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2021-07-31-accounts

Annual Report and Financial Statements Year ended 31 July 2021

Registered Charity No. 525938

Contents Year ended 31 July 2021

CONTENTS PAGES
Financial Highlights 3
Members of the University Council and their Interests 4
Report of the University Council 5 - 16
Corporate Governance Statement 17 - 20
Statement of University Council Responsibilities in Respect of the Annual Report
and the Financial Statements		 21
Independent Auditor's Report to the University Council of the University
of Chester		 22 - 26
Consolidated and University Statement of Comprehensive Income and
Expenditure		 27 - 28
Consolidated and Univeristy Statements of Changes in Reserves 29 - 30
Consolidated and University Balance Sheets 31
Consolidated Cash Flow Statement 32
Statement of Accounting Policies 33 - 37
Notes to the Financial Statements 38- 58

Page 2 of 58

Financial Highlights Year ended 31 July 2021

Result

During the year to 31 July 2021 (year to 31 July 2020 figures in brackets) the consolidated University and subsidiary companies:

Financial Strength

At 31 July 2021 the University had:

Financial Investments

During the year to 31 July 2021 the University invested £4.6 million (£2.6 million) in tangible fixed assets.

Staff and students

During the academic year the University:

Student Headcounts - based on HESA Returns (Student and Agg. Overseas) - (ex Dormant modes)

2020/1 2019/0 Increase/
Full-Time Other Total Total Decrease(-)
Home/EU Undergraduate 6945 559 7504 7739 -3%
Postgraduate 1196 3500 4696 4577 3%
Nursing and Midwifery
1710		 214 1924 1913 0%
International Undergraduate 1183 141 1324 1335 0%
Postgraduate 1391 336 1727 924 90%
Nursing and Midwifery
120		 35 155 140 11%
2020/21 Total 12545 4785 17330 16628 4%
2019/20 Total 11587 5041 16628
**Increase/ Decrease(-) ** 8% -5% 4%

The 2020/21 figures are for students studying between August 2020 and July 2021. The 2019/20 figures are for students studying between August 2019 and July 2020.

Page 3 of 58

Members of the University Council and their interests Year ended 31 July 2021

The members of the University Council are the University’s charity trustees under charity law. The members of the University Council who served as trustees during the year or subsequently are detailed below:


below:
Members of the University Council (1) (2) (3)
Foundation Members:
Canon Dr Jeff Turnbull_(President)_ •
The Right Reverend the Lord Bishop of Chester,
Mark Tanner		 Appointed 01-09-2020
The Very Reverend Dr Tim Stratford
Professor Eunice Simmons_(Vice-Chancellor)_ • •
Professor Anna Sutton Left 30-09-2020
Mr Francis Ball •
Dr David Briggs •
Mr Ian Davies Left 31-08-2020 •
Professor Charles Forsdick •
Mrs Jeannie France-Hayhurst • •
Mr Nick Jenkins •
Mrs Angela Seeney •
Mrs Sandra Verity • •
Non-Foundation Members:
Ms Eleanor Lewis_(Student Union President)_ Left 30-06-2021 •
Mrs CathyBond •
Professor Steven Broomhead Appointed 01-09-2020 •
Mr Marcus Clinton
Sir Neil Cossons •
Councillor Mrs Razia Daniels Appointed 01-09-2020
Dr Meredydd David_(Deputy President)_ •
Ms Karen Howell •
Mr Jack Rankin_(Student Union President)_ Appointed 01-07-2021 •
Dr Liane Smith Left 31-12-2020 •
Associate Professor Martin Degg •
Associate Professor Garfield Southall Left 31-08-2020
Mr Gordon Reay •
Mr Adrian Lee_(Secretary to the Council)_ •

Page 4 of 58

Report of the University Council Year ended 31 July 2021

During the year the main operational activities of the University Council were carried out through three committees. The current membership of these committees is shown above for each Council member

The University is also guided and governed by four further committees, namely, Mission; Nominations & Governance Review; Promotions and Senior Salaries.

Members of the University Council had no interest in contracts with the University.

University Senior Staff

The senior staff of the University to whom day to day management is delegated are as follows:

Professor Eunice Simmons Vice-Chancellor
Professor Helen O’Sullivan Provost and Deputy Vice-Chancellor
Professor Neville Ford Pro Vice-Chancellor (0.5)
Enhancement
Dr Helen Galbraith Pro Vice-Chancellor – Student Experience
Mr Richard Waddington Pro Vice-Chancellor Resources
Chief Financial Officer/Bursar
Mr Jerry Headley Executive Director of Estates Strategy
Mr Jonathan Moores Registrar and University Secretary
Mrs Rashmi Patel Interim Director of Human Resources
Mr Steve Jeffree Interim Director of Digital Transformation

Page 5 of 58

Report of the University Council (continued)

Year ended 31 July 2021

University Advisors

The University retains a number of professional advisers. The advisors during the year were as follows:

Bankers:

NatWest Bank plc 2-8 Church Street 1[st] Floor Liverpool L1 3BG

Auditors:

External

KPMG LLP 1 St Peter’s Square Manchester M2 3AE

Internal

RSM 9[th] Floor 3 Hardman Street Manchester M3 3HF

Solicitors:

Knights LLP 58 Nicholas Street Chester CH1 2NP

Insurance Brokers:

U M Association Ltd 5 St Helen’s Place London EC3A 6AB

Page 6 of 58

Report of the University Council (continued)

Year ended 31 July 2021

The Members of the University Council present their Annual Report for the year ended 31 July 2021 under the Charities Act 2011 together with the audited financial statements for the year.

Structure, Governance and Management

Type of organisation :

Registered Charity

Nature of Governing Document: Trust Deed

How the Charity is constituted : The University Council set the mission and approve the strategy and policies. Members of the University Council (Governors) are the management trustees and the day-today management is with the Senior Management. Chester Diocesan Board of Finance is the custodian trustee of the charity’s real estate property, acting as bare trustee of land.

Method of Appointment of Trustees : Trustees are appointed in accordance with the Instrument of Government. The Charity has a Nominations and Governance Review Committee. The Charity is responsible for ensuring that appropriate training is provided. Trustees are appointed for an initial term of office not exceeding three years.

Governors Induction and Training : The University Council have available a range of training opportunities delivered through a variety of formats. The main source of external training is through attendance on various courses organised by Advance HE. In addition, the University Council attends an “Away Day” where contributions on relevant topics are made by external and internal speakers. New members of Council are provided with an induction briefing by the Charity Secretary and an induction meeting with the President of the Council.

Organisation: The Composition of the Council is set out on page 4. It is the Council’s responsibility to bring independent judgement to bear on issues of strategy, performance, resources and standards of conduct.

The Chief Executive (Vice-Chancellor Professor E.A. Simmons) is appointed by the Council to manage the day to day operations of the Charity, and is supported by a Strategic Executive Team.

Scope and period of financial statements

The financial statements have been presented for the year ended 31 July 2021.

Principal activities of the University

The principal activity of the University is the provision of higher education. The University has a series of well-established programmes leading to the award of BA, BSc, BEd, BTh, BPhil, MA, MEd, MSc and PhD degrees.

The University is committed to the promotion of academic, vocational and personal development and professional training, preparing its students, in collaboration with employers and professional partners in the region and beyond, to make a positive contribution to the social and economic context in which they hope to work.

The University owns a substantial amount of property including a large number of residential properties which are maintained for the sole use of its students.

The Charity has three trading wholly owned subsidiaries:

Page 7 of 58

Report of the University Council (continued) Year ended 31 July 2021

Strategic Report

The 2020-21 academic year continued to be one of unprecedented challenges, not just for the University of Chester but for the Higher Education sector and the economy as a whole. The impact of COVID-19 affected a second academic cycle and what were perceived as temporary changes to the business model in 2019-20 became more normalised in 2020-21. The University worked hard at delivering, evaluating and improving its provision across its wide range of students and programmes. The planning process in 2020-21 focused on future developments and seeking out business benefits from innovative and evolving ways of working. In this period the University recorded an operating deficit of £5.6m on turnover of £123m

The Higher Education market continued to be exposed to great uncertainty mainly due to COVID-19 and the recent exiting of the UK from the European Union. ‘A’ level and other level 3 examinations were cancelled and ultimately replaced with Centre Assessment Grades (CAGs) which had been produced by teachers and were only considered during the confirmation and clearing period. This chaotic situation led to abnormal recruitment patterns for some universities, but the University of Chester’s position remained stable with reasonable recruitment levels.

Tuition fee income grew by £4.4m. This was largely due to a significant increase in international postgraduate students joining the University in February and an additional cohort in May. There was an increase in students on apprenticeships and professional programmes, in particular in Health and Social Care, with late notice in August from the Government of additional places. These welcome developments are tempered by the costs challenges identified in Future Prospects and Financial Review below.

The University has begun a strategic project to relocate its provision from Padgate into the heart of Warrington town centre, as University Centre Warrington. Initially, the Time Square location will open in December 2021, with the Remond House teaching building due to open in February 2022. Through these developments the University intends to support the UK’s post-pandemic economic recovery by providing opportunities for adults to develop further the skills needed for well-paid employment throughout their lives.

The University made significant progress in the development of Chester Medical School. At the end of July 2021, the General Medical Council confirmed it was content with the University’s stage 4 submission and we look forward to the successful completion of the remaining stages during the 202122 academic year.

The Thornton site now concentrates on developing clean growth and sustainable businesses, with complementary research and development, and contributes to the Ellesmere Port Industrial Area Strategy. Students previously at Thornton are now taught at the Exton Park site in refurbished laboratories which provide a modern, fresh and up-to-date science teaching facility. In addition to this, planning permission has been granted for a new Design and Manufacturing suite which is due to be completed during 2021-22.

During the academic year 2020-21 the University appointed a number of new colleagues to strengthen the Strategic Executive Team and this included the appointment of a new Provost and Deputy ViceChancellor – Professor Helen O’Sullivan and a new Pro Vice-Chancellor (Student Experience) – Dr Helen Galbraith.

Page 8 of 58

Report of the University Council (continued) Year ended 31 July 2021

Strategic Report (continued)

In order to align with the emerging risk-based approach to regulation of quality and standards by the Office for Students (OfS), the University continued the roll-out of a streamlined process to maintain standards and secure continuous enhancement of the academic experience of our students. This work will also support the University’s approach to the forthcoming revised Teaching Excellence and Student Outcomes Framework (TEF) which the OfS will consult on shortly. At the end of the academic year, the University reviewed its internal committee structure to ensure that academically led decision making is efficient and accords with the priorities of our Citizen Student Strategy. The revised structure, implemented from the beginning of 2021-22, is intended to ensure that the whole academic community is properly represented and has a voice in our deliberative committees.

The University continued to focus on its Access and Participation work, examining closely the experiences of its under-represented groups. New initiatives were put in place to assist with this work and these include; Student Race Advocates, Learning Facilitators, Grit training for staff and students (helping them change beliefs about themselves), Race Equality Challenge Group and a research project with Transforming Access and Student Outcomes in Higher Education (TASO,) looking at the impact of changes in delivery methods on underrepresented groups.

The University values feedback from its students and employer organisations, allowing it to make informed changes and improvements to its provision in teaching, research and employability skills. In 2020-21, the University concentrated on communicating and listening to its students whose experiences were necessarily very different from the experiences of other students in previous years. To this end it set up the Student Consultancy Board, which allows the student voice to influence and develop support mechanisms across the institution. There has been work to enhance the student experience through active partnership, particularly with the Students’ Union and in dialogue with all our students.

The focus on employment and life skills remains and we have continued to link the professional and personal skill development of our students to their academic studies. Employability enhancing experiences were delivered outside of the curriculum, and these are inclusive for all students regardless of their background. In particular, an increase in employer-based placements and projects through the Workplace Experiences programme enabled more students to gain relevant employability skills, with anonymised recruitment increasing by 100% the numbers of under-represented students accessing these experiences. In the 2018-19 Graduate Outcomes Survey, 90% of graduates, employed or in further study, agreed or strongly agreed that what they are doing is meaningful. This compares with the sector average of 87%.

The transition to Higher Education and the retention of students enrolled at the University continues to be a focus for the institution. During the year a new Directorate of Access, Skills and Apprenticeships (DASA) was created bringing together departments that work with all learners, especially those from underrepresented groups, building aspirations, skills, and confidence as they transition into higher education. Work has begun to further improve our Personal Academic Tutor system, key to supporting students, by piloting training with Grit and undertaking an internal review. Wellbeing and mental health continue to be high on the University’s agenda and new developments introduced during 2019-20 due to COVID are progressing and evolving. Support for students is primarily provided online or by phone, but we have provided on the day, face to face emergency appointments as soon as national guidance allowed it. Academic year 2020-21 saw a continued increase in complex needs, with 70% of all wellbeing cases being mental health related. Through the 24/7 support of Together all, continued roll out of Mental Health First Aid for staff and the introduction of a male mental health group and emotion regulation group, we have determined an effective balance between reactive and proactive approaches to ensure students are supported. In addition, the University has trialled new approaches to online delivery of academic programmes via AULA, a learning engagement platform, and the move to online delivery across most University support departments is providing greater access for more students.

Page 9 of 58

Report of the University Council (continued) Year ended 31 July 2021

Future Prospects

Cash generation has reduced over the last two financial years; however cash balances have not reduced materially and therefore will enable the University to adapt to challenging external factors. Student numbers after several years of reduction, have increased in the Autumn intakes of both 2020 and 2021, with the most recent increases as a result of recruiting students internationally. It is expected that this growth in students will continue in the coming years. The key challenge is dealing with the increasing cost base due to increased payroll and energy costs, as well as expected rises in other costs due to pressure on the UK supply chain.

The University Council, the Vice-Chancellor and the rest of the Senior Executive Team would like to take this opportunity to thank all the staff, students and friends of the University for their hard-work, adaptability, flexibility and commitment to our students and our success during the past year.

Page 10 of 58

Report of the University Council (continued)

Year ended 31 July 2021

Financial Review

inancial Review
Year ended Year ended
31 July 2021 31 July 2020
Financial Performance Indicator
Deficit before other gains and losses for the year (£5.6m) (£4.6m)
Margin % (4.6%) (3.8%)
Deficit for the year (£5.7m) (£5.0m)
Margin % (4.6%) (4.2%)
Staff costs as % of income 67.0% 67.6%
Cash inflow from operating activities £7.2m £3.2m
Current assets ratio 1.7 2.0
Net liquidity (days) 114 113
(Number of days expenditure held as cash/investments,
based on total expenditure less depreciation)

Financial Performance in 2020/21 compared to previous year:

Year ended Year ended
31 July 2021 31 July 2020
£’000 £’000
Income 122,719 119,754
Expenditure (128,353) (124,364)
Loss on changes in fair value on investment properties (59) (422)
_____ _____
Deficit (5,693) (5,032)

Page 11 of 58

Report of the University Council (continued)

Year ended 31 July 2021

Trade Union Facilities Time data for the period 1 April 2020 – 31 March 2021

TABLE 1 Total Number of Union Officials 18
Full time equivalent employee number 15.83
TABLE 2 Percentage of time Spent on facility time
0% 4
1-50% 14
51-99% 0
100% 0
TABLE 3 Percentage of pay bill spent on facility time
Total cost of facility time 44,576
Total Pay Bill 77,109,503
% of the total pay bill spent on facility time 0.06
TABLE 4 Paid trade union activities
% of total paid facility time hours 0

Risks and uncertainties

Although the situation regarding the Covid-19 pandemic has stabilised, this remains a key risk for the University as well as economic and political uncertainty. The outcome of the government’s review of tuition fees is still awaited and this could impact on the University’s ability to deliver improvements to the student experience as well as infrastructure and facilities. The UK’s exit from the European Union presents uncertainty across several areas of activity particularly grant funding from Europe as well as impact on the University cost base through inflation and increased utility costs.

Having seen significant growth in overseas recruitment in 2020-21, this increase is continued for the 2021-22 year. Recruitment to undergraduate courses in 2021 remains stable compared to 2020.

There continues to be upward pressure on the University cost base, particularly around pensions and payroll, with no increase in the undergraduate fee of £9,250 to offset. The increase in national insurance contributions will add 1.25% to staffing costs from April 2022, with uncertainty around the Local Government Pension Scheme triennial valuation in March 2022.

Page 12 of 58

Report of the University Council (continued) Year ended 31 July 2021

Risks and uncertainties (continued)

As the University is in a deficit position, compliance with banking covenants is at risk and although agreement has been reached with lenders for the 2021 and 2022 year ends, this will remain a key risk until the University moves into a stable surplus position.

Public benefits and inclusivity

The beneficiaries are the students who participate in higher education at the University of Chester. Ultimately higher education provides a skilled population that can contribute to the growth of the economy and the wider community as a whole.

The University of Chester has a strong network of student support including a Students’ Union, has a commitment to providing education in an open inclusive environment and a bursary scheme for those students from low income households. In addition, tuition fee loans allow students to defer the repayment of fees until they finish their studies and earn over £26,568 a year. It is felt that these measures contribute to widening participation and ensure that the opportunity to participate is not restricted by the ability to pay fees.

The acquisition of property ensures residences are available for occupation solely by students of the University of Chester at an affordable rent and has the underlying benefit of widening participation in higher education. This investment in the housing stock is facilitated by the activities of the subsidiary companies and gift aiding taxable profits to the Charity. Once in receipt of these funds the Charity can utilise them to meet the overall objectives stated above.

In setting our objectives and planning our activities the University Council has given careful consideration to the Charity Commission’s general guidance on public benefit. The balance of the benefits against any detriment or harm are considered during the decision-making processes of the University and during the activities performed. Property purchases and developments always comply with building regulation guidelines and restrictive covenants and there is regard for the wider environmental impacts. The aim of the Charity is the provision of higher education, and the infrastructure required for this should be balanced against the environmental impact this can have.

Aims, objectives and activities for the public benefit

The underlying aim of the Charity continues to be the provision of higher education.

The objectives of the Charity are:

Page 13 of 58

Report of the University Council (continued)

Year ended 31 July 2021

Aims, objectives and activities for the public benefit (continued)

Strategies employed to achieve the objectives

Investment powers and policy

The Charity invests funds on short-term deposit to ensure a safe and reasonable level of interest is earned and assists the Charity in achieving its objectives. The interest earned within the year amounted to £82k (2020: £255k) .

The use of short-term deposits is deemed appropriate as this provides a low risk investment with an acceptable rate of return. Short-term deposits also provide the required flexibility to access cash quickly as and when it is required.

The University’s Treasury Management Policy incorporates the Socially Responsible Investment Policy.

Page 14 of 58

Report of the University Council (continued)

Year ended 31 July 2021

Reserves policy (not including pension liability)

The Charity’s Trust Deed places no specific restrictions on the application of the Charity’s funds, provided that they are applied solely towards the objectives of the Charity as set forth in the Deed.

The Charity aims to provide facilities of a high standard and this is achieved through a programme of substantial capital investment, which is financed from general reserves, the subsidiary covenant payments and from bank borrowings. It is the University Council’s policy to keep free reserves at a reasonable level in light of the organisation’s requirements.

Reserves are mainly needed to fund growth and asset acquisition and refurbish the existing property stock. In addition, short-term reserves will also be needed to fund the development of new courses as well as other initiatives. The Trustees therefore consider the ideal level of reserves at 31 July 2021 to be at least 150% of short-term creditors before taking into consideration the pension liability. This level of reserves would allow all external short-term creditors at this date to be paid in full, and leave sufficient funds to invest.

The actual Consolidated Reserves for year ended 31 July 2021:

Unrestricted: £27,335k (2020: £44,138k)

Endowments: £423k (2020: £405k)

Pension liability £71,145k (2020: £54,396k)

At 31 July 2021 consolidated reserves are therefore 348% of short-term creditors and deemed to be sufficient.

Employee consultation

The average number of lecturing and support staff employed by the University during the year was 1,565 (2020: 1,595). An active policy of information dissemination encourages employee involvement and participation in the University development process. Employee representatives are regularly consulted on a variety of issues affecting their own and the University’s interests.

Auditor

The members of the University Council who held office at the date of approval of this report confirm that;

Going concern

The University recorded a deficit of £5.6m before other gains and losses, but a positive operating cashflow helped ensure the University ended the year with cash and cash equivalents of £30.6m, and investments of £8.0 The budget for 2021-22 is for a consecutive deficit, forward cash forecasts demonstrate adequate availability of financial resources.

These deficits mean that the University was not compliant with some existing loan covenants for 2021 and 2022, however agreement has been reached with lenders to amend these covenants to ensure that the University remains compliant.

Page 15 of 58

Report of the University Council (continued)

Year ended 31 July 2021

Going concern(continued)

The impact of Covid-19 had an impact on several income streams during the 20-21 year particularly income from student residences and conferences. Income from student residences has not grown to pre-pandemic levels in Autumn 2021 and growth in conference activity is uncertain. Recruitment of home undergraduates in 2021 is similar to the level recruited in 2020. However, the University saw significant growth in overseas students in 2020-21 and this growth has continued into Autumn 2021 recruitment.

There continues to be pressure on the cost base of the University particularly due to supply chain issues impacting on IT and estates expenditure, as well as utility costs. The increase in national insurance rates will increase staffing costs as well as increases in pension provisions.

We have sensitised our forecasts to assess the impact of potential falls in student numbers and potential cost increases and are satisfied that the University has sufficient headroom in its cash flow projections to withstand the impact of reasonably possible downside scenarios during the 12 months following the date of approval of the financial statements.

On this basis, the University Council is satisfied that, despite the current economic and political uncertainty, the University has adequate resources to continue in operational existence for the foreseeable future and for at least 12 months from the date of signature of these financial statements. Further details regarding the basis of preparation are given in the Statement of Accounting Policies.

Conclusion

The University has had a challenging year. Despite reductions in public funding and upward pressure on costs, the University is well placed to manage challenges in the coming years, due to careful cost management and the strategic refocusing of the University’s portfolio across all its faculties and sites which should ensure the University can continue to recruit well in the future.

President of the Council: Canon Dr J. Turnbull

Deputy President of the Council: Dr M. David

15[th] February 2022

Page 16 of 58

Corporate Governance Statement Year ended 31 July 2021

Corporate Governance Statement

The University is committed to exhibiting best practice in all aspects of governance. This summary describes the manner in which the University complies with Committee of University Chairs (CUC) Higher Education Code of Governance (2014) and its continued compliance with the 2020 edition issued September 2020. The purpose of this summary is to help the reader of the financial statements understand how the principles have been applied.

In the opinion of the Members of the University Council, the University has applied the principles of the Higher Education Code of Governance (2014 and 2020) in so far as they apply to the Higher Education Sector, and it has applied these throughout the year ended 31 July 2021 and up to the date of these accounts.

The Council

The composition of the Council is set out on page 4. It is the Council’s responsibility to bring independent judgement to bear on issues of strategy, performance, resources and standards of conduct.

The University Council meets four times a year and has several committees, including the Planning and Resources Committee, the Nominations and Governance Review Committee, the Human Resources Committee, the Senior Salaries (Remuneration) Committee, the Mission Committee and the Audit and Risk Management Committee.

Planning and Resources Committee

The Planning and Resources Committee meet six times a year and considers in detail the Strategic Plan and the Financial Forecasts. It also considers the mid-year Financial Forecast and Budgets. It considers the overall objectives of the University and is provided with the minutes from the Council Committees and receives a report at each meeting from the Vice-Chancellor. It makes recommendations, as appropriate, to the Council.

Nominations and Governance Review Committee

Any new appointments to the University Council are made in accordance with the Instrument of Government. The University Council has a Nominations and Governance Review Committee which considers the skills mix and general requirements for membership of the University Council. The University Council is responsible for ensuring that appropriate training is provided. Members of the Council are appointed for an initial term of office not exceeding three years.

Human Resources Committee

The Human Resources Committee meets at least three times a year and considers the consultative procedures with the staff unions recognised by the University Council, monitors the implications of all staffing policies of the University, and makes recommendations as appropriate to the Planning and Resources Committee.

A University Health, Safety and Environment Committee reports to the Human Resources Committee. It meets at least three times a year, reviews existing safety policies, considers the need for new safety procedures, reviews the implementation of approved safety procedures, provides advice on health and safety to staff and students, receives notification of all accidents, studies incidents and related statistics, receives reports from the safety representative and the health and safety adviser and promotes cooperation across the University to secure sound health and safety. The Health, Safety and Environment Committee’s annual report is presented to the University Council.

Page 17 of 58

Corporate Governance Statement (continued) Year ended 31 July 2021

Senior Salaries Remuneration Committee

Considers and makes recommendations to the University Council on the remuneration and conditions of service of:

and

The University Council shall take the Senior Salaries Committee’s recommendations into account in considering and determining the remuneration and conditions of service of the holders of the senior posts specified above.

To determine grievances against the Vice-Chancellor and similar matters which relate to remuneration and conditions of service.

In discharging its terms of reference the Senior Salaries Committee will:

  1. consider comparative information on the emoluments of employees within its remit when determining salaries, benefits and terms and conditions;

  2. ensure that all arrangements are clearly recorded;

  3. report on its decisions and operation at least annually to the University Council. Such a report should not normally be withheld from any members of the University Council and will record, inter alia:

  4. (a) the resulting overall levels of increase in the aggregate salary costs of the Vice-Chancellor, the Deputy Vice-Chancellor and the holders of other posts the remuneration of which is determined by the Committee; and

  5. (b) the agreed base salary for the Vice-Chancellor.

Justification for total remuneration package for the Vice Chancellor

The Committee is influenced by a wide range of factors in determining the Vice-Chancellor’s remuneration and utilises evidence from the higher education sector to benchmark pay and normally agrees quantified performance targets that are aligned to the strategy of the University. Market rates for remuneration are considered and evidenced by the comparative data, together with growing sector and institutional challenge and complexity, increasing competition and size of roles; skills, experience and individual performance.

Page 18 of 58

Corporate Governance Statement (continued) Year ended 31 July 2021

Justification for total remuneration package for the Vice Chancellor (continued)

The data supporting decisions on the Vice-Chancellor’s and other senior staff pay is drawn from the following:

Mission Committee

The Mission Committee meets at least three times a year and its role is to promote and support the Christian ethos of the University through interpreting the nature and character of the University as defined by the University Council, monitoring its impact on University life and to make recommendations as necessary to the University Council.

Audit and Risk Management Committee

The Audit and Risk Management Committee meets at least four times a year. The Audit and Risk Management Committee considers both internal and external audit reports and recommendations together with management’s response and it reviews the annual financial statements. In order to allow sufficient independence, members of the Audit and Risk Management Committee do not sit on Council Committees where staffing or financial matters are decided. For further independence there are professional members who are not Members of the University Council. The Independent Auditor responsible for Internal Audit attends each meeting of the Audit and Risk Management Committee. The Audit and Risk Management Committee meet annually with the Internal and External Auditors without Officers of the University being present. During the year the committee undertook a mapping exercise against the new CUC HE Audit code of Practice and recommended adoption of the code.

Statement of Internal Control

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

During the course of the year, internal audit work was undertaken by RSM. RSM’s annual report for the year 20/21 concluded a positive overall opinion and confirmed that the university had “an adequate and effective assurance framework”.

The Council has reviewed the key risks to which the University is exposed, together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The Council is of the view that there is an ongoing process for identifying, evaluating and managing the University’s significant risks, that has been in place for the year ended 31 July 2021 and up to the date of approval of the annual report and financial statements, that it is regularly reviewed by the Council and that it accords with Higher Education Code of Governance.

Page 19 of 58

Corporate Governance Statement (continued) Year ended 31 July 2021

Statement of Internal Control (continued)

The Strategic Executive Team receives reports setting out key performance and risk indicators and considers possible control issues brought to their attention by early warning mechanisms which are embedded within the operational units and reinforced by risk awareness training. The Strategic Executive Team and the Audit and Risk Management Committee also receive regular reports from the internal auditor and from the Health, Safety and Environment Committee which include recommendations for improvement. The Audit and Risk Management Committee’s role in this area is confined to a high level review of the arrangements for internal financial control. The Council’s agenda includes a regular item for consideration of risk and control and receives reports thereon from the ViceChancellor and the Audit and Risk Management Committee. The emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception. At its Michaelmas meeting, the Council carried out the annual assessment for the year ended 31 July 2021 by considering documentation from the Vice-Chancellor and the Audit and Risk Management Committee, and took account of events since 31 July 2021.

Regularity and propriety in the use of public funding

It is the view of University Council that the internal control environment described above, together with all the corporate governance arrangements ensure regularity and propriety in the use of public funding.

President of the Council Canon Dr J. Turnbull

Parkgate Road, CHESTER, CH1 4BJ

15[th] February 2022

Deputy President of the Council Dr M. David

Page 20 of 58

Statement of University Council Responsibilities in Respect of the Annual Report and the Financial Statements

Year ended 31 July 2021

Statement of University Council Responsibilities in Respect of the Annual Report and the Financial Statements

The University Council is responsible for preparing the Annual Report and the financial statements in accordance with the requirements of the Office for Students’ Terms and Conditions of Funding for Higher Education Institutions and Research England’s Terms and Conditions of Research England Grant and applicable law and regulations.

They are required to prepare the group and parent University financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The terms and conditions of funding further require the financial statements to be prepared in accordance with the 2019 Statement of Recommended Practice – Accounting for Further and Higher Education, in accordance with the requirements of the Accounts Direction issued by the Office for Students.

The University Council are required to prepare financial statements which give a true and fair view of the state of affairs of the group and parent University and of their income and expenditure, gains and losses and changes in reserves for that period. In preparing each of the group and parent University financial statements, the directors are required to:

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

The University Council are also responsible for ensuring that:

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

Page 21 of 58

Independent Auditor’s Report to the University Council Report on the Audit of the Financial Statements Year ended 31 July 2021

Opinion

We have audited the financial statements of the University of Chester (“the University”) for the year ended 31 July 2021 which comprise the Consolidated and University Statement of Comprehensive Income and Expenditure, Consolidated and University Statements of Changes in Reserves. Consolidated and University Balance Sheets Consolidated Cash Flow Statement and related notes, including the accounting policies.

In our opinion the financial statements:

Basis for opinion

We have been appointed as auditor under section 144 of the Charities Act 2011 (or its predecessors) and report in accordance with the regulations made under section 154 of the Act.

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

Going concern

The University Council has prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the University or to cease their operations, and as they have concluded that the Group and the University’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).

In our evaluation of the University Council’s conclusions, we considered the inherent risks to the group’s business model and analysed how those risks might affect the Group and University’s financial resources or ability to continue operations over the going concern period.

Our conclusions based on this work:

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the University will continue in operation.

Page 22 of 58

Independent Auditor’s Report to the University Council (continued) Report on the Audit of the Financial Statements Year ended 31 July 2021

Fraud and breaches of laws and regulations – ability to detect

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit .

As required by auditing standards and taking into account possible pressures to meet loan covenants we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular the risk that revenue generated from other income streams is recorded in the wrong period.

We did not identify any additional fraud risks.

In determining the audit procedures, we took into account the results of our evaluation and testing of the operating effectiveness of some of the Group-wide fraud risk management controls We also performed procedures including:

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the University Council and other management (as required by auditing standards), and from inspection of the Group’s regulatory and legal correspondence and discussed with the University Council and other management the policies and procedures regarding compliance with laws and regulations.

As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.

The potential effect of these laws and regulations on the financial statements varies considerably.

Page 23 of 58

Independent Auditor’s Report to the University Council (continued) Report on the Audit of the Financial Statements Year ended 31 July 2021

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation, taxation legislation, pensions legislation and specific disclosures required by higher education legislation and regulation, charities legislation and related legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Whilst the University is subject to many other laws and regulations, we did not identify any others where the consequences of non-compliance alone could have a material effect on amounts or disclosures in the financial statements.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed noncompliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

Other information

The University Council is responsible for the other information, which comprises the Strategic Review and the Report of the University Council and Corporate Governance Statement. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:

Matters on which we are required to report by exception

We have nothing to report in these respects.

Page 24 of 58

Independent Auditor’s Report to the University Council (continued) Report on the Audit of the Financial Statements Year ended 31 July 2021

University Council responsibilities

As explained more fully in their statement set out on page 21, the University Council is responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent University’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless it either intends to liquidate the Group or the parent University or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

We are required to report on the following matters by the Accounts Direction dated 25 October 2019 issued by the Office for Students (‘the Accounts Direction’).

In our opinion, in all material respects:

Matters on which we are required to report by exception

We are required by the Accounts Direction to report to you where the University has an access and participation plan that has been approved by the Office for Students’ director of fair access and participation and the results of our audit work indicate that the Group’s and the University’s expenditure on access and participation activities for the financial year disclosed in Note 9 has been materially misstated.

We are also required by the Accounts Direction to report to you where the results of our audit work indicate that the Group’s and the University’s grant and fee income, as disclosed in note 3 to the financial statements has been materially misstated.

We have nothing to report in these respects.

Page 25 of 58

Independent Auditor’s Report to the University Council (continued) Report on the Audit of the Financial Statements Year ended 31 July 2021

THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES

This report is made solely to the University Council, who are the trustees of the university for the purposes of charity law, in accordance with section 144 of the Charities Act 2011 (or its predecessors) and regulations made under section 154 of that Act and of the Articles, Charters, Statutes or Ordinances of the institution paragraph 13(2) of the University's Articles of Government and section 124B of the Education Reform Act 1988. Our audit work has been undertaken so that we might state to the University Council those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the University and the University Council for our audit work, for this report, or for the opinions we have formed.

Timothy Cutler

for and on behalf of KPMG LLP, Senior Statutory Auditor

Chartered Accountants 1 St Peters Square Manchester M2 3AE

Date: 22[nd] February 2022

KPMG LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006

Page 26 of 58

Consolidated and University Statement of Comprehensive Income and Expenditure Year ended 31 July 2021

Notes
Income
Tuition fees and education contracts
1
Funding body grants
2
Research grants and contracts
4
Other income
5
Investment income
6
Total income before endowments
and donations
Donations and endowments
7
Total Income
Expenditure
Staff costs
8
Other operating expenses
11
Depreciation
12
Interest and other finance costs
10
Total Expenditure
Deficit before other gains or losses		 Year ended 31 July 2021
Year ended 31 July 2020
Consolidated
University
Consolidated
University
£’000
£’000
£’000
£’000
98,173
98,173
93,797
93,797
10,584
10,584
9,819
9,819
1,870
1,870
1,699
1,699
11,763
11,862
14,072
14,797
311
311
358
357
122,701
122,800
119,745
120,469
18
18
9
9
122,719
122,818
119,754
120,478
82,230
82,222
81,028
81,028
38,819
38,747
36,136
36,432
5,039
5,039
4,946
4,946
2,265
2,265
2,254
2,254
128,353
128,273
124,364
124,660
(5,634)
(5,455)
(4,610)
(4,182)

Page 27 of 58

Consolidated and University Statement of Comprehensive Income and Expenditure (continued) Year ended 31 July 2021

Notes
Loss on changes in fair value of
investment properties
12
Deficit for the year
Actuarial loss in respect of pension
schemes
24
Total comprehensive income for
the year
Represented by
Endowment comprehensive income
for the year
Unrestricted comprehensive income
for the year
Attributable to the University
Deficit for the year attributable to:*
University		 Year ended 31 July 2021
Year ended 31 July 2020
Consolidated
University
Consolidated
University
£’000
£’000
£’000
£’000
(59)
(59)
(422)
(422)
(5,693)
(5,514)
(5,032)
(4,604)
(11,092)
(11,092)
(20,513)
(20,513)
(16,785)
(16,606)
(25,545)
(25,117)
18
18
5
5
(16,803)
(16,624)
(25,550)
(25,122)
(16,785)
(16,606)
(25,545)
(25,117)
(5,693)
(5,514)
(5,032)
(4,604)

All items of income and expenditure relate to continuing activities

Page 28 of 58

Consolidated and University Statement of changes in Reserves

Year ended 31 July 2021

Consolidated
Balance at 1 August 2019
Surplus from the statement of comprehensive
income and expenditure
Other comprehensive income
Release of restricted funds spent in year
Total comprehensive income for the year
Balance at 1 August 2020
Surplus from the statement of comprehensive
income and expenditure
Other comprehensive income
Release of restricted funds spent in year
Total comprehensive income for the year
Balance at 31 July 2021		 Income and Expenditure
Account
Endowment
Unrestricted
£’000
£’000
400
69,688
9
(5,041)
-
(20,513)
(4)
4
5
(25,550)
405
44,138
18
(5,711)
-
(11,092)
-
-
18
(16,803)
423
27,335		 Total
£’000
70,088
(5,032)
(20,513)
-
(25,545)
44,543
(5,693)
(11,092)
-
(16,785)
27,758

Page 29 of 58

Consolidated and University Statement of changes in Reserves (continued) Year ended 31 July 2021

University
Balance at 1 August 2019
Surplus from the statement of comprehensive
income and expenditure
Other comprehensive income
Release of restricted funds spent in year
Total comprehensive income for the year
Balance at 1 August 2020
Surplus from the statement of comprehensive
income and expenditure
Other comprehensive income
Release of restricted funds spent in year
Total comprehensive income for the year
Balance at 31 July 2021		 Income and Expenditure
Account
Endowment
Unrestricted
£’000
£’000
400
68,520
9
(4,613)
(20,513)
(4)
4
5
(25,122)
405
43,398
18
(5,532)
-
(11,092)
-
-
18
(16,624)
423
26,774		 Total
£’000
68,920
(4,604)
(20,513)
-
(25,117)
43,803
(5,514)
(11,092)
-
(16,606)
27,197

Page 30 of 58

Consolidated and University Balance Sheets Year ended 31 July 2021

Notes
Fixed assets
12
Investment properties
12
Current assets
Stock
13
Trade and other receivables
14
Investments
15
Cash and cash equivalents
21
Less: Creditors: amounts
falling due within one year
16
Net current assets
Total assets less current
liabilities
Creditors: amounts falling due
after more than one year
17
Provisions
Provisions for liabilities
18
Net assets
Restricted Reserves
Income and expenditure
reserve - endowment reserve
19
Unrestricted Reserves
Income and expenditure
reserve - unrestricted
Total Reserves		 As at 31 July 2021
Consolidated
University
£’000
£’000
118,313
118,313
9,004

9,004
107
107
9,403
9,234
8,000
8,000
30,598

29,864
48,108
47,205
(28,333)
(27,991)
19,775
19,214
147,092
146,531
(48,189)
(48,189)
(71,145)
(71,145)
27,758
27,197
423
423
27,335
26,774
27,758
27,197		 As at 31 July 2020
Consolidated
University
£’000
£’000
118,792
118,792
9,063
9,063
79
79
7,547
7,584
20,101
20,101
18,457
17,196
46,184
44,960
(23,669)
(23,185)
22,515
21,775
150,370
149,630
(51,000)
(51,000)
(54,827)
(54,827)
44,543
43,803
405
405
44,138
43,398
44,543
43,803		 As at 31 July 2020
Consolidated
University
£’000
£’000
118,792
118,792
9,063
9,063
79
79
7,547
7,584
20,101
20,101
18,457
17,196
46,184
44,960
(23,669)
(23,185)
22,515
21,775
150,370
149,630
(51,000)
(51,000)
(54,827)
(54,827)
44,543
43,803
405
405
44,138
43,398
44,543
43,803
44,960
(23,185)
21,775
149,630
(51,000)
(54,827)
43,803
405
43,398
43,803

The financial statements were approved by the University Council on 15[th] February 2022 and were signed on its behalf on that date by:

Professor E.A. Simmons, Vice-Chancellor

Canon Dr J. Turnbull, President of the Council

Page 31 of 58

Consolidated Cash Flow Statement

Year ended 31 July 2021

Notes
Cash flow from operating activities
Deficit for the year
Adjustment for non-cash items
Depreciation
12
Loss on investments
12
Increase in stock
13
(Increase)/Decrease in debtors
14
Increase/(Decrease) in creditors
16
Increase in pension provision
24
Decrease in other provisions
18
Adjustment for investing or financing activities
Investment income
6
Interest payable
10
Endowment income
19
Capital grant income
2
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from sales of fixed assets
Capital grants receipts
New deposits
15
Investment income
6
Payments made to acquire fixed assets
12
Cash flows from financing activities
Interest paid
10
Endowment cash received
19
Repayments of amounts borrowed
17
Increase/(Decrease) in cash and cash equivalents in the year
Cash and cash equivalents at beginning of the year
21
Cash and cash equivalents at end of the year
21		 Year ended
31 July 2021
£’000
(5,693)
5,039
59
(28)
(1,856)
4,177
5,226
-
(84)
1,479
(18)
(1,065)
7,236
-
869
12,101
84
(4,560)
8,494
(1,479)
18
(2,128)
(3,589)
12,141
18,457
30,598		 Year ended
31 July 2020
£’000
(5,032)
4,946
422
(37)
206
(1,127)
4,214
(259)
(257)
1,560
(9)
(1,421)
3,206
12
603
(73)
257
(2,592)
(1,793)
(1,560)
9
(2,147)
(3,698)
(2,285)
20,742
18,457

Page 32 of 58

Statement of Accounting Policies

Year ended 31 July 2021

The following accounting policies have been applied consistently in the current and preceding years dealing with items which are considered material in relation to the University’s financial statements.

Basis of preparation

The financial statements have been prepared under the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education Institutions 2015 and in accordance with Financial Reporting Standards (FRS 102). These financial statements are prepared in accordance with the historical cost convention. They have also been prepared in accordance with the ‘carried forward’ powers and duties of previous legislation (Further and Higher Education Act 1992 and the Higher Education Act 2004) and the new powers of the Higher Education and Research Act 2017 during the transition period to 31 July 2019, the Accounts Direction issued by the Office for Students (OfS), the Terms and conditions of funding for higher education institutions issued by the Office for Students and the Terms and conditions of Research England Grant.

The University is a public benefit entity and therefore has applied the relevant public benefit requirement of the applicable UK laws and accounting standards.

Going concern

The Group and parent University’s activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report which forms part of the Report of the University Council. The Report of the University Council also describes the financial position of the Institution, its cash flows, liquidity position and borrowing facilities.

The financial statements have been prepared on a going concern basis which the Council consider to be appropriate for the following reasons.

The University recorded a deficit of £5.6m before other gains and losses, but a positive operating cashflow helped ensure the University ended the year with cash and cash equivalents of £30.1m, and investments of £8.0. The budget for 2021-22 is for a consecutive deficit, forward cash forecasts demonstrate adequate availability of financial resources. These deficits mean that the University was not compliant with some existing loan covenants for 2021 and 2022, however agreement has been reached with lenders to amend these covenants to ensure that the University remains compliant.

The Council have prepared cash flow forecasts for a period of 12 months from the date of approval of these financial statements. We have sensitised our forecasts to assess the impact of potential falls in student numbers and potential cost increases and are satisfied that the University has sufficient headroom in its cash flow projections to withstand the impact of reasonably possible downside scenarios during the 12 months following the date of approval of the financial statements. After reviewing these forecasts the Council is of the opinion that, taking account of severe but plausible downsides, including the anticipated impact of COVID-19 the Group and parent University will have sufficient funds to meet their liabilities as they fall due over the period of 12 months from the date of approval of the financial statements (the going concern assessment period). The Report of the University Council provides more information on going concern on page 14.

Consequently, the Council is confident that the Group and parent University will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis

Basis of consolidation

The consolidated financial statements include the University and all of its subsidiaries for the financial year to 31 July 2021. Intra group sales and profits are eliminated on consolidation.

The consolidated financial statements do not include those of the Students’ Union because the University does not control these activities.

Page 33 of 58

Statement of Accounting Policies (continued)

Year ended 31 July 2021

Cash flow statement

As permitted by Section 7, paragraphs 1.11 and 1.12 of FRS 102 ‘Statements of Cash Flows’, the University’s cash flow statement has not been included in these financial statements.

Recognition of income

Funding council block grants are accounted for in the year to which they relate.

Fee income is stated gross and credited to the Statement of Comprehensive Income and Expenditure account over the period in which the students are studying. Where the amount of the tuition fee is reduced, income receivable is shown net of the discount. Bursaries and scholarships are accounted for gross as expenditure and included within operating income.

Recurrent income from government grants, contracts and other services rendered are 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.

Recurrent income from non-government grants are accounted for under the performance model, and the grant is recognised as and when performance conditions are met.

Government grants received in respect of the acquisition or construction of fixed assets are treated as deferred capital grants under the accruals model. The grants are credited to deferred capital grants and an annual transfer made to the Statement of Comprehensive 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.

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

Fixed assets and depreciation

A fixed asset is capitalised at cost where the expenditure exceeds £10,000. Assets are depreciated over their useful lives on a straight line basis as follows:

Freehold buildings - 2% pa on cost Plant and machinery - 25% pa on cost Computer equipment - 33% pa on cost

Land is capitalised at cost and is not depreciated.

Investment Properties

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

Intangible assets – research and development

Research expenditure is written off as incurred. Development expenditure is also written off, except where the directors are satisfied as to the technical, commercial and financial viability of individual projects. In such cases, the identifiable expenditure is capitalised as an intangible asset and amortised over the period during which the Group is expected to benefit. This period is between three and five years. Provision is made for any impairment.

Page 34 of 58

Statement of Accounting Policies (continued) Year ended 31 July 2021

Maintenance

The University has a five-year planned maintenance programme which is reviewed on an annual basis. Actual expenditure on routine and planned maintenance is charged to the Statement of Comprehensive Income and Expenditure in the year it is incurred.

Stocks

Stocks are stated at the lower of cost and net realisable value.

Provisions

Provisions are recognised when the University has a 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.

Pension schemes

The two principal pension schemes for the University’s staff are the Cheshire Pension Fund and the Teachers’ Pension Scheme. Pension costs are assessed on the latest actuarial valuations of the schemes and are accounted for on the basis of FRS 102 Section 28. The Cheshire Pension Fund has a full valuation every three years (last valued at March 2019) carried out by professionally qualified independent actuaries and the Teachers’ Pension Scheme is assessed every five years (last valued at March 2016).

The Cheshire Pension Fund is a funded, defined benefit scheme with the assets of the scheme held separately from those of the Group in separate trustee administered funds. Assets are included in the valuation at market value, and scheme liabilities are measured on an actuarial basis using the projected unit method; these liabilities are discounted at the current rate of return on AA rated corporate bonds. The post-retirement benefit surplus or deficit is included on the University’s balance sheet. Surpluses are included only to the extent that they are recoverable through reduced contributions in the future or through refunds from the schemes. The current service cost and any past service costs are included in the Statement of Comprehensive Income and Expenditure account within operating expenses and the expected return on the scheme’s assets, net of the impact of the unwinding of the discount on scheme liabilities, is included within other finance income. Actuarial gains and losses, including differences between the expected and actual return on scheme assets, are recognised in the statement of total recognised gains and losses.

The Teachers’ Pension Scheme is an unfunded, defined benefit multi-employer scheme. Because of the mutual nature of the scheme, the scheme’s assets are not hypothecated to individual institutions and scheme-wide contribution rates are set. The University is therefore exposed to actuarial risks associated with other institutions’ employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis. Therefore, as required by FRS 102 Section 28 this scheme is accounted for as if it is a defined contribution scheme. As a result, the amount charged to the Statement of Comprehensive Income and Expenditure account represents the contributions payable to the scheme in respect of the accounting year.

Employment benefits

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

Page 35 of 58

Statement of Accounting Policies (continued)

Year ended 31 July 2021

Leases

Where the University enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a ‘finance lease’. The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated over its estimated useful life or the term of the lease, whichever is shorter. Future instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned between the finance element, which is charged to the profit and loss account, and the capital element which reduces the outstanding obligation for future instalments.

All other leases are accounted for as ‘operating leases’ and the rental charges are charged to the Statement of Comprehensive Income and Expenditure on a straight line basis over the life of the lease.

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 in cash.

Liquid resources represent assets held that are readily disposable. They comprise term deposits held as part of the University’s treasury management activities.

Taxation

The University is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable company for UK corporation tax purposes. Accordingly, the University is potentially exempt from taxation in respect of income or capital gains received within categories covered by Chapter 3 Part 11 Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes. Subsidiary companies are liable to corporation tax.

The University is partially exempt in respect of Value Added Tax, so that it can only recover a minor element of VAT charged on its inputs. Irrecoverable VAT on inputs is included in the costs of such inputs and added to the cost of tangible fixed assets as appropriate, where the inputs themselves are tangible fixed assets by nature.

Endowment assets

Endowment assets are carried at market value. Appreciation/depreciation in the market value of endowment assets and any gain or loss on disposal is added to or subtracted from the endowment funds concerned and is not brought into the Statement of Comprehensive Income and Expenditure account, but reported through the statement of total recognised gains and losses.

Financial instruments

Financial assets and financial liabilities are recognised when the University becomes a party to the contractual provisions of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the University after deducting all of its liabilities.

All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction.

Page 36 of 58

Statement of Accounting Policies (continued)

Year ended 31 July 2021

Financial instruments (continued)

If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Financial assets and liabilities are only offset in the balance sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the University intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Derivatives

Derivatives are held on the balance sheet at fair value with movements in fair value recorded in the Surplus or Deficit.

Significant estimates and judgements

Preparation of financial statements require significant estimates and judgements for which management relies of appropriate professional advice. The estimates and judgements that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are:

a. Pension liabilities

The University participates in the Cheshire Pension Fund which is a defined benefit scheme. The present value of the University obligations depend on a number of factors including life expectancy, salary increases, asset valuations, liability periods and discount rates on corporate bonds. A qualified actuary estimate these values so management can determine net pension obligations in the balance sheet.

Asset values are reported using estimated asset allocations prepared by the scheme Actuary. This asset value is calculated at each triennial valuation. Thereafter it is rolled forward for accounting valuation purposes using investment returns, contributions received, and benefits paid out. During each annual reporting period between triennial valuations asset returns are estimated using 11 months of market experience and one month of extrapolation being assumed. However, for the year ended 31 July 2021 the pension valuation was calculated using asset returns as at that date. The difference in asset values using the actual asset return data compared to estimated was £159k

Details of the assumptions used, and associated sensitivities, are included in note 24.

b. Investment properties

These properties are located at Thornton Science Park. In June 2018, the Planning Committee of Cheshire West and Cheshire Council (CWaC) elected to reject a retrospective planning permission seeking a change of use to Class D1 (non-residential institutions) for certain elements of the site. An appeal against this decision was not successful and as such, the University will cease teaching on the site from March 2021. The University will continue to operate the site for research, and maintain investment properties. Staff will also continue to have offices on the site.

Despite this, the decision does create some future uncertainty around future marketability of the properties which may impact fair value which cannot be quantified. Therefore the fair value of investment property is determined by management upon receipt of a report by a registered valuer on the properties in question on the basis of continual use.

Page 37 of 58

Notes to the Financial Statements

Year ended 31 July 2021

1
Tuition Fees and Education Contracts
Full-time home and EU students
Full-time international students
Part-time students
Education Contracts
Other Fees and Support Grants
2
Funding Body Grants



Recurrent Grant
Office for Students
UKRI
DFE
Capital grant
Specific Grants
OfS DHSC Covid Testing
Higher Education Academic Subject Centres
Higher Education Innovation Fund
Uni Connect (formerly NCOP Higher
Horizons Project)
Uni Connect Shaping Futures
3Details of Grant and Fee Income
Grant income from Office for Students
Grant income from other bodies
Fee income for taught awards
Fee income for research awards
Fee income for non-qualifying courses
Total grant and fee income		 Year Ended 31 July 2021
Year Ended 31 July 2020
Consolidated
University
Consolidated
University
£’000
£’000
£’000
£’000
77,306
77,306
75,515
75,515
12,519
12,519
8,960
8,960
3,916
3,916
3,141
3,141
2,027
2,027
3,668
3,668
2,405
2,405
2,513
2,513
98,173
98,173
93,797
93,797
5,811
5,811
6,774
6,774
1,587
1,587
354
354
248
248
1,065
1,065
1,421
1,421
187
187
-
-
-
-
106
106
1,219
1,219
948
948
338
338
322
322
23
23
-
-
10,584
10,584
9,819
9,819
5,998
5,998
5,400
5,400
4,586
4,586
4,419
4,419
93,691
93,691
88,818
88,818
911
911
1,176
1,176
3,571
3,571
3,803
3,803
108,757
108,757
103,616
103,616

Page 38 of 58

Notes to the Financial Statements (continued)

Year ended 31 July 2021

Notes
4
Research Grants and Contracts
Research councils
Research charities
Government (UK and overseas)
Industry and commerce
Other
5
Other income
Residences, catering and
conferences
Other income		 Year Ended 31 July 2021
Year Ended 31 July 2020
Consolidated
University
Consolidated
University
£’000
£’000
£’000
£’000
310
310
156
156
450
450
534
534
326
326
303
303
35
35
241
241
749
749
465
465
1,870
1,870
1,699
1,699
3,083
3,141
5,724
5,329
8,680
8,721
8,348
9,468
11,763
11,862
14,072
14,797

Other income relates to European grants, rental income and other income (e.g. nurseries, fitness centres).

6 Investment income

Investment income on endowments
19
Other investment income

Movement in fair value of
derivatives
17

7
Donations and endowments
New endowments
19
8
Staff costs
Salaries
Social security costs
Other pension costs
Total		 2
2
82
82
227
227
311
311
18
18
59,834
59,826
6,035
6,035
16,361
16,361
82,230
82,222		 2
2
255
254
101
101
358
357
9
9
59,914
59,914
6,085
6,085
15,029
15,029
81,028
81,028

Page 39 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

8 Staff Costs (continued)

Emoluments of the Head of Institution

The emoluments below relate to Professor T.J. Wheeler, who was Vice Chancellor for the period to 31 December 2019, and to Professor E.A. Simmons who was Vice Chancellor from 1 January 2020.

Professor T.J. Wheeler 1 August 2019 to 31 December 2019:
Salary
Benefits
Other Remuneration – Expenses		 2021
2020
£’000
£’000
-
118
-
1
-
1
-
120

In addition to the emoluments above, Professor Wheeler received salary as Professor Emeritus for the period from 1 January 2020 to 31 July 2020 of £164,500, and benefits of £1,208. The arrangements were the subject of advice from the Senior Salaries Committee at a meeting on 11th July 2019 and approved by the University Council on 19th November 2019.

Professor E.A. Simmons 1 January 2020 to 31 July 2020:
Salary
Benefits
Other Remuneration – Pension & Expenses
Head of Institution Median Pay Ratios:
Professor T.J. Wheeler 1 August 2019 to 31 December 2019:
Basic Salary Ratio
Total Remuneration Ratio
Professor E.A. Simmons 1 January 2020 to 31 July 2021:
Basic Salary Ratio
Median Total Remuneration all staff		 2021
2020
£’000
£’000
250
146
-
0
59
35
309
181
2021
2020
-
8.3
-
8.3
2021
2020
7.2
7.3
8.0
7.3

The justification for the Head of Institution pay can be found on page 18.

Page 40 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

8 Staff Costs (continued)

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

£100,000 to £104,999
£105,000 to £109,999
£110,000 to £114,999
£115,000 to £119,999
£120,000 to £124,999
£125,000 to £129,999
£130,000 to £134,999
£135,000 to £139,999
£140,000 to £144,999
£145,000 to £149,999
£150,000 to £154,999
£155,000 to £159,999
£160,000 to £164,999
ompensation paid to key management personnel		 2021
2020
1
1
1
2
-
-
-
-
-
-
1
1
1
-
-
-
-
2
-
-
1
1
1
1
1
-
7
8
1,256
1,553

Total Compensation paid to key management personnel

Key Management personnel consist of 10 individuals that make up the Strategic Executive Team. Compensation consists of salary, bonus, employer’s national insurance and employer’s pension contribution.

Average staff numbers by major category:
Academic Departments
Academic Services
Administration/Central Services
Premises
Catering and Residence
Nursing		 2021
2020
589
589
130
139
426
441
191
199
74
79
155
148
1,565
1,595

Compensation for loss of office

38 payments were made in respect of compensation for loss of office during the year totalling £499k

Council Members

Reimbursements to members of University Council for expenditure incurred in attending Council and meetings of its committees amounted to £80 (2020: £299). Council members did not receive any remuneration from the University.

Page 41 of 58

Notes to the Financial Statements (continued)

Year ended 31 July 2021

Notes
9
Access & Participation
Access Investment
Financial Support
1
Disability Support
Research and evaluation (i)		 Year Ended 31 July 2021
Consolidated
University
£’000
£’000
719
719
1,890
1,890
957
957
258
258
3,824
3,824		 Year Ended 31 July 2020
Consolidated
University
£’000
£’000
710
710
1,978
1,978
786
786
245
245
3,719
3,719

(i) £1,543k of these costs are already included in the overall staff costs figures included in the financial statements, see note 8

The University of Chester’s Access and Participation plan can be found here: https://www1.chester.ac.uk/undergraduate/widening-participation/access-and-participation-plan

10 Interest and other finance costs

Loan interest
1,479
1,479
Net charge on pension
scheme
24
786
786
2,265
2,265
Analysis of other operating expenses by activity
Academic and related
expenditure
13,804
13,804
Administration and central
services
7,226
7,226
Premises (including service
concession cost)
15,726
15,726
Residences, catering and
conferences
592
590
Research grants and
contracts
841
841
Other expenses
630
560
38,819
38,747
Other operating expenses
include:
External auditor’s
remuneration in respect of
audit services
84
65
External auditor’s
remuneration in respect of
non-audit services
38
31
Operating lease rentals:
vehicles
215
215		 1,560
1,560
694
694
2,254
2,254
11,980
11,987
8,582
8,592
12,526
12,526
2,264
2,230
250
250
534
847
36,136
36,432
81
63
21
13
132
132

11 Analysis of other operating expenses by activity

Page 42 of 58

Notes to the Financial Statements (continued)

Year ended 31 July 2021

12
Fixed Assets
Consolidated
Cost
At 1 August 2020
Additions
Disposals
At 31 July 2021
Depreciation
At 1 August 2020
Charge for the year
Disposal
At 31 July 2021
Net book value
At 31 July 2021
As 31 July 2020
University
Cost and Valuation
At 1 August 2020
Additions
Disposals
At 31 July 2021
Depreciation
At 1 August 2020
Charge for the year
Disposal
At 31 July 2021
Net book value
At 31 July 2021
At 31 July 2020		 Freehold
Land and
Buildings
£’000
145,668
2,738
-
148,406
30,065
2,829
-
32,894
115,512
115,603
145,668
2,738
-
148,406
30,065
2,829
32,894
115,512
115,603		 Plant and
Machinery
£’000
26,473
1132
(627)
26,978
24,308
1351
(627)
25,032
1,946
2,165
26,473
1132
(627)
26,978
24,308
1351
(627)
25,032
1,946
2,165		 Computer
Equipment
£’000
9,278
690
-
9,968
8,254
859
-
9,113
855
1,024
9,278
690
-
9,968
8,254
859
9,113
855
1,024		 Total
£’000
181,419
4,560
(627)
185,352
62,627
5,039
(627)
67,039
118,313
118,792
181,419
4,560
(627)
185,352
62,627
5,039
(627)
67,039
118,313
118,792

At 31 July 2021, freehold land and buildings included £7.8m (2020 - £7.8m) in respect of freehold land and is not depreciated.

Page 43 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

12 Fixed Assets (continued)

Investment properties

Consolidated and University
At 1 August 2019
Additions
Loss on change in fair value
At 31 July 2020
Additions
Loss on change in fair value
At 31 July 2021		 Investment
Properties
£’000
9,485
(422)
9,063
-
(59)
9,004

The investment properties are at Thornton Science Park. An overage deed is in place on these properties until 20[th] March 2034. Under the terms of this overage deed, if the University disposes of these properties then 50% (40% from 31st March 2024) of the market value is payable to the former owners, Shell Research Limited.

The non-current investments have been valued at market value

13
Stock
General consumables
14
Trade and other receivables
Amounts falling due within one year:
Trade receivables
Other receivables
Prepayments and accrued income
Amounts due from subsidiary
companies		 Year ended 31 July 2021
Consolidated
University
£'000

£'000
107
107
5,254
4,988
35
34
4,114
3,800
-
412
9,403
9,234		 Year ended 31
Consolidated
£'000
79
4,185
38
3,324
-
7,547		 July 2020
University
£'000
79
3,556
38
3,289
701
7,584

Page 44 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

15 Current Investments



Short term deposits		 Year ended 31
Consolidated
£'000
8,000		 July 2021
University
£'000
8,000		 Year ended 31 July 2020
Consolidated
University
£'000
£'000
20,101
20,101

Deposits are held with banks and building societies operating in the London market and licensed by the Financial Services Authority with more than three months maturity at the balance sheet date. The interest rates for these deposits are fixed for the duration of the deposit at time of placement.

At 31 July 2021 the weighted average interest rate of these deposits was 0.5% per annum. The deposits are in accounts that require notice. The weighted average period of notice was 125 days. The fair value of these deposits was not materially different from the book value.

16 Creditors: amounts falling due within one year

Secured loans*
Unsecured loans
Trade payables
Social security and other
taxation payable
Accruals and deferred income
Amounts due to subsidiary
companies		 Year ended 31 July 2021

Consolidated

University
£'000

£'000
836
836
1,326
1,326
5,132
5,005
1,650
1,480
19,389
19,299
-
45
28,333
27,991		 Year ended 31 July 2020
Consolidated
University
£'000
£'000
819
819
1,309
1,309
4,356
4,347
1,588
1,398
15,597
15,257
-
55
23,669
23,185		 Year ended 31 July 2020
Consolidated
University
£'000
£'000
819
819
1,309
1,309
4,356
4,347
1,588
1,398
15,597
15,257
-
55
23,669
23,185
23,185

17 Creditors: amounts falling due after more than one year

Deferred income
Derivatives
Secured loans
Unsecured loans		 21,364
477
6,129
20,219
48,189		 21,364
477
6,129
20,219
48,189		 21,786
704
6,965
21,545
51,000		 21,786
704
6,965
21,545
51,000

Page 45 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

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

Analysis of secured and unsecured loans:

Due within one year or on
demand (Note 14)
Due between one and two
years
Due between two and five
years
Due in five years or more
Due after more than one
year
Total secured and
unsecured loans
Secured loans repayable by
2031
Unsecured loans repayable by
2038		 Year ended 31 July 2021

Consolidated
University
£'000
£'000
2,162
2,162
2.202
2,202
7,400
7,400
16,746
16,746
26.348
26,348
28,510
28,510
6,965
6,965
21,545
21,545
28,510
28,510		 Year ended 31 July 2020
Consolidated
University
£'000
£'000
2,128
2,128
2,162
2,162
6,729
6,729
19,618
19,618
28,509
28,509
30,637
30,637
7,784
7,784
22,853
22,853
30,637
30,637		 Year ended 31 July 2020
Consolidated
University
£'000
£'000
2,128
2,128
2,162
2,162
6,729
6,729
19,618
19,618
28,509
28,509
30,637
30,637
7,784
7,784
22,853
22,853
30,637
30,637
28,509
30,637
7,784
22,853
30,637

The secured loans were all repaid during the year. Refinancing followed at a lower amount. Included in loans are the following:

Lender

Barclays
Barclays
Barclays
Barclays
Lloyds TSB
Santander
Santander
TOTAL		 Amount

Term

Interest rate

Borrower
£'000



%


1,969
2026
7.31
University
1,200
2028
6.68
University
1,181
2031
1.51
University
3,814
2031
7.12
University
6,959
2034
5.55
University
9,247
2037
5.43
University
4,140
2038
1.82
University
28,510

Page 46 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

18 Provisions for Liabilities

Consolidated
At 1 August 2020
Utilised in year
Additions in year
At 31 July 2021
University


At 1 August 2020
Utilised in year
Additions in year
At 31 July 2021		 Pension
enhancements
on termination

£'000
431
(41)
-
390
Pension
enhancement
on termination

£'000
431
(41)
-
390		 Pension scheme
provision under
FRS 102 (Note 24)
£'000
54,396
-
16,359
70,755
Pension scheme
provision under
FRS 102 (Note 24)
£'000
54,396
-
16,359
70,755		 Total
Provisions
£'000
54,827
(41)
16,359
71,145
Total
Provisions
£'000
54,827
(41)
16,359
71,145

The Pension enhancement on termination provision relates to enhancements given to staff taking early retirement under a reorganisation programme. It is expected that this provision will be fully utilised over the next 10-20 years.

The pension scheme provision relates to the Cheshire Pension Fund, a funded defined benefit scheme with the assets of the scheme held separately from those of the Group in separate trustee administered funds. The provision is the deficit on the post-retirement benefits in excess of those assets.

Pension enhancement

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

Consolidated Consolidated
2021 2020
Discount rate 2.0% 2.0%
Inflation 2.0% 2.2%

Page 47 of 58

Notes to the Financial Statements (continued)

Year ended 31 July 2021

19 Endowment Reserves

Restricted net assets relating to endowments are as follows:

Balances at 1 August 2020
Capital
Accumulated income
New Endowments
Investment Income
Expenditure
(Decrease) / increase in market value of
investments
Total endowment Comprehensive
income for the year
At 31 July 2021
Represented by:
Capital
Accumulated income
Analysis by type of purpose:
Prize funds
General
Analysis by asset
Cash & cash equivalents		 Restricted
permanent
endowments
£'000
130
-
130
130
130
-
130
-
130
130		 Expendable
endowments
£'000
252
23
275
18
2
(2)
-
18
293
270
23
293
239
54
293		 2021
2020
Total
Total
£'000
£'000
382
373
23
27
405
400
18
9
2
2
(2)
(6)
-
18
5
423
405
400
382
23
23
423
405
239
239
184
166
423
405
423
405

Page 48 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

The endowments received during the year relate to expendable donations received from Alumni (£3k) and Chester TWIN (£15k)


(£15k)
Financial Instruments Year ended 31 July 2021 Year ended 31 July 2020
Financial Liabilities
Derivatives 477 477 704 704

20 Financial Instruments

The University uses derivatives to hedge interest rate exposure on some of its secured loans.

The Financial liabilities are at fair value through Statement of Comprehensive Income at the balance sheet date.

21 Cash and Cash Equivalents

21
Cash and Cash Equivalents
Notes
Consolidated
Cash and cash equivalents
22
Lease Obligations
Total rentals payable under operating leases:
Payable during the year
Future minimum lease payments due:
Not later than 1 year
Later than 1 year and not later than 5 years
Total lease payments due
Lease obligations relate to vehicle leases.		 At 1st August
2020
Cash
Flows
£'000
£'000
18,457
12,141
31 July 2021
Other leases
Total
£'000
£'000
145
145
242
242
387
387		 At 31st July
2021
£'000
30,598
31 July 2020
Total
£'000
79
190
269

Page 49 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

23 Subsidiary Undertakings

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

Company Principal Activity Status
Chester Conferences Ltd Management of conference and
related commercial facilities 100% owned
Universities Economic Development Management of European Grant
Unit Ltd funding 100% owned
Thornton Research Properties Management of Thornton Science 100% owned
Park

The registered office for the University and its subsidiary companies is:

C/O Vice-Chancellor University of Chester Parkgate Road Chester CH1 4BJ

24 Pension Schemes

Contributions to the schemes are charged to the Income and Expenditure account so as to spread the cost of the pensions over the employees’ working lives with the University of Chester. The pension charge for the year was £16,361,571 (2020: £15,029,231) which includes £40,242 (2020: £48,477) in respect of enhanced pension entitlements of staff taking early retirement under the reorganisation programme. The calculation of the cost of early retirement provisions charged to the Statement of Comprehensive Income and Expenditure account in the year of retirement is based on the total capital cost of providing enhanced pensions with allowance for future investment returns at 4% in excess of price inflation.

An amount of £389.660 (2020: £431,394) is included in provisions for liabilities and charges representing the extent to which the capital cost charged exceeds actual payments made. The provision will be released against the cost to the University of enhanced pension entitlements over the estimated life expectancy of each relevant employee. Were the institution to close and there be no successor established, the Secretary of State would become the compensating authority.

Page 50 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

24 Pension Schemes (continued)

Teachers’ Pension Scheme

The Teachers’ Pension Scheme is an unfunded defined benefit scheme. Contributions on a pay as you go basis are credited to the exchequer under arrangements governed by the Superannuation Act 1972. The total contribution for the year ended 31 July 2021 was £9,662,834(2020: £9,483,994) of which the employers’ contributions totalled £6,819,740_(2020: £6,628,498) and the employees’ contributions totalled £2,843,834(2020: £2,855,496). The pensions cost is assessed every five years in accordance with the advice of the government actuary. The assumptions and other data that have the most significant effect on the determination of the contribution levels are as follows:

Latest actuarial valuations 31 March 2016
Actuarial method Prospective Benefits
Investment returns per annum 2.9%
Salary scale increases per annum 4.2 %
Market value of assets at date of last valuation £196.1bn
Proportion of members' accrued benefits covered by the actuarial
value of the assets 90%

Following the implementation of Teachers’ Pensions (Employers’ Supplementary Contributions) Regulations 2000, the government actuary carried out a further review on the level of employers’ contributions. The employer were paid at the rate of 23.68%. Employee contribution rates are dependent on salary levels and were in bandings between 7.4% -11.7%.

The TPS is a multi-employer scheme where the share of assets and liabilities applicable to each employer is not identified. The University accounts for its pension costs on a defined contribution basis as permitted by FRS 102 Section 28.

Cheshire Pension Fund

The University participates in the Cheshire Pension Fund, which is a funded defined benefit pension scheme where contributions payable are held in a trust separately from the University. The total contribution made for the 12 months ended 31 July 2021 was £5,994,052 (2020: £5,879,576) of which the employers’ contributions totalled £4,728,154 (2020: £4,584,662) and employees contributions totalled £1,265,898 (2020: £1,294,914). The agreed contribution rates for future years are 24.7% for employers and in bandings 5.5%-12.5% for employees depending on the level of their salary.

Valuation date 31 March 2019
Valuation Method Projected Unit Method
Value of notional needs £115 Million
Funding level of accrued benefits 98.4%
Investment return per annum 3.20%
Salary scale increases per annum 2.90%

Page 51 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

24 Pension Schemes (continued)

The following information is based upon a full actuarial valuation of the fund as at 31 March 2019 updated to July 2021 by a qualified independent actuary.

31 July 31 July 31 July
2021 2020 2019
% % %
Inflation 3.2 3.1 3.5
Rate of increases in salaries 3.5 2.8 2.7
Rate of increase in pensions 2.8 2.1 2.4
Discount rate for liabilities 1.6 1.4 2.2

The current mortality assumptions include sufficient allowance for future improvements in mortality rates. The assumed life expectations on retirement age at 65 are:

31 July 31 July
2021 2020
% %
Retiring today
Males 21.4 21.2
Females 24.0 23.6
Retiring in 20 years
Males 22.4 21.9
Females 25.7 25.0

The expected return on assets is based on the long-term future expected investment return for each asset class at the beginning of the year. The University’s share of assets in the scheme were:

Equities
Bonds
Property
Cash
Total market value of assets		 31 July
2021
£’000
69,733
65,185
15,159
1,516
151,593		 31 July
2020
£’000
56,257
54,949
13,083
6,542
130,831

Page 52 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

24 Pension Schemes (continued)

The above asset values as at 31 July 2021 are at bid value as required under FRS 102 Section 28:

University's estimated asset share
Present value of scheme liabilities
Deficit in the scheme		 2021
£’000
151,593
(222,348)
(70,755)		 2020
£’000
130,831
(185,227)
(54,396)

Under FRS 102 Section 28, provision has been made by the University for the institution’s share of the deficit in the scheme.

Analysis of amount (charged)/credited to the Statement of Comprehensive Income and Expenditure account

The University’s pension charge for the year in accordance with FRS 102 Section 28 is made up of the following:

Service cost
Analysis of net return on pension scheme
Expected return on pension scheme assets
Impact on pension scheme liabilities
Net charge
Amounts recognised in Other Comprehensive Income
Actuarial loss– defined benefit obligations
Actuarial gain– fair value of employer assets
Actuarial loss		 2021
£’000
9,242
9,242
2021
£’000
1,864
(2,650)
(786)
2021
£’000
(26,059)
14,967
(11,092)		 2020
£’000
8,211
8,211
2020
£’000
2,671
(3,365)
(694)
2020
£’000
(25,572)
5,059
(20,513)

Page 53 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

24 Pension Schemes (continued)

The cumulative amount of actuarial gains and losses recognised in the Statement of Comprehensive Income and Expenditure since the adoption of FRS 102 Section 28 is £3.9 million (2019: £12.3 million).

Deficit in scheme at beginning of year
Movement in year:
Current service charge
Employer contributions
Net charge on assets
Actuarial loss
Net deficit
Liabilities at start of year
Service cost
Interest cost
Employee contributions
Actuarial loss
Benefits paid
Liabilities at end of year
Assets at start of year
Expected return on Assets
Actuarial gain
Employer contributions
Employee contributions
Benefits paid
Assets at end of year		 2021
£’000
(54,396)
(9,242)
4,761
(786)
(11,092)
(70,755)
2021
£’000
185,227
9,242
2,650
1,265
26,059
(2,095)
222,348
130,831
1,864
14,967
4,761
1,265
(2,095)
151,593		 2020
£’000
(29,564)
(8,211)
4,586
(694)
(20,513)
(54,396)
2020
£’000
148,810
8,211
3,365
1,295
25,572
(2,026)
185,227
119,246
2,671
5,059
4,586
1,295
(2,026)
130,831

The Fund Actuary has proposed a change to their standard approach to setting the CPI assumption, to take account of RPI reform. The method for calculating the RPI assumption (on which the CPI assumption is based) has been updated, resulting in a reduction in DBO of c. £11m. In addition, the difference between CPI and RPI (the RPI-CPI wedge) has been updated, resulting in an increase in DBO of c. £27m. These changes are linked and are based on pre-2030 and post-2030 rates.

Page 54 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

25 Related Party Transactions

Members of the Council are required to declare any outside interests. When an item arises in which a member has a pecuniary, business, family or other personal interest, it must be declared and the member concerned may not take part in the consideration of the matter nor vote on it. The Council has considered the financial effect of all transactions involving organisations in which a member of the Council may have an interest. It is confirmed that these are conducted at arm’s length and in accordance with the University’s Financial Regulations.

The Vice-Chancellor Professor E.A. Simmons and Mr M. Clinton were on the Governing Body of Reaseheath College. The University receives fee income from Reaseheath students, and subsequently passes 100% of this income to Reaseheath College. For the 20/21 year this was a total of £452k (19/20 £630k). The University also received £6k of other income from the College (19/20 £18k).

Professor Simmons was also a member or director of the following organisations:

The Vice-Chancellor and Deputy Vice-Chancellor, Professor Helen O’Sullivan were on the board of ADVANCED HE (previously The Higher Education Academy) – payments were made of £10,812.64

The Vice-Chancellor and Dr D. Briggs were members of Cheshire Business Leaders Ltd. – payments were made of £300.00.

Deputy Vice-Chancellor Professor Helen O’Sullivan was the chair of the board of trustees for the Association for Learning Technology – payments were made of £456.00.

Pro Vice-Chancellor Dr Helen Galbraith was an executive member of AHUA (Association of Heads of University Administration) – payments were made of £1,450.00.

Pro Vice-Chancellor Professor Neville Ford was on the board of ECC Ltd – payments were made of £7,776.00.

Cathy Bond was a Trustee of North West Cancer Research – £77,711.30 income was received.

Charles Forsdick was employed by the University of Liverpool – payments were made of £26,707.00 and £5,283.34 income was received.

Dr D. Briggs (mentioned above) is Trustee of the following organisation:

Eleanor Lewis and Jack Rankin were employed by Chester Students’ Union – payments were made of £406,035.21 and income received of £2,650.50.

Canon Dr J. Turnbull was Trustee and Clerk of:

Councillor Razia Daniels was employed by Cheshire West and Chester Council – payments were made of £28,679.74 and £76,568.19 income received.

Nick Jenkins’s wife was a governor at Glyndwr University – £52,156.00 income received (19/20 £27k)

Sandra Verity was a governor at the Kings School – £803.33 income received.

Page 55 of 58

Notes to the Financial Statements (continued)

Year ended 31 July 2021

25 Related Party Transactions (continued)

Steve Broomhead was employed by Warrington Borough Council – payments were made of £78,229.85 and £80,055.43 income was received.

Mr Broomhead was also a director with Warrington Wolves – £3,077.88 income received.

The Right Reverend the Lord Bishop of Chester, Mark Tanner and The Very Reverend Dr Tim Stratford were both members of Diocese of Chester – £24,092.41 income received

The following were also associated with Chester Cathedral Enterprises – £1,181.70 income received:

Ms E. Degg wife of Associate Professor M. Degg, is the CEO of NW Business Leadership team (mentioned above).

Page 56 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

26 US Department of Education Financial Responsibility Supplemental Schedule

In satisfaction of its obligations to facilitate students’ access to US federal financial aid, the [university] is required, by the US Department of Education, to present the following Supplemental Schedule in a prescribed format.

The amounts presented within the schedules have been:

The schedules set out how each amount disclosed has been extracted from the financial statements. As set out above, the accounting policies used in determining the amounts disclosed are not intended to and do not comply with the requirements of accounting principles generally accepted in the United States of America

Note Ref:
Line 15
Balance
Sheet
Net assets without donor
restrictions
Note 19
Net Assets with Donor restrictions
Note 25
Secured and unsecured related
party receivable
Note 25
unsecured related party receivable
Note 12
Property plant and Equipment
post implementation
Note 12
Property plant and Equipment pre-
implementation
Note 12
Property plant and Equipment post
implementation WITH debt
Note 12
Property plant and Equipment post
implementation WITHOUT debt
Note 12
Construction in progress
N/A
Lease Right of use assets, net
N/A
Lease Right of use assets, pre-
implementation
N/A
Lease Right of use assets, post
implementation
N/A
Goodwill /Intangible assets
Note 18
Post-employment and pension
liabilities
Note 17
Long term debt for long term
purposes
Note 17
Long term debt for long term
purposes
Note 17
Long term debt for long term
purposes
Note 17
Line of credit
N/A
Lease Right of use assets -
Liabilities
N/A
Lease right of use assets - liabilities
N/A
Lease right of use assets - liabilities		 Primary Reserve
Ratio:
2021
2020
Expendable net
assets:
£000
£000
£000
£000
27,335
44,138
423
405
108
12
(108)
12
118,313
118,792
(113,108)
(116,897)
-
(5,205)
(1,895)
-
-
-
-
-
71,145
54,827
28,510
30,638
Pre-implementation
32,784
32,784
Post implementation
(4,274)
(2,147)
Construction in progress
-
-
Pre-implementation
-
Post implementation
-

Page 57 of 58

Notes to the Financial Statements (continued) Year ended 31 July 2021

26 US Department of Education Financial Responsibility Supplemental Schedule (continued) US Department of Education Financial Responsibility Supplemental Schedule (continued)
N/A Annuities with Donor restrictions -
Term endowments with Donor
N/A restrictions -
Life income funds with Donor
N/A restrictions -
Net Assets with Donor
Note 19 restrictions in Perpetuity (130) (130)
Total Expenses and Losses:
2021 2020
Note 8, 10, 11,
19, 24 Cash Total operating expenses without
Flow Line 7 Donor restrictions 116,591 113,638
Note 6,12,10 Non-operating and net investment 6,207 6,148
Note 12 net investment losses (59) (422)
Note 24,
Cash Flow
Line 7 Pension related changes (16,318) (24,727)
Equity Ratio:
Modified net assets:
Line 15 Net assets without donor
Balance Sheet restrictions 27,335 44,138
Note 19 Net Assets with Donor restrictions 423 405
N/A Goodwill - Intangible assets -
Secured and unsecured related
Note 25 party receivable 108 12
Note 25 unsecured related party receivable (108) (12)
Modified assets:
Balance Sheet
Lines 1, 2 & 7 Total assets 175,425 174,039
Lease right of use asset pre
N/A implementation -
pre implementation right of use
N/A leases -
N/A Goodwill - Intangible assets -
Secured and unsecured related
Note 25 party receivable 108 12
Note 25 unsecured related party receivable (108) (12)
Net income Ratio:
Line 15 Change in net assets without Donor
Balance Sheet restrictions (16,803) (25,550)
Notes 1,2,4,5 Total Revenues and Gains 122,390 119,387

Page 58 of 58