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NORTH EAST WALES INSTITUTE OF HIGHER EDUCATION

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2005

CONTENTS PAGE Report of the Board of Governors 2 – 6 Corporate Governance 7 – 8 Responsibilities of the Institute's Board of Governors 9 Key Elements of the Institute 10 Report of the Auditors 11 – 12 Consolidated Income and Expenditure Account 13 Statement of Total Recognised Gains and Losses 14 Balance Sheets 15 – 16 Cash Flow Statement 17 Notes to the Financial Statements 18 – 37

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REPORT OF THE BOARD OF GOVERNORS 1 Annual Report

At the dawn of a new era

The past five years have seen a continuing and consistent transformation of NEWI as it heads

towards obtaining taught Degree Awarding Powers. Each year brings further developments

and a consequent growth in the confidence of the Institute.

A major milestone in the history of NEWI was reached with the admission of the Institute as a

full member of the University of Wales. This event, long foreseen, followed the

recommendations of Professor Sir David Williams, former Vice Chancellor of the University of

Cambridge in his report to the University of Wales.

At the same time the Institute has been continuing its work to support its application for

tDAPs. QAA assessors have been in the Institute throughout the year reviewing its processes

and activities.

Physical manifestations of the Institute’s commitment to being student centred came with the

refurbishment of the Edward Llwyd Centre, partly financed through HEFCW. Reviews of

assessment methods and the curriculum also took place to ensure that the needs of the

students and other stakeholders are met by the Institute. This commitment remains at the

forefront of all the Institute’s activities and is the primary consideration in the development and

implementation of all new policies.

A review of the Institute’s research and scholarship activities encapsulated the extent and

range of the work undertaken at NEWI and reflects the market led nature of the Institute. One

of many examples of this aspect of the Vision being realised is the development, with the

WDA, of the Optic Technium in St Asaph. This exciting culmination of many years innovation

relies heavily on the world class research in holograms undertaken by NEWI researchers

based in the centre.

The growth in NEWI’s research activities led the Institute to embrace a culture of research and

scholarship across all its subjects which enhances the quality of the curriculum in both its

design and implementation. Income in excess of £7 million has been generated over the last

three years from research activities and a number of research centres have been established

as the Institute prepares for a confident submission for the Research Assessment Exercise

2008.

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REPORT OF THE BOARD OF GOVERNORS – Continued

This flourishing research culture has had a significant impact on the Institute’s growing

international reputation. The last few years have seen a marked increase in the participation

of NEWI staff in international conferences. Its international activities have also been directed

at ensuring a significant increase in the number of international students attracted to study in

Wrexham.

Further international links are being developed to complement the existing partnerships with

Georgetown University, the Bauman Moscow State Technical University and Harris

Manchester College, University of Oxford, and considerable work has been undertaken to

establish good relationships with institutions in India and China.

The Institute has a proud record in opening up higher education to all sectors of society, and

its activities over the year have helped to strengthen this reputation. With an intake from social

classes IIIM, IV and V standing at 42.1%, the Institute is far exceeding the sector average of

28.4%. Similarly students from low participation areas make up 19% of the student population

at NEWI compared to the sector average of 13%.

With the implementation of a number of initiatives designed to bring people on to the campus,

such as the Wrexham Science Festival, Mission: Stratosphere and the success of

Techniquest@NEWI, the Institute expects this excellent performance to continue. A Business

Plan for Stage II of the Techniquest@NEWI project was submitted to the Assembly

Government and has been well received.

A deep rooted curriculum review is being undertaken to ensure that the programmes offered

continue to be relevant and demanded by employers and potential students alike. The

financial standing of the Institute continues to be strong as the Institute maintains its category

A status amongst higher educations institutions in Wales.

This continuing transformation of the Institute into a confident post-modern university has

been achieved through the commitment and hard work of a dedicated staff wedded to the

vision of the Institute as a market led, student centred university of international significance

which is open to all.

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2 Scope of the financial statements These financial statements cover the activities of the Institute and its subsidiary companies for

the eighth period of operation, being the year ended 31 July 2005. 3 Board of Governors The membership of the Board of Governors during the year has been as follows:

Independent Members Mr T Jones CBE Chairman Professor J Last CBE MA DLitt Hon FMA FRSA Vice Chairman Mr T Burman C.Eng F.I.STRUCT.E Ms H Pepler RN, HV, Post Grad Health Education Dip His Honour Judge R Dutton BA Mr P Higginson Mr B Towers BA MIPR Mr R Hill BSc FRICS Mr A Robarts DL ACBA, FLJMU FRAS Dr H Ceri Jones CMG Mr C Burgoyne ACIB Mr G Andrews Term started 18/3/05

Co-opted Members Professor K Perera BA MA PhD LLD Professor E Baker OBE BA MSc PGCE DLitt FRSA Term started 18/3/05 Principal & Chief Executive

Professor M Scott BA MA PhD FRSA REPORT OF THE BOARD OF GOVERNORS - Continued Academic Board Nominee

Mr S Hughes BA MA Term ended 27/10/04 Dr Hastings McKenzie Term started 28/10/04 Students' Nominee Mr Wayne Edwards Term ended 14/7/05 Mr Jamie Scott Term started 15/7/05 Co-opted member of teaching staff

Mr R Cropper BSc Co-opted member of operational staff Mr E Jones

4 Auditors The Institute has, for the year, appointed the firm PricewaterhouseCoopers LLP as its external

auditors and Bentley Jennison as internal auditors for the year to 31 July 2005. 5 Financial Highlights

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Results for the year

The Institute's consolidated Income and Expenditure account for the year ended 31 July 2005 is summarised as follows: Year ended

31 July 2005 Year ended

31 July 2004 £000 £000 Income 25,551 24,188 Expenditure (24,327) (23,012) ______ ______Surplus for year 1,224 1,176 ______ ______

The continued high level of performance is due to increased HEFCW grant, (including grants for specific initiatives) and increased levels of trading activities reflecting the continual student growth during the period.

The following items have been charged during the year: Fully funded pensions provision for early retirements 424 328 Depreciation on assets funded from Revaluation Reserve

334 334

(Profit) on sale of fixed assets -- (4) ===== =====

Cash Flow The cash flow statement shows that there was a net decrease in cash and cash equivalents of

£1,445,000 (2004 - £1,001,000). The increase from 2004 in the net cash inflow from operating activities at £1,686,000 (2004 - £1,358,000) is largely due to the movement on creditors year on year at £338,000. This was partly offset by the continued investment in fixed assets at £1,055,000 (2004 - £613,000) and repayments of both inherited debt and student village loans of £2,832,000.

Balance Sheet The net assets position has increased by £2,374,000 (2004 - £1,285,000) during the year.

Debtors have increased year on year partly due to an increase in amounts owed by corporate non-students debtors.

Creditors as at 31 July 2005 are slightly lower than 2004. This change is due to a number of factors including: • Unpresented cheques have reduced to £17,769 (2004 - £292,555) • Higher levels of franchise creditors at £569,455 (2004 - £521,547) • Deferred income has offset the overall reduction with an increase to £3,416,639 (2004 -

£2,980,655). • The main movement is due to the repayment of the student village loan balance of £1.8m

and the repayment of inherited debt of £1.9m. The inherited debt repayment to Flintshire County Council was subsequently reimbursed by HEFCW to NEWI.


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6 Fixed Asset movements During the financial year there were minor fixed asset disposals. The Institute purchased and improved assets totalling £1,055,000 (2004 - £613,000) (partially funded by HEFCW grants), and depreciation charged during the year totalled £963,000 (2004 - £883,000).

7 Employment of disabled persons Applications for employment by disabled persons are always fully considered, bearing in mind

the aptitudes of the applicant concerned. In the event of existing employees becoming disabled every effort is made to ensure that their employment with the Institute continues and that appropriate training is arranged. It is the policy of the Institute that the training, career development and promotion of disabled persons, should, as far as possible, be identical with that of other employees.

8 Employee involvement The Institute places considerable value on the involvement of its employees and on good

communication with them. Staff are encouraged to participate in formal and informal consultation at Institute, School and Departmental level, sometimes through the membership of formal committees.

9 Corporate Governance The Governing Body is responsible for internal control and overseeing the embedding of risk

management processes during the period. 10 Payment of Creditors It is the Institute’s policy to obtain the best terms for all business and, thus there is no single

policy as to the terms used. In agreements negotiated with suppliers, the Institute endeavours to include and abide by specific payment terms.

Signed on behalf of the Board:

Mr T Jones CBE Date: 16th December 2005 Chairman

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CORPORATE GOVERNANCE As the governing body of the North East Wales Institute of Higher Education (“the Institute”), we have responsibility for maintaining a sound system of internal control that supports the achievement of policies, aims and objectives, while safeguarding the public and other funds and assets for which we are responsible, in accordance with the responsibilities assigned to the governing body in the instrument and articles and the Financial Memorandum with HEFCW. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness against material misstatement or loss. The system of internal control is based on an ongoing process recorded as the risk register designed to identify the principal risks to the achievement of policies, aims and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. A strategic risk register has been in place all year up to 31 July 2005. Risk management and control processes have been in place throughout the period and risk review is embedded within the management culture and applied to the risks on the register and to all new initiatives identified during the year. These processes have been applied up to the date of approval of the financial statements and accords with HEFCW guidance. As the governing body, we have responsibility for reviewing the effectiveness of the system of internal control. The following processes have been established: • We meet at regular intervals to consider the plans and strategic direction of the Institute. • We receive periodic reports from the Chair of the Audit Committee concerning internal control and

we require regular reports from managers on the steps they are taking to manage risks in their areas of responsibility, including progress reports on key projects and issues.

• We have requested the Audit Committee to provide oversight of the Institute’s management of risks.

• The Audit Committee receives regular reports from the independent internal audit provider, Bentley-Jennison, which include the internal audit’s independent opinion on the adequacy and effectiveness of the Institute’s system of internal control, together with recommendations for improvement.

• A programme of facilitated workshops is held for Governors, senior and other managers to identify and keep up to date the key issues and risks for the Institute.

• The Institute-wide risk register is maintained and a system of reporting on risk management has been agreed by the Board and Audit Committee. This involves a range of formal reports received during the year. In addition an internal audit review of Risk Management in July 2005 has given substantial assurance and recommended some improvements to embed the management of risk.

• At the end of the year the Chair of the Audit Committee formally reports to the full Board on the Committee’s activities during the year in accordance with relevant guidance. This report includes an assessment of the effectiveness of the Internal Control System (including risk management) during the year.

• A risk prioritisation methodology based on risk ranking has been established and reviewed. • Each risk is assigned to a relevant director or the Academic Provost who report regularly to the

Senior Executive on the actions taken. Our review of the effectiveness of the system of internal control is informed by internal audit, which operates to standards defined in the HEFCW Audit Code of Practice, and was itself audited by the ELWa Audit Service in October 2004. The internal auditors submit regular reports, which include the internal auditor’s independent opinion on the adequacy and effectiveness of the Institute’s system of internal control, with recommendations for improvement. In summer 2005 a review of corporate governance was undertaken and the internal auditor’s opinion was that the controls within the system provide substantial assurance that risks are adequately managed and controlled. The overall opinion of the internal auditors was that the Institution has adequate and effective risk management, governance and control processes to manage the achievement of the institution’s objectives.

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The key risks for NEWI arise from the potential failure to recruit and retain students, retain key staff capability and maintain business systems. Student recruitment was buoyant in 2004/05 and NEWI met funded student numbers. These risks are of sufficient concern to be the subject of regular review at meetings of both Senior Executive and the Governing Body. Our review of the effectiveness of the system of internal control is also informed by the work of the executive directors within the Institute, who have responsibility for the development and maintenance of the internal control framework and by comments made by the external auditors in their management letter and other reports from external bodies such as the National Audit Office.

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RESPONSIBILITIES OF THE INSTITUTE'S BOARD OF GOVERNORS In accordance with the Institute's Financial Memorandum, the Governing body is responsible for the administration and management of the affairs of the Institute and is required to present audited financial statements for each financial year. The Governing body is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time, the financial position of the Institute and to enable it to ensure that the financial statements are prepared in accordance with the Financial Memorandum, the Statement of Recommended Practice on Accounting in Higher Education Institutions and other relevant accounting standards. In addition, within the terms and conditions of a Financial Memorandum agreed between the Higher Education Funding Council for Wales and the Board of Governors of the Institute, the Board of Governors, through its designated office holder, is required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Institute and of the surplus or deficit and cash flows for that year. In causing the financial statements to be prepared, the Board of Governors has ensured that: • suitable accounting policies are selected and applied consistently • judgements and estimates are made that are reasonable and prudent • applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements • financial statements are prepared on the going concern basis unless it is inappropriate to

presume that the Institute will continue in operation. The governing body is satisfied that it has adequate resources to continue in operation for the foreseeable future: for this reason the going concern basis continues to be adopted in the preparation of the financial statements.

The Governing body has taken reasonable steps to: • ensure that funds from the Higher Education Funding Council for Wales are used only for the

purposes for which they have been given and in accordance with the Financial Memorandum and any other conditions, which the Funding Council may from time to time prescribe

• ensure that there are appropriate financial and management controls in place to safeguard

public funds and funds from other sources • safeguard the assets of the Institute and prevent and detect fraud • secure the economical, efficient and effective management of the Institute's resources and

expenditure.

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THE KEY ELEMENTS OF THE INSTITUTE’S SYSTEM OF INTERNAL FINANCIAL CONTROLS The key elements of the Institute’s system of internal financial control, which is designed to discharge the responsibilities set out above, include the following: • clear definitions of the responsibilities of, and the authority delegated to, directors of academic and

operational areas; • a comprehensive medium and short-term planning process, supplemented by detailed annual

income, expenditure, capital and cash flow budgets; • regular reviews of student recruitment and monthly reviews of financial results involving variance

reporting and updates of forecast outturns; • clearly defined and formalised requirements for approval and control of expenditure, with

investment decisions involving capital or revenue expenditure being subject to formal detailed appraisal and review according to approved levels set by the Board of Governors or HEFCW;

• comprehensive Financial Regulations, detailing financial controls and procedures, approved by the

Audit Committee and Board of Governors; • a professional independent Internal Audit team whose annual programme is approved by the Audit

Committee. The Audit Committee, on behalf of the Board of Governors, has reviewed the effectiveness of the system of internal control of both the Institute and the group. Any systems of internal financial control can, however, only provide reasonable, but not absolute, assurance against material misstatement or loss.

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REPORT OF THE AUDITORS TO THE BOARD OF GOVERNORS OF THE NORTH EAST WALES INSTITUTE OF HIGHER EDUCATION Independent auditors’ report to the Board of Governors of North East Wales Institute of Higher Education We have audited the financial statements which comprise the consolidated Income and Expenditure Account, the Balance Sheets, the consolidated Cash Flow Statement, the consolidated Statement of Total Recognised Gains and Losses and the related notes which have been prepared under the historical cost convention as modified by the revaluation of certain fixed assets and in accordance with the accounting policies set out in the Statement of Accounting Policies. Respective responsibilities of the Board of Governors and Auditors The Board of Governors’ responsibility for preparing the financial statements in accordance with the Accounts Direction issued by the Higher Education Funding Council for Wales, the Statement of Recommended Practice – Accounting for Further and Higher Education Institutions, applicable United Kingdom law and accounting standards is set out in the Statement of the Board of Governors’ Responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements, and United Kingdom Auditing Standards issued by the Auditing Practices Board. This opinion has been prepared for and only for the Board of Governors’ of the institution. 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 or in 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 properly prepared in accordance with the Accounts Direction issued by the Higher Education Funding Council for Wales and the Statement of Recommended Practice - Accounting for Further and Higher Education. We also report to you whether in our opinion, in all material respects, monies expended out of Higher Education Funding Council for Wales grants and other funds from whatever sources administered by the Institution for specific purposes and, if appropriate, managed in compliance with all relevant legislation and whether in our opinion, in all material respects, income has been applied in accordance with the financial memorandum with the Higher Education Funding Council for Wales. We also report to you if, in our opinion, the institution has not kept proper accounting records, the accounting records do not agree with the financial statements, or if we have not received all the information and explanations we require for our audit.

We read the other information contained in the Financial Statements and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

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

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Basis of audit opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board and the Audit Code of Practice issued by the Higher Education Funding Council for Wales. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the governing body in the preparation of the financial statements, and of whether the accounting policies are appropriate to the institution’s circumstances, consistently applied and adequately disclosed.

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

i. the financial statements give a true and fair view of the state of affairs of the institution and the group at 31 July 2005, and of the surplus of income over expenditure and cashflows for the year then ended, and have been properly prepared in accordance with the Accounts Direction issued by the Higher Education Funding Council for Wales and the Statement of Recommended Practice - Accounting for Further and Higher Education; ii. in all material respects, monies expended out of Higher Education Funding Council for Wales grants and other funds from whatever source administered by the Institution for specific purposes have been properly applied to those purposes and, if appropriate, managed in compliance with all relevant legislation; iii. in all material respects, income has been applied in accordance with the institution's Statutes and where appropriate in accordance with the financial memorandum dated 1 January 1997 with the Higher Education Funding Council for Wales. PricewaterhouseCoopers LLP 16th December 2005 Chartered Accountants and Registered Auditors Liverpool

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CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT

For the year ended 31 July 2005 Note 2005 2004INCOME £000 £000 Funding council grants 2 16,291 15,013Academic fees and support grants 3 4,688 5,404Other operating income 4 4,179 3,451Interest receivable 5 393 320 ______ ______Total income 25,551 24,188 ===== =====EXPENDITURE Staff costs 6 15,205 14,380Depreciation 9 963 883Other operating expenses 7 7,950 7,398 Interest payable 8 209 351 ______ ______ Total expenditure 24,327 23,012 ______ ______Surplus after depreciation of assets at valuation and before tax

1,224 1,176

Taxation 10 -- -- ______ ______Surplus after depreciation of assets at valuation and tax

23 1,224 1,176

===== ===== The consolidated income and expenditure account of the Institute and its subsidiaries relates wholly to its continuing operations.

NOTE OF HISTORICAL COST SURPLUSES AND DEFICITS

For the year ended 31 July 2005 Note 2005 2004 £000 £000 Surplus after depreciation of assets at valuation and tax 1,224 1,176 Difference between historical cost depreciation charge and the actual depreciation charge for the year calculated on the revalued amount and historical cost profit for the year 21

334

334 ______ _____ Historical cost surplus for the year after tax 1,558 1,510 ===== ===== The notes on pages 18 to 37 form an integral part of these financial statements.

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STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

For the year ended 31 July 2005 Note 2005 2004 £000 £000 Surplus after depreciation of assets at valuation and tax 1,224 1,176 New endowments 13 -- 6 Endowments released (8) -- ______ ______Total recognised gains relating to the year 1,216 1,182 ===== ===== Reconciliation £000 £000 Opening reserves and endowments 23,641 22,386Total recognised gains for the year 1,216 1,182Inherited debt adjustment 1,052 73 ______ ______Closing reserves and endowments 25,909 23,641 ===== =====

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BALANCE SHEET AS AT 31 JULY 2005

CONSOLIDATED Note 2005 2004 £000 £000FIXED ASSETS Tangible assets 11 30,603 30,510 Investments 12 -- -- _______ _______ 30,603 30,510 ENDOWMENT ASSET INVESTMENTS 13 9 15 _______ _______CURRENT ASSETS Stocks 23 16 Debtors 14 1,590 1,317 Cash at bank and in hand 8,667 10,106 _______ ________

10,280 11,439 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

15 (6,180) (7,933)

_______ ________

NET CURRENT ASSETS 4,100 3,506 _______ ______TOTAL ASSETS LESS CURRENT LIABILITIES

34,712 34,031

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

16

--

(1,926)

PROVISIONS FOR LIABILITIES AND CHARGES

17 (4,948) (4,715)

_______ ________

NET ASSETS 29,764 27,390 ====== ======REPRESENTED BY: 2005 £000 DEFERRED CAPITAL GRANTS 18 3,855 3,749 ENDOWMENTS – SPECIFIC 20 9 15 RESERVES Revaluation reserve 21 16,695 15,979 Specific reserve 22 200 200 Income and expenditure account 23 9,005 7,447 _______ _______ TOTAL RESERVES 25,900 23,626 _______ _______ TOTAL FUNDS 29,764 27,390 ====== ======

The notes on pages 18 to 37 form an integral part of these financial statements. The financial statements on pages 13 to 37 were approved by the Board of Governors on 16th December 2005 and signed on its behalf by: .............................................................. ............................................................... Mr T Jones Professor M Scott Chairman Principal and Chief Executive

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BALANCE SHEET AS AT 31 JULY 2005 (continued)

INSTITUTE Note 2005 2004 £000 £000FIXED ASSETS Tangible assets 11 30,603 30,510 Investments 12 2,800 2,800 _______ _______ 33,403 33,310 ENDOWMENT ASSET INVESTMENTS 13 9 15 _______ _______CURRENT ASSETS Stocks 14 11 Debtors 14 1,502 1,411 Cash at bank and in hand 8,337 9,850 _______ _______ 9,853 11,272 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

15 (6,378) (8,296)

_______ _______NET CURRENT ASSETS 3,475 2,976 _______ ________

TOTAL ASSETS LESS CURRENT LIABILITIES

36,887 36,301

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

16

(2,243)

(4,169)

PROVISIONS FOR LIABILITIES AND CHARGES

17 (4,948) (4,715)

_______ ________

NET ASSETS 29,696 27,417 ====== ======REPRESENTED BY: 2005 2004 £000 £000DEFERRED CAPITAL GRANTS 19 3,855 3,749 ENDOWMENTS – SPECIFIC 20 9 15 RESERVES Revaluation reserve 21 16,695 15,979 Specific 22 200 200 Income and expenditure account 23 8,937 7,474 _______ ________

25,832 23,653 _______ _______

TOTAL FUNDS 29,696 27,417 ====== ===== The notes on pages 18 to 37 form an integral part of these financial statements. The financial statements on pages 13 to 37 were approved by the Board of Governors on 16th December 2005 and signed on its behalf by: .............................................................. ............................................................... Mr T Jones Professor M Scott Chairman Principal and Chief Executive

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CASH FLOW STATEMENT

For the year ended 31 July 2005 Note 2005 2004 £000 £000 NET CASH INFLOW FROM OPERATING ACTIVITIES

24 1,686 1,358

____ ____ RETURNS ON INVESTMENTS AND SERVICING OF FINANCE

Interest received 393 320 Interest paid (209) (351) ____ _____Net cash outflow from returns on investments and servicing of finance

184 (31)

____ _____TAX PAID -- -- CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT

Receipts from sale of tangible assets -- 4 Payments to acquire tangible assets (1,055) (613)Endowments received -- 6 Endowments released (8) -- Capital grant received 580 462 ____ _____ Net cash outflow before use of liquid resources and financing

(483) (141)

_______ _______ ENDOWMENT ASSET INVESTMENTS -- -- Net cash inflow 1,387 1,186 FINANCING Loan repaid 25 (2,832) (185) ______ ____ Net cash outflow from financing (2,832) (185) ______ _____(DECREASE)/INCREASE IN CASH 26 (1,445) 1,001 ===== ===== The notes on pages 18 to 37 form an integral part of these financial statements. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 £000 £000 (Decrease)/Increase in cash in the period (1,445) 1,001 Repayment of debt 3,879 257 ______ ______

Change in net funds 2,434 1,258 ______ _______

Net funds at 1 August 6,242 4,984 Net funds at 31 July 8,676 6,242 ===== =====

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2005 1. STATEMENT OF ACCOUNTING POLICIES (a). Basis of preparation and accounting policies The financial statements have been prepared under the historical cost convention, as

modified by the revaluation of certain fixed assets. They are in accordance with both the Statement of Recommended Practice: Accounting for Further and Higher Education (SORP 2004) and applicable accounting and financial reporting standards in the United Kingdom. Where relevant the accounts adhere to the accounting directives of HEFCW.

(b). Basis of consolidation The consolidated financial statements consolidate the financial statements of the Institute and

its subsidiary undertakings for the financial year to 31 July 2005 namely Plas Coch Sports Ltd and NEWI Innovation Ltd (formerly trading as Plas Coch Enterprises Ltd) and North Wales Science Ltd (see note 12).

The consolidated financial statements do not include those of the Institute’s Students’ Union

as it is a separate entity in which the Institute has no financial interest. (c). Recognition of Income Recurrent grants from the Funding Councils are recognised in the period in which they are

receivable.

Income from tuition fees is recognised in the period for which it is received and includes all fees chargeable to students or their sponsors, e.g. National Health Service. The cost of any fees waived by the Institute are included as expenditure in Note 7. Income from research grants, contracts and other services rendered is included to the extent of the expenditure incurred during the year or the completion of the contract or service concerned. This is generally equivalent to the sum of the relevant expenditure incurred during the year and any related contributions towards overhead costs. All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned.

Non-recurrent grants from Funding Councils or other bodies received in respect of the

acquisition or construction of fixed assets are treated as deferred capital grants and amortised in line with depreciation over the life of the assets.

Income from specific endowments is included to the extent of the relevant expenditure

incurred during the year. NOTES TO THE FINANCIAL STATEMENTS (continued)

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(d). Pension contributions The Institute has adopted the transitional provision of FRS 17 set out in note 94 of the

standard.

Retirement benefits to employees are provided by The Teachers’ Pension (TPS), the Universities’ Superannuation Scheme (USS) and the Local Government Pension Scheme (LGSS). These are defined benefit schemes which are externally funded and contracted out of the State Earnings Related Pension Scheme. Contributions to the scheme are charged to the income and expenditure account so as to spread the cost of pensions over the employees' working lives with the Institute in such a way that the pension cost is a substantially level percentage of current and future pensionable payroll. Variations from regular costs are spread over the expected average remaining working lifetime of members of the schemes after making allowances for further withdrawals. The contributions are determined by qualified actuaries on the basis of triennial valuations using the projected unit method.

(e). Leases Rental costs under operating leases are charged to expenditure in equal instalments over the

period of the lease. (f). Foreign Currencies

Transactions denominated in foreign currencies are recorded at the rate of exchange ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at year end rates. The resulting exchange differences are dealt with in the determination of income and expenditure for the financial year.

(g). Tangible Fixed Assets i. Land and Buildings The Institute’s buildings are specialised buildings and therefore it is not appropriate to value

them on the basis of open market value. Land and buildings inherited on incorporation are stated at valuation. Sites used by NEWI

during the period are valued at depreciated replacement cost on an existing education use basis. In accordance with FRS15 the Institute is to revalue its properties every three years. The last valuation was carried out during the year ended 31 July 2004 by Messrs. Gerald Eve. The properties were valued at £29,968,000.

Land and buildings acquired since incorporation and the subsequent revaluations are to be

included in the balance sheet at cost. Freehold land is not depreciated. Freehold buildings are depreciated over the expected

useful economic life to the Institute of 50 years. Capital expenditure applied to existing buildings is depreciated over its estimated useful life of 10 years.

Where land and buildings are acquired with the aid of specific grants they are capitalised and

depreciated as above. The related grants are credited to a deferred capital grant account and are released to the income and expenditure account over the expected useful economic life of the related asset on a basis consistent with the depreciation policy.

NOTES TO THE FINANCIAL STATEMENTS (continued)

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

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ii. Equipment Equipment including microcomputer software costing less than £10,000 per individual item or

group of related items is written off to the Income and Expenditure account in the period of acquisition. All other equipment is capitalised at cost. Equipment inherited from the local Education Authority is included in the balance sheet at valuation.

The value of equipment included in the balance sheet is depreciated on a straight-line basis

over its remaining useful economic life to the Institute of 5 years. Where equipment is acquired with the aid of specific grants it is capitalised and depreciated in

accordance with the above policy, with the related grant being credited to a deferred capital grant account, released to the income and expenditure account over the expected useful life of the related equipment.

iii. Motor Vehicles Vehicles are capitalised at cost and depreciated over three years factoring in a residual value. (h). Stocks Stocks consist of provisions and resources stock and are stated at the lower of their cost and

net realisable value. (i). Maintenance of Premises

The Institute has a ten-year rolling maintenance plan, which is reviewed on an annual basis. The cost of maintenance is charged to income and expenditure account as incurred.

(j). Cash flows and liquid resources Cash flows comprise increases or decreases in cash. Cash includes cash in hand and

deposits repayable on demand. Deposits are repayable on demand if they are in practice available within 24 hours without penalty.

Liquid resources include sums on short-term deposit with recognised banks. (k). Taxation status The Institute is an exempt charity within the meaning of Schedule 2 of the Charities Act 1993

and as such is a charity within the meaning the Section 506(1) of the Income & Corporation Taxes Act 1988. Accordingly, the Institute is potentially exempt from taxation in respect of income or capital gains received within categories covered by Section 505 of the Income & Corporation Taxes Act 1988 or Section 256 of the Taxation of Charitable Gains Act 1992 to the extent that such income or gains are applied to exclusively charitable purposes. The Institute receives no similar exemption in respect of Value Added Tax.

The Institute’s subsidiary companies are subject to corporation tax and VAT in the same way

as any commercial organisation. NOTES TO THE FINANCIAL STATEMENTS (continued) (l) Provisions

21

Provisions are recognised when the Institution has a present legal or constructive obligation as a result of a past event. It is probable that a transfer of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

2. FUNDING COUNCIL GRANTS (HEFCW) Year Ended

31 July 2005 Year Ended 31 July 2004

£000 £000 Recurrent grant 13,434 12,960 Specific grants: Research grants 148 241Other 2,298 1,469 Deferred capital grants released in year: Buildings (Note 18) 177 133Equipment (Note 18) 234 210 _____ _____ 16,291 15,013 ===== ===== 3. ACADEMIC FEES AND SUPPORT GRANTS Year Ended


£000 £000 UK Higher Education students 2,743 2,863European Union (excluding UK) students 528 456Non-EU students 222 260Higher education contract 1,195 1,825 ______ ______ 4,688 5,404 ===== ===== 4. OTHER OPERATING INCOME Note Year Ended


£000 £000 Residences, catering and conferences 1,469 1,406Other services rendered 1,870 1,156Research grants and contracts and other income 752 801Release from deferred capital grant 18 88 88 _____ _____ 4,179 3,451 ==== ==== NOTES TO THE FINANCIAL STATEMENTS (continued) 5. INTEREST RECEIVABLE

22

Year Ended 31 July 2005


£000 £000 Other interest receivable * 393 320 ==== ====* This includes interest receivable in respect of specific reserves. 6. STAFF COSTS Year Ended


£000 £000Staff costs: Wages and salaries 12,108 11,571Social security costs 965 917Other pension costs (Note 26) 1,976 1,777Restructuring costs 156 115 ______ ______Total Staff Costs 15,205 14,380 ===== ===== Year Ended


The average weekly number of persons (including senior post-holders) employed by the Institute during the year, expressed as full-time equivalents:

Teaching Departments 188 186Teaching Support Services 21 21Other Support Services 35 37Administration & Central Services * 166 169Premises 28 25 ____ ____TOTAL 438 438 ==== ====* Administration & Central Services staff numbers for 2004 have been restated to reflect staff numbers from Plas Coch Sports Ltd and North Wales Science Ltd. NOTES TO THE FINANCIAL STATEMENTS (continued) Senior post holders (including the Principal): The number and remuneration of senior post-holders in the year was as follows: Emoluments Band No of Post Holders

23

2005 2004 £160,001 - £170,000 1 -

£150,001 - £160,000 - -

£140,001 - £150,000 - 1

£80,001 - £90,000 3 -

£70,001 - £80,000 1 4 Emoluments include salaries, employer pension contributions and benefits in kind. Year Ended


The total number of senior post-holders including the Principal was

13 11

==== ==== Senior post-holders’ emoluments are made up as follows:

£ £ Salaries 710,344 625,818Benefits in kind 13,049 12,051Pension contribution 104,573 _99,665 827,966 737,534 ====== ====== Emoluments of the Principal Salary 130,213 113,798Benefits in kind 9,563 8,936 ______ ______ 139,776 122,734 ====== ====== The emoluments of the Principal are shown on the same basis as those for staff. The Institute's pension contributions are paid at the same rate as for other academic staff and amount to £21,949 (2004 - £26,065).

24

NOTES TO THE FINANCIAL STATEMENTS (continued) 7. OTHER OPERATING EXPENSES Year Ended


£000 £000 Residences, catering and conferences operating expenses 368 350Books and periodicals 281 298Heat, light, water and power 395 293Repairs and general maintenance 738 792Grants to NEWI Students Union 170 170Rents -- --Auditors' remuneration (external) 25 29Auditors' remuneration (internal) 18 22Auditors' remuneration in respect of non-audit services (external)

-- 2

Equipment operating lease rentals 50 50Other expenses 5,905 5,392 ______ _____ 7,950 7,398 ===== ===== 8. INTEREST PAYABLE Year Ended


£000 £000 Loans not wholly repayable within five years 209 351 ==== ==== 9. ANALYSIS OF DEPRECIATION CHARGE Year Ended


£000 £000The depreciation charge has been funded by: Deferred capital grants released 498 431Revaluation reserve released 334 334General income 131 118 _____ ____ 963 883 ==== ==== 10. TAXATION In the opinion of the Board of Governors, the criteria of S505 ICTA 1988 and S256 TCGA 1992 are fulfilled and there is no corporation tax liability arising on the Institute's activities for the period ended 31 July 2005.

25

NOTES TO THE FINANCIAL STATEMENTS (continued) 11. TANGIBLE ASSETS Consolidated Freehold

LandAnd

Buildings

Equipment Motor Vehicles

Total

£000 £000 £000 £000 Cost or Valuation As at 1 August 2004 Valuation 28,467 990 -- 29,457 Cost 1,804 3,948 34 5,786 ______ ______ ______ ______ 30,271 4,938 34 35,243 Additions at cost 727 328 -- 1,055 ______ ______ ______ ______ As at 31 July 2005 Valuation 28,467 990 -- 29,457 Cost 2,531 4,276 34 6,841 ______ ______ ______ ______Total 30,998 5,266 34 36,298 ===== ===== ===== =====Depreciation Depreciation as at 1 August 2004 548 4,169 16 4,733 Charge for the year 603 351 8 962 _____ _____ _____ ______As at 31 July 2005 1,151 4,520 24 5,695 ===== ===== ===== ===== Net Book Value As at 31 July 2005 29,847 746 10 30,603 ====== ===== ===== ======As at 31 July 2004 29,723 769 18 30,510 ====== ===== ===== ====== All properties were revalued in July 2004. Buildings with a net book value of £13,899,650 (2004 - £14,075,000) and a valuation of £14,108,723 (2004 - £14,075,000), have been funded from Treasury sources; should these particular buildings be sold, the Institute would either have to surrender the proceeds to the Treasury or use them in accordance with the Financial Memorandum with the Higher Education Funding Council for Wales.

26

NOTES TO THE FINANCIAL STATEMENTS (continued) TANGIBLE ASSETS Institute Freehold Land

and BuildingsEquipment Motor

VehiclesTotal

£000 £000 £000 £000 Cost or Valuation As at 1 August 2004 Valuation 28,467 990 -- 29,457 Cost 1,804 3,876 34 5,714 ______ ______ ______ ______ 30,271 4,866 34 35,171 Additions at cost 727 328 -- 1,055 ______ ______ ______ ______ As at 31 July 2005 Valuation 28,467 990 -- 29,457 Cost 2,531 4,204 34 6,769 ______ _____ _____ ______Total 30,998 5,194 34 36,226 ====== ===== ===== ======Depreciation Depreciation as at 1 August 2004 548 4,097 16 4,661 Charge for the year 603 351 8 962 _____ _____ _____ ______As at 31 July 2005 1,151 4,448 24 5,623 ===== ===== ===== ===== Net Book Value As at 31 July 2005 29,847 746 10 30,603 ====== ===== ===== ======As at 31 July 2004 29,723 769 18 30,510 ====== ===== ===== ======

27

NOTES TO THE FINANCIAL STATEMENTS (continued) 12. INVESTMENTS The Institute owns 100% of the issued share capital of NEWI Innovation Ltd (formerly trading

as Plas Coch Enterprises Ltd) and Plas Coch Sports Ltd. North Wales Science is a company limited by guarantee. All companies are registered in Wales. The number of shares held is as follows:

NEWI Innovation Ltd 2 x £1 ordinary shares Plas Coch Sports Ltd. 2,800,000 x £1 ordinary shares

The principal activity of NEWI Innovation Ltd is consultancy and other trading activities not associated with NEWI’s charitable purposes.

The principal activity of Plas Coch Sports Ltd is the management of a sports centre. The principal activity of North Wales Science is a science discovery centre.

13. ENDOWMENT ASSET INVESTMENTS (Consolidated and Institute)

2005 2004 £000 £000 Balance as at 1 August 15 8 Additions -- 6 Releases (8) -- Appreciation of endowment asset investments 1 1 === === Bank balance 9 15 === ===

14. DEBTORS

Consolidated Institute 2005 2004 2005 2004 £000 £000 £000 £000Amounts falling due within one year:

Debtors 1,420 1,075 1,338 1,055Amounts owed by subsidiary undertakings

-- -- -- 126

Prepayments and accrued income 170 242 164 230 ____ ____ ____ ____ 1,590 1,317 1,502 1,411 ____ ____ ____ ____

28

NOTES TO THE FINANCIAL STATEMENTS (continued) 15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Consolidated Institute 2005 2004 2005 2004 £000 £000 £000 £000 Bank loans and overdrafts * 18 292 17 289Due to subsidiary undertaking -- -- 298 454Unsecured loans -- 127 -- 127Mortgages secured on property** -- 1,830 -- 1,830Other creditors 1,649 1,588 1,574 1,534Accruals and Deferred Income 4,513 4,096 4,489 4,062 _____ ____ _____ _____ 6,180 7,933 6,378 8,296 ==== ==== ==== ====

* This relates to unpresented cheques as at year-end. ** The balance of the secured loan was repaid in full at the September 2005 option point.

16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Consolidated Institute 2005 2004 2005 2004 £000 £000 £000 £000 Due to subsidiary undertaking -- -- 2,243 2,243Mortgages secured on property -- -- -- --Unsecured loans -- 1,926 -- 1,926 _____ _____ _____ _____ -- 1,926 2,243 4,169 ==== ==== ==== ====

29

NOTES TO THE FINANCIAL STATEMENTS (continued) 17. PROVISIONS FOR LIABILITIES AND CHARGES (Consolidated and Institute)

ProvisionFor pensionFund deficit

Enhanced pension

provision Total

£000 £000 £000 As at 1 August 2004 923 3,792 4,715 Charged in the year 233 -- 233 _____ ______ _______ As at 31 July 2005 1,157 3,792 4,948 ==== ===== =====

Pension Deficit The provision is to meet the additional costs in excess of current charges that arise in respect of certain pensions. (see note 27) Enhanced pension The change in the enhanced pension provision comprises a 9% interest charge on the opening balance net of the enhanced pensions actually paid and any adjustments required for pension provisions no longer necessary.

18. DEFERRED CAPITAL GRANTS (Consolidated) Funding Council Other Total £000 £000 £000As at 1 August 2004 Buildings 2,079 1,012 3,091 Equipment 513 145 658 _____ _____ _____ Total 2,592 1,157 3,749 ==== ===== ===== Cash received Buildings 446 -- 446 Equipment 127 7 134 _____ _____ _____

Total 573 7 580 ==== ===== ===== Released to Income and Expenditure

Buildings (177) (25) (202) Equipment (234 (38) (272) _____ _____ _____

Total (411) (63) (474) ==== ===== ===== As at 31 July 2005 Buildings 2,348 987 3,335 Equipment 406 114 520 _____ _____ _____ Total 2,754 1,101 3,855 ====== ====== ======

30

NOTES TO THE FINANCIAL STATEMENTS (continued) 19. DEFERRED CAPITAL GRANTS (Institute)

Funding Council Other Total £000 £000 £000As at 1 August 2004 Buildings 2,079 1,012 3,091Equipment 513 145 658 ______ ______ ______ Total 2,592 1,157 3,749 ====== ====== ====== Cash received Buildings 446 -- 446 Equipment 127 7 134 ______ ______ ______

Total 573 7 580 ====== ====== ====== Released to Income and Expenditure

Buildings (177) (25) (202)Equipment (127) (38) (272) ______ ______ ______

Total (411) (63) (474) ====== ====== ====== As at 31 July 2005 Buildings 2,348 987 3,334 Equipment 406 114 520 ______ ______ ______ Total 2,754 1,101 3,854 ====== ====== ======

20. ENDOWMENTS (Group and Institute) 2005 2004 £000 £000Balance as at 1 August 15 8Specific additions -- 6Release of endowments (8) --Appreciation of endowment asset investments 2 1 ==== ====Representing scholarship fund 9 15 ==== ====

21. REVALUATION RESERVE (Group and Institute) 2005 2004 £000 £000 Reserves as at 1 August 15,979 16,241 Loan principal repaid 1,050 72 Revaluation adjustment -- -- Released in period (334) (334) ______ ______Net revaluation amount as at 31 July 16,695 15,979 ====== ======

31

NOTES TO THE FINANCIAL STATEMENTS (continued) 22. SPECIFIC RESERVE (Group and Institute) 2005 2004 £000 £000 Balance as at 1 August 2004 and 31 July 2005 200 200 * This balance represents a transfer of £200,004 in 2002/03 from the general I&E reserve for the sale of publicly funded assets. This value has been agreed with the Charity Commission. 23. INCOME AND EXPENDITURE ACCOUNT Consolidated Consolidated Institute Institute 2005 2004 2005 2004 £000 £000 £000 £000 Balance at 1 August 7,447 5,937 7,474 5,952 Surplus after depreciation of assets at valuation and tax

1,224

1,176

1,129

1,188

Release from revaluation reserve 334 334 334 334 _____ _____ _____ _____Balance at 31 July 9,005 7,447 8,837 7,474 ===== ===== ===== ===== The surplus for the year includes the following items, which have been charged during the year. £000 £000 £000 £000Profit on disposal of fixed assets -- 4 -- 4 ==== ==== ==== ==== 24. RECONCILIATION OF OPERATING SURPLUS TO NET CASH INFLOW FROM

OPERATING ACTIVITIES 2005 2004 £000 £000 Surplus for the year 1,224 1,176 Depreciation 963 883 (Profit) on disposal of fixed assets -- (4) Capital grants released (474) (432) Interest paid 209 351 Interest received (393) (320) (Increase)/Decrease in stocks (7) 1 (Increase) in debtors (273) (310) Increase / (Decrease) in creditors 204 (134) Increase in provisions 233 147 _____ _____ Net cash inflow from operating activities 1,686 1,358 ===== =====

32

NOTES TO THE FINANCIAL STATEMENTS (continued) 25. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR Mortgages and Loans 2005 2004 £000 £000 Balances at 1 August 3,882 4,139 Capital repayments (3,882) (257) _____ _____ Balances at 31 July -- 3,882 ===== ===== Inherited loan adjustment 1,050 72 _____ _____ Net cash outflow from financing (2,832) (185) ===== ===== 26. ANALYSIS OF CHANGES IN NET FUNDS At 1 August Cash

FlowsOther

Changes At 31 July 2005

£000 £000 £000 £000 Cash at bank and in hand 10,106 (1,439) -- 8,667 Endowment assets 15 (6) -- __ 9 10,121 (1,445) -- 8,676 ===== ===== ===== =====Debt due within one year (1,957) 1,957 -- -- Debt due after one year (1,926) 1,926 -- ____--_ 6,238 2,438 -- 8,676 ===== ==== ===== ====== 27. PENSION AND SIMILAR OBLIGATIONS

The Institute's employees belong to three principal pension schemes, the LGPS (non-academic staff), the USS (two members of staff) and the TPS (academic staff) which are the defined benefit type. The combined pension cost charged in the accounts for the period is £1,551,299 (2004 - £1,448,540).

(i) Local Government Pension Scheme (Flintshire County Council Pension Fund). An actuarial valuation of the Fund was carried out as at 31 March 2001. This valuation showed that the required level of contributions to be paid to the Fund by the

County Council with effect from 1 April 1998 was 275% of members' contributions. These rates of contribution are the rates, which, in addition to the contributions paid by the

members, are sufficient to meet: • 100% of the liabilities arising in respect of service after the valuation date; NOTES TO THE FINANCIAL STATEMENTS (continued)

33

• plus an adjustment over a very long period to reflect the shortfall of the value of each

participating employer's notional share of the Fund's assets over 100% of its accrued liabilities, allowing, in the case of members in service, for future pay increases.

The following disclosures in accordance with FRS 17 have been based on the most recent

valuation at 31 March 2004 and updated by the Actuaries to take account of the requirements of FRS 17 in order to assess the liabilities of the scheme at 31 July 2005.

The contribution rates have been calculated using the projected unit actuarial method and the main actuarial assumptions are as follows:

Financial Assumptions

2005 2004 2002 % % %Rate of inflation 2.70 2.8 2.5Rate of general pay increases 3.95 3.8 3.5Rate of increases to pensions in payment

2.70 2.8 2.5

Discount rate 5.00 5.7 6.0

The Institutes’ share of assets in the scheme and the expected rate of return were:

Long term rate of return

expected 31 July

2005

Value at 31 July

2005

Long term rate of return expected

31 July 2004

Value at 31 July

2004

Long term rate of return expected

31 July 2002

Value at 31 July

2002 % £000 % £000 % £000 Equities 7.50 7,202 7.50 7,064 7.50 5,705 Government Bonds

4.40

286 5.00

224

4.70

344

Other Bonds 5.00 1,040 5.70 885 5.50 623 Property 6.50 640 6.50 594 6.50 495 Cash/Liquidity 4.75 995 9.90 963 -- --Other 7.50 1,269 -- -- 3.75 823 --------- --------- --------Total Market Value of Assets

11,432

9,730

7,990

Present value of scheme liabilities

(18,770)

(15,200)

(13,433) ----------- ----------- --------- Deficit in the scheme – net pension liability

(7,338)

(5,470)

(5,443) ====== ====== ======

34

NOTES TO THE FINANCIAL STATEMENTS (continued) If the above amounts had been recognised in the financial statements, the Institutes’ Consolidated net assets and general reserve at 31 July 2005 would be as follows:

Year Ended

31 July 2005 Year Ended 31

July 2004Balance Sheet Presentation £000 £000 Net assets excluding pension liability 29,764 27,390 Adjustment for SSAP 24 1,157 923 Pension asset 11,432 9,730 Scheme liabilities (18,770) (15,200) --------- --------- Net assets including pension deficit 23,583 22,843 ===== ===== Reserves Note General reserve excluding pension deficit 9,005 7,447 Adjustment for SSAP 24 1,157 923 Pension deficit (7,338) (5,470) --------- --------- General reserve including pension deficit 2,824 2,900 ===== =====

Under the transitional arrangements of FRS 17, the Institutes, pension charge for the year calculated under FRS 17 assumptions is not included in the financial statements (as this is currently calculated on a SSAP 24 basis). If the charge had been recognised in accordance with FRS 17, the following components of the pensions charge would have been recognised in the income and expenditure account and statement of recognised gains and losses for the year ended 31 July 2005; Analysis of amounts charged to Income and Expenditure account:

OPERATING Year Ended

31 July 2005 Year Ended

31 July 2004 £000 £000 Current service cost (589) (525) Curtailment cost -- -- -------- -------- Total Operating Cost (589) (525) FINANCE Expected return on assets 684 570 Interest on pension liabilities (871) (759) -------- -------- Net Finance Cost (187) (189) ===== =====

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



£000 £000Actual return less expected return on pension scheme assets

969 322

Change in assumptions underlying the present value of the scheme liabilities

(2,766) (280)

--------- ---------Actuarial loss recognised in STRGL (1,797) 42 ===== =====


35

The movement in the Institutes’ share of the scheme deficit during the year is made up as follows:

Movement in Deficit Year Ended 31

July 2005Year Ended

31 July 2004 Year Ended

31 July 2002 £000 £000 £000 Deficit at the Beginning of the Year (5,470) (5,443) (2,428)Current Service cost (589) (525) (386)Contributions 705 645 642 Past Service Cost / Curtailment Cost -- -- (89) Net Interest / Return on Assets (187) (89) (34) Actuarial (Loss)/Gain /(Loss) (1,797) 42 (1,864) ---------- ---------- ---------Deficit at End of Year (7,338) (5,470) (4,159) ====== ===== =====

The experience gains and losses were as follows: Difference between the expected and actual return on scheme assets:




Amount (£000) 969 322 1,864 % of scheme assets 9.8% 3.3% 25.6% Experience gains and losses on scheme liabilities:

Amount (£000) (2,766) (280) -- % of scheme assets 14.7% 1.8% -- Total amount recognised in STRGL Amount (£000) (1,797) 42 1,864% of scheme liabilities 9.6% 0.3% 16.3%

(ii) The Institution has two members of staff participating in the Universities’ Superannuation

Scheme (USS), a defined benefit scheme which is externally funded and contracted out of the State Earnings-Related Pension Scheme. The assets of the scheme are held in a separate trustee-administered fund. It is not possible to identify each institutions share of the underlying assets and liabilities and hence contributions to the scheme which are currently set at 14%, are accounted for as it were a defined contribution scheme.

(iii) Teachers' Pension Scheme

The Teachers' Pension Scheme is an unfunded defined benefit scheme. Contributions on a pay as you go basis are credited to the Exchequer under arrangements governed by the Superannuation Act 1972. A notional asset value is ascribed to the Scheme for the purpose of determining contribution rates.

The pensions cost is assessed every five years 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 valuation 31 March 2001 Actuarial method Prospective Benefits Investment returns per annum 7.0% per annum Salary scale increases per annum 5.0% per annum Notional value of assets at date of last valuation £ 142,880 million Proportion of members' accrued benefits covered by the notional value of the assets 100%


36

Following the implementation of Teachers' Pensions (Employers' Supplementary Contributions) Regulations 2000 the government actuary carried out a further review on the level of employers' contributions. For the period from 1 April 2002 to 31 March 2004 the employer contribution was 8.35%. This rate increased to 13.5% from 1 April 2004. An appropriate SSAP 24 provision in respect of unfunded pensioners' benefits is included in provisions.

Under the definitions set out in Financial Reporting Standard 17 ' Retirement Benefits', the TPS is a multi-employer pension scheme. The College is unable to identify its share of the underlying assets and liabilities of the scheme. Accordingly, the College has accounted for its contributions as if it were a defined contribution scheme.

28 CAPITAL AND OTHER FINANCIAL COMMITMENTS Capital Commitments 2005 2004 £000 £000 Commitments contracted at 31 July 900 768 ==== ==== Lease Obligations 2005 2004 £000 £000

Operating lease commitments in respect of equipment for the 2004/2005 financial year, on leases expiring:

Within one year 32 41 Between two and five years 32 14 ____ ____ 64 55 ==== ==== 29 CONTINGENT LIABILITY There are no material contingent liabilities. 30 POST BALANCE SHEET EVENTS There were no material post balance sheet events. 31 RELATED PARTY TRANSACTIONS Due to the nature of the Institute’s operations and the composition of the Board of Governors

(being drawn from local public and private sector organisations) it is inevitable that transactions will take place with organisations in which a member of the Board of Governors may have an interest. All transactions involving organisations in which a member of the Board of Governors may have an interest are conducted at arm’s length and in accordance with the Institute’s financial regulations and normal procurement procedures.

NOTES TO THE FINANCIAL STATEMENTS (continued) 32 AGENCY PAYMENTS

37

During 2004/05 NEWI acted as an agent for the National Assembly for Wales in paying

bursaries and travel expenses to student nurses of £1,748,489 (£1,514,049 in 2003/04). Associated income and expenditure is therefore excluded from the Income and Expenditure account.

33. ACCESS FUNDS

2005 2004 £ £ Balance unspent as at 1 August 60,486 10,464 Income Funding Council grants 296,660 310,815 Add Interest earned 4,392 578 Repaid loans 236,361 91,048 Other income -- -- ________ ________ 597,899 412,905 Less Disbursed to students (418,616) (351,387) Bank charges (618) (444) Audit fees (588) (588) _______ _______Balance unspent as at 31 July 178,077 60,486 ======= =======

Funding Council grants are available solely for students. The Institute acts only as paying agent. The grants and related disbursements are managed through a separate bank account and therefore excluded from the Income and Expenditure account.

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NORTH EAST WALES INSTITUTE OF HIGHER EDUCATION › cy › YnglynaPhrifysgol... · international reputation. The last few years have seen a marked increase in the participation of