Download PDF 2008-2009 - Queen's University Belfast

Consolidated Financial Statements 

2008 - 2009

Queen’s University Belfast 

Consolidated Financial Statements 2008-2009 

Contents 

Page 

Operating and Financial Review 

(Honorary Treasurer’s Report) 2 

Corporate Governance 9 

Responsibilities of the Senate of the University 12 

Independent Auditors’ Report 13 

Statement of Principal Accounting Policies 15 

Consolidated Income and Expenditure Account 17 

Balance Sheets 18 

Consolidated Cash Flow Statement 20 

Consolidated Statement 

of Total Recognised Gains and Losses 21 

Notes to the Accounts 22 

Queen’s University Belfast Consolidated Financial Statements 2008 - 09 

1


(Honorary Treasurer’s Report) 

Scope of the Financial Statements 

The financial statements presented to 

Senate comprise the results of all the 

University’s activities. 

In accordance with Financial Reporting 

Standard (FRS) 2 (amended), the 

consolidated financial statements of the 

University include all of its wholly owned 

subsidiaries, including QUBIS Ltd, Quhars 

Ltd and the University Book Shop Ltd. The 

financial statements also reflect the full 

adoption of FRS 17 (Retirement Benefits) 

and the Statement of Recommended 

Practice: Accounting for Further and 

Higher Education 2007 (SORP). 

Content of the Operating 

and Financial Review 


The following review has been prepared 

in accordance with the Accounting 

Standards Board Reporting Statement, 

issued in January 2006, and as referred to 

within the SORP. 

Results for the Year 

A summary of the University’s 

Consolidated Income, Expenditure and 

Outturn for the year ended 31 July 2009 

is provided in the table below: 

2008-09 

£’000 

2007-08 

£’000 

Income 288,937 258,440 

Expenditure 282,095 245,077 

Surplus 

for the year 

before taxation 6,842 13,363 

Share of joint 

venture’s deficit 

before taxation (23) (188) 

Taxation 2 - 

Surplus 

for the year 6,821 13,175 

Surplus for the 

year transferred 

to endowment 

funds (770) (607) 

Surplus for the 

year retained in 

general funds 6,051 12,568 

The University’s primary financial objective 

is to generate surpluses sufficient to 

sustain its ongoing activities and to 

maintain investment in the estate and 

associated infrastructure. 

The year under review has presented a 

significant challenge to the University, 

due to the deepening global economic 

recession. Strong financial stewardship has 

been exercised during this period, and, 

in the circumstances, the financial results 

of the University have been satisfactory. 

However, in view of the deteriorating 

pension situation, escalating pay costs 

and increasing pressure on future funding 

streams, there is an urgent need to secure 

cost savings, in order to ensure future 

sustainability. Against this background, 

and also in response to the outcome of 

the Research Assessment Exercise (RAE) 

2008, Senate approved in June 2009 the 

2009 Academic and Financial Plan, further 

details of which are provided below. The 

first phase of the 2009 Plan, involved 

the implementation of a new severance 

and early retirement scheme, for which 

a provision, amounting to £9.9m, 

is included in the 2008-09 financial 

statements. 

The resultant surplus of £6.1m, 

compared to £12.6m in 2007-08, has 

been earmarked within the University to 

replenish general reserves, to fund the 

University’s capital programme, including 

the financing of external loans, and to 

support full implementation of the 2009 

Academic and Financial Plan. 

In recent years, the level of surplus 

generated as a percentage of income, has 

been in line with the University’s target 

of 5%. However, as the table above 

demonstrates, this has reduced to 2.1% in 

2008-09, largely as a result of the costs of 

the implementation of the first phase of 

the 2009 Plan. 

Academic Plan 2006-11 

In June 2006, Senate approved the 2006- 

11 Academic Plan as the foundation 

stone of its five year Corporate Plan. The 

2006 Academic Plan is based on “Plan 

435i” which set targets for improving the 

undergraduate entry standards, increasing 

the proportion of postgraduate students 

and raising the proportion of externally 

derived income. These targets remain 

valid and, notwithstanding the more 

challenging economic conditions which 

now face the University, the academic 

planning process has continued to 

2 Queen’s University Belfast Consolidated Financial Statements 2008 - 09



ensure that decisions are centred on their 

achievement. 

The Plan, which also includes enhanced 

research performance, and extended 

international connections and 

collaborations, will assist the University to 

develop world leading research centres 

and to offer a modernised, market – 

attuned education portfolio comparable 

with the best in the world. The Plan 

represents a total investment of £259m, 

of which some £189m will be on capital 

investment, to ensure that students 

and staff will be attracted to work and 

study in a safe, modern and high quality 

environment. 

Detailed arrangements are also in place 

to ensure that progress against the Plan is 

monitored, on an ongoing basis, by both 

the University Management Board and the 

Planning and Finance Committee. 

The University has adopted the CUC 

Performance Management Framework, 

incorporating 10 high level key 

performance indicators, and detailed 

reports on performance are prepared at 

Corporate, School and Academic Support 

Directorate level. 

Academic and Financial Plan 2009 

In response to the increasingly challenging 

economic conditions, the financial 

strategy for the University has recently 

been re-focused to encompass the 

following two directives: 

(i) Investment in 2009-10 and future 

years will be funded through 

disinvestment; 

(ii) Greater selectivity in the deployment 

of resources will be a central theme 

of resource allocation. 

As outlined earlier in my report, the first 

phase of the Academic and Financial Plan 

2009 has primarily focused on the need 

to reduce recurrent costs and re-position 

the University to address its objectives, 

as outlined in the Corporate Plan, in an 

increasingly competitive environment. 

This has involved four key components, 

namely: 

• the introduction of a partial 

moratorium on the recruitment and 

replacement of all posts; 

• the implementation of a new 

severance and early retirement 

scheme; 

• consideration of a series of School 

specific ‘major decisions’ which are 

aligned with strategic priorities; and 

• the re-prioritisation of current 

expenditure. 

Phase Two of the Plan, will seek to 

identify and secure levels of investment, 

in accordance with both the University’s 

Research Strategy and other institutional 

priorities. The underlying objective is 

for Queen’s to become a Global 100 

University. Such investment will be 

released on a selective basis in preparation 

for the Research Excellence Framework 

and will be fully aligned with the 

Institutional Research Strategy, and the 

undergraduate and postgraduate student 

number targets. 

Income 

Total income increased, in 2008-09, by 

£30.5m or some 11.8% in cash terms. 

During the year, government grants 

increased by £12.1m, due to a number 

of factors, including the transfer of 

funding, amounting to £1.4m, from the 

Department of Agriculture and Rural 

Development to the Department for 

Employment and Learning (DEL). This 

funding, which related to the University’s 

Institute of Agri-Food and Land Use was 

subsequently consolidated within the 

recurrent grant funding for 2008-09. 

In 2008-09, the University was successful 

in securing funding from DEL of £9.5m, 

for a 3 year period, relating to the Cross 

Border Research and Development 

Funding - Strengthening the All Island 

Research Base. In addition, 2008-09 

represented the fifth year of the approved 

expansion of the Medical School, resulting 

in the receipt of additional recurrent 

teaching grant funding. 

“Plan 435i” outlined above, includes a 

target to raise the proportion of income 

secured from non government sources 

(i.e. outside the block grant) by 5 

percentage points, after allowing for the 

increased income derived from tuition 

fees and full economic costing (fEC). 

Diversification of income can be achieved 

by, for example, increased income from 

external research grants and contracts, 

international students and knowledge 

transfer. The position across the past 

3 years, outlined below, demonstrates 

that the 5% increase has been achieved. 

However, going forward, this target will 

become particularly more challenging in 

view of increased competition for both 

research funding, and tuition fee income 

from international and postgraduate 

students. In addition, investment income 

has been adversely affected by the very 

low interest rates currently on offer. 

During the year the University has entered 

into a joint venture arrangement with 

INTO University Partnerships Limited 

(INTO), with the primary aim of increasing 


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the number and range of international 

students studying at Queen’s University 

Belfast. An INTO/Queen’s College will be 

established providing foundation courses 

which can lead to automatic enrolment on 

standard undergraduate and postgraduate 

programmes. 

During the period 2004-09 the University 

has been successful in securing funding 

under SPUR 1 and SPUR 2, of £26m and 

£39m respectively. Further funding of 

£9.5m was secured in 2009 through the 

All Island Research collaboration initiative. 

The sustainability of the research activities 

initiated by these programmes remains a 

key challenge for the University. 

The third year of variable tuition fees, 

and the ongoing implementation of the 

Access Agreement with DEL, has resulted 

in tuition fee income from Home and EU 

students increasing by a further £5.9m 

(20%). Other increases are due to the 

growth in student numbers in planned 

areas (Social Work and Medicine) and, in 

the case of overseas fee income, higher 

fee rates payable. The need to maintain 

the quality of teaching and to enhance 

the student experience remains a priority 

within the University and, in this respect, 

a QAA Institutional Audit was undertaken 

in spring 2009, with a very successful 

outcome having been achieved. Robust 

negotiations will continue with DEL to 

maximise the block grant for teaching and 

research, during the next comprehensive 

spending review period. 

The University continues to provide the 

majority of pre and post registration nurse 

training for the Department of Health, 

Social Services and Public Safety. During 

the year, income increased by £0.6m, 

due mainly to an increase in the unit of 

teaching resource for pre-registration 

students, and the impact of the four year 

direct entry Midwifery course. 

Income from research grants and contracts 

has increased by £8.1m to £59.3m. The 

2008-09 financial year was the third year 

of the implementation of the pricing of 

research grants on a fEC basis, following 

the review of the dual support system. 

Income from Research Councils and 

Charities increased by £1.2m from 2007- 

08, due to the ongoing implementation 

of fEC. The contribution to indirect 

costs increased by £2.5m, from £7.6m 

to £10.1m, representing a contribution 

rate of approximately 20%. The effective 

implementation of fEC has enabled 

the University to move towards a more 

sustainable research portfolio. However, 

it is also recognised that competition has 

increased, and the University will need to 

work harder to maintain the volume of 

research undertaken, as funders become 

more selective in awarding grants. Such 

an increase in competition, coupled 

with the current economic downturn, 

has resulted in the value and number of 

research awards decreasing in 2008-09, 

and this is clearly a cause for concern. 

Other Operating Income has increased 

by £2.8m, due to additional other 

income being generated by Schools and 

Directorates, particularly from Patents and 

Licensing, Other Services Rendered and 

additional VAT recovered during the year. 




Income from endowments and interest 

receivable remained similar to last year. 

However, the 2007-08 total included a 

gift-aid payment of £1.1m made to the 

University by QUBIS Ltd, arising from 

the sale of Meridio Holdings, a spin out 

company from Kainos Ltd, which in turn 

was a spin out from the University’s 

Computer Science Department. Income 

from short-term investments has increased 

in 2008-09 by £1.0m, due to higher levels 

of liquidity. 

While the University is currently carrying 

large cash reserves, a significant element 

of these funds is committed to support 

capital projects (see note 22). Problems 

in securing planning permission from 

the statutory authorities, for a number 

of major capital schemes, has resulted in 

delays in the capital programme. 

Expenditure 

Total expenditure increased by £37.0m, 

equivalent to some 15.1%. This includes 

an increase in staff costs of £9.6m, which 

is mainly accounted for by pay awards and 

other pay-related costs. In this respect, 

the University has honoured the final 

element of the three year pay award, 

with effect from 1 October 2008, at the 

level of 5%, being the annual increase 

in the retail price index at September 

2008. This further increase in pay costs, 

together with the outcome of the 

triennial valuations of the Universities 

Superannuation Scheme (USS) and the 

Retirement Benefits Plan (RBP), will have 

a significant impact on future costs. 

Expenditure on pay over the last 3 years 

has increased by over 13%, including the 

impact of the triennial pay award, which 

amounted to 15.9%, and clearly, increases 

at this level are unsustainable in a period 

when income growth is likely to be more 

constrained. 

In accordance with the University’s Access 

Agreement with DEL, the University 

implemented an Institutional Bursary 

Scheme in 2006-07, as part of its 

widening participation strategy. Additional 

related expenditure of £3.2m was incurred 

in 2008-09, including £3.1m in respect of 

the Institutional Bursary Scheme. In total, 

over 43% of eligible students (3,876) 

received some level of bursary payment. 

Investment Performance 

The notes to the accounts set out full 

details of the Investment Funds of the 

University. 

The University Investment Fund is 

administered under the terms set out in 

the Queen’s University (Trust Scheme) 

Order (Northern Ireland) 1982 and 

includes monies donated and bequeathed 

to the University for a variety of purposes. 

The total income of the Investment Fund 

for the year ended 28 February 2009 was 

£2,025,173 compared with £1,943,167 in 

2007-08. After allowing for management 

expenses of £78,255 and a transfer from 

reserves of £21,626, the net income 

enabled a distribution to shareholders of 

34p per share, the same as the previous 

year. The Investment Fund recorded a 

decrease in value for the year of £0.04m 

from £42.55m to £42.51m. After allowing 

for the inclusion of new endowments of 

£2.2m, the overall decrease of £2.24m, 

or 5%, is attributable to losses on 

investments, due to a downturn in global 

markets. Since 31 July 2009, markets have 

recovered and at 30 September 2009 the 

Investment Fund was valued at £46.18m, 

an increase of £3.67m, or 8%. 

The General Investment Fund is a passively 

managed, accumulated income fund. 

The value of the fund has decreased 

over the year from £14.4m to £13.6m, 

representing a decrease of £0.8m, in 

the year. After allowing for accumulated 

income of £0.5m, the total decrease 

for the year is £1.3m or 9%, and is 

attributable to losses on equity and fixed 

interest investments. Following further 

movements in investment values since 

the year end, on 30 September 2009 the 

fund was valued at £15m, representing an 

increase of £1.4m, or 10.3%. 

Treasury Management 

The University has a detailed treasury 

policy in place, which includes deposit 

limits with agreed financial institutions, 

for the investment of its cash deposits. 

The policy is regularly reviewed by the 

Investment Committee, to ensure that 

risk is minimised, and, during the current 

period of turbulence within the banking 

and financial sectors, it has proved to 

be particularly robust. The University’s 

levels of liquidity and cash reserves 

remain at high levels, although due to 

the lack of demand from the banking 

sector for funds, most institutions 

are offering very low rates on shortterm 

investments. As a consequence, 

alternative options to maximise income 

potential, whilst continuing to minimise 

risk to an acceptable level, are currently 

being explored, in conjunction with the 

Investment Committee. 


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Capital and Long Term Maintenance 

The University has approved a revised 

Estates Strategy covering the period 2007- 

17, which is based on the need to ensure 

financial and environmental sustainability. 

This strategy continues to focus on 

the efficient and effective use of space 

and the provision of accommodation 

which will enhance the quality of 

learning, teaching and research and the 

environment for students and staff. The 

level of investment, recommended by the 

Higher Education Funding Council for 

England (HEFCE), is 4.5% of Insurable 

Replacement Value invested in the capital 

development of an institution’s non 

residential estate. Notwithstanding the 

difficulties in securing planning permission 

for some major capital projects, the level 

of investment has been maintained in or 

around the target of 5% of the insurable 

replacement value of the estate. 

There has been significant investment in 

the physical estate during 2008-09 with 

some £30.4m of expenditure having 

been incurred on buildings and assets in 

the course of construction. A number of 

specific projects have been taken forward 

as part of the University’s capital and longterm 

maintenance plan. These projects 

form part of a total investment plan of 

approximately £200m, and include: 

• ongoing refurbishment of student 

accommodation; 

• ongoing refurbishment work in 

respect of Health and Safety within 

the University’s campus; 

• expenditure on the Research Capital 

Investment Fund (RCIF) and Learning 

and Teaching Capital. This includes 

development of the Whitla Medical 

and David Keir Buildings and the 

Cardiovascular Research Centre at the 

Royal Victoria Hospital site, together 

with work to develop the University’s 

ICT and Teaching Infrastructure; 

• Health Sciences refurbishment, 

including the provision of further 

research accommodation, and to 

facilitate the expansion of the medical 

school; 

• extension of the Physical Education 

Centre; 

• development of sports facilities at 

Upper Malone; 

• completion of the construction of the 

New Library; and 

• creation of an Executive Education 

Centre at Riddel Hall. 

Conventional funding, primarily from 

government, has continued to be 

supplemented by additional significant 

private contributions from benefactors, 

provided through the Queen’s University 

of Belfast Foundation. The Foundation’s 

principal activity is to advance the 

strategic goals and objectives of the 

University, under the direction of an 

independent Foundation Board. During 

the year, the level of the Foundation’s 

fundraising was substantial, with some 

£9.2m being disbursed to the University. 

This includes £2.5m in relation to the New 

Library, £2.7m on various research projects 

under the Sharing Education Programme 

and £1.5m on Vision Sciences at Queen’s. 

Work on Campaign 2, to be known as 

Campaign 100, and which will centre on 

major research initiatives, is ongoing. 

It is also vitally important that government 

capital funding is maintained, at least at 

current levels, if the level of investment 

necessary to remain competitive with 

other Russell Group universities is to be 

achieved. 

Balance Sheet 

The University has continued to account 

for the RBP in accordance with the 

requirements of FRS 17. This has involved, 

inter alia, accounting for the scheme 

deficit of £36.1m (2008: £29.9m) 

within general reserves. A fall in asset 

values in the year to 31 July 2009 was 

compounded by an increase in liabilities 

the net result being a further increase in 

the deficit. 

As at the Balance Sheet date of 31 July 

2009, total consolidated net assets of 

the University had increased to £321.1m, 

compared to £302.9m at 31 July 2008. 

This has largely been matched by an 

increase in deferred capital grants of 

£20.7m offset by a decrease in general 

reserves of £2.7m. Net liquidity improved 

during the year. The annualised servicing 

cost of external debt of 1.8% remains 

well below the 4% limit set in the 

University’s Financial Memorandum. 

The University continues to effectively 

manage its working capital and the 

current asset ratio has been maintained 

at an acceptable level, as outlined in the 

table on page 7. 

Future Developments 

The introduction of deferred variable 

tuition fees in 2006-07 has enabled 

Queen’s to gain access to levels of 

additional income similar to institutions 

in the rest of the UK and hence remain 

competitive and continue to deliver 

world class education and research. In 

this respect, both the Westminster and 




levels of investment. Pay settlements 

in future years must be moderated 

and payroll costs controlled, ensuring 

improved levels of performance and 

productivity. 

devolved governments are committed 

to reviewing the Variable Fees policy in 

2009-10. The outcome of this review 

will determine the University’s ability 

to maintain levels of investment and 

develop its competitive position, going 

forward. As part of the Access Agreement 

the University has introduced ongoing 

monitoring arrangements which inter 

alia, assess the overall impact of variable 

fees on the University’s student profile, 

and assess the effectiveness of the 

institutional bursary scheme and the 

associated outreach measures detailed in 

the Agreement. 

The University has consolidated its 

position as a major research institution, 

following the outcome of the RAE. A 

revised Research Strategy has been 

developed, in preparation for the new 

Research Excellence Framework. The 

delivery of this Strategy, supplemented by 

the implementation of the second phase 

of the 2009 Academic and Financial Plan, 

should have a significant, favourable 

impact on the University’s future position, 

relative to its peers in the Russell Group. 

Discussions are ongoing with Stranmillis 

University College with a view to 

merging. Such a merger will require 

Assembly approval and for this reason, 

is unlikely to take effect until 2010-11, 

at the earliest. Both the College and the 

University are committed to the merger, 

and recognise that the Stranmillis School 

of Education can not only be financially 

sustainable, but also can create a world 

class centre providing training for teachers 

throughout the full range of requirements, 

underpinned by a strong research base. 

Following the recommendations 

contained within the Better Regulation 

Task Force report, the University remains 

committed to the need to reduce the 

burden of bureaucracy, while remaining 

fully accountable to its key stakeholders. 

The regulatory framework within Northern 

Ireland remains particularly onerous 

and, in this respect, the University will 

continue to lobby the key stakeholders in 

an attempt to effect rationalisation and 

change. On a more positive note, a HEFCE 

Audit Assurance review was undertaken 

in 2008-09, with a very satisfactory 

outcome, in which the University was 

recognised as a sector leader, in terms 

of corporate governance and financial 

control. 

A key issue for the University involves 

the potential impact of the Northern 

Ireland Charities Act 2008 on the 

University’s future reporting, regulatory 

and governance arrangements. We are 

currently liaising closely with the Charity 

Commission for Northern Ireland and DEL, 

with a view to developing and agreeing 

a workable solution for the universities 

within Northern Ireland. 

As stated above, the projected increases 

in pay and pension costs, in 2009-10, will 

significantly impact on the University’s 

ability to continue to generate surpluses at 

the levels necessary to maintain adequate 

Of particular concern to the University 

is the financial health of the Universities 

Superannuation Scheme, a mutual scheme 

for the majority of the HE sector, and in 

particular, the size of the funding deficit. 

The conservative ongoing valuation as 

at 31 March 2008 reported a deficit of 

£11.8bn which, as at 31 March 2009, 

due largely to a substantial fall in scheme 

assets, increased to £19.7bn. The FRS 

17 figures (which use higher corporate 

bond yields rather than gilt yields, thereby 

reducing liabilities) projected a deficit 

of £3.2bn, as at 31 March 2009. Both 

measures will have recovered to some 

extent since that low point, in line with 

increases in asset values. Some immediate 

steps have been taken to address this 

issue, going forward, including the 

increase in employer contributions from 

14% to 16% from 1 October 2009. 

However, more fundamental and radical 

changes will be required, in order to 

ensure future financial sustainability of the 

Scheme. 

The role that universities can, and should 

play in the development of their regional 

economies is now well accepted and 

was endorsed in the Programme for 

Government in Northern Ireland. This is 

particularly important in a region such as 

Northern Ireland where the contribution 

of Queen’s to the maintenance and 

development of a world class portfolio 

of research and teaching is vital. The 

University will also continue to play a key 

role in the generation of new companies 

through knowledge transfer and the 

commercialisation of research. In this 

regard the contribution of QUBIS Ltd over 

the last 20 years is well recognised and 

this activity will continue. 

In recent years, Government has placed 

increased emphasis on the role of 

universities as drivers of economic growth 

at regional and national level. In this 

respect, the University has implemented a 

revised Knowledge Exploitation Strategy 

and established a Knowledge Exploitation 

Unit. Funding has been made available 


7



from Round 2 of the Higher Education 

Innovation Fund (HEIF), amounting to 

£1.5m per annum for the three years 

ending 31 July 2010, and this will assist 

the University in extending its impact 

within the regional economy. This funding 

will need to be supplemented from other 

sources, if the commercial potential of the 

high quality research undertaken within 

the University is to be fully exploited. 

I am delighted to report that the 

University has recently, in October 

2009, been named as the Times Higher 

Education Entrepreneurial University of 

the year. This demonstrates excellence in 

relation to ‘strong leadership engagement 

with students in a diversity of learning 

opportunities and a clear tangible 

impact on staff, business and the local 

community’. 

Conclusion 

In conclusion, I am pleased to confirm 

that the financial outturn for the year 

under review has been satisfactory and 

gives further assurance as to the strong 

managerial and financial framework 

which is in place. The necessary 

investment in the University’s academic 

strategy and infrastructure has been 

maintained. 

These achievements are due to the 

commitment and hard work of all staff, 

both academic and academic support, 

and their contribution is highly valued. 

I would, in particular, like to thank the 

staff of the Finance Department, for the 

efficient and effective manner with which 

the University’s financial affairs continue 

to be managed. 

The University has made significant 

progress in recent years, both in terms 

of its research and teaching quality, 

and the drive to ensure the delivery 

of world class research and education 

portfolios will continue as the Corporate 

Plan is implemented. Queen’s will also 

continue to play a significant role under 

the leadership of the Vice-Chancellor, 

Professor Peter Gregson, in research, 

education and economic development 

within the region of Northern Ireland and 

beyond and current strategies will help 

promote the University towards being 

among the top 100 global universities. 

Full implementation of the Corporate Plan 

will greatly enhance strategic planning, 

governance, management and the quality 

of decision making and accountability 

over the next ten years. In this way the 

financial success of the University can be 

secured with current and future activities 

being sustained despite difficult economic 

conditions. 


Corporate Governance 

The following statement is 

given to assist readers of the 

financial statements to obtain an 

understanding of the Governance 

procedures applied by the Senate of 

the University. 

The University is an autonomous body 

established under the Irish Universities 

Act 1908. In common with all public 

bodies it operates within a strong 

framework of regulation. Not only does 

the University comply with all mandatory 

requirements but it also strives to operate 

that guidance which represents best 

practice. The University has adopted the 

Guide for Members of Governing Bodies 

of Universities and Colleges in England, 

Wales and Northern Ireland published in 

June 1995 by the Committee of University 

Chairs, and revised, most recently, in 

March 2009. The Guide sets out current 

best practice for the corporate governance 

of higher education institutions. The 

University already fully complies with the 

key recommendations made in the Guide. 

Summary of the University’s Structure 

of Corporate Governance 

The University’s Senate comprises lay and 

academic persons appointed under the 

Statutes of the University, the majority of 

whom are non-executive. The role of the 

Chairman of Senate is separate from the 

role of the University’s Vice-Chancellor 

as Chief Executive. Senate is responsible 

for the ongoing strategic direction of the 

University whilst the Executive Officers 

are responsible for the operational 

management of the institution. Senate 

approves all major developments and 

receives regular reports on the day to 

day activities of the University and its 

subsidiary companies. Senate meets at 

least four times a year and is supported by 

several committees, including a Planning 

and Finance Committee, a Membership 

Committee, a Remuneration Committee 

and an Audit Committee. All of these 

committees are formally constituted with 

Terms of Reference and are comprised 

mainly of lay members of Senate. 

The Planning and Finance Committee 

supervises, inter alia, all matters relating to 

the finance and accounts of the University, 

the investment of its funds, the receipt of 

its income and the expenditure thereof, 

and the management of trust funds. 

The Committee also advises Senate on 

the raising and financing of loans. It is 

the duty of the Planning and Finance 

Committee to present a report to each 

meeting of Senate. 

The Membership Committee seeks out 

and recommends new lay co-opted 

members to the Senate. 

The Remuneration Committee reviews 

and determines the salaries and conditions 

of service of the senior officers of the 

University annually, including the Vice- 

Chancellor. 

The membership of the Audit Committee 

consists of four independent nonexecutive 

members of Senate, namely Mr 

E Bell (Chair), Ms R Connolly, Dr B Hanna, 

Mr D Licence and one co-optee, Mrs A 

Henderson. During the year, Miss A Paisley 

also served as Chair of the Committee, 

until her resignation from Senate in 

December 2008. The terms of reference 

are as outlined below: 

(a) To advise Senate on the appointment 

of the external auditors, the audit 

fee, the provision of any non-audit 

services by the external auditors, 

and any questions of resignation or 

dismissal of the external auditors. 

(b) To discuss with the external auditors, 

before the audit begins, the nature 

and scope of the audit. 

(c) To discuss with the external auditors 

problems and reservations arising 

from the interim and final audits, 

including review of the management 

letter, incorporating management 

responses, and any other matters the 

external auditors may wish to discuss 

(in the absence of management 

where necessary). 

(d) To consider and advise Senate on 

the appointment and terms of 

engagement of the internal audit 

service, the audit fee, the provision of 

any non-audit services by the internal 

auditors, and any questions of 

resignation or dismissal of the internal 

auditors. 

(e) To review the internal auditors’ 

audit risk assessment, strategy and 

programme; consider major findings 

of internal audit investigations and 

management’s response and promote 

co-ordination between the internal 

and external auditors. The Committee 

will ensure that the resources made 

available for internal audit are 

sufficient to meet the institution’s 

needs (or make a recommendation to 

Senate, as appropriate). 

(f) To keep under review the 

effectiveness of the University’s 

risk management, control and 

governance arrangements and, in 

particular, to review the external 

auditors’ management letter, the 

internal auditors’ annual report, 

and management responses. 

The Committee shall make 

recommendations to relevant 

committees, or to the Vice- 

Chancellor, to ensure that measures 

are taken to deal effectively with 

matters raised in audit reports. 

(g) To monitor the implementation 

of agreed audit-based 

recommendations, through the 

Internal Audit Recommendation 

Schedule. 

(h) To ensure that all significant losses 

have been properly investigated and 

that the internal and external auditors 

and, where appropriate, the HEFCE 

accounting officer and DEL, have 

been informed. 

(i) To oversee the institution’s policy on 

fraud irregularity, including being 

notified of any action taken under 

that policy. 

(j) To provide ongoing assurance to 

Senate, in respect of the management 

and quality assurance of data. 

(k) To satisfy itself that satisfactory 

arrangements are in place to promote 

economy, efficiency and effectiveness. 

(l) To receive any relevant report from 

the Northern Ireland Audit Office, the 

National Audit Office, HEFCE or any 

other body which fulfils a recognised 

audit function in respect of the 

University or related institutions, 

funded in full or part from public 

funds. 

(m) To monitor annually the performance 

and effectiveness of the external 

and internal auditors, including any 

matters affecting their objectivity, and 

make recommendations to Senate 


9


concerning their re-appointment, 

where appropriate. 

(n) To consider the draft annual financial 

statements, in the presence of the 

external auditors, ensuring that 

sufficient consideration has been 

given to all relevant matters, that 

there is compliance with relevant 

legislation, HEFCE accounts directions, 

and accounting standards, and that 

there are no major disagreements 

between the external auditors and 

the Planning and Finance Committee 

and/or the Director of Finance over 

accounting policies. 

(o) In the event of the merger or 

dissolution of the institution, to 

ensure that the necessary actions are 

completed, including arranging for a 

final set of financial statements to be 

completed and signed. 

(p) To report on a regular basis to Senate 

and to compile an annual report 

which, following consideration by 

Senate, will be sent to DEL and the 

HEFCE Assurance Service - this annual 

report shall include an opinion on 

the adequacy and effectiveness of 

the University’s arrangements for 

risk management, internal control, 

governance and value for money. 

(q) The Committee is authorised by 

Senate to obtain outside legal or 

other independent professional advice 

and to secure the attendance of nonmembers 

with relevant experience 

and expertise if it considers this 

necessary, normally in consultation 

with the Registrar and Chief 

Operating Officer and/or the Chair of 

Senate. 

The University has implemented a 

process for identifying, assessing and 

managing the University’s significant 

risks in line with HEFCE Accounts 

Direction, which in turn is based on the 

Combined Code applied as appropriate 

to Higher Education. The University has 

also adopted the Governance Code of 

Practice contained in the Committee 

of University Chairs guidance issued in 

March 2009 (‘Guide for Members of 

Higher Education Governing Bodies in 

the UK’). A Risk Management Committee 

has been established, and the process of 

embedding risk management at School/ 

Directorate level in both the planning 

processes and operational arrangements 

of the University is well developed. This 

process is regularly reviewed by the Audit 

Committee on behalf of Senate to ensure 

that a sound system of internal control 

covering all risks is in place. 

Statement on Internal Control 

As the governing body of Queen’s 

University Belfast, we have responsibility 

for maintaining a sound system of internal 

control that supports the achievement 

of the University’s policies, aims and 

objectives, while safeguarding the public 

and other funds and assets for which we 

are responsible. This responsibility has 

been assigned to Senate in accordance 

with the University’s Charter and Statutes 

and the Financial Memorandum with DEL. 

The system of internal control is designed 

to manage rather than eliminate the risk 

of failure to achieve policies, aims and 

objectives. To that extent it can, therefore, 

only provide reasonable and not absolute 

assurance of effectiveness. 

The system of internal control is based on 

an ongoing process designed to identify 

the principal risks to the achievement of 

policies, aims and objectives, to evaluate 

the nature and extent of those risks and 

to manage them efficiently, effectively 

and economically. This process has been 

in place for the year ended 31 July 2009 

and up to the date of approval of the 

financial statements, and accords in full 

with HEFCE guidance. 

As the governing body, we have 

responsibility for reviewing the 

effectiveness of the system of internal 

control. The following processes have 

been established: 

(a) We meet at regular intervals (at least 

four times a year) to consider the 

strategies and plans of the University. 

(b) We receive regular reports from the 

Chairman of the Audit Committee 

concerning internal control, and 

we require regular reports from 

managers on the steps they are 

taking to manage risk in their areas 

of responsibility, including progress 

reports on key projects. 

(c) We have established a Risk 

Management Committee to oversee 

risk management. 

(d) The Audit Committee receives regular 

reports from the internal auditors 

which include their independent 

opinion on the adequacy and 

effectiveness of the University’s 

system of internal control, together 

with recommendations for 

improvement. 

(e) Programmes of facilitated workshops 

have been held in both Schools 

and Directorates to identify new 

and emerging risks and to ensure 

the adequacy of counter measures. 

Schools and Directorates are 

responsible for identifying, evaluating 

and managing their significant risks. 

(f) A programme of risk awareness 

training is ongoing and risk 

management is integrated within 

the University’s business planning 

process. 

(g) A system of key performance and risk 

indicators has been developed. 

(h) A robust risk prioritisation 

methodology based on risk ranking 

and cost-benefit analysis has been 

established. 

(i) A corporate risk register is maintained 

and regularly reviewed and 

updated with responsibility for the 

management of each risk embedded 

within the management structure of 

the University. 

(j) All information used for both 

operational and financial reporting 

purposes is captured and processed 

accurately and to an appropriate 

quality standard, particularly where it 

is used by third parties or relied on by 

other parts of government. 

(k) Reports are received from budget 

holders, department heads and 

project managers on internal control 

activities. 



Our review of the effectiveness of the 

system of internal control is undertaken 

on an annual basis with reference to the 

HEFCE guidance on risk management. 

It is our view that the University has an 

effective Risk Management process in 

place and that the Corporate Risk Register 

is being managed on an active basis with 

specific action plans in place to address 

all risks. This view is informed by the 

work of the University’s internal auditors 

who operate to standards defined in the 

Accountability and Audit: HEFCE Code of 

Practice. 

Our review of the effectiveness of the 

system of internal control is also informed 

by the work of the Senior Officers within 

the University, who have responsibility 

for the development and maintenance of 

the internal control framework, and by 

comments made by the external auditors 

in their management letter and other 

reports. 

As a result of our overall review of the 

effectiveness of the system of internal 

control, including Risk Management, 

we are content that no significant 

weaknesses have been identified. This 

has been confirmed by the assurance 

given to University’s Accounting Officer 

by the internal auditors in their Annual 

Statement of Assurance. 


11

Responsibilities of the 

Senate of the University 

In accordance with the University’s Charter 

and Statutes the Senate, as the governing 

body, is responsible for the oversight of 

the management and administration of 

the University’s affairs, including ensuring 

an effective system of internal control, and 

is required to present audited financial 

statements for each financial year. 

The Senate is of the view that there 

is an ongoing process for identifying, 

evaluating and managing the University’s 

significant risks. This process has been in 

place for the year ended 31 July 2009 and 

up to the date of approval of the financial 

statements, is regularly reviewed by the 

Senate and accords with the Combined 

Code as deemed appropriate for Higher 

Education. 

The Senate is responsible for keeping 

proper accounting records which 

disclose with reasonable accuracy at 

any time the financial position of the 

University and enable it to ensure that 

the financial statements are prepared 

in accordance with the University’s 

Charter and Statutes, the Statement of 

Recommended Practice: Accounting for 

Further and Higher Education and other 

relevant accounting standards. In addition, 

within the terms and conditions of the 

Financial Memorandum between DEL 

and the University, the Senate, through 

its designated office holder, is required 

to prepare financial statements for each 

financial year which give a true and fair 

view of the state of the affairs of the 

University and of the surplus or deficit and 

cash flows for that year. 

In causing the financial statements to be 

prepared, the Senate has ensured that: 

-- 

Suitable accounting policies are 

selected and applied consistently; 

-- 

Judgements and estimates are made 

that are reasonable and prudent; 

-- 

Applicable accounting standards 

have been followed, subject to any 

material departures being disclosed 

and explained in the financial 

statements; and 

-- 

The financial statements are prepared 

on the going concern basis unless it 

is inappropriate to presume that the 

University will continue in operation. 

The Senate has taken reasonable steps to: 

-- 

Ensure that funds from DEL are used 

only for the purposes for which they 

have been given and in accordance 

with the Financial Memorandum 

with the Department and any other 

conditions which the Department 

may from time to time prescribe; 

-- 

Ensure that there are appropriate 

financial and management controls in 

place to safeguard public funds and 

funds from other sources; 

-- 

Safeguard the assets of the University 

and prevent and detect fraud; and 

-- 

Secure the economical, efficient 

and effective management of 

the University’s resources and 

expenditure. 

The key elements of the University’s 

system of internal control, which is 

designed to discharge the responsibilities 

set out above, include the following: 

-- 

Clear definitions of the responsibilities 

of, and authority delegated to, 

resource managers; 

-- 

A medium and short-term planning 

process, supplemented by detailed 

annual income, expenditure and 

capital budgets; 

-- 

Monthly reviews of financial results 

involving variance reporting and 

updates of forecast outturns; 

-- 

Clearly defined and formalised 

requirements for approval and 

control of expenditure, with decisions 

involving material capital or revenue 

expenditure being subject to formal 

detailed approval; 

-- 

A professional internal audit service 

whose annual programme is 

approved by Senate; and 

-- 

A system of risk management 

including the clarification, assessment 

and management of key risks. 

The Audit Committee, on behalf of 

Senate, monitors the effectiveness of the 

University’s system of internal control. 

Any system of internal control can, 

however, only provide reasonable, but not 

absolute, assurance against material loss 

or misstatement. 


Independent Auditors’ Report 

To the Senate of Queen’s University Belfast 

We have audited the group financial 

statements (‘the financial statements’) of 

Queen’s University, Belfast for the year 

ended 31 July 2009 which comprise the 

Consolidated Income and Expenditure 

Account, the Consolidated and University 

Balance Sheets, the Consolidated Cash 

Flow Statement, the Statement of Group 

Total Recognised Gains and Losses and the 

related notes. These financial statements 

have been prepared under the accounting 

policies set out therein. 

Respective responsibilities of the 

Senate and auditors 

The Senate’s responsibilities for preparing 

the financial statements in accordance 

with the Accounts Direction issued by 

the Higher Education Funding Council 

for England (HEFCE), the Statement of 

Recommended Practice – Accounting for 

Further and Higher Education, applicable 

United Kingdom law and Accounting 

Standards (United Kingdom Generally 

Accepted Accounting Practice), are set out 

in the Statement of Responsibilities of the 

Senate of the University. 

Our responsibility is to audit the financial 

statements in accordance with relevant 

legal and regulatory requirements, and 

International Standards on Auditing 

(UK and Ireland). This report, including 

the opinion, has been prepared for and 

only for the Senate of the University, 

in accordance with the Charter and 

Statutes of the University. We do not, 

in giving this opinion, accept or assume 

responsibility for any other purpose or to 

any other person to whom this report is 

shown or into whose hands it may come, 

save where expressly agreed by our prior 

consent in writing. 

We report to you our opinion as to 

whether the financial statements give 

a true and fair view and are properly 

prepared in accordance with the 

Statement of Recommended Practice 

- Accounting for Further and Higher 

Education. 

We report to you whether in our opinion, 

income from funding bodies, grants 

and income for specific purposes and 

from other restricted funds administered 

by the University, have been properly 

applied in all material respects for the 

purposes for which they were received, 

and whether income has been applied in 

all material respects in accordance with 

the University’s Charter and Statutes and 

where appropriate with the Financial 

Memorandum with the Department for 

Employment and Learning. 

We also report to you whether, in our 

opinion, the information given in the 

Honorary Treasurer’s report is consistent 

with those financial statements. In 

addition we report to you if, in our 

opinion, the University has not kept 

adequate accounting records, if financial 

statements are not in agreement with 

the accounting records or if we have 

not received all the information and 

explanations we require for our audit. 

We read the other information contained 

in the Honorary Treasurer’s report and 

consider the implications for our report 

if we become aware of any apparent 

misstatements or material inconsistencies 

with the financial statements. This other 

information comprises only the Operating 

and Financial Review and the Corporate 

Governance statement. 

We also review the statement on internal 

control, included as part of the Corporate 

Governance statement, and comment 

if the statement is inconsistent with 

our knowledge of the University and 

group. We are not required to consider 

whether the statement on internal control 

covers all risks and controls, or to form 

an opinion on the effectiveness of the 

group’s corporate governance procedures 

or its risk and control procedures. We 

consider the implications for our report 

if we become aware of any apparent 

misstatements or material inconsistencies 

with the financial statements. Our 

responsibilities do not extend to any other 

information. 

The maintenance and integrity of the 

Queen’s University of Belfast’s website 

is the responsibility of Senate; the work 

carried out by the auditors does not 

involve consideration of these matters 

and, accordingly, the auditors accept no 

responsibility for any changes that may 

have occurred to the financial statements 

since they were initially presented on the 

website. 

Basis of audit opinion 

We conducted our audit in accordance 

with International Standards on Auditing 

(UK and Ireland) issued by the Auditing 

Practices Board and with the HEFCE 

Accountability and Audit Code of Practice 

contained in the Financial Memorandum. 

An audit includes examination, on a test 

basis, of evidence relevant to the amounts 

and disclosures in the financial statements. 

It also includes an assessment of the 

significant estimates and judgements 

made by the Senate in the preparation of 

the financial statements, and of whether 

the accounting policies are appropriate 

to the group’s circumstances, consistently 

applied and adequately disclosed. 

We planned and performed our audit 

so as to obtain all the information and 

explanations which we considered 

necessary in order to provide us with 

sufficient evidence to give reasonable 

assurance that the financial statements 

are free from material misstatement, 

whether caused by fraud or other 

irregularity or error. In forming our opinion 

we also evaluated the overall adequacy 

of the presentation of information in the 

financial statements. 


13

Independent Auditors’ Report 

To the Senate of Queen’s University Belfast 

Opinion 

In our opinion: 

• the financial statements give a true 

and fair view of the state of affairs of 

the University and the group at 

31 July 2009, and of the group’s 

income and expenditure, recognised 

gains and losses and cash flows for 

the year then ended; 

• the financial statements have been 

properly prepared in accordance with 

the Statement of Recommended 

Practice - Accounting for Further 

and Higher Education, and United 

Kingdom Generally Accepted 

Accounting Practice; 

• in all material respects, income from 

the Department for Employment 

and Learning, grants and income 

for specific purposes and from other 

restricted funds administered by the 

University have been applied only for 

the purposes for which they were 

received; and 

• in all material respects, income has 

been applied in accordance with the 

University’s Charter and Statutes and 

where appropriate in accordance with 

the Financial Memorandum with the 

Department for Employment and 

Learning. 

PricewaterhouseCoopers LLP 

Chartered Accountants and 

Registered Auditors 

Belfast 

24 November 2009 


Statement of 

Principal Accounting Policies 

1. Basis of Preparation 

The financial statements have been 

prepared under the historical cost 

convention, as modified by the 

revaluation of Endowment and 

Fixed Asset Investments, and in 

accordance with both the Statement 

of Recommended Practice (SORP): 

Accounting for Further and Higher 

Education 2007 and applicable 

Accounting Standards. 

2. Consolidation 

In accordance with Financial 

Reporting Standard (FRS) 2 

(amended), the consolidated financial 

statements of the University include 

its wholly owned subsidiaries, QUBIS 

Ltd, Quhars Ltd and the University 

Book Shop Ltd. 

The results of its associated 

undertaking, University Challenge 

Fund (NI) Ltd have also been included, 

based on the share of the operating 

deficit and net assets. Details are 

presented in Note 12. In accordance 

with FRS 9, Associates, Joint Ventures 

and other Joint Arrangements, a 

proforma income and expenditure 

account and net assets statement, 

incorporating the University’s material 

interest in its associated undertaking, 

Kainos Software Limited, is presented 

at Note 12, together with summary 

details of the financial statements of 

the unconsolidated subsidiaries. 

3. Recognition of Income 

Government grants are accounted for 

in the period to which they relate. 

Fee income is stated gross and 

credited to the income and 

expenditure account over the period 

in which the students are studying. 

Bursaries and scholarships are 

accounted for gross, as expenditure, 

and not deducted from income. 

Recurrent income from research 

and other grants and contracts is 

accounted for on an accruals basis 

and included to the extent of the 

completion of the contract or service 

concerned; any payments received 

in advance of such performance are 

recognised on the balance sheet as 

liabilities. 

Grants received in respect of the 

acquisition or construction of fixed 

assets are treated as deferred capital 

grants. Such grants are credited to 

deferred capital grants and an annual 

transfer made to the income and 

expenditure account over the useful 

economic life of the asset, at the 

same rate as the depreciation charge 

on the asset for which the grant was 

awarded. 

Endowment and investment income 

is credited to the income and 

expenditure account on a receivable 

basis. Income from restricted 

endowments not expended, is 

transferred from the income and 

expenditure account to restricted 

endowments. 

Any increase or decrease in value 

arising from revaluation of fixed 

assets is carried to the revaluation 

reserve via the statement of 

recognised gains and losses. 

Increases or decreases arising on the 

revaluation or disposal of endowment 

assets are added to, or subtracted 

from, the funds concerned and 

accounted for through the balance 

sheet and reported in the statement 

of total recognised gains and losses. 

4. Pension Schemes 

The two principal pension schemes 

for the University’s staff are the 

Universities Superannuation Scheme 

(USS) and the Retirements Benefits 

Plan of Queen’s University Belfast 

(RBP). 

It is not possible to separately 

identify the University’s share of the 

underlying assets and liabilities of 

the USS, and hence contributions 

are accounted for as if it were a 

defined contribution scheme, and 

contributions to this scheme are 

included as expenditure in the period 

in which they are payable. 

The schemes are defined benefit 

schemes which are externally funded 

and contracted out of the state 

Pension Scheme. The Funds are 

valued every three years by actuaries 

using the projected unit method, the 

rates of contribution payable being 

determined by the trustees on the 

advice of the actuaries. Pension costs 

are assessed on the basis of the latest 

actuarial valuations of the schemes 

and are accounted for on the basis 

of charging the cost of providing 

pensions over the period during 

which the University benefits from 

the employees’ services. Variations 

from regular cost are spread over the 

expected average remaining working 

lifetime of members of the schemes, 

after making allowances for future 

withdrawals. 

The difference between the fair value 

of the assets held in the University’s 

defined benefit pension scheme 

(RBP) and the scheme’s liabilities, 

measured on an actuarial basis 

using the projected unit method, is 

recognised in the University’s balance 

sheet as a pension scheme asset or 

liability, as appropriate. The carrying 

value of any resulting pension scheme 

asset is restricted to the extent that 

the University is able to recover 

the surplus either through reduced 

contributions in the future, or 

through refunds from the scheme. 

Changes in the defined benefit 

pension scheme asset or liability, 

arising from factors other than 

cash contribution by the University, 

are charged to the income and 

expenditure account or the statement 

of total recognised gains and losses, 

in accordance with FRS 17. 

5. Foreign Currencies 

Transactions denominated in foreign 

currencies are recorded at the rate 

of exchange ruling at the dates of 

the transactions. Monetary assets 

and liabilities denominated in foreign 

currencies are translated into sterling 

at year-end rates. The resulting 

exchange differences are dealt with 

in the determination of income and 

expenditure for the financial year. 

6. Land and Buildings 

All University property is held freehold 

or under long lease. Freehold land 

is not depreciated. Buildings are 

depreciated over their expected useful 

lives of either 40 years or 


15

Statement of 

Principal Accounting Policies 

60 years, depending on the category 

of building in question. All land and 

buildings are stated at cost. 

Where buildings are acquired with 

the aid of specific grants they are 

capitalised and depreciated as above. 

The related grants are treated as 

deferred capital grants and released 

to income over the expected useful 

life of the buildings. 

7. Heritage Assets 

Heritage assets (valuable artefacts 

held and maintained for their 

contribution to knowledge and 

culture) valued at over £25,000, are 

capitalised and recognised at the cost 

or value of the acquisition, where 

such a cost or valuation is reasonably 

obtainable. 

The University holds a number of 

heritage assets acquired in past 

accounting periods and these are 

not capitalised, as reliable cost 

information is not available and 

conventional valuation approaches 

lack sufficient reliability. 

8. Equipment 

Equipment, including microcomputers 

and software, costing less 

than £25,000 per individual item or 

group of related items, is written off 

in the year of acquisition. All other 

equipment is capitalised. 

Capitalised equipment is stated at 

cost and depreciated on a straight 

line basis over its expected useful life, 

as follows: 

Motor vehicles and 

other general equipment - 4 years 

Equipment acquired 

for specific research 

projects 

- 3 years 

Where equipment is acquired 

with the aid of specific grants it is 

capitalised and depreciated as above. 

The related grant is treated as a 

deferred capital grant and released 

to income over the expected useful 

life of the equipment (or the period 

of the grant in respect of specific 

research projects). 

9. Investments 

Endowment assets and University 

investments are included in the 

balance sheet at market value. 

Current asset investments are 

included at the lower of cost and net 

realisable value. 

10. Cash Flows and Liquid Resources 

Cash flows comprise increases or 

decreases in cash. Cash includes 

cash in hand, deposits repayable on 

demand and overdrafts. Deposits are 

repayable on demand if they are in 

practice available within 24 hours 

without penalty. No investments, 

however liquid, are included as 

cash. Liquid resources include term 

deposits, government securities 

and loan stock held as part of the 

University’s treasury management 

activities. They exclude any such 

assets held as endowment asset 

investments. 

11. Stocks 

Stocks are valued at the lower of 

cost or net realisable value. Where 

it is deemed necessary provision is 

made for obsolete, slow moving and 

defective stocks. 

12. Maintenance of Premises 

The University has a rolling 

maintenance plan which is reviewed 

on an annual basis, and the cost 

of routine corrective maintenance 

is charged to the income and 

expenditure account as incurred. 

13. Accounting for Charitable 

Donations 

Unrestricted donations 

Charitable donations are recognised 

in the accounts when they are 

received or there is sufficient evidence 

to indicate the donation will be 

received and the value of the receipt 

can be measured with sufficient 

reliability. 

Endowment Funds 

Where charitable donations are 

to be retained for the benefit of 

the University, as specified by the 

donors, these are accounted for as 

endowments. There are three main 

types: 

(i) 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; 

(ii) Restricted expendable 


specified a particular objective 

(other than the purchase or 

construction of fixed assets) and 

the University can convert the 

donation into income; and 

(iii) Restricted permanent 


specified that the fund is to be 

permanently invested to generate 

an income stream to be applied 

to a particular objective. 

Donations for fixed assets 

Donations received in respect of 

the purchase or construction of 

fixed assets are shown on the 

balance sheet as a deferred capital 

grant and released to the income 

and expenditure account over the 

estimated useful life of the asset, 

in line with the depreciation charge 

relating to the asset. 

14. Taxation Status 

The University is an exempt charity 

within the meaning of Schedule 2 

of the Charities Act 1993 and as 

such is a charity within the meaning 

of Section 506(1) of the Taxes Act 

1988. Accordingly, the University is 

potentially exempt from taxation in 

respect of income or capital gains 

received within categories covered 

by Section 505 of the Taxes Act 1988 

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 cost of such inputs. 

Any irrecoverable VAT allocated to 

fixed assets is included in their cost. 


CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT 

for the year ended 31 July 2009 

INCOME (including share of joint venture) 

2009 2008 

Note £000 £000 

Government grants 1 108,647 96,515 

Academic fees, support grants and training contracts 2 61,109 53,690 

Research grants and contracts 3 59,303 51,182 

Other operating income 4 51,612 48,772 

less: share of joint venture’s income 4 (4) (10) 

Endowment income and interest receivable 5 

_________ 

8,270 

_________ 

8,291 

_________ 

288,937 

_________ 

258,440 

EXPENDITURE 

Staff costs 6 155,881 146,297 

Depreciation 11 14,097 14,397 

Other operating expenses 7 107,285 81,694 

Interest payable 8 _________ 4,832 _________ 2,689 

_________ 

282,095 

_________ 

245,077 

SURPLUS BEFORE TAXATION 6,842 13,363 

Share of joint venture’s deficit before taxation 12 (23) (188) 

Taxation 9 2 - 

_________ _________ 

SURPLUS FOR THE YEAR 6,821 13,175 

Surplus for the year transferred to endowment funds 19 _________ (770) _________ (607) 

SURPLUS FOR THE YEAR RETAINED IN GENERAL FUNDS 20 

_________ 

6,051 

_________ 

12,568 

The income and expenditure of the University relates wholly to continuing operations. 

There is no difference between the surplus stated above and its historical cost equivalent. 


17

BALANCE SHEET AS AT 31 JULY 2009 

Consolidated 

University 

2009 2008 2009 2008 

FIXED ASSETS Note £000 £000 £000 £000 

Tangible assets 11 253,234 233,776 253,224 233,765 

Investments: 

Investments in joint ventures: 

Share of gross assets 345 374 - - 

Share of gross liabilities _________ (18) _________ (24) _________- _________- 

12 327 350 - - 

Other investments 12 _________ 25,138 _________ 25,081 _________ 22,432 _________ 23,465 

_________ 278,699 _________ 259,207 _________ 275,656 _________ 257,230 

ENDOWMENT ASSETS AND 

OTHER INVESTMENTS 13 36,136 35,852 37,030 36,653 

CURRENT ASSETS 

Stocks 834 836 473 443 

Debtors 14 22,678 22,079 22,397 22,891 

Investments - short term deposits 135,954 130,215 135,954 130,215 

Cash at bank and in hand _________ 4,447 _________ 2,422 _________ 4,200 _________ 732 

163,913 155,552 163,024 154,281 

CREDITORS 

Amounts falling due within one year 15 _________ (44,170) _________ (49,407) _________ (44,418) _________ (49,372) 

NET CURRENT ASSETS _________ 119,743 _________ 106,145 _________ 118,606 _________ 104,909 

TOTAL ASSETS LESS CURRENT LIABILITIES 434,578 401,204 431,292 398,792 

CREDITORS: AMOUNTS FALLING DUE AFTER 

MORE THAN ONE YEAR 16 (67,331) (68,095) (67,331) (68,095) 

PROVISIONS FOR LIABILITIES AND CHARGES 17 (10,069) (279) (10,069) (279) 

_________ _________ _________ _________ 

NET ASSETS EXCLUDING PENSION LIABILITY 357,178 332,830 353,892 330,418 

NET PENSION LIABILITY 25 (36,071) (29,950) (36,071) (29,950) 

_________ _________ _________ _________ 

NET ASSETS INCLUDING PENSION LIABILITY 321,107 302,880 317,821 300,468 

_________ _________ _________ _________ 

_________ _________ _________ _________ 


BALANCE SHEET AS AT 31 JULY 2009 

Consolidated 



Represented by:- Note £000 £000 £000 £000 

DEFERRED CAPITAL GRANTS 18 209,393 188,710 209,393 188,710 

_________ _________ _________ _________ 

ENDOWMENTS AND OTHER FUNDS 

Expendable endowments 19 9,193 7,340 9,257 7,403 

Permanent endowments 19 26,751 27,841 27,020 28,111 

Undistributed investment fund income 19 _________ 192 _________ 671 _________ 753 _________ 1,139 

Total endowments _________ 36,136 _________ 35,852 _________ 37,030 _________ 36,653 

RESERVES 

General reserves excluding pension reserve 20 101,369 98,410 101,723 98,176 

Pension reserve 20 _________ (36,071) _________ (29,950) _________ (36,071) _________ (29,950) 

General reserves including pension reserve 20 65,298 68,460 65,652 68,226 

Revaluation reserve 21 _________ 10,280 _________ 9,858 _________ 5,746 _________ 6,879 

Total reserves _________ 75,578 _________ 78,318 _________ 71,398 _________ 75,105 

TOTAL FUNDS 321,107 302,880 317,821 300,468 

_________ _________ _________ _________ 

_________ _________ _________ _________ 

The financial statements on pages 15 to 41 were approved by Senate 

on 24 November 2009 and were signed by: 

Mr S. Prenter, Honorary Treasurer 

Professor P. Gregson, Vice-Chancellor 

Mr W. N. Bennett, Director of Finance 


19

CONSOLIDATED CASH FLOW STATEMENT 



Note £000 £000 

Net cash inflow from operating activities 24 (i) 12,220 10,221 

Return on investments and servicing of finance 24 (ii) 3,359 4,158 

Capital expenditure and financial investment 24 (iii) (5,052) 6,309 

_________ _________ 

Cash inflow before use of liquid resources 

and financing 10,527 20,688 

Management of liquid resources 24 (v) (5,739) (60,683) 

Financing 24 (iv) (1,241) 39,392 

_________ _________ 

Increase / (decrease) in cash 

_________ 

3,547 

_________ 

(603) 

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 


£000 £000 

Increase / (decrease) in cash in the year 3,547 (603) 

Increase in short term deposits 5,739 60,683 

Decrease / (increase) in debt 1,241 (39,392) 

_________ _________ 

Increase in net funds 10,527 20,688 

Net funds at 1 August 66,688 46,000 

_________ _________ 

Net funds at 31 July (note 24 (v)) 

_________ 

77,215 

_________ 

66,688 


CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 



Note £000 £000 

Surplus after depreciation of assets 6,821 13,175 

Unrealised surplus / (deficit) on revaluation 

of University investments 21 422 (2,246) 

Depreciation of endowment asset investments 19 (2,185) (4,629) 

Actuarial loss on pension scheme 25 (9,213) (2,243) 

New endowments 19 1,778 424 

Transfers from endowments to research funds 19 (79) (268) 

_________ _________ 

Total recognised (losses) / gains relating to the year 

_________ 

(2,456) 

_________ 

4,213 

Reconciliation 

Opening reserves and endowments 114,170 109,957 

Total recognised (losses) / gains in the year (2,456) 4,213 

_________ _________ 

Closing reserves and endowments 

_________ 

111,714 

_________ 

114,170 

Total reserves 75,578 78,318 

Endowments and other funds 36,136 35,852 

_________ _________ 

_________ 

111,714 

_________ 

114,170 


21

NOTES TO THE ACCOUNTS 

Consolidated 

1. GOVERNMENT GRANTS 2009 2008 

£000 £000 

Recurrent Grants 94,438 82,494 

Specific Grants: 

Support Programme for University Research 287 1,715 

Higher Education Innovation Fund 1,777 1,163 

Teaching Quality Enhancement Fund 281 299 

Excellence in Teaching and Learning 555 419 

Strengthening All Island Research Base 1,261 - 

Other capital projects 46 318 

Other 2,241 2,100 

Deferred Capital Grants released in the year: 

Buildings (note 18) 4,115 3,895 

Equipment (note 18) _________ 3,646 ________ 4,112 

_________ 

108,647 

________ 

96,515 

Consolidated 

2. ACADEMIC FEES, SUPPORT GRANTS AND 2009 2008 

TRAINING CONTRACTS £000 £000 

Full-time students charged home fees 35,564 29,619 

Full-time students charged overseas fees 7,493 7,077 

Part-time fees 3,271 3,366 

Short courses 1,535 1,567 

Research training support grants 20 21 

Other fees and support grants 845 232 

DHSSPS nursing contract _________ 12,381 ________ 11,808 

_________ 

61,109 

________ 

53,690 

Consolidated 

3. RESEARCH GRANTS AND CONTRACTS 2009 2008 

£000 £000 

Research Councils and charities 21,799 20,510 

UK government and EC 23,586 22,061 

Other sources _________ 13,918 ________ 8,611 

_________ 

59,303 

________ 

51,182 

Income from research grants and contracts includes deferred capital grants released 

in the year totalling £2.198m (2008: £2.335m) note 18. 



Consolidated 

4. OTHER OPERATING INCOME 2009 2008 

£000 £000 

Hospitality services 7,619 8,262 

Other services rendered 13,013 12,155 

Contribution to joint appointment salaries 7,848 7,891 

Other income 23,128 17,024 

Profit on sale of property - 3,430 

Share of joint venture’s income _________ 4 ________ 10 

_________ 

51,612 

________ 

48,772 

Details of the joint venture are included at note 12. 

Other income includes deferred capital grants released in the year totalling £1.350m 

(2008: £0.704m) note 18. 

Consolidated 

5. ENDOWMENT INCOME AND INTEREST RECEIVABLE 2009 2008 

£000 £000 

Transferred from expendable endowments (note 19) 381 385 

Transferred from permanent endowments (note 19) 1,321 1,254 

Realised profit on investments - 1,176 

Income from short-term investments _________ 6,568 ________ 5,476 

_________ 

8,270 

________ 

8,291 

Consolidated 

6. STAFF 2009 2008 

£000 £000 

Staff Costs 

Gross salaries and wages 122,244 113,858 

Employer’s national insurance contributions 9,351 9,116 

Service charge - RBP pension scheme (note 25) 2,713 1,856 

Employer’s pension contributions - USS pension scheme _________ 13,725 ________ 13,576 

148,033 138,406 

Joint appointment salaries 7,848 7,891 

_________ ________ 

_________ 

155,881 

________ 

146,297 

Emoluments of the Vice-Chancellor 

_________ 

247 

________ 

231 

The emoluments of the Vice-Chancellor are shown on the same basis as higher paid 

staff and include total pension contributions paid, which amounted to £30,334 

(2008: £28,350). 


23


Consolidated 

6. STAFF (continued) Remuneration of higher paid staff, excluding employer’s 2009 2008 

pension contributions but including NHS merit payments Number Number 

and the NHS funded element of joint appointments. 

£100,001 - £110,000 5 18 

£110,001 - £120,000 17 5 

£120,001 - £130,000 5 7 

£130,001 - £140,000 2 2 

£140,001 - £150,000 4 6 

£150,001 - £160,000 3 4 

£160,001 - £170,000 7 5 

£170,001 - £180,000 3 6 

£180,001 - £190,000 5 2 

£190,001 - £200,000 3 1 

£200,001 - £210,000 2 2 

£210,001 - £220,000 2 1 

£220,001 - £230,000 - 1 

£240,001 - £250,000 1 - 

Consolidated 

Average staff numbers by category 2009 2008 

Number Number 

Academic 1,124 1,105 

Administration 526 497 

Technical 342 357 

Research 574 549 

Other _________ 1,117 ________ 1,094 

_________ 

3,683 

________ 

3,602 

Consolidated 

7. OTHER OPERATING EXPENSES 2009 2008 

£000 £000 

Consumables and laboratory expenditure 7,966 7,453 

Books and periodicals 3,957 3,317 

Studentships and bursaries 20,269 16,963 

Heat, light, water and power 5,665 4,716 

Repairs and general maintenance 3,735 2,600 

Auditors’ remuneration 49 50 

Auditors’ remuneration for non-audit services 72 73 

Rates, insurance and telecommunication expenses 5,653 5,190 

Provision for restructuring 9,930 212 

Hospitality services 2,864 2,689 

Equipment and equipment maintenance 10,459 9,128 

Postage, photocopying and printing 2,362 2,217 

Patent fees 1,279 789 

Other _________ 33,025 ________ 26,297 

_________ 

107,285 

________ 

81,694 



Consolidated 

8. INTEREST PAYABLE 2009 2008 

£000 £000 

Loans not wholly repayable within five years 3,485 2,128 

Other _________ 1,347 ________ 561 

_________ 

4,832 

________ 

2,689 

The other interest payable charges include the finance costs relating to the RBP pension 

scheme (note 25). 

Consolidated 

9. TAXATION ON ORDINARY ACTIVITIES 2009 2008 

£000 £000 

Deferred Taxation: 

Accelerated capital allowances and other timing differences 4 - 

Adjustment in respect of previous periods _________ (2) _________- 

Tax refund 

_________ 

2 

_________ 

- 

The taxation charge arises from the operating activities of 

the subsidiary companies. The tax assessed for the period 

differs from the standard rate of corporation tax in the UK 

21% (2008: 20%). The differences are explained as follows: 

Relevant (loss) / profit on ordinary activities _________ (653) _________ 24 

Relevant (loss) / profit on ordinary activities by standard 

tax rate in the UK 21% (2008: 20%) (137) 5 

Effects of: 

Income not taxable / (expenses not deductible) for tax purposes 128 (239) 

Accelerated capital allowances and other timing differences 3 - 

Unrelieved tax losses 6 - 

Chargeable gains _________- _________ 234 

_________ 

- 

_________ 

- 

Consolidated 

Other 

10. ANALYSIS OF EXPENDITURE BY ACTIVITY Staff Operating Interest 2009 

Costs Dep’n Expenses Payable Total 

£000 £000 £000 £000 £000 

Academic departments 94,175 2,486 16,531 - 113,192 

Academic services 10,975 543 11,486 - 23,004 

Research grants and contracts 21,443 1,895 23,721 - 47,059 

Hospitality services 1,688 - 2,864 775 5,327 

Premises 5,387 8,397 14,190 - 27,974 

Administration 17,043 754 19,376 2,710 39,883 

Other _________ 5,170 _________ 22 ________ 19,117 ________ 1,347 ________ 25,656 

Total per the Income and 

Expenditure Account 

_________ 155,881 

_________ 14,097 

________ 107,285 

________ 4,832 

________ 

282,095 

The depreciation charge has been funded by: 

Deferred capital grants released (note 18) 11,234 

General income _________ 2,863 

_________ 

14,097 


25


11. TANGIBLE ASSETS 

Consolidated 

Freehold Assets 

and Long in the 

Freehold Leasehold Course of Heritage 

Land Buildings Construction Equipment Assets Total 

£000 £000 £000 £000 £000 £000 

Cost 

At 1 August 2008 990 241,134 32,070 42,799 - 316,993 

Additions - 2,328 28,083 3,095 49 33,555 

Disposals - - - (4,077) - (4,077) 

Transfers - 45,669 (45,712) - 43 - 

At 31 July 2009 990 289,131 14,441 41,817 92 346,471 

Depreciation 

At 1 August 2008 - 48,721 - 34,496 - 83,217 

Charge for the year - 8,464 - 5,633 - 14,097 

Eliminated on disposal - - - (4,077) - (4,077) 

At 31 July 2009 - 57,185 - 36,052 - 93,237 

Net Book Value 



Buildings with a net book value of £190.0m (2008: £169.4m) and cost of £237.2m (2008: £210.4m) have been funded in part from 

Treasury sources. Should these particular buildings be sold the University would either have to surrender that element of the proceeds equal 

to the grant aided proportion of the original cost to DEL or apply the proceeds, in accordance with the Financial Memorandum with DEL. 


Freehold Assets 

and Long in the 

Freehold Leasehold Course of Heritage 

Land Buildings Construction Equipment Assets Total 

£000 £000 £000 £000 £000 £000 

Cost 


Additions - 2,328 28,083 3,089 49 33,549 

Disposals - - - (4,077) - (4,077) 

Transfers - 45,669 (45,712) - 43 - 


Depreciation 

At 1 August 2008 - 48,685 - 34,146 - 82,831 

Charge for the year - 8,464 - 5,626 - 14,090 

Eliminated on disposal - - - (4,077) - (4,077) 

At 31 July 2009 - 57,149 - 35,695 - 92,844 






12. INVESTMENTS 

Consolidated 



£000 £000 £000 £000 

Investment in subsidiary and other companies (note 12 (i)) 7 5 2,111 2,110 

Investment in joint ventures (note 12 (ii)) - - 499 499 

Investment in Crescent Capital II 650 550 650 550 

Investment in CVCP Properties plc 50 50 50 50 

General Investment Fund (note 12 (iii)) 13,639 14,361 13,639 14,361 

Shares in University Investment Fund (note 13) 5,483 5,895 5,483 5,895 

Interests in group and associated undertakings (note 12 (iv)) 2,755 2,028 - - 

Other unlisted investments (note 12 (iv)) 654 1,136 - - 

Listed investments (note 12 (iv)) 1,900 1,056 - - 

25,138 25,081 22,432 23,465 

(i) Investments in subsidiaries 

The University holds the entire share capital of the following limited companies which have been fully consolidated into the financial 

statements. The companies are all incorporated in Northern Ireland. 

Quhars Limited Provision of nurse training services. Quhars Limited ceased trading on 31 January 2009 

and all its activities were transferred to the University at that date. The company was 

wound up as at 31 July 2009. 

University Book Shop Limited 

QUBIS Limited 

Sale of books to the University and the general public. 

Technology transfer company which engages in the commercial exploitation of the 

academic and research activities of the University by establishing corporate ventures. 

(ii) Joint Ventures 

The University Challenge Fund (Northern Ireland) is a Limited Partnership which has been established as a University Challenge Seed Fund to 

provide funding for university research discoveries. It is a joint venture between the University and the University of Ulster. 

Consolidated 


Interest in Joint Venture £000 £000 

Net assets at 1 August 350 538 

Share of deficit retained (23) (188) 

Net assets at 31 July 327 350 

(iii) Investments in the General Investment Fund 

Consolidated and University 


£000 £000 

UK equities and investment trusts (listed) 13,639 14,361 

Fixed interest stocks and equities at cost 10,748 10,748 


27


12. INVESTMENTS (continued) 

(iv) Group and Associated Undertakings, 

Listed Investments and Other Unlisted Investments 

Consolidated 

Group and Other 

Associated Unlisted Listed 

Undertakings Investments Investments 

£000 £000 £000 

Cost or Valuation 

At 1 August 2008 2,035 1,390 1,090 

Additions - 229 - 

Net increase / (decrease) in unrealised appreciation 720 (3) 838 

Disposals _________- _________ (164) _________- 

At 31 July 2009 

_________ 2,755 

_________ 1,452 

_________ 

1,928 

Provisions 

At 1 August 2008 7 254 34 

(Released) / provided during the year _________ (7) _________ 544 _________ (6) 


_________ - 

_________ 798 

_________ 

28 



_________ 2,755 

_________ 654 

_________ 

1,900 

At 1 August 2008 

_________ 2,028 

_________ 1,136 

_________ 

1,056 

Cost or valuation at 31 July 2009 is represented by: 

Valuation 2,755 64 1,928 

Cost _________- _________ 1,388 _________- 

_________ 2,755 

_________ 1,452 

_________ 

1,928 

The listed investments are listed on the London Stock Exchange and are stated at market value. 

Details of the interests in group and associated undertakings are set out below. Each company is incorporated in Northern Ireland and the 

investments relate to ordinary £1 shares: 

% of Latest Share of Profit / 

equity Audited net assets (loss) for 

held Accounts the year Principle Activity 

£000 £000 

Acksen Limited 25.0 31-Jul-08 15 33 Supply of instruments for 

monitoring 

electromagnetic radiation 

Kainos Software Limited 35.0 31-Mar-09 2,614 2,021 Computer services 

Marine and 

Marenco Limited 27.6 31-Dec-08 34 23 environmental 

consultancy services 

Lumichem Limited 33.3 31-Jul-08 20 (1) Supply of fine chemicals 

and ancillary plant 

Biocolor Limited 20.0 31-Jul-08 71 71 Supply and development 

of assay kits for tissue 

laboratories 

In addition to the above, the Group has shareholdings of less than 20% in twenty-four unlisted companies, all of which are incorporated in 

the United Kingdom. 



12. INVESTMENTS (continued) 

Incorporating the results of Kainos Software Limited on an equity accounting basis (other relevant companies are not included on the basis 

of materiality) the University’s consolidated results would have been: 


£000 £000 

Share of profit of associated company (net of dividend paid) 861 392 

Tax _________ (154) _________ (41) 

Share of profit of associated company, after tax 707 351 

Consolidated surplus for the year _________ 6,051 _________ 12,568 

Total surplus for the year 

_________ 

6,758 

_________ 

12,919 

The University’s proforma consolidated net assets, incorporating the investment on an equity accounting basis, are: 


£000 £000 

Fixed assets 

Tangible assets 253,234 233,776 

Investment in associate 2,614 1,912 

Other investments _________ 25,465 _________ 25,431 

_________ 281,313 _________ 261,119 

Endowment asset investments 36,136 35,852 

Current assets 163,913 155,552 

Creditors - due in less than one year _________ (44,170) _________ (49,407) 

Net current assets _________ 119,743 _________ 106,145 

Total assets less current liabilities 437,192 403,116 

Creditors falling due after more than one year (67,331) (68,095) 

Provisions _________ (10,069) _________ (279) 

Total net assets excluding pension liability 359,792 334,742 

Net pension liability _________ (36,071) _________ (29,950) 

Total net assets including pension liability 

_________ 

323,721 

_________ 

304,792 


29


13. ENDOWMENT ASSETS AND OTHER INVESTMENTS 

The University Investment Fund is an investment fund operated on unit trust principles, and administered under the terms of the Queen’s 

University (Trust Scheme) Order (Northern Ireland) 1982. The purpose of the Investment Fund is to provide an investment vehicle for the 

greater part of the University endowment funds and, in addition, the University itself holds investment units as a longer term investment 

funded from its general reserves. 

The total movement in the value of the investments in the Investment Fund, and of the other assets held directly on behalf of individual 

endowments, is as follows: 

Consolidated 

Investment Other 2009 2008 

Fund Endowments Total Total 

£000 £000 £000 £000 

At 1 August 36,501 5,246 41,747 46,512 

Additions 32,730 407 33,137 8,303 

Disposals (29,785) (877) (30,662) (7,540) 

Depreciation on disposals / revaluation _________ (2,603) _________- _________ (2,603) _________ (5,528) 

At 31 July 

_________ 36,843 

_________ 4,776 

_________ 41,619 

_________ 

41,747 

Balance at 31 July held on behalf of: 

Endowments: Permanent 22,792 3,959 26,751 27,841 

Expendable _________ 8,376 _________ 817 _________ 9,193 _________ 7,340 

31,168 4,776 35,944 35,181 

Investment Fund (undistributed income) 192 - 192 671 

_________ _________ _________ _________ 

Total endowments and other funds (note 19) 31,360 4,776 36,136 35,852 

University funds (note 21) 5,483 - 5,483 5,895 

_________ _________ _________ _________ 

_________ 36,843 

_________ 4,776 

_________ 41,619 

_________ 

41,747 

Investments held at the year end comprise: Investment Other 2009 2008 


£000 £000 £000 £000 

UK gilts and fixed interest stocks 4,803 - 4,803 5,781 

UK equities (listed) 18,821 - 18,821 22,256 

Overseas investments (listed) 3,360 - 3,360 304 

_________ _________ _________ _________ 

Total fixed interest stocks and equities 26,984 - 26,984 28,341 

Land and property 5,065 1,470 6,535 4,570 

Other investments 2,816 90 2,906 5,164 

Bank balances 1,978 3,216 5,194 3,672 

_________ _________ _________ _________ 

Total investments 

_________ 36,843 

_________ 4,776 

_________ 41,619 

_________ 

41,747 

Fixed interest stocks and equities at cost 24,779 - 24,779 30,628 

_________ _________ _________ _________ 

_________ _________ _________ _________ 

Land and property at cost 3,317 244 3,561 357 

_________ _________ _________ _________ 

_________ _________ _________ _________ 



13. ENDOWMENT ASSETS AND OTHER INVESTMENTS (continued) 


Investment Other 2009 2008 


£000 £000 £000 £000 

At 1 August 37,302 5,246 42,548 47,213 

Additions 32,823 407 33,230 8,404 

Disposals (29,785) (877) (30,662) (7,541) 

Depreciation on disposals / revaluation _________ (2,603) _________- _________ (2,603) _________ (5,528) 

At 31 July 

_________ 37,737 

_________ 4,776 

_________ 42,513 

_________ 

42,548 

Balance at 31 July held on behalf of: 

Endowments: Permanent 23,061 3,959 27,020 28,110 

Expendable _________ 8,440 _________ 817 _________ 9,257 _________ 7,404 

31,501 4,776 36,277 35,514 

Investment Fund (undistributed income) 753 - 753 1,139 

_________ _________ _________ _________ 

Total endowments and other funds (note 19) 32,254 4,776 37,030 36,653 

University funds (note 21) 5,483 - 5,483 5,895 

_________ _________ _________ _________ 

_________ 37,737 

_________ 4,776 

_________ 42,513 

_________ 

42,548 

Investments held at the year end comprise: Investment Other 2009 2008 


£000 £000 £000 £000 

UK gilts and fixed interest stocks 4,803 - 4,803 5,781 

UK equities (listed) 18,821 - 18,821 22,256 

Overseas investments (listed) 3,360 - 3,360 304 

UK equities (unlisted) 333 - 333 333 

_________ _________ _________ _________ 

Total fixed interest stocks and equities 27,317 - 27,317 28,674 

Land and property 5,065 1,470 6,535 4,570 

Other investments 3,377 90 3,467 5,632 

Bank balances 1,978 3,216 5,194 3,672 

_________ _________ _________ _________ 

Total investments 

_________ 37,737 

_________ 4,776 

_________ 42,513 

_________ 

42,548 

Fixed interest stocks and equities at cost 24,779 - 24,779 30,628 

_________ _________ _________ _________ 

_________ _________ _________ _________ 

Land and property at cost 3,317 244 3,561 357 

_________ _________ _________ _________ 

_________ _________ _________ _________ 


31


14. DEBTORS 

Consolidated 



£000 £000 £000 £000 

Amounts falling due within one year: 

Debtors for research services 6,364 4,621 6,364 4,621 

Other debtors 6,923 9,370 6,633 9,065 

Prepayments and accrued income 9,383 8,082 9,332 8,037 

Deferred tax asset (see below) 8 6 - - 

Due from subsidiary, QUBIS Limited - - 68 1,168 

22,678 22,079 22,397 22,891 

Deferred tax asset comprises: 

Accelerated capital allowances 1 1 - - 

Other timing differences 7 5 - - 

8 6 - - 

15. CREDITORS: AMOUNTS FALLING 

15. DUE WITHIN ONE YEAR 

Consolidated 



£000 £000 £000 £000 

Research funds received in advance 17,755 18,487 17,755 18,487 

Creditors 17,892 16,883 17,851 16,872 

Social security and other taxation payable 3,702 4,144 3,701 4,074 

Accruals and deferred income 3,544 8,367 3,424 8,253 

Due to subsidiary, QUBIS Limited - - 410 160 

Bank loans 1,277 1,526 1,277 1,526 

44,170 49,407 44,418 49,372 



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


£000 £000 

Bank loans 67,103 68,095 

Other long term creditors _________ 228 _________- 

_________ 

67,331 

_________ 

68,095 

The bank loans are repayable as follows: 

Between one and two years 1,382 1,332 

Between two and five years 4,564 4,392 

In five years or more _________ 61,157 _________ 62,371 

_________ 

67,103 

_________ 

68,095 

The bank loans are all at fixed interest rates. 

17. PROVISIONS FOR LIABILITIES AND CHARGES Consolidated and University 

At 

At 

1 August 31 July 

2008 Additions Expenditure 2009 

£000 £000 £000 £000 

Restructuring (note 7) 269 9,930 (130) 10,069 

Internally-funded pensions _________ 10 _________- _________ (10) _________- 

_________ 279 

_________ 9,930 

_________ (140) 

_________ 

10,069 

18. DEFERRED CAPITAL GRANTS Consolidated and University 

Other 

Grants and 

DEL Benefactors Total 

£000 £000 £000 

Balance at 1 August 2008 

Buildings 120,973 59,856 180,829 

Transfers (2,000) 2,000 - 

Equipment 5,788 2,050 7,838 

Heritage Assets _________ 43 ________- ________ 43 

Total 

_________ 124,804 

________ 63,906 

________ 

188,710 

Cash received 

Buildings 22,981 5,794 28,775 

Equipment 1,656 1,437 3,093 


Total 

_________ 24,686 

________ 7,231 

________ 

31,917 

Released to Income and Expenditure 

Buildings (notes 1, 3 & 4) 4,115 1,668 5,783 

Equipment (notes 1, 3 & 4) _________ 3,646 ________ 1,805 ________ 5,451 

Total 

_________ 7,761 

________ 3,473 

________ 

11,234 

Balance at 31 July 2009 

Buildings 137,839 65,982 203,821 

Equipment 3,798 1,682 5,480 


Total 

_________ 141,729 

________ 67,664 

________ 

209,393 


33


19. ENDOWMENTS AND OTHER FUNDS 

Consolidated 

Unrestricted Restricted Total Restricted Undistributed 2009 2008 

Permanent Permanent Permanent Expendable Investment Total Total 

Fund Income 

£000 £000 £000 £000 £000 £000 £000 

Balance at 1 August 

Capital value 4,029 23,159 27,188 7,086 - 34,274 36,608 

Accumulated income _________- ________ 653 _________ 653 _________ 254 _________ 671 _________ 1,578 _________ 3,110 

4,029 23,812 27,841 7,340 671 35,852 39,718 

Income for the year 84 1,330 1,414 381 (93) 1,702 1,639 

Expenditure for the year (84) (648) (732) (200) - (932) (1,032) 

_________ ________ _________ ________ _________ _________ _________ 

- 682 682 181 (93) 770 607 

Transfers to research and other funds - (111) (111) 32 - (79) (268) 

Endowment additions / (disposals) - 73 73 2,091 (386) 1,778 424 

Depreciation of endowment asset 

investments _________ (112) ________ (1,622) _________ (1,734) _________ (451) _________- _________ (2,185) _________ (4,629) 

At 31 July (note 13) 

_________ 3,917 

________ 22,834 

_________ 26,751 

_________ 9,193 

_________ 192 

_________ 36,136 

_________ 

35,852 

Represented by: 

Capital value 3,917 21,939 25,856 8,776 - 34,632 34,274 


_________ 3,917 

________ 22,834 

_________ 26,751 

_________ 9,193 

_________ 192 

_________ 36,136 

_________ 

35,852 


Unrestricted Restricted Total Restricted Undistributed 2009 2008 

Permanent Permanent Permanent Expendable Investment Total Total 

Fund Income 

£000 £000 £000 £000 £000 £000 £000 

Balance at 1 August 

Capital value 4,044 23,414 27,458 7,150 - 34,608 36,940 

Accumulated income _________- ________ 653 _________ 653 _________ 253 _________ 1,139 _________ 2,045 _________ 3,479 

4,044 24,067 28,111 7,403 1,139 36,653 40,419 

Income for the year 84 1,330 1,414 381 - 1,795 1,739 

Expenditure for the year (84) (648) (732) (200) - (932) (1,032) 

_________ ________ _________ _________ _________ _________ _________ 

- 682 682 181 - 863 707 

Transfers to research and other funds - (111) (111) 32 - (79) (268) 

Endowment additions / (disposals) - 73 73 2,091 (386) 1,778 424 

Depreciation of endowment asset 

investments _________ (112) ________ (1,623) _________ (1,735) _________ (450) _________- _________ (2,185) _________ (4,629) 

At 31 July (note 13) 

_________ 3,932 

________ 23,088 

_________ 27,020 

_________ 9,257 

_________ 753 

_________ 37,030 

_________ 

36,653 

Represented by: 

Capital value 3,932 22,193 26,125 8,838 - 34,963 34,608 


_________ 3,932 

________ 23,088 

_________ 27,020 

_________ 9,257 

_________ 753 

_________ 37,030 

_________ 

36,653 



19. ENDOWMENTS AND OTHER FUNDS (continued) 



Endowment funds are grouped for specific purposes as follows: £000 £000 

Chairs and lectureships 5,300 5,704 

Scholarship, studentship, medal and prize funds 7,292 7,425 

Research, department, school or faculty use 15,066 13,933 

Public lectures 1,135 1,173 

Travel 150 61 

Student amenities and associated objects 1,169 1,212 

Student assistance 1,083 1,108 

Other restricted funds 1,150 854 

General funds _________ 3,932 _________ 4,044 

Total endowments 

_________ 

36,277 

_________ 

35,514 

Being: 

Permanent endowments 27,020 28,111 

Restricted expendable endowments _________ 9,257 _________ 7,403 

_________ 

36,277 

_________ 

35,514 

20. GENERAL RESERVES 

Consolidated 



£000 £000 

Balance at 1 August 2008 68,460 68,226 

Surplus for the year 6,051 6,639 

Actuarial loss - RBP pension scheme _________ (9,213) _________ (9,213) 


_________ 

65,298 

_________ 

65,652 

Analysis of reserves 2009 2009 

£000 £000 

Capital reserves 18,143 18,143 

Departmental reserves 21,683 21,683 

Other reserves _________ 61,543 _________ 61,897 

101,369 101,723 

Pension reserve _________ (36,071) _________ (36,071) 


_________ 

65,298 

_________ 

65,652 


35


21. REVALUATION RESERVE 

Consolidated 

Associated 

Undertakings, 

Listed and University General 

Unlisted Investment Investment Total Total 

Investments Fund Fund 2009 2008 

£000 £000 £000 £000 £000 

Market value (notes 12 & 13) 6,135 5,483 13,639 25,257 24,771 

Cost (1,601) (2,629) (10,747) (14,977) (14,913) 

Revaluation surplus 4,534 2,854 2,892 10,280 9,858 

At 1 August 2,979 3,266 3,613 9,858 12,104 

Revaluation in the year 1,555 (412) (721) 422 (2,246) 

At 31 July 4,534 2,854 2,892 10,280 9,858 


University General 

Investment Investment Total Total 

Fund Fund 2009 2008 

£000 £000 £000 £000 

Market value (notes 12 & 13) 5,483 13,639 19,122 20,256 

Cost (2,629) (10,747) (13,376) (13,377) 

Revaluation surplus 2,854 2,892 5,746 6,879 

At 1 August 3,266 3,613 6,879 9,158 

Revaluation in the year (412) (721) (1,133) (2,279) 

At 31 July 2,854 2,892 5,746 6,879 

22. CAPITAL COMMITMENTS 

Consolidated and University 


£000 £000 

Commitments contracted at 31 July 34,884 41,437 

Authorised but not contracted at 31 July 142,014 151,916 

176,898 193,353 

23. CONTINGENT LIABILITIES 

The University has entered into a limited partnership agreement with Crescent Capital II LLP. The terms of this agreement have resulted in 

the University having a financial commitment to provide future finance of up to £1m in the Crescent Capital Fund. To date, financing of 

£650,000 has been provided by the University and this has been accounted for within investments at 31 July 2009. 



24. NOTES TO THE CONSOLIDATED 

CASH FLOW STATEMENT 

(i) Reconciliation of the operating surplus to the 2009 2008 

net cash inflow from operating activities £000 £000 

Operating surplus 6,051 12,568 

Movement on RBP pension and liability (3,092) (1,432) 

Transfer to endowment reserves 770 607 

Share of joint venture’s deficit 23 188 

Depreciation (note 11) 14,097 14,397 

Deferred capital grants released (note 18) (11,234) (10,971) 

Investment income (note 5) (8,270) (8,291) 

Loss on sale of endowment assets 3,087 51 

Profit on sale of tangible assets - (3,430) 

Interest payable (note 8) 4,832 2,689 

Decrease / (increase) in stocks 2 (14) 

(Increase) / decrease in debtors (599) 1,434 

(Decrease) / increase in creditors (4,759) 3,172 

Increase / (decrease) in endowment bank (see note 24 (v)) 1,522 (106) 

Increase / (decrease) in provisions _________ 9,790 _________ (641) 

Net cash inflow from operating activities 

_________ 

12,220 

_________ 

10,221 

(ii) Return on investments and servicing of finance 2009 2008 

£000 £000 

Income from endowments (note 19) 1,702 1,639 

Income from short term investments (note 5) 6,568 5,476 

Endowment income transferred to research and other funds (note 19) (79) (268) 

Interest paid (note 8) _________ (4,832) _________ (2,689) 

_________ 

3,359 

_________ 

4,158 

(iii) Capital expenditure and financial investment 2009 2008 

£000 £000 

Tangible assets acquired (note 11) (33,555) (38,997) 

Endowment asset investments acquired (note 13) _________ (33,137) _________ (8,303) 

Total fixed and endowment asset investment acquired (66,692) (47,300) 

Receipts from sales of endowment assets 27,575 7,489 

Receipts from sales of fixed assets - 3,450 

Receipts from sale of subsidiary’s investments - 1,587 

Deferred capital grants received (note 18) 31,917 40,815 

Other investments 370 (156) 

Endowments received (note 19) _________ 1,778 _________ 424 

_________ 

(5,052) 

_________ 

6,309 


37


24. NOTES TO THE CONSOLIDATED 

CASH FLOW STATEMENT (continued) 

(iv) Analysis of changes in financing during the year 2009 2008 

Loans: 

£000 £000 

Balance at 1 August 69,621 30,229 

New loans - 51,112 

Capital repayments _________ (1,241) ________ (11,720) 

Balance at 31 July 

_________ 

68,380 

________ 

69,621 

(v) Analysis of changes in net funds At At 

1 August Cash 31 July 

2008 Flows 2009 

£000 £000 £000 

Cash at bank and in hand: 

Endowment assets (note 13) 3,672 1,522 5,194 

Other _________ 2,422 _________ 2,025 _________ 4,447 

6,094 3,547 9,641 

Short term deposits 130,215 5,739 135,954 

Debt due within one year (note 15) (1,526) 249 (1,277) 

Debt due after one year (note 16) _________ (68,095) _________ 992 _________ (67,103) 

_________ 66,688 

_________ 10,527 

_________ 

77,215 



25. PENSION COMMITMENTS 

Defined Benefit Schemes 

The University participates in two separate defined benefit occupational schemes, each of which is valued triennially by professionally 

qualified actuaries. The schemes are the Universities Superannuation Scheme (USS) for academic and academic-related staff, in which all UK 

universities participate, and the Retirement Benefits Plan of the Queen’s University of Belfast (RBP) for non-academic staff. The assets of the 

schemes are held in trustee-administered funds, and the rates of contribution payable are determined by the trustees on the advice of the 

actuaries. The pension costs are assessed using the projected unit method. 

The latest actuarial valuation of the USS was carried out on 31 March 2008, when future investment returns, pay increases and pension 

increases were assumed at 6.1%, 4.3% and 3.3% respectively. The market value of the scheme assets at the date of the last valuation 

was £28,842m which covered 71% of the members’ accrued benefits at that time. It is not possible to identify each institution’s share of 

the underlying assets and liabilities of USS and hence contributions are accounted for as if it were a defined contribution scheme. The cost 

recognised within the surplus for the year in the income and expenditure account is equal to the contributions payable to the scheme for 

the year. The level of contributions paid by employers to USS was 14% of pensionable salaries for the year to 31 July 2009 and increased, 

to 16% of pensionable salaries on 1 October 2009, consistent with the long-term funding objectives of the scheme. Contributions paid by 

members are 6.35% of pensionable salary. A salary sacrifice scheme was introduced by the University in April 2008. Staff surrender that part 

of their salary equivalent to the cost of USS contributions which is then paid by the University on their behalf. 

The latest actuarial valuation of the RBP was carried out at 31 March 2008 by a qualified independent actuary. The valuation has been 

projected forward as at 31 July 2009. 

The major assumptions used by the actuary for the purposes of these accounts are: 2009 2008 

Pay increase 4.70% 4.60% 

Pension increase 3.70% 3.60% 

Pension increase rate in deferment 3.70% 3.60% 

Discount rate 6.40% 6.25% 

Inflation assumption 3.70% 3.60% 

The weighted average life expectancies on retirement at age 65 used to determine benefit obligations are: 


Member age 65 (current life expectancy) 19.4 19.4 

Member age 40 (life expectancy at 65) 20.6 20.6 

The split of assets in the scheme and the expected rate of return were: 

31 July 2009 31 July 2008 31 July 2007 

Expected % Expected % Expected % 

long-term of long-term of long-term of 

rate of Plan rate of Plan rate of Plan 

return Assets return Assets return Assets 

Equities 7.10% 61.46% 7.50% 64.88% 7.50% 68.49% 

Bonds 4.60% 32.24% 5.00% 28.68% 5.00% 25.46% 

Property 7.10% 1.40% 7.50% 1.77% 7.50% 2.19% 

Cash and other ________ 0.50% ________ 4.90% ________ 5.00% ________ 4.67% ________ 5.75% _________ 3.86% 

Total market value of assets 

________ 6.67% 100.00% 

________ ________ 6.67% 100.00% 

________ ________ 6.80% 

_________ 

100.00% 

To develop the expected long-term rate of return on assets assumption, the University considered the current level of expected returns on 

risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which 

the portfolio is invested and the expectations for future returns for each asset class. The expected return for each asset class was then 

weighted, based on the target asset allocation, to develop the expected long-term rate of return on assets assumption for the portfolio. 

This resulted in the selection of the 6.67% assumption. 

(i) Analysis of the amount shown in the balance sheet 


£000 £000 

Total market value of assets 88,922 90,804 

Present value of the wholly or partly funded obligations (124,993) ________ _________ (120,754) 

Net pension liability 

________ 

(36,071) 

_________ 

(29,950) 


39


25. PENSION COMMITMENTS (continued) 

(ii) Analysis of the amount charged to staff costs within operating surplus 2009 2008 

£000 £000 

Service cost 2,713 1,856 

Past service cost _________- _________- 

Total pension cost (note 6) 

_________ 

2,713 

_________ 

1,856 

(iii) Analysis of net return on pension scheme charged to interest payable 2009 2008 

£000 £000 

Expected return on pension scheme assets 6,143 6,464 

Interest on pension liabilities _________ (7,490) _________ (7,025) 

Net charge 

_________ 

(1,347) 

_________ 

(561) 

(iv) Analysis of amount recognised in Statement of Total Recognised Gains and Losses (STRGL) 2009 2008 

£000 £000 

Actuarial loss recognised in STRGL 

_________ 

(9,213) 

_________ 

(2,243) 

(v) Movement in deficit during the year 2009 2008 

£000 £000 

Deficit in scheme at 1 August (29,950) (29,139) 

Movement in the year: 

Current service cost (2,713) (1,856) 

Contributions 7,152 3,849 

Other finance costs (1,347) (561) 

Actuarial loss _________ (9,213) _________ (2,243) 

Deficit in scheme at 31 July 

_________ 

(36,071) 

_________ 

(29,950) 

The valuation at 31 July 2009 showed an increase in the deficit from £29.950m to £36.071m. 

(vi) Analysis of the movement in the present value of the benefit obligation 2009 2008 

£000 £000 

Benefit obligation at 1 August 120,754 124,199 

Current service cost 2,713 1,856 

Interest cost 7,490 7,025 

Plan participants’ contributions - 951 

Actuarial loss (1,415) (8,587) 

Benefits paid _________ (4,549) _________ (4,690) 

Benefit obligation at 31 July 

_________ 

124,993 

_________ 

120,754 

(vii) Analysis of the movement in the market value of the scheme assets 2009 2008 

£000 £000 

Value of assets at 1 August 90,804 95,060 

Expected return on plan assets 6,143 6,464 

Actuarial losses on plan assets (10,628) (10,830) 

Employer contributions 7,152 3,849 

Member contributions - 951 

Benefits paid from plan _________ (4,549) _________ (4,690) 

Value of assets at 31 July 

_________ 

88,922 

_________ 

90,804 

(viii) History of experience, gains and losses 2009 2008 2007 2006 2005 

£000 £000 £000 £000 £000 

Difference between expected and actual return on scheme assets (10,628) (10,830) 3,196 4,273 8,222 

Percentage of scheme assets -12% -12% 3% 5% 11% 

Experienced gains and losses on scheme liabilities 33 (2,575) (5,581) (693) - 

Percentage of present values of plan liabilities 0% -2% -4% -1% 0% 

Total amount recognised in STRGL (9,213) (2,243) 7,522 (69) (8,658) 

Percentage of scheme assets -10% -2% 6% 0% -8% 

The contributions expected to be paid during 2009-10 are £5.611m. 



26. STUDENT SUPPORT FUNDS 



£000 £000 

Department for Employment and Learning 888 888 

Interest received 10 28 

University contribution _________ 59 _________ 59 

957 975 

Disbursed to students _________ (864) _________ (1,145) 

Underspent / (overspent) balance for the year 

_________ 

93 

_________ 

(170) 

27. DERIVATIVES AND OTHER 

FINANCIAL INSTRUMENTS 

The University is aware of the availability of derivatives and other financial instruments 

and their potential use in the mitigation of financial risk (including interest rate risk 

and exchange rate risk). Given the nature of its funding arrangements and its limited 

external borrowings (see note 16), the University considers that no material risk currently 

exists under the above headings and it makes no use of derivatives and complex 

financial instruments. The University will however review this policy in the light of any 

future changes in either funding or financing. 

28. DISCLOSURE OF RELATED 

PARTY TRANSACTIONS 

Due to the nature of the University’s operations and the composition of the Senate, 

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 Senate may 

have an interest. All transactions involving organisations in which a member of the 

Senate may have an interest are conducted at arms length and in accordance with the 

University’s financial regulations and normal procurement procedures. 


41

Finance Directorate 

Administration Building 

Queen’s University Belfast 

University Road 

Belfast, BT7 1NN 

Northern Ireland 

Tel: 028 9097 3020 

Fax: 028 9097 5001 

E-mail: finance.dept@qub.ac.uk

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