Report and Financial Statements - Dixon Walter · 2019-02-25 · Report and Financial Statements 2016/2017 A University Coming of Age Our institution has a proud history stretching

Report and Financial Statements2016/2017

2 Report and Financial Statements 2016/2017

3Report and Financial Statements 2016/2017

Contents

Members of the Board of Governors 4

Advisors to the University 4

Foreword by the Vice-Chancellor 6

Foreword by the Chair of the Board of Governors 8

2016/2017 Highlights 10

Public Benefit Statement 12

Our Ambitions and Achievements in 2016/2017 16

Strategic Report 28

Corporate Governance Statement 35

Statement of Board of Governors’ responsibilities in respect of the Annual Report and the Financial Statements

38

Independent Auditor’s Report to the Board of Governors of the University of Sunderland 40

Consolidated Statement of Comprehensive Income and Expenditure 42

Consolidated and University Balance Sheet 44

Consolidated and University Statement of Changes in Reserves 45

Consolidated Statement of Cash Flows 46

Notes to the Financial Statements 47


6

Foreword by the Vice-Chancellor

Report and Financial Statements 2016/2017

A University Coming of AgeOur institution has a proud history stretching back to the beginning of the last century. In 1992 we became one of a new generation of modern universities and in this our Silver Anniversary year the University of Sunderland has certainly come of age.

We have been commended for our embedded culture of excellent teaching as part of the Teaching Excellence Framework exercise; we celebrated improved levels of student satisfaction in the National Student Survey, and a further rise in the Guardian Good University Guide league tables. Our graduate employment record remains strong, and we continue to build a sustainable financial position to protect us against the unknown consequences of Brexit, the volatility of international recruitment markets, and the continuing uncertainty surrounding the Government’s plans for higher education reform.

Reflecting on our transformation over the past 25 years, and in particular our achievements this academic year, I attribute our success to the inspiration and dedication of our staff and student communities not only here in Sunderland but also in London, Hong Kong and with our valued transnational education partners across the globe.

Achievements and DevelopmentsWe were delighted that our enduring commitment to excellent teaching was endorsed by the Teaching Excellence Framework (TEF) assessors with a Silver award in June. This outcome placed us alongside other high performing institutions such as Durham, Warwick, York, Bristol and King’s College London to name but a few. In their report the TEF assessors highlighted the embedded professional practice in our curriculum, the tangible contribution made by business and industrial partners to our programme content, and the fact that we have an inherent culture of teaching excellence. In addition, the University collected a national award which also recognises teaching excellence: the Higher Education Academy awarded the University’s Northern Centre of Photography their first ever team award, the Collaborative Award for Teaching Excellence. Fifteen universities from across the UK were shortlisted and Sunderland was highlighted for its vibrant community and excellent practice in areas such as assessment and feedback, employability, students as partners, and innovative staff development. We have seen a further rise for our institution in the Guardian league tables, increases in satisfaction reported in the National Student Survey, and graduate employment with 94.2% of our graduates in work or further study within six months following graduation. Student success is at the heart of all of our ambitions and alongside these improvements it was pleasing to note that in response to an optional question in the National Student Survey “My student experience has been valuable”, 87.32% of our students concurred with this compared to the sector average of 80.04%.

In May we endorsed a new Student Success Strategy. We are collaborating with our student community in the development of a relevant and contemporary teaching, learning and assessment framework, supporting students throughout their whole journey, comparing equality of outcomes, developing confidence and aspirations, and encouraging student engagement.

We have continued apace with our investment plans to ensure our facilities and our academic programmes are delivering excellence for our students, partners and employers. Significant investment has been a priority in both Advanced Manufacturing and Engineering, and particularly in our Health Sciences facilities.

The Faculty of Engineering and Advanced Manufacturing invested in separate mechanical and fluid laboratories, a brand new manufacturing lab and Industry standard digital equipment including laser technology and industrial 3D printers to complement traditional engineering tools. This investment provides students access to the industry level, high-tech facilities found in a modern engineering environment.

Launched in the Faculty of Health Sciences and Wellbeing, the Living Lab is a unique, purpose-built, cross-discipline, health care environment which, through the use of advanced hi-fidelity simulation facilities, can replicate emergency scenarios-providing unique levels of experiential learning. This immersive technology creates wrap-around sound and vision to simulate environments such as an operating theatre, a GP surgery, an ambulance interior, sporting venues, and a battlefield for example.

New teaching facilities for our first cohort of Adult Nurses was also a priority this year and our healthcare investment also included the relocation and development of new Psychology laboratories, now co-located alongside our health science provision at City Campus.

Here at Sunderland we have a long and proud history of Health Science education with almost 100 years of pharmacy provision. In March of this year we articulated our ambition to become a Medical School and began an application process that, if successful, will take us to the next stage of our plans to support health education in a region with challenging and significant health inequalities.

My colleagues continue to build on well-established and new links with business and industry partners to provide graduates and employers with the skills needed for both parties to prosper. Whether that’s our STEM and engineering teaching focus through our sponsorship of our University Technical College (UTC) in South Durham, or the agreement we have to supply academic expertise and graduate skills to the Sunderland based International Advanced Manufacturing Park. The University is a highly regarded preferred partner for many regional and national initiatives and has a proven track-record in supplying graduate skills to meet employer needs across all sectors.


We are also adapting our curriculum to respond to employer demand for Higher and Degree Apprenticeships in areas such as digital innovation, computer science, business management and leadership development. In February HRH the Duke of York launched our Apprenticeship offer and met with our Degree Apprentices employed by Accenture and Northumbrian Water on our BSc (Hons) Digital & Technology Solutions programme. This year we have added a suite of management and leadership programmes to the portfolio and will continue to develop our offer when approved standards for individual subject areas are made available.We have expanded our global reach into Hong Kong with a new campus located at the heart of the Central District, which was launched by the British Consul General in March 2017. The campus offers a “career-ready” brand proposition and vocational curriculum for local students.Our campus in London celebrated its 5th birthday. Our London operation is now well embedded and has a diverse population of almost 1,500 students. We use these assets to increase opportunities for student mobility and during the summer we had almost 250 students from Sunderland Campus experiencing life-changing study opportunities in London. As one of the lead partners in the bid for Sunderland to become UK City of Culture in 2021 we were delighted when the city was shortlisted for the coveted award. The judging panel will make the final announcement in December 2017, and if successful the bid will deliver significant investment into the arts and cultural regeneration of the city and region. This journey began in 2017 with the creation of a new innovative Culture Company with the University as one of three funding partners. Through the company we have already attracted significant investment from the Arts Council and other funders to support the venues, projects and activities that we are supporting in the region. Throughout the year we have delivered some exceptional pioneering research projects all with the potential to deliver real impact. The projects range from discoveries in cosmetic science to a new way to tune into local radio stations around the world; from the role of pharmacists in reducing the workload of GPs to the psychological impact of bariatric weight loss surgery.Professor Roz Anderson, a medicinal chemistry academic whose life-long work has been dedicated to improving the treatment of the rare and fatal genetic disorder Cystinosis celebrated her 30th year at Sunderland. We also congratulated Doctor Catherine Hayes who became the latest member of our community to be announced as a National Teaching Fellow by the Higher Education Academy. In June 2017 we announced a new Research and Innovation Strategy with the launch of six research institutes to lead and develop faculty research working closely with business and public sector partners.

During the year we also embarked upon an institutional review to evaluate our organisational structure and processes with a view to achieve cost savings that would add resilience to our financial model and provide a buffer against challenges such as a decline in international students, the impact of Brexit and the Government’s agenda for reform in the sector.Some of this work has not been easy, including changes to our staffing structure and more efficient use of our estate; however these changes were necessary. We have enhanced our governance controls around cash management, improved the operating model, and as a result have emerged leaner and more resilient, clear about our purpose, relevance and place; with investment headroom to ensure we remain competitive in the sector and retain our leading role in the North East’s future growth and prosperity. With a strong focus on cash management and operating returns, the University is focused on further strengthening its sustainability over the year ahead. Through our ‘digital first’ project we are re-shaping our processes and realising efficiencies as a direct result. We are growing our independent distance learning offer, realigning our portfolio to ensure our offer meets the demands of students and employers, and developing new access opportunities including our new Integrated Foundation Year programme. We are clear of the value we offer our students, who are testimony to the work we do in raising aspirations and providing life-changing opportunities to everyone with ambition regardless of background - creating the Tomorrow Makers of the future.We have made our voice heard nationally with Government and across the sector in relation to the significant changes underway in the higher education regulatory framework: championing the role of modern universities and their expertise in inclusivity and regional impact.Having highlighted just a fraction of what the University has achieved over the past 12 months, I would like to take this opportunity to thank our Board of Governors for their support over the past year and in particular to Paul Callaghan our out-going Chair. Paul has made a significant contribution to the institution for more than 20 years and we are indebted to him for his unstinting dedication and commitment.In October 2016 we launched our new Strategic Plan in the House of Commons accompanied by our many friends and supporters. The plan sets us on a trajectory for the next five years and we are very clear about our ambitions and direction of travel. Our actions, developments and successes during 2016/2017 are closely aligned to the ambitions set out in the Strategic Plan. With this clarity of purpose and intent our institution is well placed to take on the opportunities and challenges of the year ahead.

Shirley Atkinson Vice-Chancellor and Chief Executive

Foreword by the Chair of the Board of GovernorsIt is with mixed emotions that I provide the foreword for our Governor’s report for the 2016/2017 Financial Statements as this will be my last as Chair of the Board of Governors.

I am honoured to have held the role of Chair for the past eight years, during a time of enormous change in the sector. Over that period I have watched the University develop and grow into a global institution with a worldwide reputation for excellent teaching and student experience, but also for the incredible support that students receive, which builds their confidence and prepares them for making a meaningful contribution to society. This is a University that is clear about its importance as an anchor institution in the North East region.

I am immensely proud of what this University has achieved and the life-changing difference it has made to its growing list of alumni, who are now out there using their knowledge and skills to carve out careers in their chosen sectors.

It’s also pleasing to see the University receive recognition for producing graduates of such high quality. As a member of the North East’s business community and an employer of over 350 people, I know that businesses need to recruit the brightest and best graduates and that is what we get from the University of Sunderland and I know many other businesses feel the same.

The University of Sunderland plays a key role in shaping this city and this region. It helps set the vision for the future and has become the catalyst for positive economic and social change. The initiatives the University is leading are game-changing for this city and I know that as I step down from my role as Chair of the Board that it is in excellent shape to continue towards achieving the vision and ambitions set out in its Strategic Plan – making an enormous difference to its students, its graduates, partners, investors and the region’s economy and culture.

I wish the whole University of Sunderland community every success for the future.

Paul Callaghan CBE DL Chair of the Board of Governors, 2016/2017



2016/2017 HighlightsOctober 2016 £19.3m has been invested in the University’s Sciences Complex in the last five years, in facilities including the Living Lab and the development of Shackleton House for teaching Nursing and Paramedic students.Living Lab is a unique purpose-built, cross-discipline care environment, which uses advanced high-fidelity simulation facilities to replicate emergency scenarios, providing unique levels of experiential learning. This immersive technology creates wrap-around sound and vision to simulate environments such as an operating theatre, a GP surgery, an ambulance interior, sporting venues, and a battlefield for example. Living Lab was opened by Lisa Bayliss-Pratt, Director of Nursing at Health Education England.

January 2017 The University collected a new national award which recognises teaching excellence in higher education. The Higher Education Academy awarded the University’s Northern Centre of Photography their Collaborative Award for Teaching Excellence. Fifteen universities from across the UK were shortlisted and Sunderland was highlighted for its vibrant photographic community and excellent practice in areas such as assessment and feedback, employability, students as partners, and innovative staff development.

February 2017 HRH the Duke of York launched the University’s Higher and Degree Apprenticeship programmes supported by representatives from host employers Accenture and Northumbria Water and the 2017 cohort of Degree Apprentices.

February 2017 The University’s new School of Nursing was short-listed for five Student Nursing Times Awards shortly after opening, and the Guardian Good University Guide rated Sunderland’s nursing provision number 5 in the country.

March 2017 Supported by funding from the England European Regional Development fund as part of the European Structural and Investment Funds Growth Programme 2014-2020, Hope Street Xchange, the University’s new enterprise and innovation workspace, opened its doors to innovative new business startups, providing a focal point for business and industry to access University research expertise and graduate talent, as well as a home for for the region’s first digital fabrication laboratory- Fab Lab.

March 2017 Sunderland announced its ambition to become a Medical School by submitting a Stage 1 application to the General Medical Council with support from health care professionals across the region.

March 2017 The University expanded its global reach into Hong Kong with a new campus located at the heart of the Central District, which was launched by the British Consul General for Hong Kong. The campus offers a “career-ready” brand proposition and vocational curriculum for local students.



April 2017 The University, as one of the lead partners in Sunderland’s ambition to become UK City of Culture in 2021, submitted its first stage bid to the Department for Digital, Culture, Media and Sport. A winning submission would enhance Sunderland’s already strong position in the national cultural spotlight starting with a four year build-up of investment culminating in a year-long celebration of arts, heritage and culture. The prestige of being one of five short-listed cities will itself lead to significant profile enhancement for the city.

May 2017 In May we endorsed a new Student Success Strategy. We are collaborating with our student community in the development of a relevant and contemporary teaching, learning and assessment framework, supporting students throughout their whole journey, comparing equality of outcomes, developing confidence and aspirations, and encouraging student engagement.

June 2017 The University announced a new Research and Innovation Strategy with the launch of six research institutes to lead and develop faculty research, working closely with business and public sector partners.

June 2017 Our University received a Silver rating in the Teaching Excellence Framework, alongside other high performing institutions including York, Warwick, Bristol, Durham and Kings’ College London. The assessors highlighted the embedded professional practice in our curriculum, the tangible contribution made by business and industrial partners to our programme content, and the fact that the University has an inherent culture of teaching excellence.

July 2017 Our London Campus celebrated its 5th Birthday in 2017. Almost 250 students from Sunderland had the opportunity to get a taste of life and study in London through a new Student Mobility Programme, developed to promote social mobility and offer new life-changing experiences for students from Sunderland and the wider North East region.

July 2017 The Faculty of Engineering and Advanced Manufacturing made significant investment in separate mechanical and fluid laboratories, and a brand new manufacturing lab. Industry standard digital equipment including laser technology and industrial 3D printers complement the traditional engineering tools. This investment provides students access to the industry level high-tech facilities found in a modern engineering environment.

Public Benefit StatementThe University of Sunderland is a Higher Education Corporation established by Order of the Secretary of State under Section 121 of the Educational Reform Act, 1988. This University, and all other Higher Education Corporations created by the 1988 Act, were granted the status of “Exempt Charities” (as now defined in the Charities Act 2011, Section 22). Under the 1988 Act, the statutory purpose of the University is “to provide higher education and further education, and to carry out research, and to publish the results of the research or any other material arising out of or connected with it in such a manner as the corporation shall think fit”. This therefore represents the charitable objects of the University.

The Trustees of the exempt charity, the University of Sunderland, are the Members of its Board of Governors, as listed on page 4 of the Financial Statements, which includes the Vice-Chancellor and staff and student members. They have oversight of the management of the University and ensure that in achieving its charitable objects the University establishes strategic aims and objectives and performs such aims and objectives in ways which are consistent with the Charity Commission’s guidance on the general principles of public benefit. Regard has been had to the Charity Commission’s guidance on public benefit for this purpose. These primary principles state that there must be an identifiable benefit and that the benefit must be to the public, or section of the public.

The charitable beneficiaries clearly need to include the University’s undergraduate and postgraduate students but these are not exclusive classes (as the University believes sections of the wider public will also benefit from its activities). Research undertaken at the University also benefits the public.

The new Strategic Plan for the period 2016-2021 was also approved by the Board of Governors in early 2016 and launched in July 2016. The plan acknowledges the University’s moral and financial responsibility to provide an exceptional personalised experience to students, noting that the Strategic Plan embodies real opportunities to access work-integrated and relevant learning, and strong engagement with employers; as we act as an agent of social change and opportunity for our students. The introduction to the Strategic Plan also sets out that the University will continue to have a significant impact on its communities. One of the six Strategic Ambitions is to be “A leading anchor institution in the North East making significant social, economic and cultural contributions to our locality, displaying innovation, entrepreneurship, financial stability, efficiency and sustainability in our approach and delivery.”

The Strategic Plan also draws attention to the University’s work on widening participation. It states: “We are acknowledged as having been the UK leader in widening access to higher education for the past 25 years. Our commitment in this area has led us to the top of the Government’s performance indicators. Throughout this period we have been highlighted by Government, by the higher education sector and by other relevant organisations, as an exemplar of best practice. Numerous accolades and awards have been received in recognition of this life-changing strategy.” Our excellent, inspiring work in this area remains a key focus.

We will continue to raise aspirations for people from all walks of life, and during all stages of life. We will extend our commitment to attract and support harder to reach people, not just in the UK, but across the world.

We will ensure that students, such as looked after young people, mature learners and minority groups, receive the support and opportunities that will allow them to develop personally and gain the confidence and drive to make a significant contribution to society. We will not only prepare our students for the world of work we will prepare them to be able to compete in the world at large, dealing with the challenges it brings and the opportunities it offers.

We will open up new networks and connections for these students and offer personal support and guidance throughout their learning journey, empowering them to seize their opportunities as we act as an agent of social change. We will work with our partners, our supporters and our alumni to achieve these aims.

Included in the Strategic Report are a number of examples, which demonstrate the University’s commitment to public benefit, as set out in its six Strategic Ambitions. Any private benefit is incidental in comparison.



Vision and Strategic AmbitionsThe Strategic Plan 2016-2021 sets out a clear statement of intent that builds on the University of Sunderland’s strengths - and is ambitious and relevant for a 21st Century global University.


Our VisionTo be bold and inspirational in providing education, research and creative practice which offers transformative experiences to students, staff, communities and business partners in the UK and across the world.


Our Ambitions and Acheivements in 2016/2017


Life Changers: A world leading contemporary University that is distinctive in supporting learning at all stages in life

The University of Sunderland is proud to be the UK’s leading institution for widening participation in higher education.

For the past 25 years the University has been working to raise aspirations and ensure that people with talent, regardless of background or personal circumstances, have the opportunity to reach their potential. We are building social capital and confidence in our students through exemplary tailored support for each individual. Access to career-ready programmes, relevant work experience, strong links with business and the promotion of international opportunities through student exchange all contribute to the Sunderland life-changing experience.

Chair of the new Office for Students, Sir Michael Barber, highlighted the University’s work in a speech to the Universities UK Conference: “The University of Sunderland’s ‘Life Changers Ambition’ has resulted in 30% of their students attending from low participation neighbourhoods over the last 15 years: it is number one in the UK for widening participation to higher education. It is innovation in the sector - among new entrants and incumbents alike - that will drive increased participation and improved outcomes for new generations of students.”

In our OFFA (Office for Fair Access) statement we set out a commitment to attracting, and supporting, students from under-represented groups and the Government has recognised the impact of this work.

Shirley Atkinson, our Vice-Chancellor and Chief Executive, was a member of the Government’s Social Mobility Advisory Group and Sunderland’s ‘life-changing’ strategy has been highlighted as an exemplar of best practice. In 2016 our approach received numerous accolades and awards, including the ONE Awards Higher Education Award for Engagement in Access to Higher Education, and a special commendation for an outstanding individual contribution to the development of Access to Higher Education.

A recently introduced dedicated Looked After Young People and Care Leavers team provide support to any care experienced young person considering Higher Education. This has been extended in 2017 to include a growing number of young people estranged from their families. Practical help is offered throughout their University journey from accommodation to financial support, including a central point of personal contact for support throughout their studies.

Meanwhile our ‘You Still Can’ campaign, designed to appeal to mature learners, was so successful that it bucked the national trend by attracting higher numbers of mature students in what is a deemed to be a declining market for many providers and won the gold HEIST award for Best Undergraduate Student Recruitment Campaign 2017.

During 2016/17 44% of our student community were aged 21 or over and of those 1,600 were aged 30 or over.


Case study - A life-changing story

Mum-of-two Maria Freeman’s life-changing decision to change her career path, after being made redundant from her job as a chef in a call-centre, landed her a teaching role in a North East women’s prison.

Despite not having been in education since leaving catering college as a teenager, Maria, 41, was undeterred and five years ago signed up to an Access to Higher Education Course at Sunderland College, followed by a Public Health degree at the University of Sunderland.

Her hard work paid off and she graduated in July 2016 with First Class Honours, then in July 2017 with a Post Compulsory Education and Training (PCET) qualification, which allows her to teach and train others in the subjects of her choice.

Maria has now begun a new career teaching English and Public Health to inmates at Low Newton Women’s Prison in County Durham, she said: “It’s an exciting new chapter in my life. I would like to think I can make a difference to these women’s lives in some way through the fantastic teaching and training I’ve been given at Sunderland.”

She describes her university experience as “life-changing”, saying: “Coming to University was the best decision I ever made. Redundancy came as a blow, but also gave me the opportunity I needed to change my career and get into Higher Education.

“Of course, I was nervous at first and wasn’t sure I’d get through the course, but it’s about putting the work in and I found myself getting really good grades, which motivated me even more.”

Single mum Maria also says her children, aged 13 and 16, were at the heart of her decision to make a better life for them and also encourage them to go to University.

“I wanted to be a role model for them and they are really proud of what I’ve achieved. When I was young, university wasn’t even a consideration, but I really want both my children to go. I came from what you would consider a deprived area, but always wanted to work hard at whatever I was doing.”

Maria concluded: “I would encourage anyone to step out of your comfort zone and just go for it. University will develop your confidence and anyone is capable, regardless of age.”


Knowledge Creators: An institution that is acknowledged globally as an exemplar in the creation of knowledge, skills and learning that is work relevant in the 21st century

The past year has seen significant progress towards our ambition to deliver graduates with skills relevant to employers and the workplace.

94.2% of our graduates are in work or further study within six months following graduation, according to data collected for the Destinations of Leavers from Higher Education survey, which is testimony to the work we do in preparing students for employment following graduation.

In the Teaching Excellence Framework (TEF) the University received a coveted ‘Silver’ award, ranking us alongside other high-performing Universities such as York, Warwick, Sheffield, Manchester, Bristol and close neighbour Durham. The assessors highlighted the University’s strengths in embedding professional practice in the curriculum and the collaborative work we do with employers to ensure our programmes are relevant.

Students are exposed to professional engagement throughout their learning. Professional mentors give welcome advice and an employer’s perspective to the student experience. Placement and work experience opportunities are widely available via our Sunderland Futures programme and masterclasses delivered by employers offer insights to the skills they seek when appointing graduates.

As well as launching Higher and Degree Apprenticeships - BSc (Hons) Digital & Technology Solutions and BA (Hons) Management and Leadership Practice - in collaboration with employers including Accenture and Northumbria Water - we have also made great strides towards improving healthcare education in the North East.

UTC South Durham opened in September 2016 and had a very successful first year. The school, based in Newton Aycliffe, has a curriculum focused on engineering and manufacturing to meet the future skills needs in this sector. The University is a founding partner alongside Hitachi Rail Europe and Gestamp Tallent and students have an articulated pathway through to the Engineering and Advanced Manufacturing programmes at the University.

The institution is committed to forging stronger links with businesses, from SMEs to international companies, supporting their growth through internships, Knowledge Transfer Partnerships (KTPs) and applied research. Our new centre for enterprise and innovation, Hope Street Xchange, provides an access point to the University’s expertise in a purpose-built space that is also home to the Enterprise Place. Supported by ERDF, the Enterprise Place offers co-working space for University students and graduates to develop their business ideas and receive support and mentoring to maximise their chances of creating a successful business. The current ERDF programme began in October 2015 and to date 88 business ideas have been accepted to receive direct

support through Enterprise Place membership. Of these 38 have registered as a business, with a growing number in the pipeline who are researching their idea or in the early stages of the application process. In 2016/2017 we had four additional Knowledge Transfer Partnerships (KTPs) approved and had a 100% success rate on our grant submissions.

Our annual ERDF-supported Graduates Into Enterprise scheme, which matches recent graduates with businesses looking for skilled interns goes from strength to strength, with 55 interns placed in 2016/2017. These graduates are making a difference to businesses large and small.


Case study - Delivering for the region

The University is working with both Sunderland and South Tyneside councils to ensure that a proposed International Advanced Manufacturing Park (IAMP) in Sunderland has the highly skilled workforce required to succeed.

Included in the Government’s Industrial Strategy, the International Advanced Manufacturing Park (IAMP) will be a 100-hectare site for advanced manufacturing. Located close to the Nissan automotive manufacturing hub in Sunderland, IAMP is a joint venture between Sunderland and South Tyneside Councils to develop a prime location for new automotive, logistics and offshore manufacturing businesses. It is expected that IAMP will attract £300m in private sector investment and create more than 5,200 new jobs over the next decade.

During this year we have refined our strategy to develop fit-for-purpose graduates with the higher-level skills to meet the needs of the advanced manufacturing sector. As part of this project our University has made a real statement of intent and a significant step towards developing the engineering and manufacturing workforce of the future.


Tomorrow Makers: A University whose graduates are adaptive creative thinkers with the personal attributes to become the leaders and tomorrow makers of our societies and economies

In 2016/2017 we realigned our academy into six faculties led by Academic Deans, with a remit focused on excellent teaching, the student experience, research with real impact, and adapting the curriculum to be relevant to 21st century students and employers.

The University’s Strategic Plan highlights our areas of academic strength – Advanced Manufacturing and Engineering; Health Sciences and Wellbeing; Computer Sciences; Education and Society; Business, Law and Tourism; and Arts and Creative Industries.

Academic teams are working together to ensure that content in these areas is rich and compelling and taught across a variety of delivery platforms. Students are supported and challenged through every stage of their learning journey journey, ensuring that graduates are creative, adaptive and resilient learners who will value their investment, and are fully prepared, on graduation, to move into careers or further study in their chosen sector and become the problem solvers of the future.


Case study - Life-changing to changing lives

Andrew Singleton has come a long way from the chemistry laboratories of the University of Sunderland, where he gained his BSc degree over 20 years ago. Now chief of the Laboratory of Neurogenetics at the National Institute on Aging in Maryland USA, he is leading one of the world’s top research teams, tackling neurological diseases, particularly Parkinson’s and Alzheimer’s disease.

Dr Singleton returned to Sunderland in summer 2017 to receive an Honorary Doctorate of Science from his former university, in recognition of his pioneering work in the understanding of neurological health disorders.

He said: “I’ve been lucky enough to do a job that I love. A job that has allowed me to travel the world, to work with the smartest and most dedicated scientists, and to feel like I’ve made an impact. We’ve made incredible progress in diseases like Alzheimer’s and Parkinson’s, and I am now more sure than ever that we will find a cure.

“I am increasingly thankful to the University of Sunderland for helping me start my journey, and for this incredible honour. I love this place.”

Dr Singleton now leads a team studying the genetic basis of neurological disorders including Parkinson’s disease. He is a Scientific Advisor for The Michael J Fox Foundation for Parkinson’s Research, and on the Scientific Advisory Board of the Lewy Body Dementia Association.

Dr Singleton closed his acceptance speech by addressing the new graduates: “You have something to say, so don’t be afraid to say it. Many of us, myself included, can’t wait to hear it.”


Boundary Breakers: An institution that fosters a sense of pride amongst its staff, students and alumni as it makes a real difference to the world in which we live through its research, innovation and practice.

Research and innovative practice with real-world impact has long been integral to our vision - one that inspires our academic community, delivers positive outcomes for our students, and is influential in developing economies, societies and cultures regionally and internationally. In June 2017 we announced a new Research and Innovation Strategy with the launch of six research institutes to lead and develop faculty research working closely with business and public sector partners.

Our ever growing alumni family stretches around the world to form a web of connections, support and opportunity for our students and graduates, whether from our campuses in Sunderland, London and now Hong Kong, or from our transnational partners across the globe.

With a growing confidence in the impact of our research and the deep-held ambitions we have for our University, staff, students and graduates, we have embraced our position, not only as an anchor institution for the North East, but also as a global institution. Our strong commitment to innovative practice is evident in our teaching, facilities and learning options; while much of our research is having real impact on our communities right now.


Case study - Making a Difference

Dr Yitka Graham, Senior Lecturer in Public Health, researched how people adjust their lives following Bariatric surgery and the results are having an immediate impact on patients.

Bariatric surgery is usually recommended after a person with obesity has been unsuccessful in losing weight through diet and exercise. Surgery offers rapid and sustained weight loss, improves obesity-related illnesses and makes significant changes to a person’s appearance and eating habits. As a result, bariatric surgery has a life-changing impact on a person’s life, especially everyday social situations, which require a period of adjustment.

Dr Graham led a two-year study into the reality of bariatric surgery for those who have been through the procedure and the impact on their daily lives. Working with 18 patients at Sunderland Royal Hospital’s specialist ward, which treats those who are morbidly obese and have undergone bariatric surgery, Dr Graham and the team of researchers at the University of Sunderland gained a unique insight into each individual involved in the study of patients, who lost up to 60% of their body weight.

The research found that, while none of the patients regretted the surgery, they did encounter social issues and fear in adjusting to their new life; from the ‘nightmare’ of eating out in restaurants and society’s negative perceptions of bariatric surgery, to be being viewed as a weight loss ‘cheat’.

Dr Yitka Graham, who led the research for her own PhD, explained: “We have this amazing method of weight loss that keeps the weight off, resolves diseases such as diabetes, it’s the only method of weight loss that you can maintain long term and the published evidence for it is fantastic, yet what we discovered through our research is that we still live in an unfriendly bariatric society.”

Patients were reluctant to disclose that they had undergone bariatric surgery, for fear of being judged by others. The findings also showed that social aspects of life after bariatric surgery were not widely understood by the public and healthcare professionals.

As rates of bariatric surgery increase, it’s undoubtedly true that this better understanding of patients’ experiences will assist future patients to prepare for post-surgical life and better equip healthcare practitioners to support patients, before and after surgery.


Learning Engagers: A University where students want to study due to the quality of teaching, the relevance and accessibility of our programmes and the reputation we enjoy for partnering with students and personalising their experience.

During the last year we have escalated our work to support student engagement, ensuring an individual’s journey at Sunderland is personalised from first contact through to graduation and life-long engagement. Successes this year include higher levels of applicant conversion through highly personalised communications and higher levels of engagement with our graduate community.

In addition the University’s National Student Survey results compared favourably with the sector across a number of categories including Teaching, Academic Support, Organisation and Management, Learning Community and Student Voice. A number of programmes achieved a 100% satisfaction rating, including BSc (Hons) Tourism Management, BA (Hons) Social Work, BA (Hons) English and BA (Hons) Business and Marketing Management.

In Sciences our General Pharmaceutical Council (GPhC) figures showed that - at 93.1% - our School of Pharmacy had the highest pass rate of any UK university, in this summer’s pre-registration assessment.

In the Teaching Excellence Framework (TEF) the University received a coveted ‘Silver’ award, ranking it alongside other high-performing Universities such as York, Warwick, Sheffield, Manchester, Bristol and close neighbour Durham.

The panel of judges highlighted students’ academic experiences which are tailored to the individual, with personalised support available for all students and focused support for students with specific needs; and a culture that facilitates excellent teaching through a comprehensive programme of professional development and funding commitments to support pedagogical research.

In May the University’s Academic Board approved a new Student Success Strategy to support students and inspire them to collaborate in the development of a relevant and contemporary teaching, learning and assessment framework, comparing equality of outcomes, developing confidence and aspirations, and encouraging student engagement.


Case study - Working for Student Success

Dr Catherine Hayes, a Reader in Pedagogic Practice in the Faculty of Health Sciences and Wellbeing, was announced as one of 55 new National Teaching Fellows (NTF) for her outstanding impact on student learning and the teaching profession in higher education. She described the NTF - one of the most prestigious national individual awards given for excellence in teaching in higher education - as an “honour”. Dr Hayes’s contribution has also resulted in the prodigious academic being awarded Principal Fellow of the Higher Education Academy (HEA) in recognition of her continued impact in learning and teaching nationally and internationally, joining a small group of HEA Principal Fellows at the University of Sunderland and around only 560 Principal Fellows across the UK.

She said: “To have been awarded both a National Teaching Fellowship and a Principal Fellowship of the Higher Education Academy in the same academic year has been a really humbling acknowledgement of my contribution and value to the University, my professional discipline and the wider context of Higher Education pedagogy.

“I work alongside colleagues from several other faculties across the University in Business, Law and Tourism, Arts and Creative Industries, Computing, Education and Society and Engineering, all of whom have been inspirational in the context of inter-professional working. Our shared goal though, regardless of faculty, has always been to enhance the experience of the students with whom we work, so coupled with the opportunity that being based in the Faculty of Health Sciences and Wellbeing has given me, I have been in a unique position to extend the reach of my own professional practice.”

The University’s new Centre for Excellence in Learning and Teaching is where Dr Hayes will be leading on Higher Education pedagogical research over forthcoming academic years.

Future Shapers: A leading anchor institution in the North East making significant social, economic and cultural contributions to our locality, displaying innovation, entrepreneurship, financial stability, efficiency and sustainability in our approach and delivery.

Our University’s reach and impact extends to meaningful collaborations and partnerships across public and private sectors in areas from health sciences to sport, entrepreneurialism to manufacturing, and community cohesion to culture.

We encourage staff and students to engage with and support communities – changing lives, innovating and collaborating, shaping the world in which we live.

We work with businesses - from multinational organisations to small and medium sized enterprises (SMEs) and new business start-ups. We are recognised as an anchor institution, supporting regional growth and working in partnership to attract inward investment.

Generating £432m Gross Value Added per annum for the North East economy and supporting 5,400 jobs, our University is a place-shaper and we use our international connections to open doors for North East partners – be they economic, cultural or societal.

Universities are uniquely placed to foster and lead such collaborations to ensure mutual gain – businesses need access to a skilled workforce, research expertise, facilities and advice – all of which our University can provide. For students moving into their new careers the North East needs graduate-level jobs in order to retain talent within our region.

While the UK university sector operates in uncertain times, we are very confident that our innovative, integrated and agile approach, which is embedded throughout the ambitions articulated in our new strategic plan, will bring benefit to our students, partners, and stakeholders. Moreover, our work will pay dividends for the North East’s economy, society and culture.


Case study - Culture-led regeneration

Within months of being formed in January 2017 Sunderland Culture, a company set up by the University in collaboration with the City Council and MAC Trust, to advance the city’s cultural development, has received over £3m in external funding.

In March 2017 the city became one of only 16 pilot areas when Sunderland Culture received a £1.25m grant from the Great Place Scheme. Jointly funded over three years by Arts Council England (ACE) and Heritage Lottery Fund (HLF), Great Places is about putting arts, culture and heritage at the heart of communities.

Then in June 2017 Sunderland Culture was granted £2million from Arts Council England as a result of receiving National Portfolio Organisation (NPO) status. The funding represented a significant increase in Arts Council support to the city and is hugely positive for Sunderland’s cultural venues, coming in the same year as the city’s bid to be City of Culture was shortlisted to the second round.

Pro Vice-Chancellor, Graeme Thompson, who is Chair of Sunderland Culture and has been driving the city’s strategic case for cultural growth and increased funding, said: “This is a tremendous achievement for our city, and for an organisation that – despite its relative infancy – is already bringing about a genuine step change in the way we are driving culture-led regeneration. This funding will help shape a new narrative for the city over the coming years.”


“Sunderland is a city full of tough, funny people with soft hearts.

I’m proud to call it home, and of the culture I inherited growing up there.”LAUREN LAVERNE, BBC PRESENTER

Strategic ReportThe Governors of the University of Sunderland present their Report and Financial Statements for the year ended 31 July 2017. The Group Financial Statements consolidate those of the University, its subsidiaries and its quasi subsidiary (together referred to as the Group). The details of these undertakings are listed in note 25 of the Financial Statements.

The University’s Strategic Plan was approved by the Board of Governors in March 2016 and sets out the University’s vision and ambitions through to 2021.

Our VisionTo be bold and inspirational in providing education, research and creative practice, which offers transformative experiences to students, staff, communities and business partners in the UK and across the world.

Our DifferentiatorsThe University of Sunderland will be compelling and different because:

• Our programmes will be distinctive and relevant with work-integrated learning and professional practice embedded within

• Our research and creative practice will be contemporary with immediate impact for our communities, business partners and students

• Our students will become lifelong partners in the institution, able to access career accelerators and updated learning and practice throughout their lifetime

Our Ambitions

Life Changers A world leading contemporary University that is distinctive in supporting learning at all stages in life.

Knowledge Creators An institution that is acknowledged globally as an exemplar in the creation of knowledge, skills and learning that is work relevant in the 21st century.

Tomorrow Makers A University whose graduates are adaptive, creative thinkers with the personal attributes to become the leaders and tomorrow makers of our societies and economies.

Boundary Breakers An institution that fosters a sense of pride amongst its staff, students and alumni as it makes a real difference to the world in which we live through its research, innovation and practice.

Learning Engagers A University where students want to study due to the quality of teaching, the relevance and accessibility of our programmes and the reputation we enjoy for partnering with students and personalising their experience.

Future Shapers A leading anchor institution in the North East making significant social, economic and cultural contributions to our locality, displaying innovation, entrepreneurship, financial stability, efficiency and sustainability in our approach and delivery.



30 31Report and Financial Statements 2016/2017 Report and Financial Statements 2016/20173030

Key

On track, low risk

Performance outside tolerance, however appropriate management action in place

Significant issues requiring management attention

Key Performance Area 2016/2017 2015/2016

Home/EU on campus student numbers

International on campus student numbers

Widening participation

Transnational contribution

Graduate destinations

Research and contract income

Overall student satisfaction

Retention and non-continuation

Student achievement

Underlying operating surplus

Achievement of ObjectivesThe achievement of the objectives in the Strategic Plan is measured against a suite of Key Performance Indicators (KPIs) using a traffic light system. Progress is reported bi-annually to the Board of Governors. The KPIs reported to the Board of Governors in 2016/17 were an interim suite to reflect the introduction of the University’s new Strategic Plan, while providing continuity with previously reported performance. A new suite of KPIs, fully aligned to the Strategic Plan and approved by Board of Governors for 2017/2018 to 2020/2021, will be included in the 2017/2018 annual report.

The table below summarises the key areas of performance covered by KPIs for 2015/2016 and 2016/2017.

30 31Report and Financial Statements 2016/2017 Report and Financial Statements 2016/2017 3131

Financial Review The University can be proud of its financial performance in 2016/2017, during a year of significant transformational change:• Fee income from tuition increased by £2.7m despite

difficult market conditions, demonstrating the benefit of our investment in growth areas

• Operating expenditure was closely managed to deliver an underlying operating surplus of £2.4m, an improvement of £5.1m from 2015/16

• £10.5m was invested in capital programmes, as we continued to invest in market-leading facilities for our students

• Cash generated from operations increased by £8.0m, showing the impact of our more efficient operating model

• Cash holdings remained stable, even with £1.5m of bank loans being repaid and a significant cost of

transformational change, allowing us to plan for further sustainable investment

The University’s transformational programme in 2016/2017 was a key element of the longer-term strategy for achieving financial and operational sustainability. The change involved transitioning from four to six faculties and a full cross-institutional review of all the professional support services. More importantly, the change programme allowed us to continue our focus on the areas which really matter in providing value to our students:

• Teaching and research budgets were protected

• We spent £3.7m on bursaries to support our students

• We have continued to invest in our academic facilities

• Our innovative approach to widening participation has continued, with Sunderland students for the first time travelling to University of Sunderland in London

Income and expenditure in £m2015/2016 and 2016/2017 actuals and key variances to prior year (∆PY)

Income 2016/17 2015/16 ∆PY

Tuition fees and education contracts 103.5 100.8 +2.7

Grants and contracts 11.2 14.4

Other income 10.8 13.1

Less one-off capital grants (3.4) (6.0)

Total operating income 122.1 122.3 -0.2

Expenditure

Staff costs (66.0) (66.4) -0.4

Less actuarial movements in pension liabilities 3.7 2.5

Less severance expenses - 0.5

Non-staff costs (57.4) (61.6) -4.2

Total operating expenditure (119.7) (125.0) -5.3

Underlying operating surplus / (deficit) 2.4 (2.7) +5.1

Impact of non-operational and exceptional items

Actuarial movements in pension liabilities (3.7) (2.5)

Loss on disposal and impairments (2.2) -

Capital grant income 3.4 6.0

Severance expenses within staff costs - (0.5)

Severance expenses from transformation (6.0) -

(Deficit)/surplus for the year (6.1) 0.3

Actuarial gain/(loss) on pension scheme 21.0 (29.4)

Total comprehensive income / (deficit) 14.9 (29.1)

Balance sheet and cash flow in £m2015/2016 and 2016/2017 actuals and key variances to prior year (∆PY)

Balance sheet 2016/17 2015/16 ∆PY

Property, plant and equipment additions 10.5 13.7 -3.2

Cash at bank 15.7 15.0 +0.8

Bank loans (24.5) (26.1) -1.5

Finance leases (16.2) (17.1) -0.9

Net assets excluding pensions liability 132.5 134.9 -2.4

Net assets including pensions liability 43.4 28.5 +14.9

Cash flow

Net cash inflows from operating activities 12.3 4.3 +8.0

Net cash (outflow) from investing activities (6.2) (9.6) +3.4

Net cash (outflow) from financing activities (5.4) (5.2) -0.2

Increase/(decrease) in cash 0.7 (10.5) +11.2

Underlying operating performance

In 2015/2016 the University’s financial statements were presented in line with a new Statement of Recommended Practice (SORP) which follows Financial Reporting Standard 102 (FRS 102). The new SORP was the most significant change to UK accounting standards in recent years and has resulted in greater fluctuations in the measurement and recording of income and expenditure. The University monitors two key measures (the underlying operating result, and cash flows) on an ongoing basis, alongside the reported operating surplus/(deficit) which in 2016/2017 was £(6.1)m. The University’s underlying operating result for 2016/2017 shows a surplus of £2.4m, representing an improvement of £5.1m on the previous year.

Investment

The University has continued to invest to support recent growth strategies. In 2016/2017 £10.5 million was invested in infrastructure. The key recent developments being an investment of £2.4m in sector-leading nursing facilities, £1.0m on new Engineering facilities and equipment, and the completion of the £8.9m Hope Street Xchange business and innovation centre.

Cash management

Management of the University’s cash position has been a key area of focus in 2016/2017, with enhanced controls and reporting put in place and additional Governance oversight. The Government’s funding model for Student Loans leads to significant fluctuations in the University’s cash, requiring close management and oversight throughout the year. In addition, the continued reduction in Government funding requires the University to generate sufficient operating cash to repay borrowings and enable continued investment in the strategy to enhance

education, research and student experience. The £8.0m improvement in operating cash flows in 2016/2017 – particularly considering the costs of change – illustrates the impact of the University strategy on income growth and expense management.

Financial position

The University’s underlying financial position remains sound, as set out in the balance sheet. Net assets total £43.4m including the pensions liabilities, and £132.5m excluding them. The Local Government Pension Scheme liability is significant and the in-year cash contributions to reduce the pensions liabilities – reported within operating cash flows – remain a major cost. However, the Scheme’s Trustees have fixed the University’s cash contributions until March 2020, which provides medium-term certainty on the cash required.

Longer-term measures continue to be reassessed and revised to ensure that the University’s operating model is sustainable, and that the University can continue to invest in its strategy and meet its obligations on pensions and other long-term liabilities, including borrowings.

Financial outlook

The University’s financial outlook remains positive with investments being made in key areas that have supported growth in student numbers and delivered a more efficient and resilient operating model. External pressures on the University and the sector remain significant and the need to deliver outstanding student outcomes in a highly competitive global marketplace is an ongoing challenge. The University remains focused on building greater flexibility and resilience within the financial model, in order to make targeted investments which support our exciting strategy for the future.





Corporate Governance StatementThe University is committed to exhibiting best practice in all aspects of corporate governance. The University has adopted the revised CUC Code of Governance (published in December 2014) and in the opinion of the Governors has applied the seven primary elements (supported by the ‘must’ statements) of the Code throughout the year.

It is the opinion of the Governors that they have acted in compliance with the principles set out by the Committee on Standards in Public Life throughout the same period in discharging their duties as Governors in respect of University business.

Legal and Charitable StatusThe University is a Higher Education Corporation established by order of the Secretary of State under section 121 of the Education Reform Act 1988. It obtained exempt charitable status under the Act, as now defined in Section 22 of the Charities Act 2011. Degree awarding powers and the right to use the title ‘University’ were granted by the Further and Higher Education Act 1992. The Higher Education Funding Council for England became the principal regulator for the University as an exempt charity on 1 June 2010.

The Education Reform Act 1988 lays down the powers of the University as being the provision of education and research together with associated activities, and these represent the charitable objects of the University.

The Board of GovernorsThe Trustees of the exempt charity, the University of Sunderland, are the Members of its Board of Governors. The membership of the Board of Governors is set out on page 4. It is the Board’s responsibility to bring independent judgement to bear on issues of strategy, risk, performance, resources and standards of conduct.

During 2016/2017 the University Board of Governors met six times. There were several other committees, including a Finance, Development & Resources Committee, a Nominations Committee, a Remuneration Committee, an Employment Committee, an Audit Committee and the University Culture Committee. All of these Committees are formally constituted with terms of reference. They comprise mainly independent members of the Board of Governors, one of whom chairs each Committee.

The Finance, Development & Resources Committee recommends to the Board of Governors the University’s annual revenue and capital budgets and monitors performance in relation to the approved budgets.

An Academic Board provides regular updates to the Board of Governors on all academic matters ensuring that the Board can discharge its obligation to have assurance on the academic quality and standards of teaching at the institution.

All Governors are able to take independent professional advice in furtherance of their duties at the University’s expense and have access to the Clerk to the Board of Governors, who is responsible to the Board for ensuring that all applicable procedures and regulations are complied with. The appointment and removal of the Clerk are matters for the Board of Governors as a whole.

Formal agendas, papers and reports are supplied to Governors in a timely manner prior to Board meetings. Briefings and workshops are provided on an ad-hoc basis.

The Board of Governors has a strong and independent non-executive element and no individual or group dominates its decision-making process. The Board of Governors considers that each of its non-executive members is independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. There is clear division of responsibility in that the roles of the Chair of the Board of Governors and the Vice-Chancellor and Chief Executive are separate.

As noted above, the Board of Governors has adopted the CUC Code of Governance and also agreed a Statement of Primary Responsibilities. On an ongoing basis the Board of Governors will use these criteria to review institutional performance and effectiveness, the results of which will be widely published. The Board undertakes an annual assurance exercise, through its Audit Committee, to be assured of continued compliance with the CUC Code of Governance or to be able to explain as appropriate where this was not the case.

The Board follows the principles of the CUC Code of Governance in reviewing its effectiveness. Self-effectiveness reviews are undertaken on a regular basis, for example by one-to-one meetings between the Chair and each Governor, along with the use of self-effectiveness questionnaires as appropriate and the production of an annual report. A HEFCE Assurance Review was completed in June 2016 and made no recommendations for changes to University governance, and the new HEFCE Annual Provider Review process, carried out in the spring of 2017, judged the University’s financial sustainability, management and governance to be ‘not at higher risk’. In accordance with CUC guidance, a formal review of the effectiveness of the governing body with independent facilitation took place in 2014/2015 and presented its findings to the Board of Governors. The Review’s findings stated that “The overall standard of governance in the University of Sunderland is, in our view, high.”


Appointments to the Board of GovernorsThe Remuneration Committee – made up of the Chair of the Board of Governors, the Deputy Chairs and the Chairs of the main committees – ensures that there is appropriate scrutiny of, and transparency in relation to, the remuneration of senior staff. The committee determines the remuneration and terms and conditions of service of: the Vice-Chancellor & Chief Executive; the Chief Operating Officer & Clerk to the Board of Governors; and the Deputy Vice-Chancellor (Academic). It also oversees succession planning and arrangements for the filling of vacancies in these roles.

Remuneration CommitteeThe Remuneration Committee determines the remuneration and terms and conditions of service of senior staff including the Vice-Chancellor and oversees succession planning and arrangements for filling of vacancies within the Executive team.

Audit CommitteeThe Audit Committee meets five times a year, with the University’s internal and external auditors in attendance. The Committee considers detailed reports together with recommendations for any improvement of the University’s systems of internal control, management responses and implementation plans. It also receives and considers reports from the Higher Education Funding Council for England as they affect the University’s business and monitors adherence to the regulatory requirements. Whilst executive and senior management attend Audit Committee meetings, they are not members of the Committee and at least once a year the Committee meets with the Internal and External Auditors for independent discussion.

Internal ControlThe University’s Board of Governors is responsible for the University’s system of internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board of Governors has reviewed the key risks to which the University is exposed together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The Board of Governors is of the view that there is an ongoing process for identifying, evaluating and managing the University’s significant risks and that the process has been in place for the year to 31 July 2017 and up to the date of approval of the Annual Report and Financial Statements. This process is regularly reviewed by the Audit Committee on behalf of the Board of Governors and accords with the guidance on control set out in the CUC Code of Governance for Higher Education.

The senior management team receive regular reports on the key performance and risk indicators and consider issues indicated by control mechanisms embedded within operational units and reinforced by risk awareness training. The senior management team and Audit Committee also receive regular reports from Internal Audit which include recommendations for improvement. The Board of Governors receives an annual report on strategic risk management. An annual report is also provided to the Board of Governors by Audit Committee which provides an opinion on risk, control, governance and value for money.

Managing RiskThe University’s risk management processes continue to identify and manage the major strategic and financial risks. A series of reports setting out the Strategic Risks against the new Strategic Objectives in the Strategic Plan 2016 – 2021 and then linking the risks back to audit controls was considered by Board, Audit Committee and Finance and Development Committee in May, June and July 2017. The Strategic Risk Management Matrix was then presented to Board of Governors at its last meeting of the financial year. This report would be the basis of regular reporting to Audit Committee and Finance and Development Committee.

Strategic risks at the corporate level include further unforeseen changes in student recruitment and retention, failure to manage cash resource levels, internal capacity against priorities, recruitment and retention of staff, external government policy and failure to strategically plan and invest in infrastructure.

Equal Opportunities and Employment of Disabled PersonsThe University is committed to ensuring equality of opportunity for all who learn and work within it. The University respects and values differences in age, disability, gender, ethnicity, religion or belief, or sexual orientation. It strives to remove conditions which place people at a disadvantage and has policies in place to ensure this commitment is implemented, resourced and monitored on a regular basis.

The University considers all applications from disabled persons and where an existing employee becomes disabled every effort is made to ensure their employment with the University can continue.

Statement of Board of Governors’ responsibilities in respect of the Annual Report and the Financial StatementsThe Board of Governors is responsible for preparing the Annual Report and the financial statements in accordance with the requirements of the Higher Education Funding Council for England’s Memorandum of Assurance and Accountability issued by HEFCE and applicable law and regulations.

The Board of Governors is required to prepare group and parent University financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The Memorandum of Assurance and Accountability further requires the financial statements to be prepared in accordance with the 2015 Statement of Recommended Practice – Accounting for Further and Higher Education, in accordance with the requirements of HEFCE’s Accounts Direction to higher education institutions. The Governors are required to prepare financial statements which give a true and fair view of the state of affairs of the group and parent University and of their income and expenditure, gains and losses and changes in reserves for that period.

In preparing each of the group and parent University financial statements, the Board of Governors is required required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• assess the group and parent University’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

• use the going concern basis of accounting unless they either intend to liquidate the group or the parent University or to cease operations, or have no realistic alternative but to do so.

The Board of Governors is responsible for keeping adequate accounting records that are sufficient to show and explain the parent University’s transactions and disclose with reasonable accuracy at any time the financial position of the parent University and enable them to ensure that its financial statements comply with relevant legislation and other relevant accounting standards. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

The Board of Governors is also responsible under the Memorandum of Assurance and Accountability for:

• ensuring that funds from HEFCE and other funding bodies are used only for the purposes for which they have been given and in accordance with the Memorandum of Assurance and Accountability and any other conditions which HEFCE may from time to time prescribe;

• ensuring that there are appropriate financial and management controls in place to safeguard public funds and funds from other sources; and

• securing the economical, efficient and effective management of the University’s resources and expenditure.

The Board of Governors is responsible for the maintenance and integrity of the corporate and financial information included on the University’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.



Independent Auditor’s Report to the Board of Governors of the University of SunderlandReport on the audit of the Financial Statements

Opinion We have audited the financial statements of University of Sunderland (“the University”) for the year ended 31 July 2017 which comprise the Consolidated Statement of Comprehensive Income and Expenditure, Consolidated and University Balance Sheet, Consolidated and University Statement of Changes in Reserves, Consolidated Statement of Cash Flows and related notes, including the accounting policies.

In our opinion the financial statements:

• give a true and fair view of the state of the Group’s and the University’s affairs as at 31 July 2017, and of the Group’s and the University’s income and expenditure, gains and losses and changes in reserves, and of the Group’s cash flows, for the year then ended;

• have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and with the 2015 Statement of Recommended Practice – Accounting for Further and Higher Education; and

• meet the requirements of HEFCE’s Accounts Direction to higher education institutions for 2016/2017 financial statements.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the group in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Going concern We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the financial statements. We have nothing to report in these respects.

Other information The Board of Governors is responsible for the other information, which comprises the Operating and Financial Review of the Governors and Corporate Governance Statement. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work, we have not identified material misstatements in the other information.

Board of Governors responsibilities As explained more fully in their statement set out on page 38, the Board of Governors is responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the group and parent University’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless it either intends to liquidate the group or the parent University or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.


Consolidated Statement of Comprehensive Income and Expenditure for the year ended 31 July 2017

Year ended 31 July 2017 Year ended 31 July 2016

Notes Consolidated University Consolidated University

£’000 £’000 £’000 £’000

Income

Tuition fees and education contracts 1 103,545 101,840 100,805 100,345

Funding body grants 2 9,734 9,734 12,660 12,660

Research grants and contracts 3 1,455 1,354 1,734 1,406

Other income 4 10,618 12,436 12,849 12,694

Donations, endowments and investment income

5 147 25 240 108

Total Income 125,499 125,389 128,288 127,213

Expenditure

Staff costs 6 65,964 61,109 66,351 62,484

Restructure costs 6 6,055 6,052 - -

Other operating expenses 8 44,281 49,295 49,244 52,571

Depreciation and amortisation 10, 11 7,489 7,285 6,766 6,739

Impairment 10 2,135 2,135 - -

Interest and other finance costs 7 5,505 5,505 5,622 5,622

Total Expenditure 131,429 131,381 127,983 127,416

(Deficit) / surplus before other gains losses

(5,930) (5,992) 305 (203)

Realised gain on disposal of fixed asset investments

(188) (108) - 43

Unrealised gains on investments 12 11 - 11 -

(Deficit) / surplus before tax (6,107) (6,100) 316 (160)

Taxation 9 (2) - (33) -

(Deficit) / surplus for the year (6,109) (6,100) 283 (160)

Actuarial gain/(loss) in respect of pension schemes

27 20,990 20,990 (29,430) (29,430)

Total comprehensive income / (deficit) for the year

14,881 14,890 (29,147) (29,590)

Represented by:

Endowment comprehensive deficit for the year

(38) (38) - -

Restricted comprehensive (deficit) / income for the year

(27) - 76 -

Unrestricted comprehensive income / (deficit) for the year

14,946 14,928 (29,223) (29,590)

14,881 14,890 (29,147) (29,590)

All items of income and expenditure relate to continuing activities




Balance at 1 August 2016 1,043 - 26,227 27,270

Deficit from the income and expenditure statement (38) - (6,062) (6,100)

Other comprehensive income - - 20,990 20,990

(38) - 14,928 14,890

Balance at 31 July 2017 1,005 - 41,155 42,160

University

Balance at 1 August 2015 1,043 - 55,817 56,860

Deficit from the income and expenditure statement - - (160) (160)

Other comprehensive deficit - - (29,430) (29,430)

- - (29,590) (29,590)

Balance at 31 July 2016 1,043 - 26,227 27,270

Balance at 1 August 2016 1,043 750 26,725 28,518

Deficit from the income and expenditure statement (38) (27) (6,044) (6,109)

Other comprehensive income - - 20,990 20,990

(38) (27) 14,946 14,881

Balance at 31 July 2017 1,005 723 41,671 43,399

Consolidated

Balance at 1 August 2015 1,043 674 55,948 57,665

Surplus from the income and expenditure statement - 76 207 283

Other comprehensive deficit - - (29,430) (29,430)

- 76 (29,223) (29,147)

Balance at 31 July 2016 1,043 750 26,725 28,518

Consolidated and University Statement of Changes in Reserves

EndowmentReserve

RestrictedReserve

UnrestrictedReserve

TotalReserve

£’000 £’000 £’000 £’000


Consolidated Statement of Cash FlowsNotes 31 July 2017 31 July 2016

£’000 £’000

Cash flows from operating activities

(Deficit) / surplus for the year (6,109) 283

Adjustment for non-cash items

Depreciation, amortisation and impairment 10, 11 9,624 6,766

Loss on sale of fixed assets 188 -

Gains on investments 12 (11) (11)

Decrease / (increase) in stock 79 (5)

Increase in debtors (1,205) (1,174)

Increase / (decrease) in creditors 6,350 (957)

Movement in pension provision 20 3,736 2,522

Adjustment for investing or financing activities

Investment income 5 (31) (121)

Interest payable 7 3,062 3,079

Endowment income 5 (7) (8)

Capital grant income 4 (3,366) (6,020)

Net cash inflows from operating activities 12,310 4,354

Cash flows from investing activities

Proceeds from sales of fixed assets 592 -

Capital grants receipts 3,755 4,968

Disposal of non-current asset investments 210 1

Investment income 31 116

Payments made to acquire fixed assets (10,527) (13,840)

Acquisition of a subsidiary net of cash acquired - (808)

New non-current asset investments (223) (12)

Net cash outflows from investing activities (6,162) (9,575)

Cash flows from financing activities

Interest paid (1,392) (1,396)

Interest element of finance lease payments (1,614) (1,679)

Endowment cash received 7 8

Repayments of amounts borrowed (1,546) (1,486)

Capital element of finance lease payments (855) (693)

Net cash outflows from financing activities (5,400) (5,246)

Increase / (decrease) in cash and cash equivalents in the year 748 (10,467)

Cash and cash equivalents at beginning of the year 21 14,957 25,424

Cash and cash equivalents at end of the year 21 15,705 14,957


Notes to the Financial Statements for the year ended 31 July 2017Statement of principal accounting policies and estimation techniquesThese financial statements have been prepared in accordance with the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education 2015 and in accordance with Financial Reporting Standards (FRS 102). The University is a public benefit entity and therefore has applied the relevant public benefit requirement of FRS 102.

The financial statements are prepared in accordance with the historical cost convention. Following a review of the FEHE SORP internal designations of the unrestricted reserve are no longer split out on the Balance Sheet in accordance with paragraph 18.22. Details of unrestricted reserve designations are disclosed in note 20.

Basis of consolidationThe consolidated financial statements include the University and its subsidiary undertakings and associate undertakings for the financial year to 31 July 2017. The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of comprehensive income and expenditure from the date of acquisition or up to the date of disposal. Intra group transactions are eliminated fully on consolidation. The financial year ends of the consolidated entities are coterminous with those of the University.

The consolidated financial statements do not include those of the University of Sunderland Students’ Union (USSU) because the University does not control its activities or have significant influence over policy decisions. While the University is a partner in the University Technical College, South Durham, this college is also not consolidated since the University does not control its activities or have significant influence over policy decisions.

Going concernThe activities of the University, together with the factors likely to affect its future development and performance are set out in the Strategic Report. The financial position of the University, its cash flow, liquidity and borrowings are described in the Financial Statements and accompanying Notes.

The University’s forecasts and financial projections indicate that it will be able to operate within the terms of its borrowing facilities and covenants for the foreseeable future.

Accordingly the University has adequate resources to continue in operational existence for the foreseeable future, and for this reason will continue to adopt the going concern basis in the preparation of its Financial Statements. Existing overdraft facilities are due for renewal on 31 July 2018, the University anticipate that the facilities will be renewed if required.

Basic financial instrumentsTrade and other debtors are recognised initially at transaction price less attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs.

Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors.

If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an Integral part of the University’s cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.

Income recognitionIncome from the sale of goods or services is credited to the Consolidated Statement of Comprehensive Income and Expenditure when the goods or services are supplied to the external customers or the terms of the contract have been satisfied.

Where the amount of the tuition fee is reduced by a discount, either for a fee waiver scholarship or prompt payment, income receivable is shown net of the discount. Other bursaries and scholarships are accounted for gross as expenditure and not deducted from income.

Investment income is credited to the Income and Expenditure Account on a receivable basis.

Grant fundingGrant funding including funding council block grant, research grants from government sources, and grants (including research grants) from non-government sources are recognised as income when the University is entitled to the income and performance related conditions have been met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the balance sheet and released to income as the conditions are met.


Donations and endowmentsNon exchange transactions without performance related conditions are endowments. Endowments with donor imposed restrictions are recognised in income when the University is entitled to the funds. Income is retained within the restricted reserve until such time that it is utilised in line with such restrictions at which point the income is released to general reserves through a reserve transfer.

Investment income and appreciation of endowments is recorded in income in the year in which it arises, and as either restricted or unrestricted income according to the terms of restriction applied to the individual endowment fund.

There are three main types of donations and endowments identified within reserves:

Unrestricted permanent endowments - the donor has specified that the fund is to be permanently invested to generate an income stream for the general benefit of the University.

Restricted expendable endowments - the donor has specified a particular objective other than the purchase or construction of tangible fixed assets, and the University has the power to use the capital.

Restricted permanent endowments - the donor has specified that the fund is to be permanently invested to generate an income stream to be applied to a particular objective.

Capital grantsCapital grants are recognised in income when the University is entitled to the funds subject to any performance related conditions being met.

Agency arrangementsFunds the institution receives and disburses as paying agent on behalf of a funding body or other body, where the institution is exposed to minimal risk or enjoys minimal benefit related to the receipt and subsequent disbursement of the funds, are excluded from the income and expenditure of the institution.

Accounting for retirement benefitsThe University contributes to three defined benefit schemes, the Local Government Pension Scheme (LGPS), the Teachers Pension Scheme (TPS) and the Universities Superannuation Scheme (USS), and one defined contribution scheme, the National Employment Savings Trust (NEST).

The TPS is an unfunded, multi-employer scheme and it is therefore not possible to identify the assets of this scheme attributable to each institution and retirement and other pension benefits are paid from monies provided by Parliament. As an unfunded scheme, other than for the information provided in Note 27, no additional, separate disclosure is required.

The USS is also a multi-employer scheme and it is therefore again not possible to identify the assets of this scheme attributable to each institution. A liability is recorded within provisions for any contractual commitment to fund past deficits within the USS scheme.

In accordance with FRS 102, both the TPS and USS schemes are accounted for on a defined contribution basis and contributions to the schemes are included as expenditure in the period in which they are payable.

The University is able to identify its shares of assets and liabilities of the LGPS and thus this scheme is accounted for as a defined benefit scheme.

Defined benefit plansDefined benefit plans are post-employment benefit plans other than defined contribution plans. Under defined benefit plans, the University’s obligation is to provide the agreed benefits to current and former employees, and actuarial risk (that benefits will cost more or less than expected) and investment risk (that returns on assets set aside to fund the benefits will differ from expectations) are borne, in substance, by the University. The Group should recognise a liability for its obligations under defined benefit plans net of plan assets. This net defined benefit liability is measured as the estimated amount of benefit that employees have earned in return for their service in the current and prior periods, discounted to determine its present value, less the fair value (at bid price) of plan assets. The calculation is performed by a qualified actuary using the projected unit credit method. Where the calculation results in a net asset, recognition of the asset is limited to the extent to which the University is able to recover the surplus either through reduced contributions in the future or through refunds from the plan.

Defined contribution plans and other long term employee benefitsA defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.

Employment BenefitsShort term employment benefits such as salaries and compensated absences are recognised as an expense in the year in which the employees render service to the University. Any unused benefits are accrued and measured as the additional amount the University expects to pay as a result of the unused entitlement.


Fixed assetsFixed assets are stated at deemed cost less accumulated depreciation and accumulated impairment losses. Certain items of fixed assets that had been revalued to fair value on or prior to the date of transition to the 2015 FE HE SORP, are measured on the basis of deemed cost, being the revalued amount at the date of transition to FRS 102.

Land and buildingsCosts incurred in relation to land and buildings after initial purchase or construction, and prior to valuation, are capitalised to the extent that they increase the expected future benefits to the University.

Borrowing costs are recognised as expenditure in the period in which they are incurred.

EquipmentEquipment additions are stated at cost, unless they cost less than £5,000 per individual item or group of related items in which case they are written off in the year of acquisition.

DepreciationDepreciation is not provided on freehold land. On other assets it is provided in equal annual instalments over the estimated useful lives of the assets. The rates of depreciation are as follows:

Freehold buildings and major improvements

Remaining life of each building between 3 and 40 years

Fixtures, fittings and equipment

Five years

Equipment acquired for specific research projects

If the estimated project life is two or more years at the balance sheet date, over the project life, otherwise written off as incurred

Depreciation is not provided on assets under construction.

Depreciation methods, useful lives and residual values are reviewed at the date of preparation of each Balance Sheet.

Heritage assetsItems that meet the definition under FRS102 of a Heritage Asset (a tangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture) are capitalised if their acquisition cost exceeds £5,000. Any heritage assets owned by the University will be held at cost or valuation where reasonably obtainable.

Investment propertyInvestment property is land and buildings held for rental income or capital appreciation rather than for use in delivering services. Investment properties are measured initially at cost and subsequently at fair value with movements recognised in the Surplus or Deficit. Properties are not depreciated but are revalued or reviewed annually according to market conditions as at 31 July each year.

Impairment of tangible fixed assetsThe carrying amounts of the Group’s assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the fixed asset may not be recoverable. If any such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Consolidated Statement of Comprehensive Income and Expenditure.

Calculation of recoverable amountThe recoverable amount of a fixed asset is the greater of its fair value less costs to sell and its value in use. In assessing value in use, the expected future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the rate of return expected on an equally risky investment. For an asset that does not generate largely independent cash-flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairmentFor tangible fixed assets where the recoverable amount increases as a result of a change in economic conditions or in the expected use of the asset then the resultant reversal of the impairment loss should be recognised in the current period.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Intangible assets and goodwillGoodwill arises on consolidation and is based on the difference between the fair value of the consideration given for the undertaking acquired and the fair value of its separable net assets or liabilities at the date of acquisition.

Goodwill and intangible assets are amortised on a straight line basis over the five year estimated economic life of the asset, being the rebuttable presumption under FRS 102. Goodwill and intangible assets are subject to periodic impairment reviews as appropriate.


StockStock is stated at the lower of cost measured using an average cost formula and estimated selling price less costs to complete and sell.

ProvisionsProvisions are recognised in the financial statements when:

(a) the University has a present obligation (legal or constructive) as a result of a past event;

(b) it is probable that an outflow of economic benefits will be required to settle the obligation; and

(c) a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

InvestmentsInvestments in subsidiary undertakings and associates are carried at cost less impairment in the University’s accounts.

Listed investments, are held at fair value with movements recognised in the consolidated statement of comprehensive income and expenditure.

TaxationThe University is an exempt charity within the meaning of Part 3 of the Charities Act 2011. It is therefore a charity within the meaning of Para 1 of schedule 6 to the Finance Act 2010 and accordingly, the University is potentially exempt from taxation in respect of income or capital gains received within categories covered by section 478-488 of the Corporation Tax Act 2010 (CTA 2010) or section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied to exclusively charitable purposes.

The University receives no similar exemption in respect of Value Added Tax. Irrecoverable VAT on inputs is included in the costs of such inputs. Any irrecoverable VAT allocated to tangible fixed assets is included in their cost.

The University’s subsidiaries are liable to Corporation Tax in the same way as any other commercial organisation.

Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in financial statements. Deferred tax assets are more likely than not to be recovered. Deferred tax assets and liabilities are not discounted.

ReservesReserves are classified as restricted or unrestricted. Restricted endowment reserves include balances which, through endowment to the University, are held as a permanently restricted fund which the University must hold in perpetuity.

Other restricted reserves include balances where the donor has designated a specific purpose and therefore the University is restricted in the use of these funds.

LeasesCosts in respect of operating leases are charged on a straight-line basis over the lease term. Any lease premiums or incentives are spread over the minimum lease term.

Leasing agreements which transfer to the University substantially all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in fixed assets and the capital elements of the leasing commitments are shown as obligations under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied in order to reduce outstanding obligations and the interest element is charged to the Income and Expenditure Account in proportion to the reducing capital element outstanding. Assets held under finance leases are depreciated over the shorter of the lease term or the useful economic lives of equivalent owned assets.

Maintenance of premisesExpenditure on routine corrective maintenance is charged directly to the Consolidated Statement of Comprehensive Income and Expenditure in the period in which it is incurred.

Long term maintenance work is carried out on the basis of a long term maintenance plan. Actual expenditure on long term maintenance is charged against the Consolidated Statement of Comprehensive Income and Expenditure in the period in which it is incurred.

Foreign currenciesTransactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the Surplus or Deficit.

Cashflows and liquid resourcesCash and cash equivalents comprise cash balances and deposits with an original maturity of three months or less.


3 Research grants and contracts

Research councils and charities 573 573 464 464

Governmental 681 678 960 835

Industry and commerce 201 103 310 107

1,455 1,354 1,734 1,406

4 Other income

Residences, catering and conferences income

3,341 3,325 4,521 4,513

Other grants income 2,623 1,966 1,911 1,893

Capital grants 3,366 3,366 3,370 3,370

Other income 1,288 3,779 3,047 2,918

10,618 12,436 12,849 12,694

5 Donations, endowments and investment income

Income from endowments 18 7 7 8 8

Investment income on restricted reserves

19 10 - 12 -

Income from investments 21 18 109 100

Donations with restrictions 109 - 111 -

147 25 240 108


Consolidated University Consolidated University

Notes £’000 £’000 £’000 £’000

1 Tuition fees and education contracts

Full-time home and EU students 62,457 62,457 58,064 58,064

International students 36,708 35,307 38,344 38,344

Part-time students 3,274 3,274 3,250 3,250

Short courses 1,106 802 1,147 687

103,545 101,840 100,805 100,345

2 Funding body grants

Grants for HE Provision

Recurrent HEFCE teaching 6,356 6,356 6,493 6,493

Recurrent NCTL 92 92 150 150

Recurrent HEFCE research 1,322 1,322 1,294 1,294

Recurrent - other (including non- recurrent special funding)

1,826 1,826 1,871 1,871

Other grants

Education Funding Agency 138 138 202 202

Capital grants - funding bodies - - 2,650 2,650

9,734 9,734 12,660 12,660



£’000 £’000 £’000 £’000

6 Staff costs

Salaries 50,173 45,892 52,255 48,761

Social security costs 5,217 4,822 4,528 4,261

Other pension costs 10,574 10,395 9,109 9,003

Severance payments 6,055 6,052 459 459

Total 72,019 67,161 66,351 62,484

The reconciliation of the total staff costs, as presented in the Statement of Comprehensive Income and Expenditure, is:



£’000 £’000 £’000 £’000

Staff costs 65,964 61,109 66,351 62,484

Restructure costs 6,055 6,052 - -

Total 72,019 67,161 66,351 62,484

Year Ended 31 July 2017


£’000 £’000

Emoluments of the Vice-Chancellor:

S A Atkinson

Salary 202 200

Benefits in kind 5 4

207 204

Pension contributions 32 30

239 234

Remuneration of other higher paid staff, excluding employer’s pension contributions

No. No.

£100,000 to £109,999 - -

£110,000 to £119,999 - -

£120,000 to £129,999 - -

£130,000 to £139,999 - 2

£140,000 to £149,999 3 -

£150,000 to £159,999 - -

£160,000 to £169,999 - -

3 2

No higher paid staff members in either 2016/2017 or 2015/2016 received compensation for loss of office.


Year Ended 31 July 2017 Year Ended 31 July 2016

£’000 £’000 £’000 £’000

Debtor Creditor Debtor Creditor

City of Sunderland College 1 - 3 -

Sunderland City Council 204 1 62 34

University Students’ Union 5 - 86 10

Northumbrian Water - - 2 -

Cellular Solutions - - 10 -

Cambridge English Language 48 - 48 -

BT - - - 20



£’000 £’000

Key management personnel compensation 620 493

Board members

The members of the Board of Governors are the trustees for charitable law purposes. Due to the nature of the University’s operations and the composition of the Board, 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 may have an interest. All transactions involving organisations in which a member of the Board may have an interest, including those identified below are conducted at arm’s length and in accordance with the University’s Financial Regulations and usual procurement procedures.

The following principal related party transactions with the Group were identified for disclosure:

6 Staff costs (continued)

FTE FTE

Average staff numbers by major category (FTE): No. No.

Academic departments 602 762

Academic services 275 218

Administration and central services 342 308

Premises 106 127

Residences, catering and conferences 28 22

Research grants and contracts 11 9

Other 25 27

1,389 1,473

The Staff FTE in academic departments for the year ended 31 July 2016 included support staff. For the year ended 31 July 2017, all support staff are recorded in support services in the lines below.

Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the University. Staff costs include compensation paid to key management personnel.

The key management personnel are defined as the University Executive – the Vice-Chancellor, Deputy Vice-Chancellor and the Chief Operating Officer.




£’000 £’000 £’000 £’000

7 Interest and other finance costs

Loan interest 1,393 1,393 1,401 1,401

Finance lease interest 1,611 1,611 1,678 1,678

Other interest 58 58 - -

Net charge on pension scheme 2,443 2,443 2,543 2,543

5,505 5,505 5,622 5,622

Sales Purchases Sales Purchases

City of Sunderland College 18 926 27 1,094

Sunderland City Council 602 491 173 679

University Students’ Union 78 96 233 157

Northumbrian Water 30 246 3 343

Cellular Solutions 5 2 22 4

Cambridge English Language 292 - 267 -

Accenture North East 41 - - -

NELEP 2,369 - 2,531 -

BT - 80 - 513

No council member has received any remuneration or waived payments from the group during the year (2016: none)

Members of the Governing Body are not remunerated for their work, but are reimbursed for reasonable expenses.

The total expenses paid to or on behalf of Governors was £517 for the year ended 2017 (2016: £2,948). This represents travel and subsistence expenses incurred in attending council, committee meetings and charity events in their official capacity.

6 Staff costs (continued)


8 Analysis of other total expenditure by activity

Academic departments 19,246 19,112 21,396 21,055

Academic services 5,302 4,971 5,406 5,289

Administration and central services 11,734 9,818 13,252 12,634

Premises 4,853 3,359 5,441 3,938

Residences, catering and conferences 1,059 1,059 1,661 1,660

Research grants and contracts 657 581 514 391

Other 1,430 10,395 1,574 7,604

44,281 49,295 49,244 52,571

Other operating expenses include:

External auditors remuneration in respect of audit services

64 32 53 31

External auditors remuneration in respect of non-audit services

36 25 120 111

Operating lease rentals

Land and buildings 590 - 590 -

Other 38 38 12 12

9 Taxation



£’000 £’000

Recognised in the statement of comprehensive income and expenditure

Current tax

Current tax expense 5 6

Adjustment in respect of previous years (2) 14

Current tax expense 3 20

Deferred tax

Origination and reversal of timing differences (1) 13

Deferred tax (credit) / expense (1) 13

Total tax expense 2 33


University

Cost

At 31 July 2016 170,771 3,997 420 14,040 22,882 11,967 224,077

Additions 7,122 - - - 2,982 400 10,504

Transfers 7,160 3,853 - - 955 (11,968) -

Disposals (166) (700) - - - - (866)

At 31 July 2017 184,887 7,150 420 14,040 26,819 399 233,715

Depreciation

At 1 August 2016 17,881 2,697 - 13,531 17,124 - 51,233

Charge for the year 4,815 - - 62 2,408 - 7,285

Impairment - 2,135 - - - - 2,135

Transfers (325) 325 - - - - -

Disposals (166) - - - - - (166)

At 31 July 2017 22,205 5,157 - 13,593 19,532 - 60,487

Net book value

At 31 July 2017 162,682 1,993 420 447 7,287 399 173,228

At 31 July 2016 152,890 1,300 420 509 5,758 11,967 172,844

10 Fixed assets

Freehold Land and Buildings

Freehold Land and Buildings

held for sale

Freehold Investment properties

Leasehold Land and Buildings

Fixtures, Fittings and Equipment

Assets under

construction Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Consolidated

Cost

At 31 July 2016 170,771 3,997 420 14,360 22,993 11,967 224,508

Additions 7,122 - - 7 3,015 400 10,544

Transfers 7,160 3,853 - - 955 (11,968) -

Disposals (166) (700) - (89) (30) - (985)

At 31 July 2017 184,887 7,150 420 14,278 26,933 399 234,067

Depreciation

At 1 August 2016 17,881 2,697 - 13,779 17,108 - 51,465

Charge for the year 4,815 - - 69 2,444 - 7,328

Impairment - 2,135 - - - - 2,135

Transfers (325) 325 - - - - -

Disposals (166) - - (35) (4) - (205)

At 31 July 2017 22,205 5,157 - 13,813 19,548 - 60,723

Net book value

At 31 July 2017 162,682 1,993 420 465 7,385 399 173,344

At 31 July 2016 152,890 1,300 420 581 5,885 11,967 173,043


10 Fixed assets (continued)

11 Goodwill arising from the acquisition of The University of Sunderland in Hong Kong Limited (Formerly RDI Limited) (Consolidated)

Goodwill

£’000

Cost

At 1 August 2016 807

Recognition of goodwill on acquisition -

At 31 July 2017 807

Amortisation

At 1 August 2016 13

Charge for year 161

At 31 July 2017 174

Net book value

At 31 July 2017 633

At 31 July 2016 794

At 31 July 2017, freehold land and buildings included £12,965k (2016: £13,665k) in respect of freehold land which is not depreciated.

Included within freehold land and buildings are assets funded wholly or partly by finance leases with the net book value of £3,644k (2016: £3,826k).

An impairment of £2,135k has been recognised, in relation to the Forster Building, which was held for sale at 31 July 2017. The impairment has been incurred as a result of deemed cost taken on transition to FRS 102, which was based on Depreciated Replacement Cost, rather than Open Market Value. The corresponding transfer from the revaluation reserve is shown in the detail of Unrestricted Reserve activity in Note 20.



12 Non-Current Investments

Subsidiary companies

Other fixed assets

investments Total

£’000 £’000 £’000

Consolidation

Cost or valuation

At 1 August 2016 - 619 619

Additions - 223 223

Disposals - (210) (210)

Unrealised gain - 11 11

At 31 July 2017 - 643 643

Provision for impairment

At 1 August 2016 - 50 50

At 31 July 2017 - 50 50

Net book value

At 31 July 2017 - 593 593

At 1 August 2016 - 569 569

University

Cost or valuation

At 1 August 2016 2,457 83 2,540

Disposals (10) - (10)

At 31 July 2017 2,447 83 2,530

Provision for impairment

At 1 August 2016 2,457 50 2,507Removal on de-recognition or disposal of investment

(10) - (10)

At 31 July 2017 2,447 50 2,497

Net book value

At 31 July 2017 - 33 33

At 1 August 2016 - 33 33



£’000 £’000 £’000 £’000

Other non-current investments consist of:

CVCP Properties Limited 33 33 33 33

UBS Portfolio Investments:

TMS UBS (UK) Global Yield 560 - 334 -

Nationwide International Wealth 95 Account - - 202 -

593 33 569 33


13 Stock



£’000 £’000 £’000 £’000

Finished goods 108 75 187 148

108 75 187 148

14 Trade and other receivables: amounts falling due within one year

Trade receivables 6,918 6,458 5,128 4,719

Other receivables 415 12 329 173

Prepayments and accrued income 4,800 4,663 6,334 6,168

Amounts due from subsidiary companies - 1,345 - 1,184

12,133 12,478 11,791 12,244

15 Creditors: amounts falling due within one year

Bank overdraft 22 22 15 15

Secured bank loans 1,621 1,621 26,080 26,080

Obligations under finance lease 1,045 1,045 873 873

Payments received on account 14,435 14,435 11,307 11,307

Trade payables 3,123 2,597 2,775 2,569

Social security and other taxation payable 1,359 1,182 923 852

Accruals and deferred income 8,681 7,579 6,774 5,517

Amounts due to subsidiary companies - 485 - 30

Other payables 1,386 1,278 1,255 1,169

Amounts due to funding bodies 28 28 - -

31,700 30,272 50,002 48,412

Included in the balance of secured bank loans due within one year is £Nil (2016: £24,535k) which in accordance with the loan facility repayment profile, would be payable in more than one year, and is detailed in note 16.

The disclosure of the whole balance being included within current liabilities at 31 July 2016 was due to a covenant breach in the previous year which was not resolved at the year end. During the year ended 31 July 2017 however, Barclays Bank plc have confirmed waiver of the breach, and the disclosure for this year end matches the original repayment profile.

2017 2016

£’000 £’000

Analysis of secured bank loans:

Due within one year 1,621 1,545

Due between one and two years 1,621 1,621

Due between two and five years 5,308 5,308

Due in five years or more 15,984 17,606

Due after more than one year 22,913 24,535

Total secured and unsecured loans 24,534 26,080

Summary of Group and University bank loans at 31 July 2017

Lender Amount Start date Term Interest rate Borrower

£’000 %

Barclays Bank 12,500 Apr 2008 25 years 6.30 University

Barclays Bank 6,500 Apr 2008 15 years 6.13 University

Barclays Bank 3,640 Mar 2012 11½ years 4.01 University

Barclays Bank 5,000 Mar 2009 14½ years 5.92 University

Barclays Bank 6,000 Feb 2011 22 years 5.15 University

Total 33,640

All interest rates are fixed. The bank loans and overdraft are secured by means of a fixed and floating charge over the group assets.

16 Creditors: amounts falling due after more than one year



£’000 £’000 £’000 £’000

Secured bank loans 22,913 22,913 - -

Obligations under finance lease 15,156 15,156 16,183 16,183

Other amounts due to funding bodies 271 271 300 300

38,340 38,340 16,483 16,483

As detailed in Note 15, £24,535k of secured bank loans were disclosed as current liabilities at 31 July 2016, due to a breach in the prior year covenants, which was not resolved at the year end. During the financial year ended 31 July 2017 Barclays Bank confirmed waiver of the breach, and so the disclosure for that year matches the actual repayment profile in accordance with the loan facility, as follows:


17 Provisions for liabilities

Obligation to fund

deficit on USS Pension

(Note 27)

Teacher’s Scheme - Enhanced Pensions

Defined Benefit

Obligations (Note 27)

Total Pensions

Provisions

£’000 £’000 £’000 £’000

Consolidated and University

At 1 August 2016 404 1,999 103,950 106,353

Utilised in year - (141) (2,316) (2,457)

Additions in 2016/17 25 92 6,076 6,193

Actuarial gain in respect of pension schemes - - (20,990) (20,990)

At 31 July 2017 429 1,950 86,720 89,099

Pension enhancements on termination

The assumptions for calculating the provision for pension enhancements on termination under FRS 102, are as follows:

Year ended 31 July 2017


Consolidated and University

Discount rate 2.6% 2.3%

Inflation 3.1% 1.3%

USS deficit

The obligation to fund the past deficit on the Universities Superannuation Scheme (USS) arises from the contractual obligation with the pension scheme for total payments relating to benefits arising from past performance. Management have assessed future employees within the USS scheme and salary payment over the period of the contracted obligation in assessing the value of this provision.

16 Creditors: amounts falling due after more than one year (continued)

Analysis of finance leases

31 July 2017 31 July 2016

£’000 £’000

Group and University

Future minimum lease payments due:

Due within one year 2,602 2,481

Due between one and two years 2,655 2,624

Due between two and five years 8,836 8,471

Due in five years or more 11,612 14,837

Total lease payments due 25,705 28,413

Less: future finance charges (9,504) (11,357)

Obligations under finance leases held on the balance sheet 16,201 17,056



18 Endowment reserves

Restricted net assets relating to endowments are as follows:

Restricted permanent

endowmentsExpendable

endowments 2017 Total 2016 Total

£’000 £’000 £’000 £’000

University and Consolidated

At 1 August

Capital 514 201 715 720

Accumulated income 309 19 328 323

823 220 1,043 1,043

Investment income 5 2 7 8

Expenditure (44) (1) (45) (8)

At 31 July 784 221 1,005 1,043

Represented by:

Capital 515 200 715 715

Accumulated income 269 21 290 328

784 221 1,005 1,043

Analysis by type of purpose:

Scholarships and bursaries 165 273 438 435

Prize funds 550 17 567 608

715 290 1,005 1,043

Analysis by asset:

Current and non-current asset investments - -

Cash & cash equivalents 1,005 1,043

1,005 1,043


19 Restricted reserves

Reserves with restrictions are as follows:

Donations

31 July 2017 Total

31 July 2016 Total

£’000 £’000

Group

At 1 August 750 674

New donations 109 567

Investment income 10 12

Increase in market value of investments 11 11

Expenditure (157) (514)

Movement for the year (27) 76

At 31 July 723 750

Analysis of other restricted funds / donations by type of purpose:

Scholarships and bursaries 109 111

Capital - 456

109 567

University restricted reserves were £Nil (2016: £Nil)


20 Unrestricted reserve

In previous years the pension and revaluation reserves were disclosed on the face of the Balance Sheet in line with the 2007 SORP. Under the new SORP, these are not identified separately in the primary statements, however the split is as follows:

Income and Expenditure

ReservePension Reserve

Revaluation Reserve Total

£’000 £’000 £’000 £’000

Consolidated

Balance at 1 August 2015 52,618 (74,401) 77,731 55,948

Surplus from the income and expenditure statement

207 - - 207

Other comprehensive deficit - (29,430) - (29,430)

Transfer for pension scheme movements 2,522 (2,522) - -

Transfer for historical cost 1,833 - (1,833) -

Balance at 31 July 2016 57,180 (106,353) 75,898 26,725


Deficit from the income and expenditure statement

(6,044) - - (6,044)

Other comprehensive income - 20,990 - 20,990



Transfer on disposal of assets 430 - (430) -

Transfer on impairment of assets 2,135 - (2,135) -

Balance at 31 July 2017 59,270 (89,099) 71,500 41,671

University



(160) - - (160)

Other comprehensive deficit - (29,430) - (29,430)



Balance at 31 July 2016 56,682 (106,353) 75,898 26,227



(6,062) - - (6,062)

Other comprehensive income - 20,990 - 20,990



Transfer on disposal of assets 430 - (430) -

Transfer on impairment of assets 2,135 - (2,135) -

Balance at 31 July 2017 58,754 (89,099) 71,500 41,155


21 Reconciliation of statement of cash flows to balance sheet

Notes At 1 August 2016 Cash Flows At 3 July2017

£’000 £’000 £’000

Consolidated

Cash and cash equivalents 14,972 755 15,727

Bank overdraft 15 (15) (7) (22)

14,957 748 15,705

22 Capital and other commitments

Provision has not been made for the following capital commitments:

At 31 July 2017 At 31 July 2016

Group and University

Commitments contracted for 2,413 4,380

2,413 4,380

23 Lease obligations

Total rentals payable under non-cancellable operating leases:

31 July 2017 At 31 July 2016

Land and Buildings

Plant and Machinery Total Total

£’000 £’000 £’000 £’000

Payable during the year 590 38 628 602

Future minimum lease payments due:

Not later than 1 year 590 50 640 641

Later than 1 year and not later than 5 years

1,426 104 1,530 1,621

Later than 5 years - - - -

Total lease payments due 2,016 154 2,170 2,262

24 Amounts disbursed as agent (Consolidated and University)

31 July 2017 Year ended 31 July 2016

£’000 £’000 £’000 £’000

NCTL

Income

Excess of income over expenditure at 1 August

183 223

NCTL grants 2,104 1,416

Interest earned - -

2,287 1,639

Expenditure

Disbursed to students (1,842) (1,243)

Recovery of grant (193) (191)

Release to income - (22)

(2,035) (1,456)

Excess of Income over expenditure at 31 July

252 183

Funding Council grants are available solely to assist students, the University acts only as paying agent. The grants and related disbursements are therefore excluded from the consolidated statement of comprehensive income and expenditure.


25 Subsidiary undertakings

The subsidiary companies (all of which are registered in England & Wales), wholly-owned or effectively controlled by the University, are as follows:

Company Principal Activity Registration Status Note

University of Sunderland Enterprises Limited

Consultancy, non-accredited courses and rentals

England & Wales 100% owned

University of Sunderland London Campus Limited

Provision of fully serviced campus at Canary Wharf site


University of Sunderland Intern Factory Limited

Providing employment opportunities for graduates


NGC Trading Limited Ceased trading England & Wales 100% owned

Learning North East Limited

University of Sunderland recruitment operations in China


Learning World Limited University of Sunderland recruitment operations in Malaysia and Hong Kong


Sunderland Learning Malaysia Sdn Bhd

University of Sunderland recruitment operations in Malaysia

Malaysia 100% owned i.

Learning World Hong Kong Limited

University of Sunderland recruitment operations in Hong Kong

Hong Kong 100% owned i.

The University of Sunderland in Hong Kong Limited (Formerly RDI Limited)

Provision of fully serviced campus in Hong Kong

Hong Kong 100% owned

The University of Sunderland in Hong Kong Campus Limited (Formerly RDI Learning Management Limited)

Dormant Hong Kong 100% owned ii.

University of Sunderland Services Limited

Dormant England & Wales 100% owned

Usefine Limited Dormant England & Wales 100% owned

Globalscreen Limited Dormant England & Wales 100% owned

National Glass Centre Dormant England & Wales 100% owned

University of Sunderland Development Trust

Charitable activities for the benefit of the University of Sunderland and its students

England & Wales Registered charity

26

i. Indirectly owned through shareholding in Learning World Limited

ii. 20% owned directly, and 80% owned indirectly owned through shareholding in The University of Sunderland in Hong Kong Limited (formerly RDI Limited).

The financial year end of all subsidiaries are co-terminous with the University.

The entire reserves of University of Sunderland Development Trust are held as restricted within the group accounts on the basis that the Trust has a separate Board of Governors and so the University does not have full control.


26 Connected charitable Institutions

The University of Sunderland Development Trust is registered with the Charities Commission and administered by the University. It has been established for its general and special purposes. The activities of the charity are consolidated into the group accounts, as a quasi subsidiary, because the University and its students are the sole beneficiaries of the Trust. The movements in the year on the total funds of the Trust, as reported in its own accounts, are as follows:

Opening balance Income Expenditure

Change in market value

Closing balance

£’000 £’000 £’000 £’000 £’000

Consolidated

University of Sunderland Development Trust

750 119 (157) 11 723

27 Pension schemes

The University’s employees belong to three main pension schemes• Universities Superannuation Scheme (USS)• the Teachers’ Pension Scheme (TPS)• the Local Government Pension Scheme (LGPS)

These are contracted out of the State Second Pension (S2P), the assets of which are held in separate trustee administered funds, and the University has accounted for the pension costs in accordance with FRS 102.

Those not eligible to join the aforementioned schemes are enrolled with the National Employment Savings Trust (NEST).

Analysis of pension liability by schemeYear ended

31 July 2017Year ended

31 July 2016

£’000 £’000

LGPS pension scheme - Funded liabilities (82,490) (99,720)

LGPS pension scheme - Unfunded liabilities (4,230) (4,230)

Teachers’ pension scheme - Enhanced pensions (1,950) (1,999)

USS pension scheme - Deficit obligation (429) (404)

(89,099) (106,353)

The group pension charge to operating profit was as follows:

LGPS (including unfunded payments) 7,214 5,752

TPS 3,007 3,081

USS 267 251

NEST 41 25

Overseas pension plans 45 -

10,574 9,109

LGPS pension scheme – part of restructure costs (Note 6) 2,387 -

Total group pension charge 12,961 9,109


27 Pension Schemes (continued)

(i) The Universities Superannuation Scheme

The institution participates in the Universities Superannuation Scheme (the scheme). Throughout the current and preceding periods, the scheme was a defined benefit only pension scheme until 31 March 2016 which was contracted out of the State Second Pension (S2P). The assets of the scheme are held in a separate trustee- administered fund. Because of the mutual nature of the scheme, the scheme’s assets are not hypothecated to individual institutions and a scheme-wide contribution rate is set. The institution is therefore exposed to actuarial risks associated with other institutions’ employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by Section 28 of FRS 102 “Employee benefits”, accounts for the scheme as if it were a defined contribution scheme.

As a result, the amount charged to the income and expenditure account represents the contributions payable to the scheme in respect of the accounting period. Since the institution has entered into an agreement (the Recovery Plan that determines how each employer within the scheme will fund the overall deficit), the institution recognises a liability for the contributions payable that arise from the agreement to the extent that they relate to the deficit and the resulting expense in the income and expenditure account.

FRS 102 makes the distinction between a Group Plan and a multi-employer scheme. A Group Plan consists of a collection of entities under common control typically with a sponsoring employer. A multi-employer scheme is a scheme for entities not under common control and represents (typically) an industry-wide scheme such as that provided by USS. The accounting for a multi-employer scheme where the employer has entered into an agreement with the scheme that determines how the employer will fund a deficit results in the recognition of a liability for the contributions payable that arise from the agreement (to the extent that they relate to the deficit) and the resulting expense is recognised in profit or loss. The directors are satisfied that the scheme provided by USS meets the definition of a multi-employer scheme and has therefore recognised the discounted fair value of the contractual contributions under the funding plan in existence at the date of approving the financial statements.

Calculation of liability and assumptions

The University has calculated the liability using a modelling tool released through the British Universities Finance Directors Group (BUFDG), and has determined that a provision of £429k (2016: £404k) should be recognised in the balance sheet. The assumptions inherent within the calculation include a discount rate of 2.6% (2016: 2.4%), increase in staff salaries of 3.6% (2016: 3.6%), and employer contributions of 18% (2016: increasing from 16% to 18% from April 2018).

The total cost charged to the profit and loss account is £267k (2016: £251k) as shown in the table at the beginning of this note.

The latest available full actuarial valuation of the scheme was at 31 March 2014 (“the valuation date”), which was carried out using the projected unit method. The valuation as at 31 March 2017 is underway.

Since the institution cannot identify its share of scheme assets and liabilities, the following disclosures reflect those relevant for the scheme as a whole.

The 2014 valuation was the third valuation for USS under the scheme-specific funding regime introduced by the Pensions Act 2004, which requires schemes to adopt a statutory funding objective, which is to have sufficient and appropriate assets to cover their technical provisions. At the valuation date, the value of the assets of the scheme was £41.6 billion and the value of the scheme’s technical provisions was £46.9 billion indicating a shortfall of £5.3 billion. The assets therefore were sufficient to cover 89% of the benefits which had accrued to members after allowing for expected future increases in earnings.



Defined benefit liability numbers for the scheme have been produced using the following assumptions:

2017 2016

Discount rate 2.57% 3.60%

Pensionable salary growth N/A N/A

Pension increases (CPI) 2.41% 2.20%

The main demographic assumption used relates to the mortality assumptions. Mortality in retirement is assumed to be in line with the Continuous Mortality Investigation’s (CMI) S1NA tables as follows:

Male members’ mortality 98% of S1NA [“light”] YoB tables – No age rating

Female members’ mortality 99% of S1NA [“light”] YoB tables – rated down 1 year

Use of these mortality tables reasonably reflects the actual USS experience. To allow for further improvements in mortality rates the CMI 2014 projections with a 1.5% pa long term rate were also adopted. The current life expectancies on retirement at age 65 are:

2017 2016

Males currently aged 65 (years) 24.4 24.3

Females currently aged 65 (years) 26.6 26.5

Males currently aged 45 (years) 26.5 26.4

Females currently aged 45 (years) 29.0 28.8

Scheme assets £60.0bn £49.8bn

Total scheme liabilities £77.5bn £58.3bn

FRS 102 total scheme deficit £17.5bn £8.5bn

FRS 102 total funding level 77% 85%

As part of this valuation, the trustees determined, after consultation with the employers, a recovery plan to pay off the shortfall by 31 March 2031. The next formal triennial actuarial valuation is as at 31 March 2017.

If experience up to that date is in line with the assumptions made for this current actuarial valuation, and contributions are paid at the determined rates or amounts, the shortfall at 31 March 2017 is estimated to be £5 billion, equivalent to a funding level of 92%. The contribution rate will be reviewed as part of each valuation and may be reviewed more frequently.

The technical provisions relate essentially to the past service liabilities and funding levels, but it is also necessary to assess the ongoing cost of newly accruing benefits. The cost of future accrual was calculated using the same assumptions as those used to calculate the technical provisions but the allowance for promotional salary increases was not as high.

Analysis has shown very variable levels of growth over and above general pay increases in recent years, and the salary growth assumption built into the cost of future accrual is based on more stable, historic, salary experience. However, when calculating the past service liabilities of the scheme, a cautionary reserve has been included, in addition, on account of the variability mentioned above.


Scheme Changes

Lord Hutton, who chaired the Independent Public Service Pensions Commission, published his final report in March 2011 and made recommendations about how pensions can be made sustainable and affordable, whilst remaining fair to the workforce and the taxpayer. The Government accepted Lord Hutton’s recommendations as the basis for consultation and Ministers engaged in extensive discussions with trade unions and other representative bodies on reform of the TPS. Those discussions concluded on 9 March 2012, and the Department published a Proposed Final Agreement, setting out the design for a reformed TPS to be implemented from 1 April 2015.

The key provisions of the reformed scheme include: a pension based on career average earnings; an accrual rate of 1/57th; and a Normal Pension Age equal to State Pension Age, but with options to enable members to retire earlier or later than their Normal Pension Age. Importantly, pension benefits built up before 1 April 2015 will be fully protected.

In addition, the Proposed Final Agreement includes a Government commitment that those within 10 years of Normal Pension Age on 1 April 2012 will see no change to the age at which they can retire, and no decrease in the amount of pension they receive when they retire. There will also be further transitional protection, tapered over a three and a half year period, for people who would fall up to three and a half years outside of the 10 year protection.

(ii) Teachers’ Pension Scheme (TPS)

The Teachers’ Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers’ Pensions Regulations 2010, and the Teachers’ Pension Scheme Regulations 2014. These regulations apply to teachers in schools and other educational establishments, including academies, in England and Wales that are maintained by local authorities. In addition, teachers in many independent and voluntary-aided schools and teachers and lecturers in some establishments of further and higher education may be eligible for membership. Membership is automatic for full-time teachers and lecturers and, from 1 January 2007, automatic too for teachers and lecturers in part-time employment following appointment or a change of contract. Teachers and lecturers are able to opt out of the TPS.

Although members may be employed by various bodies, their retirement and other pension benefits are set out in regulations made under the Superannuation Act 1972 and are paid by public funds provided by Parliament. The TPS is an unfunded scheme and members contribute on a ’pay as you go‘ basis – these contributions, along with those made by employers, are credited to the Exchequer under arrangements governed by the above Act.

The Teachers’ Pensions Regulations require an annual account, the Teachers’ Pension Budgeting and Valuation Account, to be kept of receipts and expenditure (including the cost of pension increases). From 1 April 2001, the Account has been credited with a real rate of return, which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return.

Not less than every four years the Government Actuary (GA), using normal actuarial principles, conducts a formal actuarial review of the TPS. The aim of the review is to specify the level of future contributions.

The latest actuarial review of the TPS was carried out as at 31 March 2012 and in accordance with The Public Service Pensions (Valuations and Employer Cost Cap) Direction 2014. The valuation report was published by the Department of Education (the Department) on 9 June 2014. The key results of the valuation are:

• employer contribution rates were set at 16.4% of pensionable pay; in line with current regulations, not including the additional 0.08% employers pay for the cost of Scheme administration;

• total scheme liabilities for service to the effective date of £191.5 billion, and notional assets of £176.6 billion, giving a notional past service deficit of £15.0 billion; and

• an employer cost cap of 10.9% of pensionable pay.

The new employer contribution rate and administration levy for the TPS were implemented with effect from September 2015. A full copy of the valuation report and supporting documentation can be found on the Teachers Pension Scheme website at https://www.teacherspensions.co.uk/news/employers/2014/06/publication-of-the-valuation-report.aspx.



In his interim report of October 2010, Lord Hutton recommended that short-term savings were also required, and that the only realistic way of achieving these was to increase member contributions. At the Spending Review 2010 the Government announced an average increase of 3.2 percentage points on the contribution rates by 2014/15. The increases have been phased in since April 2012.

The arrangements for a reformed Teachers’ Pension Scheme, in line with the remainder of the recommendations made by Lord Hutton, have now been implemented. The Career Average Revalued Earnings (CARE) scheme was implemented from 1 April 2015, whereby benefits will accrue on a career average basis and there is a normal pension age aligned to the state pension age.

The total TPS pension cost for the institution was £3,007k (2016: £3,081k). The liability for unpaid contributions was £399k (2016: £396k) at the balance sheet date with respect to both employees’ and employers’ contributions.

iii. Local Government Pension Scheme (LGPS)

The LGPS is a defined benefit scheme, with the assets held in separate trustee administered funds. LGPSs are regulated by statute, with separate regulations for (a) England and Wales and (b) Scotland. The benefits of the LGPSs are determined nationally by regulation and meet the definition of a defined benefit scheme. The South Tyneside Metropolitan Council is the administering authority for the Tyne & Wear Pension Fund (TWPF).

The metropolitan councils in Tyne & Wear, and other bodies, for example the University, are employing bodies within the TWPF. In the event that the University closes, and there is no successor establishment, the Secretary of State becomes the compensating authority.

The disclosures below relate to the funded liabilities within the Tyne & Wear Pension Fund (the Fund) which is part of the Local Government Pension Scheme (LGPS) and certain related unfunded liabilities which have been separately disclosed.

The LGPS is a funded defined benefit plan with benefits earned up to 31 March 2014 being linked to final salary. Benefits after 31 March 2014 are based on a Career Average Revalued Earnings scheme. Details of the benefits earned over the period covered by this disclosure are set out in ‘The Local Government Pension Scheme Regulations 2013’ and ‘The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014’.

The unfunded pension arrangements relate to termination benefits made on a discretionary basis upon early retirement in respect of members of the Local Government Pension Scheme under the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations.

The funded nature of the LGPS requires participating employers and its employees to pay contributions into the Fund, calculated at a level intended to balance the pension liabilities with investment assets. Information on the framework for calculating contributions to be paid is set out in LGPS Regulations 2013 and the Fund’s Funding Strategy Statement. The last actuarial valuation was at 31 March 2016 and the contributions to be paid until 31 March 2020 resulting from that valuation are set out in the Fund’s Rates and Adjustment Certificate.

The Fund Administering Authority, South Tyneside Council, is responsible for the governance of the Fund.



AssetsThe assets allocated to the Employer in the Fund are notional and are assumed to be invested in line with the investments of the Fund for the purposes of calculating the return to be applied to those notional assets over the accounting period. The Fund is large and holds a significant proportion of its assets in liquid investments. As a consequence there will be no significant restriction on realising assets if a large payment is required to be paid from the Fund in relation to an employer’s liabilities. The assets are invested in a diversified spread of investments and the approximate split of assets for the Fund as a whole (based on data supplied by the Administering Authority) is shown in the disclosures.

The Administering Authority may invest a small proportion of the Fund’s investments in the assets of some of the employers participating in the Fund if it forms part of their balanced investment strategy.

Risks associated with the fund in relation to accounting asset volatility

The liabilities used for accounting purposes are calculated using a discount rate set with reference to corporate bond yields. If assets underperform this yield will create a deficit in the accounts. The Fund holds a significant proportion of growth assets which while expected to outperform corporate bonds in the long term creates volatility and risk in the short term in relation to the accounting figures.

Changes in bond yield

A decrease in corporate bond yields will increase the value placed on the liabilities for accounting purposes although this will be marginally offset by the increase in the assets as a result.

Inflation risk

The majority of the pension liabilities are linked to either pay or price inflation. Higher inflation expectations will lead to a higher liability value. The assets are wither unaffected or loosely correlated with inflation meaning than an increase in inflation with increase the deficit.

Life expectancy

The majority of the Fund’s obligation are to provide benefits for the life of the member following retirement, so increases in life expectancy will result in an increase in liabilities.

Exiting employers

Employers who leave the Fund (or their guarantor) may have to make an exit payment to meet any shortfall in assets against their pension liabilities. If the employer (or guarantor) is not able to meet this exit payment the liability may in certain circumstances fall on other employers in the Fund. Further, the assets at exit in respect of ‘orphan liabilities’ may, in retrospect, not be sufficient to meet the liabilities. This risk may fall on other employers. ‘Orphan liabilities’ are currently a small proportion of the overall liabilities in the Fund.

Total contributions for the year Year ended 31 July 2017


£’000 £’000

Employer’s ordinary contributions 3,186 3,631

Additional lump sum payments for early retirement 1,690 43

Additional employer’s contributions to recover the historic deficit 2,087 1,888

Employer’s contribution in respect of unfunded benefits 277 279

7,240 5,841

Employees’ contributions 1,530 1,640

8,770 7,481



The agreed contribution rate was set at 17% (2016: 17%) for employers and this rate is planned to continue for the next year. The employee rate is dependent upon salary and ranges from 5.5% to 12.5% but averages around 6.5%.

LGPS deficit contributionsA lump sum payment (with inflationary increases) is payable each year to address the pension scheme deficit. In 2016/17, the University was charged a total of £2,087k (2015: £1,888k) for the recovery of the scheme deficit identified in the 2004 valuation.

AssumptionsThe financial assumptions used to calculate scheme liabilities under FRS102 are:

LGPS Ex-Gratia LGPS Ex-Gratia

At 31 July At 31 July At 31 July At 31 July

2017 2017 2016 2016

%pa %pa %pa %pa

Discount rate 2.6 2.6 2.4 2.4

Price Inflation (RPI) 3.1 3.1 2.9 2.9

Price Inflation (CPI) 2.0 2.0 1.8 1.8

Pension increases 2.0 2.0 1.8 1.8

Pension accounts revaluation rate 2.0 - 1.8 -

Salary increases 3.5 - 3.3 -

AssumptionsThe most significant non-financial assumption is the assumed level of longevity. The table below shows the life expectancy assumptions used in the accounting assessments based on the life expectancy of male and female members at age 65.

At 31 July 2017

At 31 July 2016

Males

Member aged 65 at accounting date 22.8 23.2


Females



SensitivityThe approximate impact on the present value of the funded defined benefit obligation, of changing key assumptions as at 31 July 2017, and the projected service cost for the period ending 31 July 2018 is set out below. In each case, only the assumption mentioned is altered; all other assumptions remain the same and are summarised in the previous section. The sensitivity of unfunded benefits (where applicable) has not been included on materiality grounds.

Increase / (decrease) in present value of the total

obligation

Increase / (decrease) in Projected service costs

% £’000 % £’000

Discount rate increased by 1% (2.0) (4,870) (3.1) (220)

Salary increase rate increased by 1% 0.6 1,440 - -

Pension increase rate increased by 1% 1.5 3,520 3.2 220

Mortality age rating increased by 1 year * (2.9) (6,960) (3.6) (250)



The tables below include, where applicable, disclosures for the LGPS and Ex-gratia pensions combined to enable clear presentation. The Ex-gratia pensions account for £4,309k of the total liabilities of £86,719k and £nil of the total assets.



£’000 £’000

Analysis of the amount shown in the balance sheet for LGPS and ex-gratia pensions:

Scheme assets 157,810 140,320

Scheme liabilities (244,530) (244,270)

Deficit in the scheme – net pension liability recorded within pension provisions

(Note 17) (86,720) (103,950)

Current service cost (6,900) (5,711)

Past service costs (1,690) (40)

Total operating charge (8,590) (5,751)

The total operating charge disclosed above of £8,590k (2016: 5,751k) excludes £9k (2016: £1k) increase in the employee benefits accrual required under FRS 102, and £1,002k with respect to amounts payable into the fund for early retirements which will be settled in the next financial year. The total charge to the statement of comprehensive income and expenditure was therefore £9,601k (2016: £5,752k).

*A rating of +1 year means that members are assumed to follow the mortality pattern of the base table for an individual that is 1 year older than them. The sensitivities presented show the impact of increasing each rate. A decrease in each rate would have a similar impact upon the funded defined benefit obligation, in the opposite direction.

Scheme assetsThe assets in the scheme were:

Fair value as at

At 31 July 2017

At 31 July 2016

At 31 July 2015

£’000 £’000 £’000

Equities 104,312 93,032 81,162

Property 14,203 14,032 11,823

Government bonds 6,155 5,332 4,434

Corporate bonds 18,148 16,137 14,287

Cash 6,155 4,210 3,448

Other 8,837 7,577 8,006

Total 157,810 140,320 123,160



At 31 July 2017 At 31 July 2016

£’000 £’000

Analysis of the amount charged to interest payable for LGPS and ex-gratia pensions

Net interest cost (2,410) (2,490)

Net charge to other finance income (2,410) (2,490)

Analysis of other comprehensive income for LGPS and ex-gratia pensions:

Gain on assets 13,180 9,800

Gain / (loss) on liabilities 7,810 (39,230)

Total other comprehensive income before deduction for tax 20,990 (29,430)

Analysis of movement in deficit for LGPS and ex-gratia pensions

Deficit at beginning of year (103,950) (72,120)

Contributions or benefits paid by the University 7,240 5,841

Current service cost (6,900) (5,711)

Past service cost (1,690) (40)

Other finance charge (2,410) (2,490)

Gain / (loss) recognised in other comprehensive income 20,990 (29,430)

Deficit at end of year (86,720) (103,950)

Analysis of movement in the present value of LGPS and ex-gratia liabilities

Present value of LGPS and ex-gratia liabilities at the start of the year 244,270 195,280

Current service cost (net of member contributions) 6,900 5,711

Past service cost 1,690 40

Interest expense 5,790 6,980

Actual member contributions (including notional contributions) 1,530 1,640

Actuarial (gains) / losses (7,810) 39,230

Actual benefit payments (7,840) (4,611)

Present value of LGPS and ex-gratia liabilities at the end of the year 244,530 244,270

Analysis of movement in the fair value of scheme assets

Fair value of assets at the start of the year 140,320 123,160

Interest income on assets 3,380 4,490

Actuarial gain on assets 13,180 9,800

Actual contributions paid by University 7,240 5,841

Actual member contributions (including notional contributions) 1,530 1,640

Actual benefit payments (7,840) (4,611)

Fair value of scheme assets at the end of the year 157,810 140,320

LGPS assets do not include any of the University’s own financial instruments, or any property occupied by the University.



(iv) National Employment Savings Trust (NEST)

NEST is a qualifying pension scheme, established by law to support the introduction of pension auto-enrolment. It is a defined benefit scheme, regulated by The Pensions Regulator and administered by a corporate trustee, the NEST Corporation, a non- departmental public body that operates at arm’s length from government but is accountable to the Department for Work and Pensions.

The total contribution for the year ended 31 July 2017 was £70k (2016: £46k) of which employers’ ordinary contributions totalled £41k (2016: £25k) and employees’ contributions totalled £29k (2016: £21k). No additional lump sum contributions were made in the year, and the liability for unpaid contributions was £8k (2016: £4k) at the balance sheet date.

(v) Overseas Pension Schemes

The group operates defined contribution schemes for its employees in Hong Kong and Malaysia.

The Mandatory Provident Fund retirement benefit scheme (the “MPF Scheme”), and the Employees Provident Fund (KWSP) (the “EPF Scheme”) operate in accordance with the laws of Hong Kong and Malaysia respectively.

Contributions are made based on a percentage of the employees’ basic salaries and are charged to the consolidated profit or loss as they become payable in accordance with the rules of the MPF and EPF Schemes. The assets of the schemes are held separately from those of the group in independently administered funds.

28 Financial Instruments

The University is included in the consolidated financial statements, and is considered to be a qualifying entity under FRS 102 paragraphs 1.8 to 1.12. The following exemptions available under FRS 102 in respect of certain disclosures for the University only financial statements have been applied:

Consolidated

At 31 July 2017 At 31 July 2016

Financial assets

Cash and cash equivalents 15,727 14,972

Trade receivables 6,918 5,128

Other receivables 378 329

Accrued Income 777 3,692

Financial liabilities

Bank overdraft 22 15

Secured bank loans 24,534 26,080

Obligations under finance lease 16,201 17,056

Payments received on account

Trade payables 14,435 11,307

Trade payables 3,123 2,775

Accruals 8,341 6,324

Other payables 2,745 2,178

Amounts due to funding bodies 299 300

There is no material difference between the book value of financial assets and liabilities noted above, and their fair value.

The Group’s financial assets and liabilities comprise cash and liquid resources, and various items, such as trade receivables and trade payable which arise directly from its operations. The Group is not exposed to significant foreign exchange or interest rate risk.



29 Accounting estimates and judgements

Pension Provisions

The University recognises a significant liability in its balance sheet with respect to its employee pension obligations, most notably in relation to the LGPS scheme. The assumptions used in calculating these liabilities are outlined in detail in Note 27, and the University has not deviated from those advised by the actuary.

The liability decreased in the year ended 31 July 2017 by 17%, largely as a result of the recovery of corporate bond yields, which fell in the immediate months following the UK’s vote to leave the EU in June 2016. The discount rate remains the key area of uncertainty regarding future estimates and judgements around the pension scheme liability, given that small movements in the discount rate can significantly impact on the estimate.

Provision for doubtful debts

The University has provided for aged debts using its best estimate of unrecoverable debts from historical experience and known factors, and is satisfied that all unprovided debts are recoverable as reported in the balance sheet.


Key Facts, Figures and Accolades

In response to an optional question in the 2017 National Student Survey “My student experience has been valuable”, 87.32% our students concurred with this compared to the sector average of

80.04%

84% of our students are satisfied with the quality of their course (National Student Survey, 2017)

94.2% of our 2016 graduates were in work or further study 6 months after graduating

We were ranked Silver in the Teaching Excellence Framework, alongside York, Manchester and Durham universities

250 of our students got a taste of life and study in London this summer, through the Student Mobility Programme

We have risen 38 places in the Guardian League Tables since 2016

£19.3 million invested in our Sciences Complex

We won the GOLD HEIST award for Best Undergraduate Student Recruitment Campaign 2017 for our You Still Can campaign, which attract students to University no matter what their age

Our new Sunderland School of Nursing was shortlisted in five categories of the national Student Nursing Times Awards 2017

£1 million invested in our School of Engineering this summer


Academic Awards Winter 2016

Baroness Tanni Grey-Thompson DBE Gold-medal-winning athlete, Director of UK Athletics, serving Member of the House of Lords Honorary Doctorate of Law, in recognition of her outstanding sporting achievements, broadcasting career, and her work as a serving cross-bench peer in challenging the inequalities faced by disabled people.

James Ramsbotham DL Chief Executive of the North East England Chamber of Commerce Honorary Doctorate of Business Administration, in recognition of his outstanding career in business and steadfast commitment to supporting North East business and the regional economy.

Academic Awards Summer 2017

Brenda Blethyn OBE Actress, Vera Honorary Doctorate of Arts, in recognition of her outstanding acting career in film, television and theatre.

Ken Bremner CEO, City Hospitals Sunderland NHS Foundation Trust Honorary Fellowship, in recognition of over 35 years of service to the NHS in the North East.

Paul Michael Callaghan CBE, DL, FRSA Chairman, The Leighton Group Honorary Doctorate of Business Administration, in recognition of his commitment to the University, to Sunderland and to the global IT business community.

Gary Fildes Director of Kielder Observatory Honorary Fellowship, in recognition of his outstanding contribution to making astronomy and space science accessible to a wider audience.

Felicity Finch Actress, The Archers Honorary Doctorate of Arts, in recognition of her outstanding career as an actor, radio presenter and reporter.

Heidi Mottram CEO, Northumbrian Water Group Honorary Doctorate of Science, in recognition of her outstanding contribution to the business community in the North East, and supporting diversity.

Dr Andrew Singleton Chief of the Laboratory of Neurogenetics, National Institute on Aging, USA Honorary Doctorate of Science, in recognition of his pioneering work in the understanding of neurological health disorders.

Lesley Spuhler OBE CEO, Foundation of Light Honorary Fellowship, in recognition of her outstanding support for North East charities, in particular the Foundation of Light.

University of Sunderland City Campus Chester Road Sunderland SR1 3SD

T: 0191 515 2000 www.sunderland.ac.uk

Documents

Report and Financial Statements - Dixon Walter · 2019-02-25 · Report and Financial Statements 2016/2017 A University Coming of Age Our institution has a proud history stretching