Notes to the financial statements

NOTES TO THE FINANCIAL STATEMENTS

 

1. TUITION FEES AND EDUCATION CONTRACTS (consolidated and university)

2016/17

consolidated and university

£000

2015/16

consolidated and university

£000

Scottish higher education students

5,208 5,085
Rest of UK students 1,402 1,451
European Union (excluding UK) students 2192 2048
Non-European Union students 2,485 2,677
Other fees and discounts (82) 32
Education contracts 1,680 1,445
  13,918 13,923
  13,918 13,923

2. SCOTTISH FUNDING COUNCIL GRANTS (consolidated and university)

2016/17

consolidated and university

£000

2015/16

consolidated and university

£000

Recurrent grant

   
Teaching 12,142 12,558
Research 951 765

Specific grants

   
Wider access retention funding 586 765

Regional Coherence - Academies programme

- 312

Disabled student premium

54 53

Knowledge exchange / University innovation fund

350 334

Scottish Drama Training Network

148 148

Capital maintenance grant released

982 309

Other miscellaneous grants

- 54

Deferred capital grants released (note16)

   

Land & buildings

468 456

Equipment

- -
 

15,681

15,313

 

RESEARCH GRANTS & CONTRACTS

Consolidated

2016/17

£000

University

2015/16

£000

Consolidated

2016/17

£000

University

2015/16

£000

Research councils

158 93 158 93

UK based charities

212 322 179 322

UK government and health authorities

927 1,139 919 1,115

UK private sector

64 11 41 11

European funding

- - - -

Other grants & contracts

240 194 238 194

 

OTHER OPERATING INCOME

Consolidated

2016/17

University

2015/16

Consolidated

2016/17

University

2015/16

 

£000

£000

£000

£000

Residences, catering and conferences

4,844

4,609

4,620

4.335

Other services rendered

999

1,024

829

877

Sports centre income

235 236 235 236

Released from deferred capital grants (note 16)

- 72 - 72

Other income

2,699 652 2,880 652 

 

8,777

6,593

8,564

6,172

 

INVESTMENT INCOME

Consolidated

2016/17

University

2015/16

Consolidated

2016/17

University

2015/16

 

£000

£000

£000

£000

Investment income on endowments

2 1 2 -

Other investment income

11 28 11 28

Net return on pension scheme

- - - -

 

13 29 13 28

 

STAFF COSTS

Consolidated

2016/17

University

2015/16

Consolidated

2016/17

University

2015/16

 

£000

£000

£000

£000

Staff costs        

Wages and salaries

17,779

16,890

17,669

16,814

Social security costs

1,774

1,450

1,773

1,450

Movement on USS provision Social security costs

1,774

1,450

1,773

1,450

Other pension costs

3,869

3,539

3,869

3,539

 

23,423

21,884

23,312

21,808

 

Emoluments of the Principal and Vice-Chancellor

2016/17

£000

2015/16

£000

Professor Petra Wend - -

Salary

210 202

Employers’ pension contributions

27 34

In lieu of employers’ pension contribution

8 -

 

247 238

Pension contributions for Professor Wend are in respect of employers’ contributions to the Scottish Teachers’ Superannuation Scheme, and are paid at the same rate as for other employees in that scheme. Employer pension contributions have reduced as a result of the Principal opting out of the pension scheme part way through the year. Additional payments equivalent to pensions contributions foregone are included within emoluments.

Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the University: this comprises the Executive Board. The total compensation for the year ended 31 July 2017 (including any employers’ pension contributions) was £888,000 (year ended 31 July 2016, £902,000).

University Court members

The University Court members are the trustees for charitable law purposes and are also the directors of the company limited by guarantee for company law purposes. Due to the nature of the University’s operations and the composition of the University Court (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 University Court may have an interest. All transactions involving organisations in which a member of the University Court may have an interest are conducted at arm’s length, and in accordance with the University’s financial regulations and normal procurement procedures. University Court members receive no remuneration in respect of their duties as members of the University Court. A number of members of the University Court, including the Principal and Vice-Chancellor, receive a salary in respect of their employment with the University. Detail of such remuneration is set out below.

University Court members

2019/20

£000

2018/19 (restated)

£000

Directors’ emoluments (including pension contributions)    

Fees for services as members of University Court

- -

Emoluments (i.e. salaries as members of staff)

463

478

Contributions paid to pension schemes

69

81

Benefits in kind

3 5

Total

535

563

These figures relate to eight members of staff (2015/16: six), including the Principal

The number of members of staff, including the Principal, who received remuneration (including benefits and excluding pension contributions) in each of the following ranges was:-

Senior post holders

2019/20

Number

2018/19

Number

Senior post holders    

£100,001 to £110,000

1 -

£110,001 to £120,000

1 -

£120,001 to £130,000

- 1

£170,001 to £180,000

- 1

£240,001 to £250,000

1 -

Senior post holders

2016/17

2015/16

 

£000

£000

Compensation for loss of office

 

 

Compensation payable in respect of senior postholders

-

-

 

Average full time equivalent (FTE) staff numbers by major category:

2016/17

FTE number

2015/16

FTE number

(Consolidated and university)

   

Academic schools

194

190
Academic services 55 50

Research grants & contracts

30

31

Residences, catering & conferences

29 29

Premises

22 24

Administration & central services

111 111
  441 435

 

INTEREST PAYABLE AND OTHER FINANCE COSTS

Consolidated

2016/17

£000

University

2015/16

£000

Consolidated

2016/17

£000

University

2015/16

£000

Loan interest

1,385

1,215

1,385

1,215

Finance lease interest

- - - -

Net charge on pension scheme

335 403 335 403

 

1,720

1,618

1,720

1,618

 

ANALYSIS OF TOTAL EXPENDITURE BY ACTIVITY

Consolidated

2016/17

£000

University

2015/16

£000

Consolidated

2016/17

£000

University

2016/17

£000

Academic schools

12,732

12,732

12,732

12,732

Academic services

4,864

4,820

4,864

4,823

Research grants & contracts

1,480

1,390

1,455

1,390

Residences, catering and conferences

2,705

4,664

2,616

4,441

Premises

7,118

6,550

7,118

6,550

Administration & central services

7,437

6,236

7,429

6,236

 

2,878

1,247

2,878

1,244

Total per income and expenditure account

39,925

38,447

39,643

38,001

 

TAXATION

(consolidated and university)

2016/17

2015/16

 

£000

£000

UK Corporation Tax payable

- -
  -

 

OTHER OPERATING EXPENSES

Consolidated

2016/17

£000

University

2015/16

£000

Consolidated

2016/17

£000

University

2015/16

£000

External audit

49

40

43

32

Internal audit

25

40

43

32

Grants to QMU Students’ Union

242

240

242

240

Other expenses

9,516 10,158 9,661 9,788 

 

9,832

10,158

9,661

9,788

 

TANGIBLE ASSETS

Consolidated and University

Freehold Land & Building

Fixture, Fitting & Equipment

Fixture, Fitting & Equipment Total 
Cost or valuation:

Owned

£000

Owned

£000

Held under finance leases

£000

 

At 1 August 2016

96,289 7,886 1,271 105,446

Disposals at cost

- - - -

Additions at cost

202 722 - 924

At 31 July 2017

96,491

8,608

1,271

106,370

Depreciation:

 

 

 

 

At 1 August 2016

10,347

7,737

1,192

19,272

Written off on disposals

-

-

-

-

Provided during the year

4,616

308

26

4,950

At 31 July 2017

14,963

8,045

1,218

24,226

Net book amount at 31 July 2017

 

81,528

563

53

82,144

Net book amount at 1 August 2016

85,942

149

79

86,170

Analysis of net book amount at 31 July 2017

 

 

 

 

Financed by capital grant

9,323

-

-

9,323

Other

72,205

563

53

78,144

 

81,528

563

53

82,144

The valuation of the Craighall campus was carried out at 31 July 2013 by Gerald Eve, Chartered Surveyors. The basis of the valuation, which was carried out in accordance with guidelines issued by the Royal Institution of Chartered Surveyors, is depreciated replacement cost.

The University has a modest collection of works of art and other items of historical interest. No value is included within fixed assets in respect of this collection.

INVESTMENTS Subsidiary Undertaking

Country of incorporation and registration

Description of shares held

Proportion of nominal value of shares held

%

Cost at 1 August 2016 and
31 July 2017

£

QMU Enterprises Ltd

Scotland

Ordinary £1 shares

100 100

QMU Enterprises Limited undertakes activities which, for legal or commercial reasons, are more appropriately channelled through a separate limited company. These activities include vacation letting, conferences and rendering of services (other than research) for a variety of commercial and other organisations. The results of QMU Enterprises Limited have been consolidated into the group financial statements.

 

TRADE AND OTHER RECEIVABLES

Consolidated

2017

£000

University

2016

£000

Consolidated

2017

£000

University

2016

£000

Amounts falling due within one year:

       

Trade debtors

1,996

540

1,942

513

Prepayments and accrued income

949 1,082 928 1,081

Amounts due from subsidiaries

- - 704 591
 

2,945

1,622

3,574

2,185

Amounts due from subsidiaries

- - 704 591
 

2,945

1,622

3,574

2,185

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Consolidated

2017

£000

University

2016

£000

Consolidated

2017

£000

University

2016

£000

Secured loans (see note 16)

1,492

1,492

1,492

1,492

Trade creditors

861

861

1,492

1,492

Social security and other taxation payable

519

482

487

458

Accruals and deferred income

4,346

5,329

4,139

5,178

Finance lease commitments due within one year

44

84

44

84

 

7,262

8,248

7,087

8,073

 

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Consolidated and University

2017

£000

2016

£000

Secured loan

32,070

33,562

Deferred capital grants

9,323

9,791

 

41,393

43,353

Analysis of secured loans:-

 

 

Due between one and two years

1,492

1,492

Due between two and five years

4,475

4,475

Due in five years or more

26,103

27,595

Total due after more than one year

32,070

33,562

Due within one year (note 15)

1,492

1,492

Total secured loans

33,562

35,054

The secured long-term facility with Barclays Bank plc is £33.6 million, and has a final maturity date of 17 December 2024. The loan is secured over the campus site at Musselburgh. The University has entered into a fixed-rate arrangement in

order to protect itself against any significant fluctuations in interest rates. The terms of this arrangement are commercially confidential.

Analysis of deferred capital grants

Consolidated and University

2017

£000

Consolidated and University

2016

£000

Opening balance : buildings

9,791

10,319

Opening balance : equipment

-

-

 

9,791

10,319

Receivable : buildings

-

-

Receivable : equipment

-

-

 

-

-

Release : buildings

468

528

Release : equipment

-

-

 

468

538

Closing balance : buildings

9,323

9,791

Closing balance : equipment

-

-

 

9,323

9,791

 

PROVISIONS FOR LIABILITIES

Consolidated and University

Pensions

£000

Obligation to fund deficit on USS Pension

£000

Pension enhancements

£000

Defined Benefit Obligations LGPS

£000

Total Pensions Provisions

£000

At 1 August 2016

368 3,395 13,428 17,191

Utilised in year

(28)

(229)

- (257)

Transfer from income & expenditure account

29

65

(1,557) (1,463)

At 31 July 2017

369

3,231

11,871 15,471

The University has a liability for pension enhancements payable to former members of staff who have taken early retirement in prior years. An actuarial valuation of the amount of this liability was carried out by Hymans Robertson, Actuaries at 31 July 2017, on the basis of valuation prescribed by FRS 102, and using the same set of assumptions as are set out in note 20 in relation to the valuation of the Local Government Pension Scheme.

The University also has a liability to fund the past deficit on the Universities’ Superannuation Scheme (USS).This obligation 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 contractual obligation in assessing the value of this provision.

ENDOWMENT RESERVES

Consolidated and University

Unrestricted

£000

Consolidated and University

Restricted Expendable

£000

Consolidated and University

Restricted Permanent

£000

Consolidated and University

Restricted Total

£000

Consolidated and University

Total

£000

Balance at 1 August 2016

-

433

46

479

479

Appreciation of endowment asset

         

investments

- (15) - (15) (15)

Income for year

-

218

-

218

218

Expenditure for year

- (191) - (191) (191)

At 31 July 2017

- 445 46 491 491

Represented by:

         

Capital value

- -

35

35

35

Accumulated income

- 445 11 456 456
  - 445 46 491

491

 

REVALUATION RESERVE

Consolidated and University

2017

Consolidated and University

2016

At 1 August

7,399

7,535

Revaluation of land and buildings

-

-

Release to general reserve

(136)

(136)

At 31 July

7,263

7,399

PENSIONS AND SIMILAR OBLIGATIONS


The University’s employees belong to three principal pension schemes, the Scottish Teachers Superannuation Scheme (STSS),the Local Government Pension Scheme (LGPS) and the Universities Superannuation Scheme (USS). The total pension cost for the year was £3,870,000 (2015/16: £3,539,000).

PENSIONS AND SIMILAR OBLIGATIONS Consolidated and University Consolidated and University
 

Year ended 31 July 2020

Year ended 31 July 2019

The total pension charge is analysed as follows:

£000 £000

Lothian Pension Fund (LGPS)

2,184 1,933

Scottish Teachers Superannuation Scheme

1,453 1,420

Universities Superannuation Scheme

233 186
 

3,870

3,539

Estimated employers’ pension contributions for the year to 31 July 2021 are £3,898,000.

A) Local Government Pension Scheme (LGPS)

The Lothian Pension Fund is a funded multi-employer defined benefit scheme, with the assets held in a separate trustee-administered fund to meet long-term pension liabilities to past and present employees. The trustees of the fund are required to act in the best interests of the fund’s beneficiaries. The appointment of trustees to the fund is determined by the scheme’s trust documentation. The trustees are responsible for setting the investment strategy for the scheme after consultation with professional advisors.

The following information is based upon a full actuarial valuation of the fund at 31 March 2017 updated to 31 July 2020 by a qualified independent actuary, Hymans Robertson LLP.

Assumptions at

31 July 2017 31 July 2016 31 July 2015

Pension increase rate

2.5% 1.9% 2.6%

Salary increase rate

4.5% 4.4% 4.5%

Expected return on assets

2.7% 2.4% 3.6%

Discount rate

1.4% 2.1% 2.8%

The fund is valued every three years by professionally qualified independent actuaries using the projected unit method, the rates of contribution payable being determined by the trustees on the advice of the actuaries. In the intervening years, the scheme actuary reviews the progress of the scheme. The actuary has indicated that the resources of the scheme are likely, in the normal course of events, to be sufficient to meet the liabilities as they fall due at the level specified by the scheme regulations. The currently agreed employer’s contribution rate for the University is 18.5%.

Local Government Pension Scheme (LGPS)

The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the timescales covered, may not necessarily be borne out in practice. The current mortality assumptions, which are consistent with those used for the latest formal funding valuation, include sufficient allowance for future improvements in mortality rates. The assumed life expectations on retirement at age 65 are:-

Current pensioners

31 July 2017 No. of years

31 July 2017 No. of years

Males 22.1 22.1
Females 23.7 23.7

Future pensioners

   

Males

24.2 24.2

Females

26.3 26.3

 

Analysis of the amount shown in the balance sheet

Value at 31 July 2017

£000

Value at 31 July 2016

£000

Value at 31 July 2015

£000

Value at 31 July 2014

£000

Value at 31 July 2013

£000

Estimated employer assets (A)

57,322

50,644

40,901

36,535

33,477

Present value of scheme liabilities

(68,492)

(63,303)

(50,918)

(46,362)

(38,740)

Present value of unfunded liabilities

(701)

(769)

(804)

(776)

(753)

Total value of liabilities (B)

(69,193)

(64,072)

(51,722)

(47,138)

(39,493)

Net pension liability (A) – (B)

(11,871)

(13,428)

(10,821)

(10,603)

(6,016)

Analysis of movements in the present value of the scheme liabilities

  

Current service cost

31 July 2017

£000

31 July 2016

£000

Opening defined benefit obligation

64,072

51,722

Current service cost

2,394

2,012

Interest cost

1,556 1,885

Actuarial losses

430 420

Past service costs

- 47

Unfunded benefits paid

(46) (51)

Benefits paid

(1,134)

(1,119)

Closing defined benefit obligation

69,193

64,072

Analysis of movement in the market value of the scheme assets

Analysis of movement in the market value of the scheme assets

31 July 2017

£000

31 July 2016

£000

Opening fair value of employer assets

50,644

40,901

Expected return on assets

4,932

7,680

Contributions by members

430

420

Contributions by employer

1,229

1,279

Contributions in respect of unfunded benefits

46

51

Actuarial (losses)/gains

1,221

1,483

Unfunded benefits paid

(46)

(51)

Benefits paid

(1,134)

(1,119)

Closing fair value of employer assets

57,322

50,644

B ) Scottish Teachers’ Superannuation Scheme (STSS)

The STSS is an unfunded multi-employer defined benefit scheme. The Scheme is financed by contributions from employers and current members of the Scheme. The contributions paid to the Scheme fall into general government revenues. There is no actual fund of assets but an account is maintained of a notional fund made up of contributions paid by employers and members, supplemented by a return on the notional fund at a pre-determined rate and reduced by benefits as and when they are paid to retired and former members of the Scheme. The University is unable to identify its share of the underlying assets and liabilities of the scheme. Accordingly, the University has accounted for its contributions as if it were a defined contribution scheme. The University has no obligation for other employers’ obligations to the multi-employer scheme.

The last audited full actuarial and funding valuation of the scheme was carried out at 31 March 2012. This valuation used the Projected Unit Methodology. With effect from 1 September 2015, the employer contribution rate has been set at 17.2%. Employee contributions are dependant upon the member’s salary bracket. The notional fund at 31 March 2012 amounted to £19.6 billion, and total Scheme liabilities for service amounted to £20.9 billion, giving a notional past service deficit of £1.3 billion. The next valuation will be based on scheme data as at 31 March 2016, and any changes arising from that valuation will be applied from 1 April 2019.

C ) Universities Superannuation Scheme (USS)

The University participates in the Universities Superannuation Scheme (the scheme). Throughout the preceding period, 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.

The total cost charged to the consolidated income and expenditure account is £29,000 (2016: £181,000) and included in note 7.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 numbers for the scheme have been produced using the following assumptions:

Superannuation

2017

2016

Discount rate

2.57% 3.6%

Pensionable salary growth.

N/A N/A

Price inflation (CPI)

2.41% 2.2%

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:

Members

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

 

Existing benefits

2017 2016

Scheme assets

£60.0 billion

£49.8 billion

Total scheme liabilities

£77.5 billion

£58.3 billion

FRS 102 total scheme deficit

£17.5 billion

£8.5 billion

FRS17 funding level

77%

85%

D ) Other pension liabilities

The University has a liability for pension enhancements payable to former members of staff who have taken early retirement in prior years. An actuarial valuation of the amount of this liability was carried out by Hymans Robertson, Actuaries at 31 July 2017, on the basis of valuation prescribed by FRS 102. The total provision in respect of this liability is £3.231 million (2016: £3.395 million).

HARDSHIP AND CHILDCARE FUNDS

HARDSHIP AND CHILDCARE FUNDS

2016/17

£000

2015/16

£000

HARDSHIP FUND (undergraduate and postgraduate)

Balance at 1 August

   

Amounts received from Student Awards Agency for Scotland

239 236

Amount vired (to)/from Childcare Fund

46 (8)

 

285

228

Disbursed to students

(242)

(222)

Other costs

(36)

-

Refunded to Student Awards Agency for Scotland

(7)

(6)

Balance unspent at 31 July

-

-

CHILDCARE FUND

 

 

Balance at 1 August

-

-

Amounts received from Student Awards Agency for Scotland

137

123

 

137

123

Disbursed to students

(77)

(127)

Amount vired (to)/from Hardship Fund

(46)

8

Refunded to Student Awards Agency for Scotland

(14)

(4)

Balance unspent at 31 July

-

-

Amounts received from the Student Awards Agency for Scotland are available solely for students; the University acts only as paying agent. The grants and related disbursements are therefore excluded from the Income and Expenditure Account.