on disposal of fixed assets)

This result also reflects the impact of the Strategic Review, which was initiated in May 2008. Thisaddressing a historic deficit position, securing greatethe effectiveness of professional services support through the restructuring of faculties, schools anddirectorates. The review was undertaken over a period of twelve months, working with both themanagement team and the wider staff community and with the recognised trade unions. Efficiencies wereachieved without the need for compulsory redundancies, and the new structures which are now in place havebeen the subject of widespread consultation.

During this period the University established a new Directorate of Teaching and Learning and renewed itsTeaching and Learning strategy. The university also developed or refocused a number of key supportingstrategies, relating to Internationalisation, Rese

Income

Overall, the University’s income increased by 9.5% in 2009 (2008: increase 12.1%). This reflects an increase inFunding Body grants of 7.3% (2008: increase 9.0%), a 16.5% increase in tuition fee and educatiincome (2008: increase 18.8%), a 4.1% reduction in research grant income (2008: increase 12.2%) and a 16.8%increase in other income (2008: increase 7.5%).

Figure 1: Types of income as a % of total income

The University is still very reliant on Funding Body grants although the proportion of its HEFCE/TDA recurrentfunding of total income fell again this year from 48.5% to 47.1%.

The third year of variable fees has impacted on the tuition fee income together with a 33% increase in nonEU income. The development of the Internationalisation Strategy and increased investment in theInternational Office is beginning to bear fruit with increased student numbers.

Home/EU Tuitionfees 16%

Overseas/othertuition fees 5%

Educationcontracts 9%

Research Grants& Contracts 6%

2008/09

Operating surplus/(deficit) for the year as a % of income

(before surplus on disposal of fixed assets)

1.16%

This result also reflects the impact of the Strategic Review, which was initiated in May 2008. Thisaddressing a historic deficit position, securing greater efficiencies, and on maximising academic synergies andthe effectiveness of professional services support through the restructuring of faculties, schools anddirectorates. The review was undertaken over a period of twelve months, working with both the

anagement team and the wider staff community and with the recognised trade unions. Efficiencies wereachieved without the need for compulsory redundancies, and the new structures which are now in place havebeen the subject of widespread consultation.

ring this period the University established a new Directorate of Teaching and Learning and renewed itsTeaching and Learning strategy. The university also developed or refocused a number of key supportingstrategies, relating to Internationalisation, Research and Innovation and Human Resources.

Overall, the University’s income increased by 9.5% in 2009 (2008: increase 12.1%). This reflects an increase inFunding Body grants of 7.3% (2008: increase 9.0%), a 16.5% increase in tuition fee and educatiincome (2008: increase 18.8%), a 4.1% reduction in research grant income (2008: increase 12.2%) and a 16.8%increase in other income (2008: increase 7.5%).

Figure 1: Types of income as a % of total income

on Funding Body grants although the proportion of its HEFCE/TDA recurrentfunding of total income fell again this year from 48.5% to 47.1%.

The third year of variable fees has impacted on the tuition fee income together with a 33% increase in nonome. The development of the Internationalisation Strategy and increased investment in the

International Office is beginning to bear fruit with increased student numbers.

Home/EU Tuition

Other income10%

Endowment andInvestmentincome 1%

23

2007/08 2006/07

1.43% (2.76%)

This result also reflects the impact of the Strategic Review, which was initiated in May 2008. This focused onr efficiencies, and on maximising academic synergies and

the effectiveness of professional services support through the restructuring of faculties, schools anddirectorates. The review was undertaken over a period of twelve months, working with both the

anagement team and the wider staff community and with the recognised trade unions. Efficiencies wereachieved without the need for compulsory redundancies, and the new structures which are now in place have

ring this period the University established a new Directorate of Teaching and Learning and renewed itsTeaching and Learning strategy. The university also developed or refocused a number of key supporting

arch and Innovation and Human Resources.

Overall, the University’s income increased by 9.5% in 2009 (2008: increase 12.1%). This reflects an increase inFunding Body grants of 7.3% (2008: increase 9.0%), a 16.5% increase in tuition fee and education contractincome (2008: increase 18.8%), a 4.1% reduction in research grant income (2008: increase 12.2%) and a 16.8%

on Funding Body grants although the proportion of its HEFCE/TDA recurrent

The third year of variable fees has impacted on the tuition fee income together with a 33% increase in non-ome. The development of the Internationalisation Strategy and increased investment in the

Funding BodyGrants 53%

Expenditure

Total expenditure for the University increased to £196m from £178m inshow an increase of 3.5% on the previous year (2008: increase 7.5%). Other operating expenses haveincreased by 14.9% (2008: increase 4.3%). An area of significant increase is the payments to partner colleges,which have increased from £24.5m to £27.8m. Associated partner colleges are funded by the Universitywhich obtains matching HEFCE income. The increase in this financial year relates to capital investmentframework funding which was due to the colleges.

Figure 2: Types of expenditure as a % of total expenditure

The University has set itself a target of keeping staff costs as a % of total expenditure below 58% and hasachieved this for the second year in a row. Non staff expenditure has increased this year, lmaking additional capital payments to the partner colleges.

Performance indicator

Pay expenditure (excluding redundancy costs) as a %

of total expenditure

Non-pay expenditure* as a % of total

*Non- pay expenditure excludes depreciation, impairment and interest charged in the year

Otheroperating

expenses 24%

Payments topartner

colleges 14%

Depreciation4%

Total expenditure for the University increased to £196m from £178m in 2008, an increase of 9.8%. Staff costsshow an increase of 3.5% on the previous year (2008: increase 7.5%). Other operating expenses haveincreased by 14.9% (2008: increase 4.3%). An area of significant increase is the payments to partner colleges,

have increased from £24.5m to £27.8m. Associated partner colleges are funded by the Universitywhich obtains matching HEFCE income. The increase in this financial year relates to capital investmentframework funding which was due to the colleges.

re 2: Types of expenditure as a % of total expenditure

The University has set itself a target of keeping staff costs as a % of total expenditure below 58% and hasachieved this for the second year in a row. Non staff expenditure has increased this year, lmaking additional capital payments to the partner colleges.

2008/09

Pay expenditure (excluding redundancy costs) as a %55%

pay expenditure* as a % of total expenditure 38%

pay expenditure excludes depreciation, impairment and interest charged in the year

Staff costs 55%

DepreciationImpairment

1%Interest

payable 2%

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2008, an increase of 9.8%. Staff costsshow an increase of 3.5% on the previous year (2008: increase 7.5%). Other operating expenses haveincreased by 14.9% (2008: increase 4.3%). An area of significant increase is the payments to partner colleges,

have increased from £24.5m to £27.8m. Associated partner colleges are funded by the Universitywhich obtains matching HEFCE income. The increase in this financial year relates to capital investment

re 2: Types of expenditure as a % of total expenditure

The University has set itself a target of keeping staff costs as a % of total expenditure below 58% and hasachieved this for the second year in a row. Non staff expenditure has increased this year, largely as a result of

2007/08 2006/07

58% 59%

36% 39%

pay expenditure excludes depreciation, impairment and interest charged in the year

Staff costs 55%

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Capital expenditure

The capital programme associated with the closure of the other University campuses is now complete. During2008/09 a total of £10.6m was spent on equipment and improving existing buildings on the Plymouth campus.

Balance sheet

The University balance sheet shows a reduction in net assets of £7.1m mainly due to a £22.8m increase to thePension Fund liability at the year end.

Tangible fixed assets have decreased by £7.7m. The Seale Hayne campus and Exmouth properties have beentransferred to assets for resale, causing a reduction of £8.6m, and the Exeter campus has been written downto reflect the current market value.

There has been an improvement in the current asset position since last year, £57.0m at 31 July 2009compared to £43.0m at 31 July 2008. The University and its subsidiaries were holding £8.2m more cash andinvestment reserves than at the same time last year, partly due to the disposal of a number of properties onthe Exmouth campus, and partly due to delays in capital expenditure.

Current liabilities have fallen by £7.5m compared to the same time last year, largely as a result of reducedaccruals and deferred income. This, together with the improved current asset position, has led to ratio ofcurrent assets to current liabilities of 149%.

Performance indicator 2008/09 2007/08 2006/07

Ratio of current assets to current liabilities 149% 94% 102%

Creditors of more than one year include 18.9m relating to the recognition of a creditor for the Rolle building.

This will be released to the Income and Expenditure account over a 35 year period. The remainder is with

regard to the loan balances held with HSBC Plc and Lloyds TSB.

Performance indicator 2008/09 2007/08 2006/07

External borrowings* as % of total income 29.0% 32.5% 38.7%

External borrowings* as % of reserves (excluding

pension liability)

78.1% 82.2% 91.1%

* External borrowings include bank loans only

The pension scheme liability reflects the University’s share of the Devon County Council pension schemedeficit in line with the requirements of FRS 17. The deficit has increased by £22.8m (2008: increase £23.1m)and this has led to an increased liability of £66.2m. This is partly due to the actual return on the scheme assetsbeing £13.4m below the expected return, which reflects current market conditions. Net costs recognised inthe income and expenditure account are £2.15m (2008: £0.97m).

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Cash flow

The University cash flow shows a decrease of cash balances (excluding investments) in the year of £2.5m(2008: a decrease of £2.5m). The other key movements in the year being £11.0m of deferred capital grantsreceived £10.6m capital expenditure and a £10.8m increase in investments.

Fundraising

The 2008-09 year saw the appointment of the three Alumni Relations and Development staff. TheGovernment Matched Funding scheme started at the start of this financial year and systems have beenestablished to cope with the reporting requirements of the scheme. Income has increased and groundworkhas been laid for the establishment of an Annual Fund and a major gift programme. A comprehensive alumniprogramme is now in place which will lead on to greater alumni engagement which will in turn reap financialrewards as the fundraising case for support is developed.

Treasury Management Policy

The University’s surplus cash deposits are invested in accordance with the University’s Treasury ManagementPolicy and are currently placed with Royal London Cash Management. The University adopts a prudentapproach to the investment of surplus funds. To protect capital sums invested, the university‘s fund managersare instructed to invest in institutions carrying ratings of A1 (Standard and Poors) and F1 (Fitch IBCA). Moniesare placed on the London short term money markets, with the prime requirement being to ensure that thecapital sum is not at risk. It is the University’s policy that no trading in financial instruments shall beundertaken and speculative practices avoided.

Creditors Payment Policy

In order to comply with the Late Payment of Debts Act, and to optimise its negotiating position with externalsuppliers, the University aims to settle all creditor payments within a maximum of 28 days from the receipt ofa valid invoice. On average the university took 28 days to pay its creditors from the date of issue of theinvoice (2007/08 25 days).

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Corporate Governance Statement

Corporate Governance Statement

The University is committed to best practice in all aspects of corporate governance. This summary describesthe manner in which the university has applied the principles set out in Section 1 of the Combined Code onCorporate Governance issued by the London Stock Exchange in June 1998. Its purpose is to help the reader ofthe financial statements understand how the principles have been applied.

In the opinion of the Board of Governors, the University complies with all the provisions of the CombinedCode in so far as they apply to the Higher Education Sector, and it has complied throughout the year ended 31July 2009. The Board of Governors can also confirm that the university continues to comply with theprovisions of the Committee of University Chairmen (CUC) Guide for Members of Higher Education GoverningBodies, and the advice contained in the Guidance on Corporate Governance for Higher Education issued bythe British Universities Finance Directors’ Group (BUFDG) in 2006.

Governance structure

The University’s Instrument and Articles of Government establish the structural framework of governance.The University’s Board of Governors is constituted in accordance with the Instrument: in 2008/09 it comprisedtwenty-two non-executive governors plus the Vice-Chancellor as an ex-officio executive member. Themajority of governors were independent lay members with experience of industry, the professions,commercial or employment matters, or members co-opted on the basis of their knowledge and experience ofeducation matters; there were also three academic staff members, one member of professional services staffand one student member, who was the President of the Students’ Union. Pending a review of its size andcomposition, the Board did not immediately replace one of the independent members who retired at the endof December 2008. The Board held five scheduled meetings during the year, plus one away day to discussissues of strategic importance.

The University understands the need for a clear separation of the roles of the non-executive Chair of theBoard of Governors and the Vice-Chancellor and Chief Executive. The Board of Governors approves andmonitors the University’s long-term strategic objectives and budgets and is responsible for reviewing theeffectiveness of the University’s systems of internal control. It also has responsibilities for the educationalcharacter and mission of the University, and to this end, the Vice-Chancellor and the University Secretary andRegistrar ensure that the Board is kept fully apprised of, and has the opportunity to contribute to, strategicdiscussions: one of the away days in 2008/09 focused on the further development of the enterprise agendawithin the university. The Board is charged with specific responsibilities under the University’s Articles ofGovernment, under financial and other agreements with funding bodies, and by statutory authority, and suchmatters are presented to the Board in the form of approvals and regular reports. The Vice-Chancellor,supported by the Chief Executive’s Group and the Senior Management Team, is responsible for the leadershipand management of the university and for ensuring that the University meets its academic and financialobjectives. The Vice-Chancellor is the University’s Accounting Officer.

The Board has established several committees, including a Finance Committee, an Audit Committee, anEmployment and Remuneration Committee, and a Nominations Committee. Each is formally constituted withclear terms of reference. Membership is largely drawn from members of the Board, although there isprovision for co-opted independent members with relevant professional expertise who are not members ofthe University or of the Board of Governors. In 2008/09, the Audit Committee and the Finance Committeeeach included two such co-opted members.

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In 2008/09, the Audit Committee met on five occasions, with the internal auditors always in attendance. Theexternal auditors attended for those meetings concerned with the presentation of the audit strategy andconsideration of the financial statements and management letter. The Committee considers detailed reportsand recommendations concerning the University’s systems of risk management and internal control, togetherwith management responses and action plans. It also receives and considers reports from the FundingCouncil as appropriate and monitors adherence to regulatory requirements. Senior executives attendmeetings of the Audit Committee as necessary but are not members of the Committee. The internal andexternal auditors meet privately with the governor members of the Committee annually, and have directaccess to the Committee Chair at any time.

The Finance Committee makes recommendations to the Board about the University’s financial strategy,including annual and long term capital and revenue plans, about the financial viability and financialmanagement of capital projects, and about the university’s Financial Statements and financial forecasts. Itregularly monitors performance in relation to budgets.

The Employment and Remuneration Committee makes recommendations to the Board about strategicemployment issues and the framework governing the pay and conditions of service of staff, and determinesthe guidelines to be applied to the determination of management salaries and the remuneration of the mostsenior staff, including the Vice-Chancellor. The Board has decided that from 2009/10, it will operate with aseparate Employment Committee and Remuneration Committee, in accordance with best practice advice.

The Nominations Committee considers the skills set available to the Board and issues of succession planning,advises on mechanisms for securing the services of new governors, including advertisement and interview,and identifies preferred candidates to the Board.

Formal Statement of the Board of Governors’ Responsibilities

In accordance with the University's Articles of Government, the Board of Governors, through the Vice-Chancellor, is responsible for the administration and management of the university’s affairs, includingensuring an effective system of internal control, and is required to present audited financial statements foreach financial year.

Within the terms and conditions of a Financial Memorandum agreed between the Higher Education FundingCouncil for England and the University, the Board of Governors, through the Vice-Chancellor, is required toprepare Financial Statements for each financial year which give a true and fair view of the University’s state ofaffairs and of the surplus or deficit and cash flows for that year. The Board is also responsible, through theVice-Chancellor, for keeping proper accounting records which disclose with reasonable accuracy at any timethe financial position of the University. In causing the Financial Statements to be prepared, the Board ofGovernors 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 beingdisclosed and explained in the financial statements;

the University has adequate resources to continue in operation for the foreseeable future: for thisreason the going concern basis continues to be adopted in the preparation of the financial statements.

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The Board of Governors has taken reasonable steps to:

ensure that funds from the Higher Education Funding Council for England are used only for thepurposes for which they have been given and in accordance with the Financial Memorandum with theFunding Council and any other conditions which the Funding Council may from time to time prescribe;

ensure that funds from the Training and Development Agency for Schools are used only for thepurposes for which they have been given and in accordance with the Funding Agreement with theTraining and Development Agency for Schools and any other conditions which the Training andDevelopment Agency for Schools may from time to time prescribe;

ensure that there are appropriate financial and management controls in place to safeguard publicfunds and funds from other sources;

safeguard the assets of the university and prevent and detect fraud;

secure the economical, efficient and effective management of the university’s resources andexpenditure to achieve value for money.

The Board engages in regular internal review of its own performance, involving interviews with all Governorsand with members of the Office of the Vice-Chancellor; the most recent review was undertaken in Spring2008. The Audit Committee also ensures that an aspect of institutional governance is selected for review bythe internal auditors in each year. In Autumn 2008 the Audit Committee implemented a number of minorrevisions to its terms of reference, composition and operating procedures in line with the good practiceguidance issued by the Committee of University Chairmen in the Handbook for Members of Audit Committeesin HE Institutions.

Internal control

The Board of Governors is responsible for maintaining a sound system of internal control to support theachievement of the University’s policies, aims and strategic objectives, while safeguarding the public andother funds and assets for which it is responsible, in accordance with the responsibilities assigned to theBoard in the Articles of Government and the Financial Memorandum. The Board of Governors is alsoresponsible for reviewing the effectiveness of the internal control system.

The system of internal control is designed to manage rather than eliminate the risk of failure to achievestrategic objectives. It can therefore provide a reasonable, not absolute, assurance of effectiveness. Thesystem is based on an ongoing process designed to identify, evaluate and manage, efficiently, effectively andeconomically, the strategic risks facing the University. This process has been in place for the year ended 31July 2009 and up to the date of approval of the financial statements, and accords with HEFCE guidance. Theuniversity is therefore compliant with Funding Council requirements.

The review of the effectiveness of the system of internal control is informed inter alia by the work of Mazars,the University’s internal auditors. The internal auditors submit an annual report to the Audit Committee andthe Board of Governors which includes an independent opinion on the adequacy and effectiveness of theinstitution’s overall system of internal control, with recommendations for improvement.

The review of the effectiveness of the system of internal control is also informed by the work of seniormanagers within the institution, who have responsibility for the development and maintenance of the internalcontrol framework, and by comments made by the external auditors in their management letter and otherreports.

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Risk management

The role of the Board of Governors is to manage and report on risk at a strategic level, by determining theUniversity’s risk appetite and the acceptable risk level, satisfying itself that the University’s actual levels of riskdo not exceed the agreed levels, approving major decisions affecting the University’s risk profile, monitoringthe management of corporate risks, setting the tone and influencing the culture of risk management withinthe University, and satisfying itself that the processes for embedding risk management are workingeffectively. The Board considers an amended corporate risk register in November of each year and at thesame time reviews the current risk management policy.

In meeting its responsibilities, the Board relies heavily on advice from the Audit Committee. The AuditCommittee and the internal auditors have continued an approach to risk-based audit which integrates moreclosely operational audits and reviews of associated risk. Review processes cover business risk, operationalrisk and compliance, as well as financial risk. There is also an annual audit of risk management, which in2008/09 resulted in an assessment of substantial assurance. The Committee also commissioned a number ofstrategic audits linked with the University’s key objectives, including a review of personal tutoring forstudents, and IT disaster recovery and governance.

The Office of the Vice-Chancellor is responsible for implementing the risk management arrangementsapproved by the Board of Governors; for identifying, evaluating and monitoring the risks associated with theirdecisions and with proposals made to the Board; and for ensuring that managers within the University fulfiltheir responsibilities for risk management.

In addition to the corporate risk register, faculties, major projects and many directorates produce local riskregisters. Where directorates identified that the key risks in their area are incorporated within the corporaterisk register or individual project registers, the university has not hitherto required the production of a specificlocal register, but that requirement has now been introduced.

The Chief Executive’s Group reviews the corporate risk register on a monthly basis, and the SeniorManagement Team considers the changes termly. Local risk registers are reviewed centrally in January ofeach year. The Audit Committee receives a report at each meeting highlighting changes in the corporate riskregister, either in terms of content or of movement in risk ratings.

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Independent auditors’ report to the Board of Governors of theUniversity of Plymouth

We have audited the group financial statements of the University of Plymouth for the year ended 31 July 2009which comprise the Consolidated Income and Expenditure Account, the Group and University Balance Sheets,the Consolidated Cash Flow Statement, the Consolidated Statement of Historical Cost Surpluses and Deficits,the Consolidated Statement of Total Recognised Gains and Losses and the related notes. These financialstatements have been prepared under the accounting policies set out therein.

Respective responsibilities of the governing body and auditors

The governing body’s responsibilities for preparing the financial statements in accordance with the AccountsDirection issued by the Higher Education Funding Council for England, the Statement of RecommendedPractice – Accounting for Further and Higher Education, applicable United Kingdom Law and AccountingStandards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of theGoverning Body’s Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatoryrequirements and International Standards on Auditing (UK and Ireland). This report, including the opinion,has been prepared for and only for the governing body of the institution in accordance with the institution’sArticles of Government and section 124B of the Education Reform Act 1988. We do not, in giving this opinion,accept or assume responsibility for any other purpose or to any other person to whom this report is shown orin to whose hands it may come save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the financial statements give a true and fair view and are properlyprepared in accordance with the Statement of Recommended Practice - Accounting for Further and HigherEducation.

We report to you whether in our opinion, income from funding bodies, grants and income for specificpurposes and from other restricted funds administered by the institution, have been properly applied in allmaterial respects for the purposes for which they were received, and whether income has been applied in allmaterial respects in accordance with the institution’s Articles of Government and where appropriate with thefinancial memorandum with the Higher Education Funding Council for England (HEFCE) and with the fundingagreement with the Training and Development Agency for Schools.

In addition we report to you if, in our opinion, the institution has not kept adequate accounting records, if thefinancial statements are not in agreement with the accounting records or if we have not received all theinformation and explanations we require for our audit.

We read the other information contained in the financial statements and consider the implications for ourreport if we become aware of any apparent misstatements or material inconsistencies with the financialstatements. This other information is comprised of the Operating and Financial Review and the CorporateGovernance Statement.

We also review the statement of internal control included as part of the Corporate Governance Statementand comment if the statement is inconsistent with our knowledge of the institution. We are not required toconsider whether the statement of internal control covers all risks and controls, or to form an opinion on theeffectiveness of the institution's corporate governance procedures or its risk and control procedures. We

32

consider the implications for our report if we become aware of any apparent misstatements or materialinconsistencies with the financial statements.

Our responsibilities do not extend to any other information.

The maintenance and integrity of the University of Plymouth website is the responsibility of the GoverningBody; the work carried out by the auditors does not involve consideration of these matters and, accordingly,the auditors accept no responsibility for any changes that may have occurred to the financial statements sincethey were initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements maydiffer from legislation in other jurisdictions.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued bythe Auditing Practices Board and with the HEFCE Accountability and Audit Code of Practice contained in theFinancial Memorandum 2008/19. An audit includes examination, on a test basis, of evidence relevant to theamounts and disclosures in the financial statements. It also includes an assessment of the significantestimates and judgements made by the governing body in the preparation of the financial statements, and ofwhether the accounting policies are appropriate to the institution’s circumstances, consistently applied andadequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial statements are free from material misstatement, whether caused by fraud or other irregularity orerror. In forming our opinion we also evaluated the overall adequacy of the presentation of information in thefinancial statements.

Opinion

In our opinion:

i. the financial statements give a true and fair view of the state of affairs of the institution at 31 July2009, and of the group’s income and expenditure, recognised gains and losses, and statement of cashflows for the year then ended;

ii. the financial statements have been properly prepared in accordance with the Statement ofRecommended Practice - Accounting for Further and Higher Education, and United Kingdom GenerallyAccepted Accounting Practice;

iii. in all material respects, income from the Higher Education Funding Council for England and theTraining and Development Agency for Schools, grants and income for specific purposes and from otherrestricted funds administered by the institution have been applied only for the purposes for whichthey were received; and

33

iv. in all material respects, income has been applied in accordance with the institution's Articles ofGovernment and where appropriate in accordance with the financial memorandum (2008/19) with theHigher Education Funding Council for England and the funding agreement with the Training andDevelopment Agency for Schools.

PricewaterhouseCoopers LLPChartered AccountantsPlymouth26 November 2009

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Statement of principal accounting policies

Basis of preparation

These financial statements have been prepared in accordance with the Statement of Recommended Practice(SORP): Accounting for Further and Higher Education Institutions 2007 and in accordance with applicableaccounting standards.

Basis of accounting

The financial statements are prepared under the historical cost convention as modified by the revaluation ofcertain land and buildings.

Basis of consolidation

The consolidated financial statements include the university and all its subsidiary undertakings for thefinancial year to 31 July 2009. Intra-company sales and profits are eliminated fully on consolidation. Inaccordance with FRS 2 Accounting for subsidiary undertakings, the consolidated financial statements do notinclude those of the University of Plymouth Students' Union, as it is a separate organisation in which theuniversity has no financial interest and no control or significant influence over policy decisions. The Universityis party to a joint arrangement for the Peninsula College of Medicine and Dentistry, which is not an entity. TheUniversity accounts directly for its 50% share of the income, expenditure, assets, liabilities and cash flows(excluding Research). The items comprising the externally funded Research activity are included within theUniversity employing each project’s Principle Investigator. Such arrangements are reported in theconsolidated financial statements on the same basis.

Recognition of income

Income from research grants, contracts and other services rendered is included to the extent of thecompletion of the contract or service concerned. This is generally equivalent to the sum of the relevantexpenditure incurred during the year and any related contributions towards overhead costs. All income fromshort-term deposits and general endowment asset investments is credited to the income and expenditureaccount in the period in which it is earned.

Recurrent grants from the Funding Councils are recognised in the period in which they are receivable.Non-recurrent grants from Funding Councils or other bodies received in respect of the acquisition orconstruction of fixed assets are treated as deferred capital grants and amortised in line with depreciation overthe life of the assets.

Maintenance of premises

The University has produced a costed long-term maintenance plan for buildings. In accordance with therequirements of FRS 12 Provisions, Contingent Liabilities and Contingent Assets, the cost of maintenance ischarged to the income and expenditure accounts as incurred.

35

Foreign currency translation

Transactions denominated in foreign currencies are recorded at the rate of exchange ruling at the dates of thetransactions. All exchange differences are dealt with in the income and expenditure account. Assets andliabilities expressed in foreign currencies are translated into sterling at rates of exchange ruling at the balancesheet date.

Research and Development expenditure

Expenditure on research and development is written off to the income and expenditure account in the year inwhich it is incurred.

Pension schemes

Retirement benefits for employees are provided by defined benefit schemes which are funded bycontributions from the University and employees. Most academic staff are members of the Department forEducation's Teachers' Pension Scheme. There are particular circumstances in which a few members of staffare eligible for the Universities’ Superannuation Scheme and some members of the Peninsula College ofMedicine and Dentistry are eligible for membership of the Department of Health's NHS Pension Scheme.Most other salaried employees and many weekly paid employees are members of the Local GovernmentPension Scheme run by Devon County Council. All schemes are independently administered.

Contributions to the schemes, except for the Devon County Council pension scheme, are charged to theincome and expenditure account so as to spread the cost of the pensions over the employees’ working liveswith the university in such a way that the pension cost is a substantially level percentage of present andfuture pensionable payroll. Variations from regular costs are spread over the expected average remainingworking lifetime of members of the schemes after making allowances for further withdrawals.

The University of Plymouth participates in the Devon County Council Pension Fund. The Fund, which is part ofthe Local Government Pension Scheme, provides benefits based on final pensionable salary. The assets of thescheme are held separately from those of the Group. Pension scheme assets are measured using marketvalues. Pension scheme liabilities are measured using a projected unit method and discounted at the currentrate of return on a high quality corporate bond of equivalent term and currency to the liability. The pensionscheme surplus (to the extent that it is recoverable) or deficit is recognised in full. The movement in thescheme surplus/deficit is split between operating charges, finance items and, in the statement of totalrecognised gains and losses, actuarial gains and losses. This is a defined benefits scheme and is valued everythree years by a professionally qualified actuary using the projected unit method, the rates of contributionpayable being determined by the actuary.

The Teachers' Pension Scheme is valued every five years by the Government Actuary who specifies thecontribution rate paid by the university. The Department for Education operates a notional fund for thisscheme. The University has no liability for pensions or pension increases for past employees in this scheme.

The University participates in the Universities Superannuation Scheme (USS), a defined benefit scheme whichis externally funded and contracted out of the State Second Pension (S2P). The assets of the scheme are heldin a separate trustee-administered fund. The University is unable to identify its share of the underlying assetsand liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS 17“Retirement benefits”, accounts for the scheme as if it were a defined contribution scheme. As a result, theamount charged to the income and expenditure account represents the contributions payable to the scheme

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in respect of the accounting period. The liabilities are valued every three years by a professionally qualifiedindependent actuary using the projected unit method, the rates of contribution payable being determined bythe trustee on the advice of the actuary. In the intervening years, the actuary reviews the progress of thescheme. Pension costs are assessed in accordance with the advice of the actuary, based on the latestactuarial valuation of the scheme, and are accounted for on the basis of charging the cost of providingpensions over the period during which the University benefits from the employees’ services.

The NHS Pension Scheme is valued every five years by the Government Actuary who specifies the contributionrate paid by the University. The Department of Health operates a notional fund for this scheme. TheUniversity has no liability for pensions or pension increases for past employees in this scheme.

Tangible fixed assets

a. Land and buildings

The University has taken advantage of the transitional arrangements available on the first adoption of FRS 15Tangible Fixed Assets not to update the value of its land and buildings. The land and buildings were thesubject of a comprehensive revaluation carried out by Chesterton property consultants as at 31 March 1990.The basis of valuation is in accordance with the Royal Institute of Chartered Surveyors’ guidance notes. Thesedirect that, where possible, assets should be valued on the basis of existing use or open market value. Theguidance notes recognise that in the case of specialist buildings this may not always be possible and in thosecases valuation should be on the basis of depreciated replacement cost. The consultants used bothapproaches in their valuation.

As part of the same survey the property consultants estimated the remaining life of each building, typically 20to 50 years. Buildings acquired after the survey are shown at cost less depreciation based on a life of 50years. All buildings are depreciated on a straight line basis. Land is not depreciated.

Where land and buildings are acquired with the aid of specific grants they are capitalised and depreciated asabove. The related grants are credited to a deferred capital grant account and are released to the income andexpenditure account over the expected useful economic life of the related asset on a basis consistent with thedepreciation policy.

A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that thecarrying amount of the fixed asset may not be recoverable.

Assets in the course of construction are accounted for at cost, based on the value of architects’ certificatesand other direct costs incurred to 31 July. They are not depreciated until they are brought into use.

Finance costs which are directly attributable to the construction of buildings are capitalised as part of the costof those assets. Such interest is capitalised only up until the date the relevant building is brought into use. Therate of interest used is the applicable cost of funds during this period.

b. Equipment

Equipment costing less than £15,000 per individual item or group of related items is written off to the incomeand expenditure account in the year of acquisition. All other equipment is capitalised at cost.Capitalised equipment is depreciated over its useful economic life using the straight-line method. The life ofeach asset is established on acquisition and may fall within the range of three to ten years depending on its

37

nature. For a group of related items of computer equipment purchased as part of a networking/softwareenhancement programme, the life is established by reference to the date of the next proposed upgrade.

When equipment is acquired with the aid of specific grants it is capitalised and depreciated in accordancewith the above policy, with the related grant being credited to a deferred capital grant account and releasedto the income and expenditure account over the expected useful economic life of the related equipment.

Leased assets

Leasing agreements which transfer to the University substantially all the benefits and risks of ownership of anasset are treated as if the asset had been purchased outright and are capitalised at their fair value at theinception of the lease and depreciated over the shorter of the lease term or the useful economic lives ofequivalently owned assets. The capital element outstanding is shown as obligations under finance leases.

The finance charges are allocated over the period of the lease in proportion to the capital elementoutstanding. Where finance lease payments are funded in full from funding council capital equipment grants,the associated assets are designated as grant-funded assets.

Costs in respect of operating leases are charged on a straight-line basis over the lease term.

Investments

Fixed asset investments that are not listed on a recognised stock exchange are carried at historical cost lessany provision for impairment in their value. Endowment asset investments are included in the balance sheetat market value. Current asset investments are included in the balance sheet at the lower of their original costand net realisable value, and relate to short term deposits.

Stocks

Stocks represent consumable materials held by catering outlets, materials held by Information and LearningServices and livestock and related items held by the farm at Seale Hayne. They are stated at the lower of costand net realisable value. Where necessary, provision is made for obsolete, slow moving and defective stocks.

Contract work in progress relates to projects being undertaken and is stated at costs incurred, less thosetransferred to the profit and loss account, after deducting foreseeable losses and payments on account notmatched with turnover.

Taxation

The University is an exempt charity within the meaning of Schedule 2 of the Charities Act 1993 and as such is acharity within the meaning of Section 506 (1) of the Income and Corporation Taxes Act (ICTA) 1988.Accordingly, the University is potentially exempt from taxation in respect of income or capital gains receivedwithin categories covered by Section 505 of the ICTA 1988 or Section 256 of the Taxation of Chargeable GainsAct 1992, to the extent that such income or gains are applied to exclusively charitable purposes. However theuniversity does have some trading income, which is subject to Corporation Tax in the same way as commercialorganisations.

The charge for taxation is based on the profit for the year and takes into account taxation deferred because oftiming differences between the treatment of certain items for taxation and accounting purposes. Deferredtax is recognised, without discounting, in respect of all timing differences between the treatment of certain

38

items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date,except as otherwise required by FRS 19.

The University received no exemption in respect of Value Added Tax. The University’s subsidiary companiesare subject to corporation tax and VAT in the same way as any commercial organisation.

Liquid resources

Liquid resources include sums on short-term deposits with recognised banks and building societies andgovernment securities.

Provisions

Provisions are recognised when the institution has a present legal or constructive obligation where, as a resultof a past event, it is probable that a transfer of economic benefit will be required to settle the obligation and areliable estimate can be made of the amount of the obligation.

39

Consolidated income and expenditure accountfor the year ended 31 July 2009

Year ended31 July 2009

Year ended31 July 2008

Notes £000 £000

INCOME

Funding Body grants 1 104,836 97,697

Tuition fees and education contracts 2 60,493 51,939

Research grants and contracts 3 11,845 12,354

Other income 4 20,220 17,317

Endowment and investment income 5 672 1,636

Total income 198,066 180,943

EXPENDITURE

Staff costs 6 (106,707) (103,055)

Other operating expenses 8 (74,462) (64,811)

Depreciation 13 (8,003) (7,098)

Impairment of properties 13 (1,465) -

Interest and other finance costs 10 (5,129) (3,385)

Total expenditure (195,766) (178,349)

Surplus after depreciation of tangible fixed assets at valuationand before tax 2,300 2,594

Taxation 11 (149) (253)

Surplus before exceptional items 2,151 2,341

Exceptional items:

Surplus on disposal of fixed assets 868 1,402

Redundancy costs (3,063) (1,908)

(Deficit)/surplus on continuing operations after depreciation oftangible fixed assets, disposal of assets and tax

12 (44) 1,835

(Deficit)/surplus for the year transferred from endowment funds (2) 3

(Deficit)/surplus for the year retained within general reserves (46) 1,838

The income and expenditure account is in respect of continuing activities.

40

Consolidated statement of historical cost surpluses and deficitsfor the year ended 31 July 2009

Notes2008/09

£0002007/08

£000Surplus on continuing operations before taxation but afterexceptional items 105 2,088

Difference between historical cost depreciation and the actualcharge for the year calculated on the revalued amount 25 1,459 1,004

Released in respect of disposals, demolitions and impairments 25 1,134 94

Historical cost surplus for the year before taxation 2,698 3,186

Historical cost surplus for the year after taxation 2,549 2,933

Statement of total recognised gains and losses for the yearended 31 July 2009

Notes2008/09

£0002007/08

£000(Deficit)/surplus on continuing operations after depreciation ofassets at valuation and taxation

(46) 1,835

Actuarial loss on pension scheme 37 (20,640) (22,150)

Movement on endowments 24 73 13

Total recognised losses relating to the year (20,613) (20,302)

Reconciliation2008/09

£0002007/08

£000

Opening reserves and endowments 28,043 48,345

Total recognised losses for the year (20,613) (20,302)

Closing reserves and endowments 7,430 28,043

Balance sheet as at 31 July 2009

Fixed assetsTangible assetsInvestments

Endowment asset investments

Current assetsStockAssets held for resaleDebtors – amounts falling due after more thanone yearDebtors – amounts falling due within one yearInvestments (liquid resources)Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets/(liabilities)

Total assets less current liabilities

Creditors - amounts falling due after more thanone year

Provisions for liabilities

NET ASSETS BEFORE PENSION SCHEMELIABILITIES

Pension scheme liabilities

NET ASSETS AFTER PENSION SCHEMELIABILITIES

Deferred capital grants

EndowmentsExpendablePermanent

ReservesIncome and expenditure account excludingpension reservePension reserve

Income and expenditure account includingpension reserve

Revaluation reserve

Total reserves

TOTAL FUNDS

The financial statements on pages 39 to 65 were approved by the Board of Governors on 25 November 2009 and were signed on its

behalf by:

Nick BucklandChair of the Board of Governors


NoteConsolidated

2009£000

University2009£000

Consolidated

13 210,750 210,66114 76 70

210,826 210,731

15 147 147

16 326 16417 8,582 8,582

amounts falling due after more than18 7,515 7,515

amounts falling due within one year 18 14,841 15,27025,746 25,120

- -

57,010 56,651

Creditors: amounts falling due within one year 19 (38,184) (37,761)

18,826 18,890

229,799 229,768

amounts falling due after more than20 (87,340) (87,247)

22 (5,457) (5,457)

137,002 137,064

37 (66,240) (66,240)

70,762 70,824

23 63,332 63,282

24 99 9948 48

147 147

26 39,543 39,655

26 (66,240) (66,240)

(26,697) (26,585)

25 33,980 33,980

7,283 7,395

70,762 70,824


Professor Wendy PurcellVice-Chancellor and Chief Executive

41


Consolidated2008£000

University2008£000

218,456 218,12079 73

218,535 218,193

74 74

330 181- -

9,302 6,658

16,013 17,99114,971 13,651

2,397 2,127

43,013 40,608

(45,651) (43,337)

(2,638) (2,729)

215,971 215,538

(89,092) (89,016)

(5,543) (5,543)

121,336 120,979

(43,450) (43,450)

77,886 77,529

49,843 49,787

32 3242 42

74 74

34,846 34,545

(43,450) (43,450)

(8,604) (8,905)

36,573 36,573

27,969 27,668

77,886 77,529


Chancellor and Chief Executive

42

Consolidated cash flow statementFor the year ended 31 July 2009

Notes2008/09

£0002007/08

£000

Cash flow from operating activities 27 9,892 38,833

Returns on investments and servicing of finance 28 (1,924) (1,711)

Taxation paid 29 - (401)

Capital expenditure and financial investment 30 1,538 (28,633)

Management of liquid resources 32 (10,775) (6,857)

Financing 31 (1,243) (3,776)

Decrease in cash in the year (2,512) (2,545)

Reconciliation of net cash flow to movement in net debt

2008/09£000

2007/08£000

Decrease in cash in the year 32 (2,512) (2,545)

Cash outflow from repayment of loans 31 1,352 3,776

Cash inflow from finance lease 31 (109) -

Cash outflow from liquid resources 32 10,775 6,857

Other non-cash changes 32 (18,754) -

Movement in net debt in year (9,248) 8,088

Net debt at 1 August 32 (42,074) (50,162)

Net debt at 31 July 32 (51,322) (42,074)

43

Notes to the financial statements1 Funding Body grants

2008/09 2007/08HEFCE TDA Total Total

£000 £000 £000 £000

Recurrent teaching grants 84,117 4,532 88,649 83,477

Recurrent research grants4,734 - 4,734 4,271

Specific grants:Other 8,372 - 8,372 7,589Releases of deferred capital grants:

Buildings (note 23) 2,011 - 2,011 1,696

Equipment (note 23) 1,070 - 1,070 664

Total 100,304 4,532 104,836 97,697

2 Tuition fees and education contracts

2008/09£000

2007/08£000

Full-time UK & European Union (EU) students 32,406 24,883Full-time non-EU students 6,425 4,823Part-time students 2,024 1,781Special and short course fees 1,047 340Total fees paid by or on behalf of individual students 41,902 31,827

Education contracts 18,591 20,112

Total 60,493 51,939

3 Research grants and contracts2008/09

£0002007/08

£000

Research councilsUK based charities

3,7131,509

3,5341,807

UK based government bodiesUK based industry and commerceEuropean grants and contractsOther overseas grants and contractsReleases of deferred capital grants re equipment (note 23)Other grants and contracts

3,936546

1,103370

64604

4,753596

1,319316

29-

Total 11,845 12,354

44

4 Other income

5 Endowment and investment income

2008/09£000

2007/08£000

Income from expendable endowmentsIncome from permanent endowmentsIncome from short term investments

21

669

12

1,073

672 1,076

Other Finance income:

Expected return on pension scheme assetsInterest on pension scheme liabilities

--

8,950(8,390)

- 560

Total Endowment and investment income672 1,636

6 Staff costs

The average weekly number of persons (including senior post-holders) employed by the university during the year, expressed asfull-time equivalents (FTEs), was:

2008/09Number

2007/08Number

Teaching departments 1,507 1,564Academic support services 298 333Administration and central services 357 333Premises 197 218Other income-generating activities 79 61Catering and residences 58 69

Total 2,496 2,578

2008/09£000

2007/08£000

Residences, catering and conferencesOther grant incomeNursery income

2,5069,735

449

2,5545,877

430Rental and car park incomeEducational visits and field tripsStudent finesRecreation incomeOther miscellaneous income

635654185354

5,702

348492193256

7,167

20,220 17,317

45

6 Staff costs (continued)

2008/09 2007/08

£000 £000

Wages and salaries 86,967 83,474Social security costs 7,077 6,631Other pension costs 12,663 12,950

Total 106,707 103,055

2008/09£000

2007/08£000

Employment costs for staff on permanent contracts 82,078 79,924Employment costs for staff on short-term and temporary contracts 24,629 23,131

Total 106,707 103,055

7 Senior post-holders' emoluments

Emoluments of the Vice-Chancellor (VC): 2008/09 2007/08£ £

Salary 207,400 183,000Pension contributions 28,115 21,507Benefits in kind 605 17,397

Total 236,120 221,904

The emoluments of the Vice-Chancellor for last year are those of the Vice-Chancellor and the acting Vice Chancellor.

The number of staff, including staff in the Peninsula College of Medicine and Dentistry, excluding the Vice-Chancellor, who receivedemoluments in the following ranges, excluding employer's pension contributions, were:

2008/09Number

2007/08Number

£100,000 - £109,999 4 2£110,000 - £119,999 2 -£120,000 - £129,999 2 2£130,000 - £139,999 - 1£140,000 - £149,999 - 1£150,000 - £159,999 3 2£160,000 - £169,999 1 4£170,000 - £179,999£180,000 - £189,999£190,000 - £199,999

111

--1

The aggregate total of these senior staff emoluments including the Vice-Chancellor was £2,304,413 (£2,124,820 in 2007/08),

including benefits in kind.

46

8 Other operating expenses

2008/09£000

2007/08£000

Payments to partner institutions (see note below) 27,750 24,455Residences, catering and conferences operating expenses 1,215 1,578Consumables 2,599 3,310Books and periodicals 2,654 1,766Heat, light, water and power 3,713 3,387Repairs and general maintenance 995 835Grants to University of Plymouth Students’ Union 832 786Rents 1,856 1,717Equipment 2,352 1,849External auditors’ remuneration 73 75External auditors’ remuneration in respect of non-audit services 23 47Internal auditors’ remuneration 99 55Hire of other assets 2,638 2,632Other expenses 27,663 22,319

74,462 64,811

Associated partner colleges delivering University of Plymouth programmes are funded by the university which obtains matchingHEFCE income. These funds are managed separately from internal University HEFCE funds.

Within the Rents figure above is £1,405,870 (2007/08 £1,360,000) paid in the year in relation to operating leases for land andbuildings. Within the Hire of other assets figure above is £2,290,000 (2007/08 £1,900,000) paid in the year in relation to operatingleases for equipment.

The unconsolidated audit fee for the university only was £42,021 (£43,475 in 2007/2008).

9 Analysis of staff costs and other operating expenses by activity

Staff costs Other operating expenses

2008/09 2007/08 2008/09 2007/08£000 £000 £000 £000

Teaching departments 75,051 70,016 54,454 46,676Academic support services 11,508 11,988 9,967 8,489Administration and central services 11,232 10,284 3,154 2,662Premises costs 5,198 6,429 6,111 5,228Other income-generating activities 2,523 2,708 230 904Catering and residences operations 1,195 1,630 546 852

Total 106,707 103,055 74,462 64,811

10 Interest payable

2008/09£000

2007/08£000

Interest:On bank loans wholly repayable in more than five years 1,365 3,446On Finance lease for the Rolle Building, wholly repayable in more than 5 years 1,304 -On Corporation Tax - 8On VAT - 62Less finance costs capitalised - (131)Net interest charge on pension scheme assets and liabilities 2,460 -

5,129 3,385

47

11 Taxation

Analysis of charge in period 2008/09£000

2008/09£000

2007/08£000

2007/08£000

UK corporation tax

Current tax on income for the period (3) -

Adjustments in respect of prior periods - (30)

Total current tax (3) (30)

Deferred tax

Origination/reversal of timing differences 152 394

Changes in tax rates or laws - 39

Adjustment in respect of previous years - (150)

Total deferred tax 152 283

Tax charge for the year 149 253

The deferred tax asset (note 18) has arisen primarily due to timing differences in subsidiary companies.

Analysis of movement in deferred tax asset 2008/09£000

2007/08£000

Opening balance 152 441

Adjustment in respect of prior year - (6)

Adjustment in respect of subsidiary brought forward asset - 150

Profit and loss account (152) (433)

Closing balance - 152

12 Surplus on continuing operations for the year

The surplus on continuing operations is made up as follows: 2008/09 2007/08

£000 £000

University’s surplus for the year 367 106

Surpluses generated by subsidiary undertakings and payable to the University underthe Gift Aid Regulations - 450

Surpluses generated by subsidiary undertakings but retained within subsidiaries 236 1,280

Losses incurred by subsidiary undertakings (647) (1)

(Deficit)/surplus on continuing operations for the year (44) 1,835

48

13 Tangible fixed assets (consolidated)

Land and buildingsAssets incourse of Long

construction Freehold leasehold Equipment Total£000 £000 £000 £000 £000

Cost

At 1 August 2008 22,699 223,835 2,409 19,440 268,383

Additions 8,984 - - 1,655 10,639Transfers (25,661) 6,412 18,755 418 (76)Transfer to Assets for resale - (15,934) - - (15,934)Disposals - (550) - (682) (1,232)

At 31 July 2009 6,022 213,763 21,164 20,831 261,780

DepreciationAt 1 August 2008 - (41,008) (644) (8,276) (49,928)Charge for year - (5,507) (419) (2,077) (8,003)Adjustments - (200) - 276 76Transfers to Current Assets - 7,352 - - 7,352Impairment of properties at Exeter - (1,465) - - (1,465)Eliminated in respect of disposals - 350 - 588 938

At 31 July 2009 - (40,478) (1,063) (9,489) (51,030)

Net book value

At 31 July 2009 6,022 173,285 20,101 11,342 210,750

At 31 July 2008 22,699 182,827 1,766 11,164 218,456

Funded by:Inherited - 26,177 - - 26,177Financed by capital grant - 59,481 - 3,851 63,332Other 6,022 87,627 20,101 7,491 121,241

Net book value at 31 July 2009 6,022 173,285 20,101 11,342 210,750

A valuation was performed in 1990 and in line with the transitional arrangements of FRS 15, the university has chosen not to updatethese valuations. Included in the cost of tangible fixed assets is £610,000 (2008: £610,000) in respect of capitalised finance costs.This represents an average interest rate of 5.32% (2008: 5.32%).

In July 2009 the University carried out an impairment review of its properties. In the light of this review the Exeter properties werereduced in value by £1,465,000.

At 31 July 2009 assets with a net book value of £8,582,000, were transferred to Assets Held for Resale. These assets are vacantproperties in Newton Abbot and Exmouth which are expected to be sold during the year to July 2010.

The depreciation charge has been funded by:2008/09

£0002007/08

£000

Revaluation reserve release 986 1,098Deferred capital grant 3,145 2,407General income 3,872 3,593

8,003 7,098

49

13 Tangible fixed assets (University)

Land and buildings

BuildingProjects Freehold

LongLeasehold

Equipment Total

£000 £000 £000 £000 £000

Cost

At 1 August 2008 22,699 223,820 2,409 18,880 267,808

Additions 8,984 - - 1,655 10,639Inter-company transfers – from PHEL - - - 139 139Transfers (25,661) 5,306 18,755 1,600 -Adjustments - 1,106 - (1,182) (76)Transfers to Current Assets - (15,935) - - (15,935)Disposals - (550) - (511) (1,061)

At 31 July 2009 6,022 213,747 21,164 20,581 261,514

DepreciationAt 1 August 2008 - (41,002) (644) (8,042) (49,688)Charge for year - (5,506) (419) (2,027) (7,952)Adjustments - (200) - 276 76Transfers to current assets - 7,352 - - 7,352Impairment of properties at Exeter - (1,465) - - (1,465)Eliminated in respect of disposals - 350 - 474 824

At 31 July 2009 - (40,471) (1,063) (9,319) (50,853)

Net book value

At 31 July 2009 6,022 173,276 20,101 11,262 210,661

At 31 July 2008 22,699 182,818 1,766 10,837 218,120

Funded by:Inherited - 26,177 - - 26,177

Financed by capital grant - 59,481 - 3,801 63,282

Other 6,022 87,618 20,101 7,461 121,202

Net book value at 31 July 2009 6,022 173,276 20,101 11,262 210,661

Included in the cost of tangible fixed assets is £18,754,734 (2008: £18,754,734) in respect of the Rolle building, which is fundedthrough a finance lease. Depreciation of £375,095 was charged on these assets during the year to July 2009 (2008: £nil).

14 Investments


University2009£000


University2008£000

Shares in subsidiary companies - 1 - 1Other investments other than loans 76 69 79 72

Total 76 70 79 73

The university owns 100% of the issued share capital of 100 £1 ordinary shares of UPTC Limited, a company limited by shares andregistered in England and Wales, which engages in the provision of conference, catering and car parking facilities on the two

50

campuses of the University of Plymouth. The results of UPTC limited have been consolidated into the University of Plymouth’s groupfinancial statements. The company ceased trading on 31 July 2009 and will be closed during the year ended 31 July 2010.

The university owns 100% of the issued share capital of 100,000 £1 ordinary shares of University of Plymouth Enterprise Limited, acompany limited by shares and registered in England and Wales, which undertakes research and consultancy projects utilising theresources of the University of Plymouth. The results of University of Plymouth Enterprise Limited have been consolidated into theUniversity of Plymouth’s group financial statements.

The university owns 100% of PEP (Research and Consultancy) Limited, a company limited by guarantee and registered in Englandand Wales to undertake research and consultancy projects utilising the resources of the University of Plymouth. The results of PEP(Research and Consultancy) Limited have been consolidated into the University of Plymouth’s group financial statements. Thecompany ceased trading on 31 July 2009 and will be closed during the year ended 31 July 2010.

The university owns 100% of the issued share capital of 1,000 £1 ordinary shares of Plymouth Healthcare Education Limited, acompany limited by shares and registered in England and Wales, which engages in the provision of nursing and allied healthcaretraining. The results of Plymouth Healthcare Education Limited have been consolidated into the University of Plymouth’s groupfinancial statements. The company ceased trading on 31 July 2009 and will be closed during the year ended 31 July 2010.

The university owns 100% of the issued share capital of 1 £1 ordinary share of PMS (Facilities) Plymouth Limited, a company limitedby shares and registered in England and Wales, which provides facilities management at the John Bull building, Tamar Science Park.The results of PMS (Facilities) Plymouth Limited have been consolidated into the University of Plymouth’s group financialstatements.

University of Plymouth Enterprise Limited owns 100% of the issued share capital of the Centre of Leadership and OrganisationalExcellence (CLOE) Limited, a company limited by shares and registered in England and Wales. The company was set up to developintellectual property owned by an external party, to provide practical and sustainable business solutions and to improve thecommercial performance and capability of internal partners and external customers. It is intended that the company will be spunout in the future. The company has not been consolidated into these financial statements as it did not start trading until after 31July 2009.

University of Plymouth Enterprise Limited owns 27% of the issued share capital of Moustraining Limited, a company limited byshares and registered in England and Wales. The company was set up to offer distance learning IT courses. The company, which haspublished its accounts for the year to 31 March 2009, has not been consolidated into these financial statements, since its results arenot material to the University.

The university is a member of Tamar Science Park Limited, a company limited by guarantee and incorporated in England and Walesto secure the development of a science park in Plymouth. The university's liability is limited to £1. The university nominates two ofthe directors. The company has not been consolidated into these financial statements, since the university does not have asignificant influence over its activities. The company has published its accounts for the year to 31 March 2008. The university hasprovided in full for the cost of the investment of £200,000.

The university is a member of Marinetech South Limited, a company incorporated in England and Wales to carry out researchmanagement. The university holds one of the seven issued shares, its liability is limited to £1 and it nominates one of the directors.The company, which has published its accounts for the year to 31 December 2007, has not been consolidated within these financialstatements as the university, does not have the ability to exert no significant influence over the Company.

The university is a member of South West England Regional Network Limited, a company limited by guarantee, incorporated inEngland and Wales and contracted by UKERNA to manage and administer the South West Regional Network. The university'sliability is limited to £1. The university nominates one of the six directors. The company has not been consolidated into thesefinancial statements, since the university does not have the ability to exert significant influence over its activities. The company haspublished its accounts for the year to 30 September 2008.

The university is a member of James Square (Plymouth) Limited, a company limited by guarantee and incorporated in England andWales, which secured the lease of the Rolle Building on completion. The university's liability is limited to £1. The universitynominates two of the four directors, but day to day administration has been delegated to UPP Residential Services Limited.Therefore the company has not been consolidated into these financial statements, since its results are not material to theUniversity.

51

The university is a member of Mountbatten Sailing and Water Sports Centre Limited, a company limited by guarantee, incorporatedin England and Wales and set up to increase participation in sporting activity through the development of a centre of excellence forthe encouragement of and enjoyment and competition in, sailing, water sports and related activities. The Directors’ liability islimited to £1 each. The university nominates two of the directors. The company has not been consolidated into these financialstatements, since its results are not material to the University. The company has published its accounts for the year to 31 October2008.

15 Endowment assets

Consolidated and University2008/09

£0002007/08

£000

Balance at 1 August 2008 74 61New endowments invested 71 16Increase /(decrease) in cash balances held for endowment funds 2 (3)

Balance at 31 July 2009 147 74

16 Stock


University2009£000


University2008£000

Media stocks 35 35 52 52

Merchandise stocks - - 9 9

Farm stocks 82 82 76 76

Catering stocks 36 36 33 33

Maintenance stocks 11 11 11 11

Work in Progress (commercial projects) 162 - 149 -

Total 326 164 330 181

17 Assets held for resale

The University expects to sell its properties in Exmouth and Newton Abbot during the year to July 2010.

The net book value of these assets of £8,582,000 has therefore been transferred from fixed assets to assets held for resale as at 31July 2009.

18 Debtors


University2009£000


University2008£000

Amounts falling due within one year:

Trade debtors 5,756 5,333 4,662 4,176Amounts owed by group undertakings:Subsidiary undertakings - 975 - 3,594

Other debtors 755 749 1,556 1,401

Deferred tax assets - - 152 -Prepayments and accrued income 8,330 8,213 9,643 8,820

Total 14,841 15,270 16,013 17,991

52

Amounts falling due after more than one year:

Other debtors 179 179 - -Prepayments and accrued income 7,336 7,336 9,302 6,658

Total 7,515 7,515 9,302 6,658

Total debtors 22,356 22,785 25,315 24,649

The elements of deferred taxation are as follows:

2009£000

2008£000

Difference between accumulated depreciation and capital allowance - 152Losses brought forward - -

Balance at 31 July - 152

19 Creditors: amounts falling due within one year


University2009£000


University2008£000

Bank loans (see note 21) 1,511 1,511 1,012 1,012Bank overdrafts 962 971 774 713Trade creditors 2,044 2,014 903 898

Amounts owed to subsidiary undertakings - 3 - -

Other creditors 4,779 4,777 4,311 4,336

Taxation and Social Security 3,009 2,980 2,691 2,308

Accruals 5,916 5,844 6,703 6,058

Deferred income 19,963 19,661 29,257 28,012

Total 38,184 37,761 45,651 43,337

20 Creditors: amounts falling due after more than one year


University2009£000


University2008£000

Unsecured Loans 55,879 55,879 57,730 57,730

Deferred income and other creditors 12,598 12,505 31,362 31,286

Finance Lease - Rolle Building 18,863 18,863 - -

Total 87,340 87,247 89,092 89,016

Loan 1 is payable until 2037, the current rate of interest is 1.56%. This loan is unsecured. The outstanding capital amount at 31 July2009 was £24,605,898 (2007 £25,226,555).


53


The Finance Lease is on the Rolle Building and is all repayable in more than 5 years.

21 Borrowings

Bank loans and other loans

Consolidated and University2009£000

2008£000

Bank loans and other loans are repayable as follows:

in one year or less 1,511 1,012between one and two years 1,724 1,051between two and five years 8,214 5,427in five years or more 45,941 51,252

Total 57,390 58,742

22 Provisions for liabilities

EnhancedPension

OtherProvisions

Total2008/09

Total2007/08

£000 £000 £000 £000

Enhanced pension provisions

At 1 August 5,395 148 5,543 5,103

Expenditure in the year (1,039) - (1,039) (1,901)Charged in income and expenditureaccount 1,101 (148) 953 2,341

At 31 July 5,457 - 5,457 5,543

The pension provision is in respect of the future costs of lump sum payments and enhanced pensions payable to staff who haveagreed terms for early retirement

23 Deferred capital grants

Consolidated Buildings2008/09

£000

Equipment2008/09

£000

Total2008/09

£000

Total2007/08

£000

At 1 August 2008 45,470 4,373 49,843 49,041Cash receivable 15,750 1,306 17,056 3,469Transfer of capital grants 272 (694) (422) (260)Release to funding body grant income (2,011) (1,070) (3,081) (2,378)Release to research grant and contract income - (64) (64) (29)

At 31 July59,481 3,851 63,332 49,843

54

UniversityBuildings2008/09

£000

Equipment2008/09

£000

Total2008/09£000

Total2007/08

£000

At 1 August 45,470 4,317 49,787 49,041Cash receivable 15,750 1,306 17,056 3,435Transfer of capital grants 272 (694) (422) (282)Release to income and expenditure account (2,011) (1,128) (3,139) (2,407)

At 31 July59,481 3,801 63,282 49,787

24 Endowments – Consolidated and University

RestrictedPermanent

£000

RestrictedExpendable

£000

2009Total£000

2008Total£000

Balance at 1 AugustCapital 38 34 72 56Accumulated income 4 (2) 2 5

42 32 74 61

New endowments 6 65 71 16

Investment income 1 2 3 3Expenditure (1) - (1) (6)

- 2 2 (3)

At 31 July 48 99 147 74

Represented by:Capital 44 99 143 72Accumulated income 4 - 4 2

48 99 147 74

25 Revaluation reserve

Consolidated and University2008/09

£0002007/08

£000

At 1 August 36,573 37,671- Disposal, demolition and impairment of assets (1,134) (94)- Depreciation on revalued assets (1,459) (1,004)

At 31 July 33,980 36,573

55

26 Movement on general reserves

Income and expenditure account reserve

Consolidated2008/09

£000

University2008/09

£000

At 1 August 34,846 34,545(Deficit)/surplus before transfer from revaluation reserve (46) 367

Transfer from revaluation reserve in respect of:- Disposals, demolitions and impairments 1,134 1,134- Depreciation 1,459 1,459Add back pension deficit 2,150 2,150

Balance at 31 July 39,543 39,655

Pension reserveConsolidated &

University2008/09

£000

At 1 August (43,450)Actuarial loss on pension scheme assets and liabilities (20,640)Deficit retained within reserves (2,150)

Balance at 31 July (66,240)

27 Reconciliation of consolidated operating surplus to net cash inflow from operating activities

2008/09£000

2007/08£000

(Deficit)/surplus on continuing operations after depreciation of assetsand after taxation (46) 1,835Taxation 152 253FRS17 pension adjustment (310) 970Depreciation 8,003 7,098Deferred capital grants released to income (3,145) (2,407)Impairment of assets 1,465 -Surplus on disposal of tangible fixed assets (868) (1,402)

Decrease/(increase) in stocks 4 (85)Decrease in debtors 2,807 6,666(Decrease)/increase in creditors (2,541) 23,716(Decrease)/increase in provisions (86) 440

Interest payable 5,129 3,385Interest receivable (672) (1,636)

Net cash inflow from operating activities 9,892 38,833

56

28 Returns on investments and servicing of finance

2008/09£000

2007/08£000

Income from endowments 73 13Other interest received 672 1,636Interest paid (1,365) (3,360)Interest element of finance lease rental payments (1,304) -

Net cash outflow from returns on investments and servicing of finance (1,924) (1,711)

29 Taxation

2008/09£000

2007/08£000

Taxation paid - (401)

Net cash outflow from taxation - (401)

30 Capital expenditure and financial investment

2008/09£000

2007/08£000

Purchase of tangible fixed assets (10,639) (35,088)Purchase of investment 3 (23)Sale of tangible fixed assets 1,162 3,009Deferred capital grants received 11,012 3,469

Net cash inflow/(outflow) from capital expenditure and financial investment 1,538 (28,633)

31 Financing

2008/09£000

2007/08£000

Capital element of finance lease rental payments 109 -Repayment of loans (1,352) (3,776)

Net cash outflow from financing (1,243) (3,776)

57

32 Analysis of changes in net funds

At 1 August Other non- At 31 July2008 Cashflows cash changes 2009£000 £000 £000 £000

Cash in hand, and at bank 2,397 (2,397) - -Endowment asset investments (note 15) 74 73 - 147Overdrafts (774) (188) - (962)

1,697 (2,512) (815)

Debt due within one year (1,012) (499) - (1,511)Debt due after one year (57,730) 1,851 - (55,879)Finance leases due after one year - (109) (18,754) (18,863)Management of liquid resources 14,971 10,775 - 25,746

Net debt (42,074) 9,506 (18,754) (51,322)

The non-cash change figure of £18,754,000 relates to a movement from deferred income and other creditors to finance leasecreditor following the signing of the lease in August 2008.

33 Commitments

Capital commitments at the end of the financial year for which no provision has been made are as follows:

Consolidated and University2009£000

2008£000

Commitments contracted at 31 July 1,103 3,786Authorised but not contracted at 31 July 14,297 9,883

Total 15,400 13,669

Annual commitments under non-cancellable operating leases are as follows:

Consolidated and University2009 2008

£000 £000 £000 £000Land andBuildings

OtherLand andBuildings

Other

Operating leases which expire:

Within one year 40 3 45 -

In the second to fifth years inclusive 23 2,287 192 2,081

Over five years 452 - 438 -

Total 515 2,290 675 2,081

34 Contingent Liabilities

There are no contingent liabilities.

35 Related party transactions

Due to the nature of the university’s operations and the composition of the Board of Governors (being primarily drawn from localpublic and private sector organisations) it is inevitable that transactions will take place with organisations in which a member of theBoard of Governors may have an interest. All transactions involving organisations in which a member of the board of governors

58

may have an interest are conducted at arm’s length and in accordance with the university’s financial regulations and normalprocurement procedures.

The university has taken advantage of the exemptions under FRS 8 for 90% owned subsidiaries not to disclose intra-grouptransactions.

These financial statements reflect the following transactions with related parties, which were undertaken on an arm’s length basisand under normal commercial terms:

2008-09 2007-08

Name Nature of interest Detail Income /(Expense)

Amountdue to /

(from)

Income /(Expense)

Amountdue to /

(from)£000 £000 £000 £000

Tamar Science Park Senior Managementacting as Non-executive Directors

Rental payments andconsumables

(25) - (38) 4

Moustraining Limited Associate HEFCE teaching grantpayments

(463) - (500) -

Moustraining Limited Associate Dividend Receipt inUPEL

28 - 47 -

South West EnglandRegional Network Ltd

Senior Managementacting as Non-executive Directors

IT networking 179 (1) 154 -

Theatre RoyalPlymouth/ PlymouthPavilions Ltd

MD acts as Governor Ticket purchase andarena hire

(15) - (36) -

South West RegionalDevelopment Agency

Chair of University is aBoard member

Research grant andcontract income

536 - 543 -

South West Film &Television Archive

A Dean of theUniversity acts as aBoard Member

Use of film footage 40 - 93 -

South West MediaGroup

Governor acts as MD Media Advertisement (24) - - -

South WesternAmbulance Trust

National Institute forHealth & ClinicalExcellence

Senior Manager actsas Non-executiveDirector

Governor acts asVice-Chairman

Ambulance Services

Health Promotion

(27)

36

-

-

-

-

-

-

Devon Partnership NHSTrust

Governor acts asChairman

HealthCare (193) - - -

BT Group PLC Governor acts asEmployee

Telecommunications (102) - - -

Further to the disclosures made above, Two Senior Managers are Trustees of James Square (Plymouth) Limited. The University hasleased the Rolle Building from this company from August 2008. (See note 20)

59

One of the Board of Governors is Chair of Governors at Truro College, a partner college of the University of Plymouth. HEFCErecurrent teaching grant and other specific funding totalling £3.93m (2007/08: £3.36m) was paid to Truro College during the year.

One of the Board of Governors during the year is Chair of the Universities Superannuation Scheme. Details of the payments madeinto this scheme by the university can be found in note 37. The Governor’s term of service ended in July 2009.

One Board member is an independent member of the Standards Committee for Plymouth City Council. The university pays rent,business rates, refuse collection charges and other miscellaneous charges to Plymouth City Council. The transactions that took placeduring the year are not considered material to either party.

36 Access funds

2008/09£000

2007/08£000

Funding council grants 1,214 1,328

Disbursed to students (1,214) (1,328)

Balance unspent as at 31 July - -

Funding council grants are available solely for students; the university acts only as paying agent. The grants and relateddisbursements are therefore excluded from the income and expenditure account.

37 Pensions

Devon County Council Pension Fund

The university participates in the Local Government Pension Scheme, a defined benefit scheme based on final pensionable salary.The most recent valuation was carried out as at 31 March 2007, and has been updated by independent actuaries to the DevonCounty Council Pension Fund (the Fund) to take account of the requirements of FRS 17 in order to assess the liabilities of the Fundas at 31 July 2009. Liabilities are valued on an actuarial basis using the projected unit method which assesses the future liabilitiesdiscounted to their present value.

The total contribution made for the year ended 31 July 2009 was £8,619,900 (2008: £7,470,000), of which employer’s contributionstotalled £6,200,000 (2008: £5,390,000) and employees’ contributions totalled £2,419,900 (2008: £2,080,000). Employercontribution rates were 16.5% to 31 March 2008 and 16% from 1 April 2008. Expected employer’s contributions for the yearbeginning 1 August 2009 are £6,080,000.

Changes to the LGPS

A number of changes to the LGPS came into effect on 1 April 2008. The changes mainly relate to benefits accruing and schememember contributions after this date.

However, the changes introduced in the 2008 scheme also affect active members’ benefits earned before 1 April 2008 as follows:

An increase in the period of pension guarantee following retirements from five to ten years.

The introduction of contingent dependents’ benefits for co-habitees.

An increase in the lump sum on death in deferment benefits following the member leaving service from three times to fivetimes the deferred pension

A change to service enhancements for ill-health and death in service pensions.

The past service costs of these benefit improvements has been calculated as 1.7% of active members’ liabilities.

60

The major assumptions used in this valuation were:

31 July 2009 31 July 2008 31 July 2007%pa %pa %pa

Discount rate 6.4 6.5 5.7Rate of increase in salaries 5.3 5.3 4.8Rate of increase in pensions in payment 3.8 3.8 3.3

Rate of increase in deferred pensions 3.8 3.8 3.3Rate of inflation 3.8 3.8 3.3Commutation of pensions to lump sums 75.0 75.0 50.0

Long term expected rates of return on:Equities 8.0 7.8 7.9Bonds (Government) 4.5 4.8 4.9Property 7.0 6.8 6.9Other assets 0.9 5.9 6.0Bonds (Corporate)Average long term expected rate of return

5.96.5

6.57.0

5.77.2

The current mortality assumptions include sufficient allowance for future improvements in mortality rates. The assumed lifeexpectations on retirement age 65 are:

31 July 2009 31 July 2008

Retiring today

Males 23.1 22.1

Females 25.0 24.1

Retiring in 20 years

Males 25.4 24.0

Females 27.3 25.3

Scheme assets

The fair value of the scheme’s assets, which are not intended to be realised in the short term and may be subject to significantchange before they are realised, and the present value of the scheme’s liabilities, which are derived from cash flow projections overlong periods and thus inherently uncertain, were: -

31 July 2009£m %

31 July 2008£m %

31 July 2007£m %

31 July 2006£m %

Equities 56.67 63 56.46 63 83.94 68 70.43 67Property 5.50 6 7.56 8 17.28 14 11.56 11Bonds 15.77 17 15.74 18 12.34 10 16.82 16Other 12.15 14 10.32 11 9.88 8 6.31 6

Total 90.09 100 90.08 100 123.44 100 105.12 100

61

37 Pensions (continued)

In accordance with Paragraph 77(o) of FRS17 (as revised), the assets for the current period and previous period are measured atcurrent bid price. Asset values for periods ending 2007, 2006 and 2005 are stated at mid market value.

31 July2009

31 July2008

31 July2007

31 July2006

31July2005

£m £m £m £m £m

Share of assets in the Fund 90.09 90.08 123.44 105.12 89.37

Estimated funded liabilities (156.33) (133.53) (143.77) (136.03) (119.03)

Estimated unfunded liabilities - - - - -

University of Plymouth’s deficit in the Fund (66.24) (43.45) (20.33) (30.91) (29.66)

Note: Unfunded liabilities are not allowed for unless specifically instructed. Where they are included they are also allowed for in theanalyses below.

The University of Plymouth employs a building block approach in determining the rate of return on Fund assets. Historical marketsare studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital marketprinciples. The assumed rate of return on each asset class is set out within this note. The overall expected rate of return on assets isthen derived by aggregating the expected rate of return for each asset class over the actual asset allocation for the Fund as at 31July 2009.

Actual return on assets

2009 2008

£m £m

Expected return on assets 6.43 8.95

Actuarial loss on assets (13.35) (48.17)

Actual return on assets (6.92) (39.22)

Analysis of the amount charged to income and expenditure account

2009 2008£m £m

Current service cost 5.46 5.53Past service cost 0.43 1.39

Total operating charge 5.89 6.92

Analysis of pension finance costs / (income)

2009 2008£m £m

Expected return on pension scheme assets (6.43) (8.95)Interest on pension liabilities 8.89 8.39

Total pension finance costs / (income 2.46 (0.56)

62

Amount recognised in the statement of total recognised gains and losses (STRGL)

2009 2008£m £m

Actuarial loss recognised in STRGL in the year (20.64) (22.15)Cumulative actuarial loss recognised in STRGL at 1 August (32.72) (10.57)

Cumulative actuarial loss recognised in STRGL at 31 July (53.36) (32.72)

Asset and Liability Reconciliation2009 2008

£m £mReconciliation of Liabilities

Liabilities at start of period 133.53 143.77Current service cost 5.46 5.53Interest cost 8.89 8.39Employee contributions 2.42 2.08Actuarial gain 7.29 (26.02)Benefits paid (1.69) (1.61)Past Service cost 0.43 1.39

Liabilities at end of period 156.33 133.53

Reconciliation of Assets

Assets at start of period 90.08 123.44Expected return on assets 6.43 8.95Actuarial loss (13.35) (48.17)Employer contributions 6.20 5.39Employee contributions 2.42 2.08Estimated benefits paid (net of transfers in) (1.69) (1.61)

Assets at end of period 90.09 90.08

History of experience gains and losses

2009 2008 2007 2006 2005£m £m £m £m £m

Experience gains /(losses) on Scheme liabilities (0.24) 23.74 (0.20) (0.19) (5.62)

Experience gains /(losses) on Scheme assets (13.35) (48.71) 6.41 5.53 11.41

Universities’ Superannuation Scheme

The institution participates in the Universities Superannuation Scheme (USS), a defined benefit scheme which is contracted out ofthe State Second Pension (S2P). The assets of the scheme are held in a separate fund administered by the trustee, UniversitiesSuperannuation Scheme Limited. USS has over 130,000 active members and the institution has 45 active members participating inthe scheme.

The appointment of directors to the board of the trustee is determined by the company’s Articles of Association. Four of thedirectors are appointed by Universities UK; three are appointed by the University and College Union, of whom at least one must bea USS pensioner member; one is appointed by the Higher Education Funding Councils; and a minimum of two and a maximum offour are co-opted directors appointed by the management committee. Under the scheme trust deed and rules, the employercontribution rate is determined by the trustee, acting on actuarial advice.

63

Because of the mutual nature of the scheme, the institution is unable to identify its share of the underlying assets and liabilities ofthe scheme on a consistent and reasonable basis and therefore, as required by FRS 17 “Retirement benefits”, accounts for thescheme as if it were a defined contribution scheme. As a result, the amount charged to the income and expenditure accountrepresents the contributions payable to the scheme in respect of the accounting period.

The latest actuarial valuation of the scheme was at 31 March 2008. This was the first valuation for USS under the new scheme-specific funding regime introduced by the Pensions Act 2004, which requires schemes to adopt a statutory funding objective, whichis to have sufficient and appropriate assets to cover their technical provisions.

The valuation was carried out using the projected unit method. The assumptions which have the most significant effect on the resultof the valuation are those relating to the rate of return on investments (ie the valuation rate of interest), the rates of increase insalary and pensions and the assumed rates of mortality. The financial assumptions were derived from market yields prevailing at thevaluation date. An “inflation risk premium” adjustment was also included by deducting 0.3% from the market-implied inflation onaccount of the historically high level of inflation implied by government bonds (particularly when compared to the Bank of England’starget of 2% for CPI which corresponds broadly to 2.75% for RPI per annum).

To calculate the technical provisions, it was assumed that the valuation rate of interest would be 6.4% per annum (which includesan additional assumed investment return over gilts of 2% per annum), salary increases would be 4.3% per annum (plus an additionalallowance for increases in salaries due to age and promotion reflecting historic Scheme experience, with a further cautionaryreserve on top for past service liabilities) and pensions would increase by 3.3% per annum.

Standard mortality tables were used as follows:

Male members’ mortality PA92 MC YoB tables – rated down 1 year

Female members’ mortality PA92 MC YoB tables - No age rating

Use of these mortality tables reasonably reflects the actual USS experience but also provides an element of conservatism to allowfor further improvements in mortality rates. The assumed life expectations on retirement at age 65 are:

Males (females) currently aged 65 22.8 (24.8) years

Males (females) currently aged 45 24.0 (25.9) years

At the valuation date, the value of the assets of the scheme was £28,842.6 million and the value of the scheme’s technicalprovisions was £28,135.3 million indicating a surplus of £707.3 million. The assets therefore were sufficient to cover 103% of thebenefits which had accrued to members after allowing for expected future increases in earnings.

The actuary also valued the scheme on a number of other bases as at the valuation date. On the scheme’s historic gilts basis, using avaluation rate of interest in respect of past service liabilities of 4.4% per annum (the expected return on gilts) the funding level wasapproximately 71%. Under the Pension Protection Fund regulations introduced by the Pensions Act 2004 the Scheme was 107%funded; on a buy-out basis (ie assuming the Scheme had discontinued on the valuation date) the assets would have beenapproximately 79% of the amount necessary to secure all the USS benefits with an insurance company; and using the FRS17 formulaas if USS was a single employer scheme, using a AA bond discount rate of 6.5% per annum based on spot yields, the actuaryestimated that the funding level at 31 March 2008 was 104%.

The technical provisions relate essentially to the past service liabilities and funding levels, but it is also necessary to assess theongoing cost of newly accruing benefits. The cost of future accrual was calculated using the same assumptions as those used tocalculate the technical provisions except that the valuation rate of interest assumed asset outperformance over gilts of 1.7% perannum (compared to 2% per annum for the technical provisions) giving a discount rate of 6.1% per annum; also the allowance forpromotional salary increases was not as high. There is currently uncertainty in the sector regarding pay growth. Analysis has shownvery variable levels of growth over and above general pay increases in recent years, and the salary growth assumption built into thecost of future accrual is based on more stable, historic, salary experience. However, when calculating the past service liabilities ofthe scheme, a cautionary reserve has been included, in addition, on account of the variability mentioned above.

The institution contribution rate required for future service benefits alone at the date of the valuation was 16% of pensionablesalaries and the trustee company, on the advice of the actuary, agreed to increase the institution contribution rate to 16% ofpensionable salaries from 1 October 2009.

64

Since 31 March 2008 global investment markets have continued to fall and at 31 March 2009 the actuary has estimated that thefunding level under the new scheme specific funding regime had fallen from 103% to 74%. This estimate is based on the fundinglevel at 31 March 2008, adjusted to reflect the fund’s actual investment performance over the year and changes in marketconditions (market conditions affect both the valuation rate of interest and also the inflation assumption which in turn impacts onthe salary and pension increase assumptions).

On the FRS17 basis, using a AA bond discount rate of 7.1% per annum based on spot yields, the actuary estimated that the fundinglevel at 31 March 2009 was 86%. An estimate of the funding level measured on a buy-out basis at that date was approximately46%.

Surpluses or deficits which arise at future valuations may impact on the institution’s future contribution commitment. A deficit mayrequire additional funding in the form of higher contribution requirements, where a surplus could, perhaps, be used to similarlyreduce contribution requirements. The sensitivities regarding the principal assumptions used to measure the scheme liabilities areset out below:

Assumptions Change in assumption Impact on scheme liabilities

Valuation rate of interest Increase/decrease by 0.5% Decrease/Increase by £2.2 billion

Rate of pension increases Increased/decrease by 0.5% Increase/decrease by £1.5 billion

Rate of salary growth Increase/decrease by 0.5% Increase/decrease by £0.7 billion

Rate of mortality More prudent assumption* Increase by £1.6 billion

*Move to long cohort future improvements from the medium cohort adopted at the valuation.

USS is a “last man standing” scheme so that in the event of the insolvency of any of the participating employers in USS, the amountof any pension funding shortfall (which cannot otherwise be recovered) in respect of that employer will be spread across theremaining participant employers and reflected in the next actuarial valuation of the scheme.

The trustee believes that over the long-term equity investment and investment in selected alternative asset classes will providesuperior returns to other investment classes. The management structure and targets set are designed to give the fund a biastowards equities through portfolios that are diversified both geographically and by sector. The trustee recognises that it would bepossible to select investments producing income flows broadly similar to the estimated liability cash flows. However, in order tomeet the long-term funding objective within a level of contributions that it considers the employers would be willing to make, thetrustee has agreed to take on a degree of investment risk relative to the liabilities. This taking of investment risk seeks to target agreater return than the matching assets would provide whilst maintaining a prudent approach to meeting the fund’s liabilities.Before deciding to take investment risk relative to the liabilities, the trustee receives advice from its investment consultant and thescheme actuary, and considers the views of the employers. The strong positive cash flow of the scheme means that it is notnecessary to realise investments to meet liabilities. The trustee believes that this, together with the ongoing flow of new entrantsinto the scheme and the strength of covenant of the employers enables it to take a long-term view of its investments. Short-termvolatility of returns can be tolerated and need not feed through directly to the contribution rate. The actuary has confirmed that thescheme’s cash flow is likely to remain positive for the next ten years or more.

The next formal triennial actuarial valuation is due as at 31 March 2011. The contribution rate will be reviewed as part of eachvaluation and may be reviewed more frequently.

At 31 March 2009, USS had over 130,000 active members and the institution had 45 active members participating in the scheme.

The total pension cost for the institution was £419,069 (2008: £429,711). The contribution rate payable by the institution was 14%of pensionable salaries.

65

Teachers’ Pension Scheme (TPS)

The Teachers’ Pension Scheme (TPS) is an unfunded defined benefit pension scheme. Contributions on a pay as you go basis arecredited to the exchequer under arrangements governed by the Superannuation Act 1972. The pension cost is assessed every fiveyears in accordance with the advice of the government actuary.

The assumptions and other data that have the most significant effect on the determination of the contribution levels are as follows:

Latest actuarial valuations 31 March 2004

Actuarial method Prospective benefits

Investment returns per annum 6.5%

Salary scale increases per annum 5.0%

Market value of assets at date of last valuation £162,650m

Proportion of members’ accrued benefits covered by the actuarial value of the assets 98%

From 1 January 2007 the employer contribution rate was 14.1%. The pensions charge recorded by the university during theaccounting period was equal to the contributions payable of £5,580,744 (2007/8: £5,166,150). The expected employer’scontributions for 2009/10 are £5,800,000.

National Health Service Pension Scheme (NHS)

The pensions charge recorded by the university during the accounting period was equal to the contributions payable of £342,240(2007/08: £304,217). The contribution rate payable by the institution was 14% of pensionable salaries (2007/08: 14%). The expectedemployer’s contributions for 2009/10 are £360,000.

66

38 PENINSULA COLLEGE OF MEDICINE AND DENTISTRY - this note does not form part of the audited Financial

Statements

INCOME & EXPENDITURE ACCOUNT of the HE Community Chest for the year ended 31 July 2009

University ofExeter

University ofPlymouth

Total Total

2008/09 2008/09 2008/09 2007/08INCOME Note £’000 £’000 £’000 £’000

Funding Body grants iii 9,334 9,334 18,668 11,847Tuition fees and education contracts 1,952 1,952 3,904 2,987University research support - - - -NHS funding iv 3,712 3,713 7,425 6,560Research grants and contracts 5,544 1,856 7,400 6,326Other income v 1,720 1,844 3,564 2,237Endowment and investment income

314 314 628 849

Total income 22,576 19,013 41,589 30,806

EXPENDITURE

Staff costs 9,930 7,688 17,618 16,545Other operating expenses 7,629 6,344 13,973 11,488Depreciation vii 127 92 219 246

Total expenditure 17,686 14,124 31,810 28,279

EXCEPTIONAL ITEM

Loss on Investment 100 100 200 0

Surplus on continuing operations 4,790 4,789 9,579 2,527

BALANCE SHEET of the HE Community Chest as at 31 July 2009

2009 2008Note £’000 £’000

Fixed assetsTangible assets vii 2,370 1,447

Current assetsDebtors viii 4,919 5,281Cash at bank and in hand ix 28,439 19,449

33,358 24,730Creditors: amounts falling due within one year x (17,689) (18,640)

Net current assets 15,669 6,090

Total assets less current liabilities 18,039 7,537

TOTAL NET ASSETS 18,039 7,537

Deferred capital grants 2,370 1,447Reserves xi 15,669 6,090

TOTAL 18,039 7,537

67

Explanatory Notes

i. Background

The Peninsula College of Medicine and Dentistry (PCMD) is not a legal entity in its own right. It is a joint arrangement entered into inpartnership by the University of Exeter and the University of Plymouth. PCMD, in turn, has partnership arrangements with threeNHS Trusts (The Royal Devon and Exeter NHS Foundation Trust, Plymouth Hospitals NHS Trust and Royal Cornwall Hospitals Trust)and further arrangements with healthcare providers throughout the South West peninsula.

ii. Audit arrangements

A 50% share of the Income, Expenditure and Balance Sheet items (excluding Research) of the Peninsula College of Medicine andDentistry is included within the Income and Expenditure Account and Balance Sheet of each of the universities. The itemscomprising the externally funded Research activity of PCMD are included within the statements of the university employing eachproject’s Principle Investigator.

These transactions are part of the audited financial statement of each university for the year ended 31 July 2009.

iii. Funding Body grants

2009 2008£’000 £’000

Recurrent grant 17,405 11,394Other specific grants 1,171 284Deferred capital grants released in the year: Equipment 92 169

18,668 11,847

iv. NHS funding

2009 2008£’000 £’000

7,425 6,560

This funding was receivable to cover HE expenditure attributable to the NHS aspects of the Peninsula College of Medicine andDentistry.

v. Other income

2009 2008£’000 £’000

Other grant income 2,768 659Other income 796 1,578

3,564 2,237

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38 PENINSULA COLLEGE OF MEDICINE AND DENTISTRY (continued)

vi. Staff numbers

The average number of persons (including senior post-holders) employed on behalf of PCMD by either the University of Exeter orthe University of Plymouth during the year, expressed as full-time equivalents, was:

2009 2008Number Number

Academic staff 86 82Research staff 94 82Teaching fellows (formerly tutors) 6 13Support staff 191 181

Total 377 358

The above staff numbers are split equally between the two Universities and included in their staff number disclosures.

vii. Fixed assets

Equipment costing less than £25,000 per individual item or group of related items is written off in the year of acquisition. All otherequipment is capitalised. Capitalised equipment is stated at cost and depreciated over its useful life:

Computer Equipment 4 yearsEquipment acquired for specific research projects Project life (generally 3 years)Other Equipment 5-10 years

Where equipment is acquired with the aid of specific grants it is capitalised and depreciated as above. The related grant is treated asa deferred capital grant and released to income over the expected life of the equipment. The equipment capitalised in thisstatement is solely acquired with funding made available from the HE Community Chest and the equipment is jointly owned by thetwo universities.

viii. Debtors

2009 2008£’000 £’000

Debtors 1,961 1,113Prepayments and accrued income 2,021 1,746Due from partner university 937 545Due from NHS partners 0 1,877

4,919 5,281

ix. Cash at bank and in hand

2009 2008£’000 £’000

Held by:University of Exeter 19,363 16,156University of Plymouth 8,522 3,025University of Plymouth - PCMD 554 268

28,439 19,449

These balances are held under the agreed management arrangements. The University of Plymouth Peninsula College of Medicineand Dentistry account facilitates payments to suppliers whilst the balances held by the University of Exeter and the University ofPlymouth are held in short-term deposits.

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38 PENINSULA COLLEGE OF MEDICINE AND DENTISTRY (continued)

x. Creditors: amounts falling due within one year

2009 2008£’000 £’000

Trade creditors 113 112Other creditors 88 57Due to partner universities 580 319Deferred income:

HEFCE Recurrent Teaching Grant 0 3,659HEFCE Capital funding 1,977 435HEFCE Dental start-up funding 1,767 1,767NHS Capital funding 2,341 1,360NHS Dental start-up funding 2,896 1,909NHS SIFT 0 3,657

Accruals and other deferred income 7,927 5,365

17,689 18,640

xi. Reserves

2009 2008£’000 £’000

Opening balance 6,090 3,563Surplus for the year 9,579 2,527

Closing balance15,669 6,090

xii. Exceptional Item

A deposit of £1.02m was placed (by the University of Exeter on behalf of PCMD) with the Icelandic Bank Landsbanki Islands hf on 18April 2008. The deposit was placed in line with the University of Exeter’s investment policy and per the terms of the PCMDMemorandum of Agreement that ensured that no more than £3 million was held in a single bank or £5 million in the case of UKclearing banks. At this date Landsbanki Islands hf had the appropriate short term credit rating with Fitch (F1) and Moodys (P1). Itwas due to mature on 20 October 2008.

On 7 October 2008 Landsbanki Islands hf issued a statement that it had gone into receivership and, like all other Icelandic bankstaken into Icelandic Government control, all payments in and out of the bank were stopped. To date, there has been no movementof funds and this will not happen until the administrators / receivers have completed their work and are in a position to fundpayments or declare actual loss.

The most current professional advice indicates that amounts ranging between 75% and 93% of such deposits will be recoverable.The Universities of Exeter and Plymouth have taken the prudent approach that 80% of the sum will be recovered and havetherefore written-off 20% of the deposit, totalling £200,000, in the current year.

The Universities of Exeter and Plymouth will each bear 50% of any future loss that may arise.

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