UNIVERSITY OF WALES INSTITUTE, CARDIFF

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JULY 2008

CONTENTS

Report of the Board of Governors

Responsibilities of the Board of Governors

Corporate Governance Statement

Governors & Directorate

Independent Auditors Report

Statement of Principal Accounting Policies

11

Consolidated Income & Expenditure Account

14

Consolidated Statement of Total Recognised Gains & Losses

15

Balance Sheets

16

Consolidated Cash Flow Statement

17

Notes to the Financial Statements

18

UNIVERSITY OF WALES INSTITUTE, CARDIFF REPORT OF THE BOARD OF GOVERNORS OPERATING & FINANCIAL REVIEW Scope of the Financial Statements These financial statements cover the year ended 31 July 2008 and represent the sixteenth Annual Report of UWIC following incorporation in 1992. These accounts are consolidated accounts with the main activity of UWIC consolidated with its subsidiary companies, UWIC Company Limited and Cardiff Institute Residences Company Limited (CIRCL). Principal Activities The principal activity of UWIC is the provision of higher education from campuses in Cardiff and increasingly through franchising elsewhere in the UK and overseas. UWICs portfolio extends across undergraduate, post graduate and research activities and is complemented by training, consultancy and other commercial spin offs which are provided to local, national and international organisations. UWIC also provides conferencing and residential services and sports and restaurant facilities for students and external users. Many of these commercial activities are carried out through UWIC's subsidiary companies, which gift the taxable profits back to UWIC under the Gift Aid scheme. Financial & Investment Strategy UWIC has an established financial strategy for 2006 to 2011. This strategy has the objective of ensuring financial stability for the institution and enabling investment for the future development of UWIC. In particular the institution has established an Estates Strategy which will require 54 Million to be invested into the estate over the next 10 years. Borrowing has been secured to fund approximately half of this investment through 30 year term loans from two separate banking sources. The balance of the investment will be funded via the generation of modest annual surpluses. The Strategy sets minimum targets for the generation of surpluses and requires the achievement of minimum key liquidity measures year on year. These targets have all been exceeded in these results. Investment in UWICs infrastructure during the year amounted to 5,138K (2007: 5,992K) into buildings and equipment. This will climb to 15M and 20M in the next two years with significant buildings works commencing at Cyncoed & Llandaff campuses, the latter facilitating the transfer of the Management School to enable the closure of the Colchester Avenue campus. Results for the Year UWICs turnover now exceeds 70.5Million (2007: 65.1Million) It has produced an historic cost surplus of 1.7Million (2.4%) (2007: 2.4M) and an operating surplus of 1Million (2007: 1.7M). UWIC has achieved an historic cost surplus in every year since incorporation and has again exceeded its KPI set at 1.5% in the Financial Strategy. Considerable growth in salaries and pay costs has been experienced by the sector in recent years as a result of the implementation of a new pay framework and the rising cost of pensions. However the pay costs have marginally fallen this year as a proportion of total costs to 63.05% (2006: 63.26%). Reliance upon Government funding has considerably fallen in the year, and will continue to fall next year, with the introduction of higher student fees. HEFCW Grants as proportion of income is now at 41.8% (2007 49.9%) albeit that approximately 4M of student fees was effectively paid by the Welsh Assembly Government through their protection of Welsh domiciled students from the top up fees charged.

UNIVERSITY OF WALES INSTITUTE, CARDIFF REPORT OF THE BOARD OF GOVERNORS (continued) OPERATING & FINANCIAL REVIEW (continued) At the year-end the Income and Expenditure account reserves before pension liabilities stood at 25.4M (2007: 23.1M) reflecting another good return from the year. However, the Pension Liability Provision, established under FRS17, rose to the same level of 25.4M (2007: 18.7M) fully absorbing those available reserves. In the previous year the assessed liability fell which reflects the sensitivity of this provision to the particularly volatile financial markets currently being experienced. The Income & Expenditure reserves are, of course, historic and therefore already generated whereas the provision for pension liability looks forward to what might be required. The FRS17 Provision only reflects the Cardiff & Vale of Glamorgan Pension Fund, which provides pensions to the administrative staff of UWIC but similar pension shortfalls are being experienced by USS, the pension provider for half of the academic staff in the sector. UWICs academic staff are predominately covered by TPS, an unfunded government scheme, the contributions to which tend to follow those set by USS. Contributions to all the schemes have been rising to counter funding deficits and it is expected that this will continue into the future until the actuarial valuations are seen to come back into surplus. UWIC can therefore expect the overhead costs of staff to continue to grow over the medium term. Change in Accounting Policy for Land & Buildings UWIC has altered its accounting policy to bring it into line with the rest of the Welsh HE sector. Previously UWIC had re-valued its land & buildings on a regular basis and reflected these valuations in the statutory accounts. The effect of this policy was to inflate the asset value and the net worth on the balance sheet but to increase the depreciation charge in the Income & Expenditure Account and depress the Operating surplus. The Operating surplus is the main KPI used to compare the performance of Universities across the UK and therefore, under the previous policy, UWICs annual performance was being undervalued. This change has corrected that measure to ensure that UWICs Operating Surplus has been calculated in a comparable way with most other institutions. The change, however, has a detrimental effect on the published Balance Sheet reducing the fixed asset value by 61m from the previous years value of 141m. The Land & Buildings values have now been frozen at cost or 1997 valuations in respect of inherited assets, which is broadly what other Welsh HEIs have applied. The change mainly affects the land valuation which had escalated significantly since that time. The real net worth of UWIC remains largely unaltered from that published previously (122m) and the market value of the assets remains well in excess of that shown on the balance sheet. Liquidity & Cash UWICs Financial Strategy contains 2 key KPIs to ensure the financial health of the institution. These require a minimum working capital of 5M and a minimum current ratio of 1.25 with a longer term target of 2. Albeit benefiting from the first draw downs of the term loans of 8M, these measures have been easily achieved with a year end cash & investments balance of 21M (2007: 12M) and a current ratio of 2 (2007: 1.45). UWIC has an extremely prudent investment policy and does not use an agent to invest its cash. This restricts investments to a named set of banks and building societies located in the UK & Ireland. Consequently UWIC has, so far, been shielded from the risks and effects of the current credit crunch. Similarly the two new agreements for term loans are with main stream banks. The first tranches of these loans were drawn down at the year end and amounted to 8M which will not be repayable until 2018. This has lifted UWICs borrowings to 13.7M (2007: 5.8M).

UNIVERSITY OF WALES INSTITUTE, CARDIFF REPORT OF THE BOARD OF GOVERNORS (continued) OPERATING & FINANCIAL REVIEW (continued) The Financial Outlook Welsh Higher Education remains under funded in comparison to England by more than 70M annually. This is roughly equivalent to the fee subsidy provided by the Welsh Assembly government to Welsh domiciled students. Despite a recent report, commissioned by the Assembly on the subject of student fees which identified that this subsidy was unsustainable particularly if fees rise in the future, there are, as yet, no signs that the discrepancy will be addressed. In fact, on the contrary, recent settlements for the sector have been below inflation and the gap has widened. Initial budget estimates for 2008/09 suggests a further real reduction in grant levels. As the UK enters a recession it is likely that government funding will become tighter and UWIC can therefore expect that its income from HEFCW and the NHS will be constrained accordingly. UWIC has already extended its student numbers beyond the level funded by HEFCW and, unless the student fee significantly increases in the future growth in home and EU numbers will be minimal. UWIC has historically sought to broaden its income base through the development of commercial activities in the UK & internationally, by attracting overseas students to study at UWIC and, more recently, by franchising courses to organisations providing higher education to Non EU residents. Whilst the former has currently reached a plateau of contribution and will find the market more difficult in the coming years, initiatives continue to be developed, including a focus upon continuing professional development (CPD) provision which it is hoped will provide a new volume market for UWIC. Growth in Overseas students has been spectacular over the past 10 years growing from less than 1M in fees to in excess of 6M this year. However, competition has increased significantly in this market and HE provision within some of the countries from which UWIC draws its students is improving. Nevertheless UWIC has a number of niche markets of its own and expects to continue to punch above its weight. Franchising courses to further extend UWICs overseas student numbers is a relatively recent activity which brings in circa 0.5M p.a. currently. A number of opportunities exist to extend this activity, which UWIC is exploring with the aim of targeting a significant increase in both students and income. Overall opportunities do exist to improve income generation in UWIC and, longer term, the funding gap with England is expected to be addressed. In the short term, however, it is likely that maintaining a surplus will be challenging and revenue budgets will have to be contained and efficiencies found. UWIC hopes to achieve Research Degree Awarding Powers during the new year and this, together with the development of the estate should improve the saleability of UWIC and help attract new students and clients. UWIC will continue to strive to expand markets and generate new income to support its core activities. Membership of the Board of Governors The membership of the Board for the year 1 August 2007 to 31 July 2008 is set out on Page 7 of this report. Auditors The external auditors for the year were PricewaterhouseCoopers LLP. The internal auditors for the year were Bentley Jennison.

UNIVERSITY OF WALES INSTITUTE, CARDIFF REPORT OF THE BOARD OF GOVERNORS (continued) OPERATING & FINANCIAL REVIEW (continued)

Equality of Opportunity UWIC aims to work beyond compliance in equality legislation, and is committed to integrating the principles of equality into all our activities. In 2008, a Single Equality Scheme has been agreed and implemented, covering the equality strands of Race, Gender and Disability. Guidelines have been developed in other equality strands, including religion/belief, age, sexual orientation and gender reassignment. A Welsh Language Scheme is in place. UWIC is very active in widening access to education, and in providing an inclusive approach to learning and teaching. The Disability Service supports the increasing number of disabled students accessing courses at UWIC. UWIC has a diverse community of staff and students, and is working to further develop its inclusive campus.

Health and Safety at Work The health, safety and wellbeing of staff and students is recognised as being essential to the success of UWIC. UWICs Health & Safety Committee has been established to consider all relevant aspects of health, safety and welfare. The committee receives regular monitoring reports of periodic audits of schools/units health & safety management arrangements and of initiatives and/or issues emanating from school/unit health & safety meetings. Additionally the committee disseminates updates on legislation and guidance on good practice and monitors accident levels and staff absence. The minutes of the committee are presented to the Human Resources Committee and health & safety reports also feature at UWICs Audit and Risk Management Committees. An Annual Health & Safety Report is provided to the Board of Governors to enable its statutory obligation to ensure compliance with health & safety legislation to be exercised. UWIC has continued to improve its provisions under the terms of the equality legislation. In particular, extensive work has been undertaken in relation to increasing widening participation, a formal Race Policy and Action Plan has been agreed and implemented, and further improvements have been made to the estate to facilitate access for disabled students and staff. Several new lifts have been installed and ramps and paving areas improved.

Dealing with these future challenges can only be achieved through the continuing work and support of UWICs staff and the Board of Governors wish to thank them all for their efforts and commitment to UWIC throughout the year.

Signed

Chairman of the Board of Governors

UNIVERSITY OF WALES INSTITUTE, CARDIFF

RESPONSIBILITIES OF THE BOARD OF GOVERNORS

In accordance with the Education Reform Act 1988 the Board of Governors of University of Wales Institute, Cardiff (UWIC) is responsible for the administration and management of the affairs of UWIC and is required to present audited financial statements for each financial year.

The Board of Governors is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of UWIC and to enable it to ensure that the financial statements are prepared in accordance with the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education Institutions (effective from 1 August 2007) and in accordance with applicable Accounting Standards. In addition, within the terms and conditions of the Financial Memorandum agreed between the Higher Education Funding Council for Wales and the Board of Governors of UWIC, the Board of Governors, through its designated office holder, is required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of UWIC and of the surplus or deficit, total recognised gains or losses and cash flows for that year.

In preparing these financial statements, the Board of Governors has ensured that: suitable accounting policies are selected and applied consistently; judgements and estimates are made that are reasonable and prudent; applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; financial statements are prepared on the going concern basis unless it is inappropriate to presume that UWIC will continue in operation.

The Board of Governors has taken reasonable steps to: ensure that funds from the Higher Education Funding Council for Wales are used only for the purposes for which they have been given and in accordance with the Financial Memorandum with the Funding Council and any other conditions which the Funding Council may from time to time prescribe; ensure that there are appropriate financial and management controls in place to safeguard public funds and funds from other sources; safeguard the assets of UWIC and prevent and detect fraud; secure the economical, efficient and effective management of UWIC resources and expenditure.

The maintenance and integrity of UWICs website is the responsibility of the Board of Governors. The work carried out by the external auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the Annual Report and Financial Statements since they were originally presented on the website.

UNIVERSITY OF WALES INSTITUTE, CARDIFF

CORPORATE GOVERNANCE STATEMENT UWIC is committed to exhibiting best practice in all aspects of corporate governance. This summary describes the manner in which UWIC has applied the principles set out in Section 1 of the Combined Code on Corporate Governance issued by the London Stock Exchange in June 1998. Its purpose is to help the reader of the accounts to understand how the principles have been applied. UWIC's Governing Body is responsible for UWIC's system of internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Governing Body is of the view that there is an ongoing process for identifying, evaluating and managing UWIC's significant risks that has been in place for the period of the accounts. The Governing Body regularly reviews this process which accords with the internal control guidance for directors on the Combined Code as deemed appropriate for higher education. UWIC's Governing Body meets at least three times a year and has several committees, including a Finance and Estates Committee, a Strategic Planning Committee, a Nominations Committee, a Remuneration Committee, a Human Resources Committee, and an Audit Committee. All of these Committees are formally constituted with terms of reference and are comprised mainly of lay members of the Governing Body, one of whom is the Chair. During 2007/08, to enhance the quality and extent of UWICs dialogue with the wider community, the Board of Governors established a Stakeholder Forum to provide a focus and direction for all UWICs ongoing stakeholder interactions. The Forum, which first met in March 2008, has no formal governance role or responsibilities. The Finance and Estates Committee recommends to the Governing Body UWIC's annual revenue and capital budgets and monitors performance in relation to the approved budgets. The Nominations Committee consider nominations for vacancies in the Governing Body membership under the relevant statute. The Remuneration Committee determines the remuneration of the most senior staff, including the Vice Chancellor. The Audit Committee meets four times a year, with UWIC's internal auditors and where appropriate, external auditors in attendance. The Committee includes two independent members from the Public and Private Sector, not members of the Governing Body, who provide a wider externality to its deliberations. The Committee considers detailed reports together with recommendations for the improvement of UWIC's systems of internal control and management's responses and implementation plans. It also receives and considers reports from the Welsh Funding Councils as they affect UWIC's business and monitors adherence to the regulatory requirements. Whilst senior officers attend meetings of the Audit Committee as necessary, they are not members of the Committee and prior to each meeting the Committee meets with UWIC's Internal Auditors on their own for independent discussions. The Vice Chancellor & Principals Board has an established Risk Management Committee with responsibility for embedding risk management within the institution, providing training and maintaining an overview of the key high level institutional risks. The Vice Chancellor and Principals Board receives reports setting out key performance indicators and identifying risks and considers control issues that relate. The Audit Committee receives regular Risk Management reports and these help inform the future direction of the internal audit rolling programme. The Vice Chancellor & Principals Board also receive regular reports from UWICs internal and external auditors that include recommendations for improvement. The Audit Committees role in this area is to provide a high level review of the arrangements for internal financial control. The Governing Bodys agenda includes a regular item for the consideration of risk and control and

receives reports thereon from the Vice Chancellor & Principals Board and the Audit Committee. The emphasis is upon obtaining the UNIVERSITY OF WALES INSTITUTE, CARDIFF

CORPORATE GOVERNANCE STATEMENT (continued)

relevant degree of assurance and not merely reporting by exception. The key areas of student recruitment and financial performance have been subject to this monitoring throughout the year together with the implications of the National Assembly for Wales strategy for reconfiguration of the sector.

UNIVERSITY OF WALES INSTITUTE, CARDIFF GOVERNORS Mr J W Owen CB (Chairman) Mr R J Anning Mr R D Blair CBE Mr T E Boswell MP Professor A J Chapman Prof H R Evans CBE Mrs Z Harcombe Mr J D Jones Mr S Mathur Mr A Painter Mr A N Piper Dr G N J Port Mr D C W Preece Ms L D Quinn MBE Mr N B Roberts Mr D I Rosser Mr P Sefton Dr R G Smith Mr E C Thomas Mr J D Wildsmith Mr W P Wilkins CBE DATE OF APPOINTMENT 7 June 2005 1 August 2004 1 August 2004 1 August 2007 1 September 1998 (ex officio) 1 August 2004 1 January 2006 1 August 2002 (retired 31.07.08) 1 August 2007 1 August 2007 1 August 2006 1 August 2007 1 August 2000 1 August 2002 (retired 31.07.08) 1 August 2005 1 August 2005 4 June 2007 (resigned 31.07.08) 1 August 2007 1 August 2007 1 August 2005 1 August 2006

CLERK TO THE GOVERNORS Mr R D G Walters Clerk to the Governors

VICE CHANCELLOR & PRINCIPALS BOARD Professor A J Chapman Mrs P M Ackroyd Professor R Brown Mrs J Hare Mr R Moremon Mr M J Warren Vice-Chancellor & Principal Director of Operations Pro Vice-Chancellor (Research) Pro Vice-Chancellor (Learning & Teaching) Director of Marketing & Communications Director of Finance

UNIVERSITY OF WALES INSTITUTE, CARDIFF Independent auditors report to the Board of Governors of University of Wales Institute, Cardiff We have audited the financial statements which comprise the income and expenditure account, the balance sheet, the cash flow statement, the statement of total recognised gains and losses and the related notes which have been prepared under the historical cost convention (as modified by the revaluation of tangible fixed assets) and the accounting policies set out in the statement of principal accounting policies. Respective responsibilities of the Board of Governors and auditors The Board of Governors responsibility for preparing the financial statements in accordance with the Accounts Direction issued by the Higher Education Funding Council for Wales, the Statement of Recommended Practice Accounting for Further and Higher Education Institutions, applicable United Kingdom law and accounting standards is set out in the Statement of Responsibilities of the Board of Governors. 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 Board of Governors of the University in accordance with the Universitys Articles of Government and section 124B of the Education Reform Act 1988 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or in to whose hands it may come save where expressly agreed by our prior consent in writing. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Accounts Direction issued by the Higher Education Funding Council for Wales and the Statement of Recommended Practice - Accounting for Further and Higher Education Institutions. We also report to you whether in our opinion, in all material respects, monies expended out of Higher Education Funding Council for Wales grants and other funds from whatever sources administered by the Institution for specific purposes have been properly applied and, if appropriate, managed in compliance with all relevant legislation and whether in our opinion, in all material respects, income has been applied in accordance with the financial memorandum with the Higher Education Funding Council for Wales. We also report to you if, in our opinion, the report of the Board of Governors is not consistent with the financial statements, if the Institution has not kept proper accounting records, the accounting records do not agree with the financial statements or if we have not received all the information and explanations we require for our audit. We read the other information contained in the Financial Statements and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises only: the Report of the Board of Governors, the Corporate Governance Statement and the Statement of Responsibilities of the Board of Governors. We also review the statement of internal control included as part of the Corporate Governance Statement and comment if the statement is inconsistent with our knowledge of the University and group. We are not required to consider whether the statement of internal control covers all risks and controls, or to form an opinion on the effectiveness of the Universitys corporate governance procedures or its risk and control procedures.

UNIVERSITY OF WALES INSTITUTE, CARDIFF Independent auditors report to the Board of Governors of University of Wales Institute, Cardiff (continued) Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) and the Audit Code of Practice issued by the Higher Education Funding Council for Wales. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Board of Governors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the University's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion: i. The financial statements give a true and fair view of the state of affairs of the University and the group at 31 July 2008 and of the surplus of income over expenditure, recognised gains and losses and cashflows of the group for the year then ended, and have been properly prepared in accordance with the Accounts Direction issued by the Higher Education Funding Council for Wales and the Statement of Recommended Practice - Accounting for Further and Higher Education Institutions; ii. In all material respects, monies expended out of Higher Education Funding Council for Wales grants and other funds from whatever source administered by the Institution for specific purposes have been properly applied to those purposes and, if appropriate, managed with all relevant legislation; iii. In all material respects, income has been applied in accordance with the University's statutes and where appropriate in accordance with the Financial Memorandum with the Higher Education Funding Council for Wales.

PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors Cardiff

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UNIVERSITY OF WALES INSTITUTE, CARDIFF STATEMENT OF PRINCIPAL ACCOUNTING POLICIES

Basis of Preparation

These financial statements have been prepared in accordance with the statement of recommended practice (SORP): Accounting for Further and Higher Education Institutions, the Accounts Direction issued by the Higher Education Funding Council for Wales and applicable Accounting Standards in the United Kingdom. The principal accounting policies have been applied consistently except as where described otherwise and are set out below. 2 Basis of Accounting

The financial statements have been prepared under the historical cost convention as modified to include the revaluation of certain tangible fixed assets. 3 Basis of Consolidation

The consolidated financial statements include UWIC and its wholly owned subsidiary undertakings, UWIC Company Ltd and Cardiff Institute Residences Company Ltd. Intra-group sales and profits are eliminated fully on consolidation. In accordance with FRS2, the activities of UWICs student union have not been consolidated because UWIC does not control those activities. 4 Recognition of Income

Income from research grants and other services rendered is included to the extent of the completion of the contract or service concerned. This is generally equivalent to the sum of the relevant expenditure incurred during the year and any related contributions towards overhead costs. All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned. Recurrent grants from the Welsh Funding Councils are recognised in the period in which they are receivable. Non-recurrent grants from the Welsh Funding Councils or other bodies received in respect of the acquisition or construction of fixed assets are treated as deferred capital grants and amortised in line with depreciation over the life of the related assets. 5 Foreign Currency Translation

Transactions denominated in foreign currencies are recorded at the rate of exchange ruling at the dates of the transactions. Monetary assets and liabilities are translated into sterling either at year end rates or, where there are related forward foreign exchange contracts, at contract rates. The resulting exchange differences are dealt with in the determination of income and expenditure for the financial year. 6 Pension Schemes

The two principal pension schemes for UWIC's staff are the Cardiff and Vale of Glamorgan Fund (CVGPF) and the Teachers' Pension Scheme (TPS). The schemes are funded, defined benefit and are contracted out of the Second State Pension. The CVGPF is valued every three years by a professionally qualified actuary using the projected unit method, the rate of contribution payable being determined by the Administering Authority on the advice of the actuary. The TPS is subject to an actuarial valuation every five years by the Government Actuarial Department using the age entry method. The rate of contribution for the TPS is determined by the Teachers' Pension Agency on the advice of the actuary.

11

In respect of the CVGPF, the net asset or liability recognised in the balance sheet represents the present value of the pension schemes liabilities less the fair value of the schemes assets.

12

UNIVERSITY OF WALES INSTITUTE, CARDIFF Statement of Principal Accounting Policies (continued)

Pension Schemes (continued)

Pension scheme assets are measured using market values. Pension scheme liabilities are measured using a project unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability. The difference between these amounts represent UWICs share of the surplus or deficit of the CVGPF as estimated by the actuary to the CVGPF. The increase in the present value of UWICs share of the liabilities of the CVGPF expected to arise from employee service in the period is charged to staff costs. The expected return on UWICs share of the assets of the CVGPF and the increase during the period in the present value of UWICs share of the liabilities of the CVGPF arising from the passage of time are included in interest payable. Actuarial gains and losses are recognised in the statement of total recognised gains and losses. It is not possible to identify UWICs share of the underlying assets and liabilities of the TPS. Therefore, as permitted by FRS17, the TPS is accounted for as a defined contribution scheme with contributions accruing being charged to staff costs during the year. 7 (a) Tangible Fixed Assets Land and Buildings

During the year UWIC changed its accounting policy in accordance with FRS18 in relation to the revaluation of its land and buildings to one considered more appropriate and consistent with the majority of other institutions in the sector. Land and buildings are now stated at cost except for certain assets inherited from the Local Education Authority, where the 1997 valuation has been used as a proxy for cost. No further valuation of these assets will be made in the future. Freehold land is not depreciated. Freehold buildings are depreciated over their expected useful economic life to UWIC. Where land and buildings are acquired with the aid of specific grants they are capitalised and depreciated as above. The related grants are credited to a deferred capital grant account and released to the income and expenditure account over the expected useful economic life of the related asset on a basis consistent with the depreciation policy. Finance costs, which are directly attributable to the construction of land and buildings, are capitalised as part of the cost of those assets. A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying amount of the fixed asset may not be recoverable. Buildings under construction are accounted for at cost, based on the value of architects' certificates and other direct costs incurred to 31 July. They are not depreciated until they are brought into use. (b) Equipment

Equipment costing less than 5,000 per individual item is written off to the income and expenditure account in the year of acquisition. All other equipment is capitalised at cost. Capitalised equipment is depreciated on a straight-line basis over its useful economic life of between 3 and 10 years. Where equipment is acquired with the aid of specific grants it is capitalised and depreciated in accordance with the above policy, with the related grant being credited to a deferred capital grant account and released to the income and expenditure account over the useful economic life of the related equipment.

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UNIVERSITY OF WALES INSTITUTE, CARDIFF Statement of Principal Accounting Policies (continued) 8 Leased assets

Costs in respect of operating leases are charged on a straight-line basis over the lease term. Leasing arrangements that transfer to UWIC substantially all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in fixed assets and the capital element of the leasing commitment is shown as an obligation under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is charged to the income and expenditure account in proportion to the reducing capital element outstanding. Assets held under finance leases are depreciated over the shorter of the lease term or the useful economic lives of equivalent owned assets. 9 Stocks

Stocks are stated at the lower of cost or net realisable value. 10 Taxation

No provision for taxation, deferred or otherwise, is provided in these accounts in respect of UWIC. As an exempt charity, by virtue of Clause 64, Schedule 12 of the Education Reform Act 1988, UWIC is not liable to Corporation Tax or Capital Gains Tax in respect of its charitable activities. UWIC receives no similar exemption in respect of Value Added Tax. No charge for taxation has been included in respect of the Subsidiary Companies' activities since the entire taxable profit of these companies is transferred to UWIC under the Gift Aid scheme. 11 Short term investments

Short term investments include sums on short-term deposits with recognised banks and building societies. 12 Provisions

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

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UNIVERSITY OF WALES INSTITUTE, CARDIFF Consolidated income and expenditure account For the year ended 31 July 2008

Year Ended 31 July 2008

Year Ended 31 July 2007 Restated 000 32,296 17,130 1,602 13,518 639 65,185

Note INCOME Funding council grants Tuition fees and education contracts Research grants and contracts Other operating income Endowment and investment income Total income EXPENDITURE Staff costs Other operating expenses Depreciation Interest payable Total expenditure 1 2 3 4 5

000 29,510 24,877 1,564 13,919 727 70,597

6 8 13 9

43,901 22,319 2,397 1,004 69,621

40,145 19,993 2,152 1,169 63,459

Surplus on continuing operations after depreciation of fixed assets at valuation

976

1,726

Consolidated statement of historical cost surpluses and deficits For the year ended 31 July 2008 Difference between historical cost depreciation and the actual charge for the year calculated on the revalued Amount

20

694

694

Historical cost surplus for the year

1,670

2,420

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

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UNIVERSITY OF WALES INSTITUTE, CARDIFF Consolidated statement of total recognised gains and losses For the year ended 31 July 2008

Year Ended 31 July 2008

Year Ended 31 July 2007 Restated 000

Note

000

Surplus on continuing operations after depreciation of fixed assets at valuation Actuarial (loss)/gain on pension obligations Total recognised (loss)/gain relating to the year 28

976 (6,029) (5,053)

1,726 3,794 5,520

Prior year adjustment Total recognised losses since last annual report Reconciliation of movement in reserves Opening reserves as previously stated Prior year adjustment

(60,726) (65,779)

108,060 (60,726) 47,334 (5,053) 42,281

102,929 (61,115) 41,814 5,520 47,334

Total recognised (loss)/gain for the year Closing reserves

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UNIVERSITY OF WALES INSTITUTE, CARDIFF Balance sheets as at 31 July 2008 Group 2008 Note Fixed Assets Tangible assets Current Assets Stocks Debtors: Due within one year Due after one year Short term investments Cash at bank and in hand 13 000 83,542 UWIC 2008 000 77,977 Group 2007 Restated 000 80,801 UWIC 2007 Restated 000 75,154

14 15 15

137 2,199 14,500 6,580 23,416

44 2,221 4,000 14,500 6,447 27,212

155 2,575 31 7,250 4,850 14,861

29 3,060 4,031 7,250 4,294 18,664

Creditors Amounts falling due within one year Net Current Assets Total assets less current Liabilities Creditors Amounts falling due after more than one year Net Assets excluding Pension Liability Pension Liability NET ASSETS INCLUDING PENSION LIABILITY Deferred capital grants Reserves Revaluation reserves Income and expenditure account Reserve before pension liabilities Reserve for pension liabilities Total reserves TOTAL

16

(11,607) 11,809

(10,935) 16,277

(10,256) 4,605

(9,677) 8,987

95,351

94,254

85,406

84,141

17

(13,525)

(11,891)

(5,705)

(4,042)

81,826 28 (25,370)

82,363 (25,370)

79,701 (18,710)

80,099 (18,710)

56,456 19 14,175

56,993 14,175

60,991 13,657

61,389 13,657

20 21

42,291 25,360 (25,370) 42,281 56,456

41,640 26,548 (25,370) 42,818 56,993

42,985 23,059 (18,710) 47,334 60,991

42,326 24,116 (18,710) 47,732 61,389

The Financial Statements on pages 14 to 34 were approved by the Board of Governors on 9 December 2008 and signed on its behalf by

John Wyn Owen (Chairman)

. Prof. A J Chapman (Vice-Chancellor & Principal)

17

UNIVERSITY OF WALES INSTITUTE, CARDIFF Consolidated cash flow statement For the year ended 31 July 2008

Note

Year ended 31 July 2008 000

Year ended 31 July 2007 000

Cash inflow from operating activities Returns on investments and servicing of finance Capital expenditure and financial investment Management of liquid resources Financing Increase in cash in the year

22 23 24 25 26

4,875 288 (4,016) (7,250) 7,833 1,730

4,877 168 (4,431) 250 (496) 368

Reconciliation of net cash flow to movement in net funds Increase in cash in the year Increase/(decrease) in short term deposits Net cash (inflow)/outflow from financing Movement in net funds in the year Net funds at 1 August Net funds at 31 July 27 27 1,730 7,250 (7,833) 1,147 6,227 7,374 368 (250) 496 614 5,613 6,227

18

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements

Funding Council Grants

Year ended 31 July 2008 HEFCW FEFCW TOTAL 000 000 000 25,109 1,291 2,082 512 25,621 1,291 2,082

Year ended 31 July 2007 000 24,988 1,242 5,826

Recurrent grant Research grant Specific grants Deferred capital grants released in year: Buildings / Equipment (note 19)

516 28,998

512

516 29,510

240 32,296

Tuition Fees and Education Grants

Year ended 31 July 2008 000 2,546 14,879 6,188 1,264 24,877

Year ended 31 July 2007 000 2,349 7,769 5,846 1,166 17,130

Welsh Assembly Government NHS contract Full-time students Full-time students charged overseas fees Part-time fees

Research Grants and Contracts

Year ended 31 July 2008 000 1,564 1,564

Year ended 31 July 2007 000 1,602 1,602

Grants and contracts

Other Operating Income

Year ended 31 July 2008 000 4,777 9,053 89 13,919

Year ended 31 July 2007 000 4,295 9,134 89 13,518

Residences, catering and conferences Other income Deferred capital grant released (note 19)

Endowment and Investment Income

Year ended 31 July 2008 000 727

Year ended 31 July 2007 000 639

Income from short term investments

19

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

Staff Costs The average weekly number of persons (including senior post-holders) employed by UWIC during the period, expressed as full time equivalents Year ended 31 July 2008 Number Academic Technicians Administrative, Support & Projects Ancillary 461 50 503 140 1,154 Year ended 31 July 2007 Number 454 55 514 130 1,153

Staff costs for the above persons

Year ended 31 July 2008 000 35,804 2,853 5,244 43,901

Year ended 31 July 2007 000 33,322 2,649 4,174 40,145

Wages and salaries Social security costs Other pension costs (note 28) Total

The number of senior post-holders, excluding the vice-chancellor & principal, who received emoluments in the following ranges was:

Year ended 31 July 2008 Number 100,001 to 110,000 110,001 to 120,000 120,001 to 130,000 2 3 1 6

Year ended 31 July 2007 Number 3 2 5

20

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

Emoluments of the Vice-Chancellor & Principal

Year ended 31 July 2008 167,741 15,479 183,220

Year ended 31 July 2007 159,753 12,867 172,620

Salary Benefits in kind

The emoluments of the Vice-Chancellor & Principal are shown excluding employers pension contributions. The Universitys pension contributions in respect of the Vice-Chancellor & Principal amounted to 23,484 (2007: 22,365).

Other Operating Expenses

Year ended 31 July 2008 000 2,067 1,667 1,200 933 1,732 522 131 25 3 10 48 13,981 22,319

Year ended 31 July 2007 000 1,900 1,801 1,004 961 1,249 482 111 22 3 9 58 12,393 19,993

Residences, catering and conference operating expenses Consumables and laboratory expenditure Books and periodicals Heat, light, water and power Estates repairs/maintenance and projects Grants to UWIC student union Rent & rates External auditors remuneration: UWIC : Subsidiaries : Other services Internal audit fees Other expenses

Interest Payable

Note Year ended 31 July 2008 000 Year ended 31 July 2007 000 459 710 1,169

On bank loans, overdrafts and other loans: Net expense on pension scheme assets & liabilities 28

444 560 1,004

21

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

10

Surplus on Continuing Operations for the year The surplus on continuing operations for the year is made up as follows Year ended 31 July 2008 000 564 412 976 Year ended 31 July 2007 000 1,367 359 1,726

UWICs surplus for the year Surplus generated by subsidiary undertakings and Transferred to UWIC by way of Gift Aid Total 11 Analysis of 2007/2008 Expenditure by Activity
Other Operating Expenses 000 6,753 2,053 753 6,434 2,067 3,664 595 22,319

Staff Costs 000 Academic Departments Academic Services Research Grants & Contracts Administration & Central Services Residence/Catering/Conferences Premises Other Expenses Total Expenditure 25,379 4,857 837 8,003 1,364 2,280 1,181 43,901

Depn 000 391 16 1,624 245 121 2,397

Interest Payable 000 560 128 316 1,004

Year ended 31 July 2008 Total 000 32,523 6,926 1,590 16,621 3,804 5,944 2,213 69,621

Year ended 31 July 2007 Total 000 29,631 6,344 1,345 14,698 3,546 5,473 2,422 63,459
Deleted: 2,152 Deleted: 19,993 Deleted: 1,169

12

Investments

UWIC holds 100% of the issued share capital in the following Companies which are both registered in England and Wales: Name of undertaking UWIC Company Limited Cardiff Institute Residences Company Limited Principal activity Short courses and commercial activities Leasing of assets

In addition, an 11% interest is held in Welsh Networking Limited, a company providing high bandwidth networking facilities to education institutions in Wales.

22

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

13

Tangible Fixed Assets (Group) Freehold Land 000 Cost or valuation At 1 August 2007 previously stated Prior year adjustment At 1 August 2007 as restated Additions At 31 July 2008 Depreciation At 1 August 2007 previously stated Prior year adjustment At 1 August 2007 as restated Charge for the year At 31 July 2008 Net book value At 31 July 2008 Net book value At 1 August 2007 Inherited/Revalued Financed by capital grant Other Net book value At 31 July 2008 63,628 (41,503) 22,125 22,125 Assets Under Constructio n 000 591 591 3,182 3,773

Buildings 000 76,193 (14,390) 61,803 297 62,100

Equipment 000 9,561 9,561 1,659 11,220

Total 000 149,973 (55,893) 94,080 5,138 99,218

3,188 4,832 8,020 1,291 9,311

5,258 5,258 1,106 6,365

8,446 4,832 13,278 2,397 15,676

22,125

52,789

3,773

4,855

83,542

22,125 21,255 870

53,783 21,382 12,366 19,041

591 3,773

4,302 895 3,960

80,801 42,637 13,261 27,644

22,125

52,789

3,773

4,855

83,542

23

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued) 13 Tangible Fixed Assets (UWIC) Freehold Land 000 Cost or valuation At 1 August 2007 previously stated Prior year adjustment At 1 August 2007 as restated Additions At 31 July 2008 Depreciation At 1 August 2007 previously stated Prior year adjustment At 1 August 2007 as restated Charge for the year At 31 July 2008 Net book value At 31 July 2008 Net book value At 31 July 2007 Inherited Financed by capital grant Other Net book value at 31 July 2008 60,869 (39,520) 21,349 21,349 Assets Under Constructio n 000 591 591 3,182 3,773

Buildings 000 68,332 (11,490) 56,842 297 57,139

Equipment 000 9,118 9,118 1,616 10,734

Total 000 138,910 (51,010) 87,900 5,095 92,995

2,966 4,854 7,820 1,221 9,041

4,926 4,926 1,051 5,977

7,892 4,854 12,746 2,272 15,018

21,349

48,098

3,773

4,757

77,977

21,349 21,079 270

49,022 20,906 12,366 14,826

591 3,773

4,192 894 3,863

75,154 41,985 13,260 22,732

21,349

48,098

3,773

4,757

77,977

a)

During the year, UWIC changed its accounting policy in accordance with FRS18 in relation to the valuation of its land and buildings. Land and buildings are now stated at cost except for certain assets inherited from the Local Education Authority. A valuation of these assets was undertaken as at 31 July 1997 by Cooke & Arkwright, Chartered Surveyors, with this figure being used as a proxy for cost. The assets were valued in accordance with the RICS appraisal and valuation manual. The basis of the valuation was depreciated replacement cost.

24

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

14

Stocks Group 2008 000 Computer/reprographics Catering & other Work in progress 18 80 39 137 UWIC 2008 000 18 26 44 Group 2007 000 11 68 76 155 UWIC 2007 000 11 18 29

15

Debtors Group 2008 000 Amounts falling due within one year: Debtors Amounts owed by subsidiary undertakings Prepayments & accrued income 1,816 383 2,199 1,478 379 364 2,221 1,935 640 2,575 1,374 1,181 505 3,060 UWIC 2008 000 Group 2007 000 UWIC 2007 000

Amounts falling due after one year: Amounts owed by other bodies Amounts owed by subsidiary undertakings

4,000 4,000

31 31

31 4,000 4,031

16

Creditors Amounts falling due within one year Group 2008 000 Bank loans Payments received in advance Trade creditors Social security & other taxation Accruals Other 180 3,614 2,743 1,028 2,574 1,468 11,607 UWIC 2008 000 151 3,424 2,597 963 2,522 1,278 10,935 Group 2007 000 167 2,909 2,586 990 2,541 1,063 10,256 UWIC 2007 000 140 2,639 2,480 905 2,472 1,041 9,677

25

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

17

Creditors Amounts falling due after more than one year Group 2008 000 Bank loans 13,525 13,525 UWIC 2008 000 11,891 11,891 Group 2007 000 5,705 5,705 UWIC 2007 000 4,042 4,042

18

Borrowings Group 2008 000 a) Unsecured loans Repayable as follows: In five years or more Total Secured loans Repayable as follows: In one year or less Between one and two years Between two and five years In five years or more Total Total UWIC 2008 000 Group 2007 000 UWIC 2007 000

8,000 8,000

8,000 8,000

b)

181 194 679 4,652 5,706 13,706

151 162 568 3,161 4,042 12,042

167 181 629 4,895 5,872 5,872

140 151 526 3,365 4,182 4,182

c)

UWIC entered into two unsecured loan agreements during July 2008, for loans of 12m and 13m respectively. The first tranche of 8m (4m each loan) was drawn down on 31 July 2008. Further tranches of 9m and 8m will be drawn down in July 2009 and July 2010. Both loans are at a fixed rate of interest of 5.1% repayable over 30 years, with no repayment of principal during the first 10 years. UWIC has two bank loans secured by legal mortgages over freehold land and buildings: A loan of 1.8m (1,633k outstanding at 31 July 2008), is secured by freehold land and buildings at the Cyncoed Campus. The loan is repayable on an annuity basis over 25 years. Interest is payable on this loan at a fixed rate of 7.625% until July 2012 at which time UWIC will have the option to either enter into a further fixed interest period or switch to variable lending rates linked to LIBOR. A loan of 5m is secured by freehold land and buildings at the Plas Gwyn Campus. At 31 July 2008, 4,042k of this loan was outstanding. The loan is repayable over 25 years (15 years remaining) on an annuity basis at a fixed rate of interest of 7.6925%.

d)

26

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

19

Deferred capital grants group and UWIC Funding Council 000 000 At 31 July 2007 Buildings Equipment 6,655 830 7,485 Cash Received Buildings Equipment Other Grants & Benefactions 000 000 6,172 6,172 Total 000 12,827 830 13,657

349 773 1,122

349 773 1,122

Released to Income and Expenditure Buildings Equipment

89 426 515

89 89

178 426 604

At 31 July 2008 Buildings Equipment

6,915 1,177 8,092

6,083 6,083

12,998 1,177 14,175

20

Revaluation Reserves Provision for Enhanced Pensions 000 Revaluations At 1 August 2007 previously stated Prior year adjustment At 1 August 2007 & 31 July 2008 Contributions to Depreciation At 1 August 2007 previously stated Prior year adjustment At 1 August 2007 as restated Released in the year At 31 July 2008 Net Revaluation Reserve At 31 July 2008 At 31 July 2007 (345) (345)

Inherited Assets 000 106,226 (55,893) 50,333

Consolidated Total 000 105,881 (55,893) 49,988

(1,087) (5,916) (7,003) (694) (7,696)

(1,087) (5,916) (7,003) (694) (7,696)

(345) (345)

42,637 43,331

42,291 42,985

652k (2007 659k) of the revaluation reserve relates to assets owned by Cardiff Institute Residences Company Limited giving rise to a net revaluation reserve for UWIC of 41,639k (2007 42,326k)

27

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

21

Movement on General Reserves Group 2008 000 UWIC 2008 000 Group 2007 000 UWIC 2007 000

At 1 August 2007 Surplus on continuing operations before transfer from revaluation reserve Transfer from revaluation reserve Pension items in STRGL At 31 July 2008

4,349

5,406

(1,865)

(843)

976 694 (6,029) (10)

1,114 687 (6,029) 1,178

1,726 694 3,794 4,349

1,768 687 3,794 5,406

Presented in the Balance Sheet as: Reserve before pension liabilities Reserve for pension liabilities

25,360 (25,370) (10)

26,548 (25,370) 1,178

23,059 (18,710) 4,349

24,116 (18,710) 5,406

22

Reconciliation of Surplus on Continuing Operations to Net Cash Inflow from Operating Activities

Year ended 31 July 2008 000 Surplus before tax Depreciation (Note 12) Interest receivable Interest payable Difference between pension charge and cash contributions Decrease in Stocks Decrease/increase in Debtors Increase in Creditors Deferred Capital Grants released to income (Note 18) Net cash Inflow from operating activities 976 2,397 (727) 1,004 (489) 18 407 1,893 (604) 4,875

Year ended 31 July 2007 Restated 000 1,726 2,152 (639) 1,169 (376) 19 (242) 1,397 (329) 4,877

28

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

23

Returns on Investments and Servicing of Finance

Year ended 31 July 2008 000 Interest received Interest paid Net cash inflow from returns on investments and servicing of finance 732 (444)

Year ended 31 July 2007 000 637 (469)

288

168

24

Capital Expenditure and Financial Investment Year ended 31 July 2008 000 Purchase of tangible fixed assets Deferred capital grants received Net cash outflow from Capital expenditure and financial investment (5,138) 1,122 Year ended 31 July 2007 000 (5,992) 1,561

(4,016)

(4,431)

25

Management of Liquid Resources Year ended 31 July 2008 000 Redemption of investments Purchase of investments Net cash (outflow)/inflow from Management of Liquid Resources 7,250 (14,500) Year ended 31 July 2007 000 7,500 (7,250)

(7,250)

250

26

Financing Year ended 31 July 2008 000 Repayments of amounts borrowed New borrowings Net cash inflow/(outflow) from financing (167) 8,000 7,833 Year ended 31 July 2007 000 (496) (496)

29

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

27

Analysis of Changes in Net Funds At 31 July 2007 000 Cash in hand, and at bank Short term deposits Debt due within one year Debt due after one year 4,850 7,250 (167) (5,706) 6,227 Cash flows 000 1,730 7,250 167 (8,000) 1,147 Non cash Changes 000 (181) 181 At 31 July 2008 000 6,580 14,500 (181) (13,525) 7,374

28

Pension Obligations The pension schemes for UWICs staff are the Cardiff & Vale of Glamorgan Pension Fund (CVGPF) (principally administration and support staff); the Teachers Pension Scheme (TPS) (principally academic staff); the Universities Superannuation Scheme (USS) (a mixture of administrative and academic staff). The contributions payable to the scheme were :Year ended 31 July 2008 000 Cost of TPS Cost for CVGPF Cost for USS 2,259 2,421 245 4,925 The current service costs recognised within UWICs historic cost surplus for the year were :Year ended 31 July 2008 000 Cost of TPS Cost for CVGPF Cost for USS 2,259 2,180 245 4,684 Year ended 31 July 2007 000 2,003 2,050 121 4,174 Year ended 31 July 2007 000 2,003 2,185 121 4,309

30

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued) Pension Obligations (continued) Cardiff & Vale of Glamorgan Pension Fund ( CVGPF) CVGPF is a local government superannuation scheme which meets the definition of a defined benefits scheme. The most recent full actuarial valuation was carried out as at 31 March 2007, and has been updated by independent actuaries to the Cardiff & Vale of Glamorgan Pension Fund to take account of the requirements of FRS 17 in order to assess the liabilities of the Fund as at 31 July 2008. The principal assumptions used for the purposes of FRS17 are as follows :31 July 2008 Discount rate Rate of long-term increase in salaries Rate of increase to pensions in payment Rate of increase in deferred pensions Rate of inflation 6.5% pa 5.3% pa 3.8% pa 3.8% pa 3.8% pa 31 July 2007 5.7% pa 4.8% pa 3.3% pa 3.3% pa 3.3% pa 31 July 2006 5.1% pa 4.6% pa 3.1% pa 3.1% pa 3.1% pa

The expected rate of return on assets, the market value of assets and the FRS17 scheme liabilities at 31 July are :Value and long term rate of return at 31 July 2008 000 Equities Bonds Property Other Total market value of assets Present value of scheme liabilities UWICs share of deficit in the scheme Unfunded pension liabilities Provision as at 31 July
7.8% 6.0% 6.8% 5.9%

Value and long term rate of return at 31 July 2007 000

7.9% 5.5% 6.9% 6.0%

Value and long term rate of return at 31 July 2006 000

7.4% 4.9% 6.4% 4.7%

21,847 5,825 1,638 1,680 30,990 (52,150)

23,397 4,323 1,991 849 30,560 (45,340)

18,908 4,086 1,534 402 24,930 (43,160)

(21,160) (4,210) (25,370)

(14,780) (3,930) (18,710)

(18,230) (3,950) (22,180)

The unfunded pension liabilities relate to additional benefits due to pensioners as a result of enhancements made to their benefits on early retirement. The balances in relation to these unfunded liabilities are shown separately overleaf. 31 July 2008 Assumed life expectancy at 65 years - retiring today male/(female) - retiring in 20 years male/(female) 31 July 2007 31 July 2006

20.3 (24.1) 22.2 (25.3)

31

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued) 28 Pension Obligations (continued) Analysis of amounts charged to the income and expenditure account 31 July 2008 000 Funded Unfunded Operating - current service cost - past service cost Net expense Finance - expected return on assets - interest on pension liabilities Net expense 31 July 2007 000 Funded Unfunded

2,180 560 2,740

2,050 2,050

(2,310) 2,650 340

220 220

(1,740) 2,260 520

190 190

Analysis of amount recognised in the statement of total recognised gains and losses 31 July 2008 000 Funded Unfunde d Actual return less expected return on assets Actuarial (losses)/gains on liabilities (4,040) (1,669) (5,709) (320) (320) 31 July 2007 000 Funded Unfunded

1,650 2,184 3,834

(40) (40)

Changes to plan assets fair values 2008 000 Funded Opening value Expected return on assets Actual less expected return Employer contributions Member contributions Benefits paid Closing value Changes to present value of liability 2008 000 Funded Unfunde d 45,340 3,930 2,180 560 2,650 220 830 (1,100) (260) 1,690 320 52,150 4,210 2007 000 Funded Unfunded 43,160 2,050 2,260 780 (730) (2,180) 45,340 3,950 190 (250) 40 3,930 30,560 2,310 (4,040) 2,430 830 (1,100) 30,990 2007 000 Funded 24,860 1,740 1,650 2,180 780 (730) 30,480

Opening value Current service cost Past service cost Interest on liabilities Member contributions Benefits paid Actuarial losses Closing value

32

UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued

28

Pension Obligations (continued) The actuarial gain/(loss) can be further analysed as follows: CVGPF Funded & Unfunded Actual return less expected return on assets % of scheme assets Experience gains and losses of pension liabilities % of scheme liabilities Total amount recognised in STRGL % of scheme liabilities Teachers Pension Scheme (TPS) The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme with over 200 member institutions. All members pay the same contributory rate, currently 14.1%. The last valuation of the TPS was at 31 March 2004. The assumptions and other data which have had the most significant impact on the contribution level are as follows: Investment return per annum Salary increases per annum Market value of assets Deficit at date of valuation Proportion of members accrued benefits covered by actuarial value of assets Universities Superannuation Scheme UWIC participates in the Universities Superannuation Scheme, a defined benefit scheme which is externally funded and contracted out of the State Earnings-Related Pension Scheme. The assets of the scheme are held in a separate trustee-administered fund. It is not possible to identify each institutions share of the underlying assets and liabilities of the scheme and hence contributions to the scheme are accounted for as if it were a defined contribution scheme. The cost recognised within the surplus/deficit for the year in the Income & Expenditure account is equal to the contributions payable to the scheme for the year. The latest actuarial valuation of the scheme was at 31 march 2005. The assumptions which have the most significant effect on the result of the valuation are those relating to the rate of return on investments (i.e. the valuation rate of interest) and the rates of increase in salary and pensions. In relation to the past service liabilities, the financial assumptions were derived from market yields prevailing at the valuation date. It was assumed that the valuation rate of interest would be 4.5% per annum, salary increases would be 3.9% per annum and pensions would increase by 2.9% per annum. In relation to the future service liabilities, it was assumed that the valuation rate of interest would be 6.2% per annum, salary increases would be 3.9% per annum and pensions would increase by 2.9% per annum. The valuation was carried out using the projected unit method. At the valuation date, the market value of the assets of the scheme was 21,740 million and the value of the past service liabilities was 28,308 million, leaving a deficit of 6,568 million. The assets therefore were sufficient to cover 77% of the benefits which had accrued to members after allowing for expected future increases in earnings. The contribution rate payable by the institution was 14% of pensionable salaries and is to remain at 6.5% 4.5% 163,240 million 3,260 million 98% 31 July 2008 000 (4,040) (13.0%) (2,229) (3.9%) (6,029) (10.7%) 31 July 2007 000 1,650 5.4% (80) (0.2%) 3,794 (7.7%)

33

the same level pending a review. Surpluses or deficits which arise at future valuations may impact on UWICs future contribution commitment. UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

Creditor Balances UWICs creditor balances as at 31 July 2008 for each scheme are as follows:Year Ended 31 July 2008 000 TPS CVGPF USS 280 279 40 599 Year Ended 31 July 2007 000 253 256 22 531

29

Capital Commitments Group and UWIC 2008 000 Commitments contracted at 31 July Authorised but not contracted at 31 July 7,750 22,095 29,845 Group and UWIC 2007 000 900 4,950 5,850

30

Access Funds Year Ended 31 July 2008 000 Funds at 1 August Funding Council grants Interest earned 13 577 7 597 Disbursed to students Balance unspent at 31 July (588) 9 Year Ended 31 July 2007 000 17 443 7 467 (454) 13

Funding council grants are available solely for students; UWIC acts only as a paying agent. The grants and related disbursements are therefore excluded from the Income and Expenditure Account. 31 Related party transactions Due to the nature of the Universitys operation and the composition of the Board of Governors (being drawn from public and private sector organisations) it is inevitable that transactions will take place with organisations in which a member of the Board of Governors may have an interest. All transactions involving organisations in which a member of the Board of Governors may have an interest are conducted at arms length and in accordance with the Universitys financial

34

regulations and normal procurement procedures. No transactions require disclosure under Financial Reporting Standard No 8: Related Party Disclosures. UNIVERSITY OF WALES INSTITUTE, CARDIFF Notes to the financial statements (continued)

32

Financial commitments At 31 July 2008 the group had annual commitments under non-cancellable operating leases for assets other than land and buildings expiring as follows:2008 000 Within one year Within two to five years 104 28 137 2007 000 28 98 126

35