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2008

 

 
 
UNIVERSITY OF KENT 
 
 
 

FINANCIAL STATEMENTS FOR THE YEAR TO 31 JULY 2008 
 
 
 
 
 
 
 
 
CONTENTS   
 
 
 
 
 
 
PAGE 
 
 
Membership of the Council 2007/08 
 
 
 
 
 

 
University 
Status 
and 
Mission 
     

 
Operating and Financial Review 
 
 
 
 
 
 4 - 13 
 
Corporate 
Governance 
Statement      
14 

16 
 
Statement of the Responsibilities of the University’s Council   
 
 
17 
 
Independent Auditor’s Report to the Council of the University of Kent   
  18 - 19 
 
Consolidated Income and Expenditure Account   
 
 
 
20 
 
Statement of Consolidated Total Recognised Gains and Losses   

 
21 
 
Balance 

Sheets 
 
     
22 

23 
 
Consolidated 
Cash 
Flow 
Statement 
     
24 
 
Statement of Principal Accounting Policies  
 
 
 
  25 - 29 
 
Notes to the Accounts  
     
30 

52 
 
        FINANCIAL STATEMENTS 2007/08 1 

 
MEMBERSHIP OF THE COUNCIL 2007/08 
 
 
Chair of the Council: 
 
 
Valerie Marshall 
 
Deputy Chair of the Council/ 
Chair of the Finance and Resources Committee:  
John Simmonds 
Chancellor:  
 
 
 
Sir Robert Worcester 
Vice-Chancellor:  
 
 
Professor Julia Goodfellow 
Senior Deputy Vice-Chancellor:    
 
David Nightingale 
President of the Students’ Union:  
 
Achike Ofodile 
 
External members: 
 
 
Judith Armitt 
   
   
Colin 
Carmichael 
   
   
Julia 
Casson 
   
   
Dr 
Eliot 
Forster 
 
 
 
 
 
Marcia Fry 
   
   
Stephen 
Grix 
   
   
Sally 
Muggeridge 
   
   
Richard 
Oldfield 
   
   
Vicky 
Pryce 
   
   
Anthony 
Quigley 
   
   
Mark 
Watts 
 
 
 
 
 
His Honour Judge Anthony Webb 
 
 
 
 
 
The Very Reverend Robert Willis 
   
   

Vacancy 
 
Staff and Student representatives: 
 
Tom Christian  
   
   
Professor 
Joanne 
Conaghan 
   
   
Dr 
Konstantinos 
Sirlantzis 
   
   
Juliet 
Thomas 
 
   
   
Michael 
Woods 
 
Total Membership: 
 
 
25 
 
Secretary of the Council:  
 
 
Karen Goffin 
 
 
The Chairs of Council committees were as follows: 
Audit Committee: 
 
 
 
Anthony Quigley 
Finance and Resources Committee: 
 
 
John Simmonds 
Lay Nominations Committee: 
 
 
 
Valerie Marshall 
Remuneration Committee: 
 
 
 
Valerie Marshall 
Safety, Health and Environment  
Executive Committee: 
 
 
 
David Mee (to 27 April 2008)/Professor 
Keith Mander (from 28 April 2008) 
Staff Policy Committee: 
 
 
 
Marcia Fry 
 
As prescribed in University Ordinance the Vice-Chancellor chairs the Joint Committee for 
Honorary Degrees, a joint committee of Senate and Council. 
 

UNIVERSITY OF KENT 

 
UNIVERSITY STATUS AND MISSION 
 
 
STATUS 
The University was incorporated by Royal Charter in 1965 and is an exempt charity within the 
meaning of the Charities Act. 
 
MISSION 
The University of Kent: 
•  Provides higher education of excellent quality 

characterised by flexibility and interdisciplinarity 

informed by research and scholarship 

meeting the lifelong needs of a diversity of students 
•  Enlarges knowledge by research 

to standards achieving international recognition 

throughout its subject range 
•  Is an intellectual and cultural focus for Kent and Medway 
•  Supports national and regional economic success 
•  Builds vigorously on its close ties within Europe and continues to develop wider 
international relationships. 
 
The main enabling activities to facilitate achievement of the Plan are: 
• Effectiveness 

Communicate effectively, internally and externally 

Provide appropriate and well-equipped teaching, learning, research and 
support space for staff and students 

Use interoperable administrative systems efficiently and effectively to support 
the University’s objectives 
• Sustainability 

Generate net income for medium- and long-term survival 

Recognise and control risk 

Adopt an ethical approach to the use of resources 
• Professionalism 

Attract and retain good staff 

Support staff to act professionally and confidently 

Ensure sound management of the University. 
 
        FINANCIAL STATEMENTS 2007/08 3 

 
OPERATING AND FINANCIAL REVIEW 
 
 
Introduction and Scope of the Financial Statements 
The Financial Statements for the year ended 31 July 2008 have been prepared on a 
consolidated basis and include all the recommendations outlined in the revised Statement of 
Recommended Practice (SORP): Accounting for Further and Higher Education effective from 1 
August 2007. All subsidiary undertakings have been consolidated but only Kent Enterprise 
Limited was trading during the current and prior financial years. As a result of new and revised 
requirements set out in the SORP, these accounts contain a prior year adjustment relating to a 
change in the accounting for certain gifts and donations that had previously been classified as 
endowments but no longer meet the definition and also a change in the required treatment of 
donated assets. Details of the prior year adjustment and the impact on the current and previous 
financial years are given in Note 15 to the Statement of Principal Accounting Policies. 
 
The University has had another successful year financially and academically, and continues to 
improve its results and facilities. Income has risen by 14% reflecting a further increase in 
student numbers and the final year of the introduction of variable fees. The University has 
exceeded its budget and generated a surplus of £5.7m. Continuing growth in teaching activity 
and strategic investment into research has meant 21% more staff have been submitted in the 
2008 Research Assessment Exercise. Despite this, and in common with all universities, the 
University faces a number of challenges in the coming years, both in terms of the need to 
continue to grow income and to contain costs at a sustainable level. Specific pressures arise 
from: 
•  The need to replace income lost following the removal of funding for students registering 
for a lower or equivalent qualification; 
•  Pay costs that have risen at rates well above inflation, as a result of the national pay 
agreement for 2006-09;  
•  Potential increases in pension costs in future years; 
•  Predicted demographics of the Home/EU population and its impact on student demand; 
•  Continuing increases in student expectations; 
•  An uncertain world economic climate and possible constraints on the availability of 
capital; 
•  Increased global competition. 
 
Financial Highlights for the Year to 31 July 2008 
•  Operating surplus of £5.7m; 
•  Residences and catering income up £3.3m largely due to successful conference activity 
and improved occupancy levels following refurbishment of study bedrooms; 
•  Effective cost control with favourable performance against budgeted expenditure; 
•  Improvement in Net Current Assets to £4.2m with strong liquidity levels at the year-end; 
•  Net increase in Tangible Assets of £8.8m. 
 
Kent’s Mission 
The University’s vision, looking forward to 2015 is that “the exceptional student experience, 
internationally recognised research and strong partnerships of the University of Kent - the UK’s 
European University - will make Kent one of the UK’s outstanding universities”. The strategy in 
place to achieve this is based on three core values of Excellence, Engagement and Enterprise, 
which are enabled by the partnerships between staff and students in academic schools and the 
staff in professional service departments that ensure that the University is run in an effective, 
efficient, sustainable and professional manner. 
 

UNIVERSITY OF KENT 

 
 
OPERATING AND FINANCIAL REVIEW 
 
 
Inspiring and Supporting Students to Develop their Full Potential 
Key to the University’s continuing financial strength is the desire to provide an excellent 
experience for its students. The University is proud to have been voted top University in London 
and the south-east for the second year running and is one of the top ten multi-faculty 
universities in the UK as shown in the results of the 2008 National Student Survey. The survey 
also revealed that over 90% of final year students were satisfied with the quality of their course. 
 
Student numbers in the year grew by 6% and were consistent with growth levels in the past 
three years, another indication that Kent remains a popular choice for students in this 
competitive era of variable tuition fees. The number of overseas students fell marginally in the 
period but followed a year in which overseas students had leapt by over 6%. 
 
Total Student Numbers Over the Last Five Years
18000
16,886
15,992
16000
15,165
1,732
14,280
1,735
13,803
1,630
14000
1,610
1,705
12000
10000
8000
15,154
14,257
13,535
12,670
6000
12,098
4000
2000
0
2003/04
2004/05
2005/06
2006/07
2007/08
Home
Overseas
 
 
The sustained increase in the number of undergraduate students over the past 10 years has not 
been matched by levels of postgraduate recruitment and the University will, over the coming 
years, seek to re-balance its mix of provision. Approximately 12% of Kent’s student population 
are postgraduate students and in 2007/08, the number of full-time postgraduate students was at 
1,266, its highest point to date. In total, over 1,450 students were studying for a postgraduate 
taught award and a further 612 were preparing for research degrees. Specific targets are in the 
process of being set during the formulation of the Institutional Strategy for the period 2009/10-
2011/12, but significant growth is expected in postgraduate provision during that period. 
 
        FINANCIAL STATEMENTS 2007/08 5 

 
 
OPERATING AND FINANCIAL REVIEW 
 
 
Five Year Analysis of Student Population
16000
U
U
U
14000
U
U
12000
10000
8000
6000
4000
2000
T
T
T
T
T
R
R
R
R
R
0
2003/04
2004/05
2005/06
2006/07
2007/08
Academic Year
Postgraduate - Research [R]
Postgraduate - Taught [T]
Undergraduate [U]
 
 
In the period from 2004 to 2008, the University has spent £102m on new facilities and 
refurbishment of older academic and residential buildings, of which £34m has been funded by 
capital grants. The University is currently developing a new Estates Strategy to underpin the 
University’s strategic ambitions over the next 15 years. Spend during 2007/08 is detailed below 
under Capital Projects.  
 
Research 

Research income has grown from £9.5m in 2003/04 to £13.0m in 2007/08, a rise of 37% and 
postgraduate research student numbers have increased from 498 to 612 (a rise of 23%). This is 
part of the University’s strategy to increase its share of income from research. In addition, the 
University has put in place 90 university-funded postgraduate research scholarships. A Dean of 
the Graduate School has been appointed to lead the new strategy and a new Postgraduate 
College (Woolf College) providing 544 ensuite study bedrooms, a 496 seat lecture theatre and 
six seminar rooms will be completed by Christmas 2008. Recent grant awards are encouraging 
and have reflected a policy of applying for higher value grants. The 2008/09 budget shows a 
further increase in research income to £13.9m. 
 
Enterprise and Innovation 

During the year, planning permission was granted for the £6.5m development of a new 3,638m2 
Innovation Centre on the Canterbury campus, forming the first phase of a technology park, 
scheduled to open in the summer of 2009. The development is funded by SEEDA and follows 
work by the University and its local stakeholders, including Canterbury City Council.  
 
The final allocation of the third round of the Higher Education Innovation Fund (HEIF 3) was 
received in the year and the 2008/09 year commenced with the successful announcement of a 
further £4.5m in HEIF 4 funding for the three year period to 2011. The Enterprise and Innovation 
Strategy has a significant strand of improving the opportunities for students to engage in 
innovation and enterprise as well as growing income from enterprise activities in thematic areas. 
During 2008/09, the University will carry out a format audit of its Intellectual Property with a view 
to improving support for academics and increasing exploitation. 
 

UNIVERSITY OF KENT 

 
 
OPERATING AND FINANCIAL REVIEW 
 
 
Kent’s International Profile 
The University of Kent continues to grow its activity at its campus in Brussels and has entered 
into various collaborative or cooperative ventures with institutions in China and other fast 
developing countries. Many of our students are given the opportunity to spend a year abroad in 
either study or a work-based placement. A new Internationalisation Strategy has been agreed 
during the year and additional resources allocated to implement it. 
 
Kent’s contribution to the local and regional community 
The 2007/08 academic year started well with the Kent Law Clinic, part of the University’s Law 
School, achieving both the Queen’s Anniversary Prize for Higher and Further Education and the 
Times Higher Education award for Outstanding Contribution to the Local Community in 
recognition of the service it delivers to the local community whilst “enriching the academic study 
of law” and providing a first class education to its law undergraduates. 
 
Kent’s commitment to its campus in Medway and in delivering its objectives in relation to the 
sector-wide Widening Participation Strategy was strengthened further during the year by the 
appointment of a new Pro-Vice-Chancellor for Medway activities. 
 
Student numbers at Medway grew by an overall 26% in the year and in response to this 
increased demand, the University has now entered into an agreement with Berkeley First for the 
provision of student residences offering accommodation to more than 600 students as well as 
plans for an express-style supermarket and a café, to be completed by August 2009. 
 
Major academic developments at the Medway campus include a new Centre for Work and 
Learning. A new Centre for Journalism has also been established with the first cohort of 
students being recruited in September 2008. This is an exciting course providing a practice-
based, innovative curriculum taught by staff that have substantial experience at a senior level 
within the industry. 
 
In addition, the University’s School of Physical Sciences has become an important part of the 
South East Physics Network and is one of six departments in the south east to benefit from a 
£12.5m HEFCE-funded initiative. Acting together the Network will promote and sustain physics 
provision in the south-east and is part of a series of collaborative projects designed to 
strengthen research, teaching and knowledge transfer in science. 
 
Measurement of Past and Future Performance 
The University measures its performance with reference to a number of approved key 
performance indicators which are reported to Council at the end of each year. These measure 
performance and monitor progress in a number of areas, including institutional sustainability, 
student experience, financial health, knowledge transfer and relationships, staff development 
and estates and infrastructure. At its June 2008 meeting, the University reported good overall 
results in a number of these areas, with just under half the supporting indicators being reported 
as green and showing excellent performance in relation to progress on institutional projects. 
Further work was identified as being required to improve areas such as estates costs, conditions 
and utilisation levels, together with a further drive on research and postgraduate activities in line 
with the University Plan. Activities are already underway to address these issues with provision 
having been made in the current year budget for capital and strategic investments in these 
areas. 
 
        FINANCIAL STATEMENTS 2007/08 7 

 
OPERATING AND FINANCIAL REVIEW  
 
 
The Council reviewed the University’s ongoing achievements against key targets at its July 
meeting and approved the 2008/09 budget in the context of key performance indicators set out 
in the University’s Financial Framework. The budgeted surplus for 2008/09, at 2% of income, is 
consistent with the framework and has been set to ensure that continuing investment can be 
made both in strategic academic developments and in the University’s estate. This is despite 
increased staff costs which are anticipated to rise to almost 58% of income as a result of the 
national pay settlement and further pressure from rising utility costs.  
 
High planned levels of capital expenditure budgeted for 2008/09, to ensure that facilities and 
accommodation meet both the needs and expectations of our students will put pressure on cash 
reserves, but it is still expected that the target of 40 days expenditure will be achieved.  
 
Growth in overall student numbers is expected to slow down, due to the availability of fewer 
additional funded full-time undergraduate student numbers across the sector; however, one of 
the University’s key strategic goal is to expand postgraduate activity, with a higher than average 
budgeted increase in postgraduate student numbers. 
 
The overseas student market, however, remains highly competitive and therefore future 
overseas numbers are expected to remain at levels achieved in 2007/08. It is anticipated that 
the implementation of the University’s Internationalisation Strategy will ensure these levels are 
maintained and provide further means of expansion in this area in the medium term.  
 
Financial Summary 
The University’s consolidated results for the years ended 31 July 2008 and 31 July 2007 are 
summarised 
as 
follows: 
     
  
 
 
Restated 
 
  
 
2007/08 
2006/07 
Change 
    
     
£000 £000 
%age 
 
Income   
   145,345 
127,656 
13.9 
Expenditure  
 
 
 
(139,745) (124,935)  11.9 
Transfer in respect of Specific Endowments 
 
        92 
        83 
 
 
Surplus for the Year   
 
 
   5,692 
   2,804 103.0 
 
2007/08 has been another successful year resulting in a surplus of £5.7m (2006/07: £2.8m) 
which substantially exceeds the budget of £2.0m and has been once again been achieved by 
the continuation of positive income growth combined with effective budgetary control over 
expenditure. 
 

UNIVERSITY OF KENT 

 
OPERATING AND FINANCIAL REVIEW 
 
 
Income 
Analysis of Income 2003/04 to 2007/08
60,000
A
A
50,000
A
B
A
40,000
A
B
B
00 30,000
B
B
£0
D
20,000
D
D
D
C
C
D
E
E
C
C
C
E
10,000
E
E
F
F
F
F
F
0
2003/04
2004/05
2005/06
2006/07
2007/08
 
  Key: 
  A - Funding Council Income 
 
 
D - Residences, Catering and Conferences 
  B - Tuition Fees and Education Contracts 
 
E - Other Income 
  C - Research Grants and Contracts  
 
F - Investment Income 
 
The growth in income follows another good year of recruitment, specifically of full and part-time 
Home/EU undergraduates together with encouraging growth in the number of full-time 
postgraduate students, particularly from overseas. The level of funding from the Higher 
Education Funding Council for England (HEFCE) was greatly improved by the allocation of 
funding for additional Home/EU students and £50.9m (2006/07: £46.6m) was received by way of 
block grant. In comparison to 2006/07, the second year of variable fees brought in an additional 
£4.7m net income after payments for a generous bursary scheme to assist students from less 
advantaged backgrounds.  
 
The high levels of research income seen last year have been maintained with good margins 
continuing to be reported. Income from student residences has risen significantly with good 
control over associated costs and will continue to provide funds for refurbishing accommodation, 
catering and social facilities. Returns on investments and cash balances once again improved.  
Income from Kent Hospitality, the University’s residential and catering division, exceeded budget 
by £1.7m as a result of a very successful year in the conference trade, an area that has 
developed well in past years and looks set to continue albeit at slightly lower levels. It is part of 
the University’s strategy to pursue the growth and diversity of income levels as a means of 
ensuring sustainability for the future. 
 
        FINANCIAL STATEMENTS 2007/08 9 


 
OPERATING AND FINANCIAL REVIEW 
 
 
Management of Resources 
Analysis of Expenditure 2007/08 (£000)
Interest Payable 
4,158 
Depreciation  8,817 
Other Operating 
Expenses  43,421 
Staff Costs  82,704 
Exceptional 
Restructuring Costs 
645 
 
 
Staff Costs rose by 11.1% in the year, following investments in academic departments to 
enhance further the research and teaching functions, with a number of new posts in 
departments within the Social Sciences faculty, together with an increased focus on the 
University’s academic service provision and on enterprise activities. The implementation of the 
nationally negotiated pay settlement also continued to have an effect with a much larger impact 
anticipated for the coming year. During the year, the University reviewed the operations of one 
of its smaller academic departments, the Kent Institute of Medicine and Health Sciences, and 
made a decision to close down the department, resulting in the redeployment of 23 staff and 6 
staff who opted to take voluntary severance. A new strategy for health-related activities is being 
developed and a closer working relationship with local NHS Trusts is being developed.  
 
Average staff numbers increased by 103 full-time equivalents in the year, primarily in academic 
departments. 
 
Other Operating Expenses increased by £5.3m (13.9%) but were well within budgeted levels 
and once again is evidence of effective cost control in a period of higher than anticipated 
inflation. Academic departments accounted for a further £1.2m, with planned strategic 
investments being made in the new Centre for Journalism and in providing new studentships. In 
Academic Services, an additional £0.3m was spent largely on e-strategy and systems software 
developments and on increasing and updating library stocks, together with an extra £0.2m on 
JISC-funded projects. Residences and catering costs increased by £1.0m as a result of 
increased conference activity. 
 
Central administration costs also rose during the year by £2.5m which included an additional 
£1.0m payments to students in the form of bursaries, providing a total of £2.0m financial 
assistance to those students affected by variable tuition fees, the further development of the 
University’s Medway and Brussels campuses and expansion of the University’s Development 
Office to increase its capacity for fundraising. Research non-pay costs were well controlled and 
reduced by £0.8m in response to rising staff costs and helped push margins earned on these 
activities up to 18.5%. 
 
10 
UNIVERSITY OF KENT 

 
 
OPERATING AND FINANCIAL REVIEW 
 
 
Depreciation charged in the year increased by £1.0m following high levels of capital investment 
in refurbishing study bedrooms within Darwin College and revamping Mungo’s Bistro. Work was 
also completed on the £1.5m refurbishment of the Rochester Building at Medway, incorporating 
a second Gulbenkian Café bar and a meeting and conference venue for University of Kent 
visitors. 
 
Balance Sheet 
Net Current Assets increased to £4.2m from £3.5m. Endowments decreased by just under 
£0.1m as a result of reclassifications required in accordance with the revised SORP for Higher 
and Further Education. Loan capital repayments led to a reduction in long-term creditors as 
expected but was offset by the reclassification of a long-term lease premium received in 
advance. Restructuring provisions increased slightly as a result of the closure of a department at 
the end of the year. The University’s main pension schemes are USS and SAUL and are multi-
employer schemes and continue to be accounted for as defined contribution schemes. The 
University follows the requirements of FRS17 in relation to the accounting for the Local 
Government Pension Scheme for which it has one remaining member and the pension deficit 
can be seen on the balance sheet; during the year, the deficit increased by £149,000 and now 
stands at £474,000. Full details of the pension schemes can be found in Note 28 to the financial 
statements. 
 
Investment Management 
The University’s current asset and endowment investments are invested in Common Investment 
Funds managed by CCLA Investment Management Limited (CCLA). 
 
During the year the Investment Advisory Group monitored the returns from both the Common 
Investment Funds and the high interest bearing deposit accounts. The COIF and CBF 
Investment Funds reflected weak market trends and produced negative returns over the period. 
The bias towards long-term assets such as equities and property in these funds meant that they 
underperformed the WM Co. Charity Fund Universe. The COIF and CBF Fixed Interest Funds 
produced positive returns and outperformed the benchmark. 
 
As a result of the above and in line with the general economic downturn, the market value of the 
University’s Endowment Assets fell by £0.6m and now stand at £4.4m whilst the market value of 
Current Asset Investments fell to just above cost. 
 
Cash Flow 
The University’s cash position at the end of the year remains strong and was better than 
planned due to the higher than budgeted surplus in the period, some timing delays of major 
capital projects and the advance payment of certain grants. Plans are still in place to invest just 
over £110m into the estate over the next five years, of which circa £60m will be required to be 
self or loan funded and Council has agreed that it is appropriate for cash holding levels to 
reduce to finance this investment as new facilities are built or refurbished to meet rising student 
expectations. 
 
Total Cash, Short-Term Deposits and Current Asset Investments at market value have 
increased by £3.2m as follows: 
  
 
 
Restated 
  
 
2008 
2007 
Change 
    
     
£000 £000 
%age 
 
Cash Deposits and Short-Term Deposits   
 
15,217 
11,995 
26.9 
Current Asset Investments at Market Value 
 
  3,574 
  3,614 (1.1) 
 
    
    18,791 15,609 20.4 
 
        FINANCIAL STATEMENTS 2007/08 11 

 
 
OPERATING AND FINANCIAL REVIEW 
 
 
Capital Projects 
Capital expenditure amounted to £17.6m in the year, of which £4.6m was spent on the 
construction of a 496 seat lecture theatre and new seminar rooms as part of the Woolf College 
development. Work will continue into 2008/09 with an expected total cost of £6.7m. The 
refurbishment of the Rochester Building at Medway, with catering and conference facilities for 
University of Kent staff, students and visitors, was completed with additional costs this year of 
£0.8m. Other developments in Canterbury included a £3.8m series of lecture theatre, seminar 
room and laboratory refurbishments, mainly funded by 2006-08 HEFCE teaching and learning 
capital grants, and the continuation of a rolling programme of refurbishing student residences at 
a cost of £2.0m, including the completion of refurbishments of bedrooms within Darwin College 
started in 2007/08. Planning approval was eventually granted for the construction of a landmark 
new building for the School of Drama, Film and Visual Arts and work commenced in October 
2008 with expected completion in December 2009. This will offer considerably improved 
facilities and performance space and is a project that is part-funded from HEFCE Teaching and 
Research Capital Grants. 
 
Gearing 
Long-term bank loan debt has fallen by £2.0m in the year with gearing levels now reduced to 
42% as a percentage of income as earlier investments are now generating income. Further loan 
funding is being considered as part of the overall capital investment plan. 
 
Equal Opportunities and Diversity 

In line with the general intention of its Charter and the law, the University confirms its 
commitment to policies of equality and diversity, and to the implementation of these policies.  
 
Equality and diversity issues, relating both to staff and students, are regularly considered by the 
Staff Policy and Student Services Committees. The University employs an Equality and Diversity 
Manager who acts as a focus for work in these areas on a day-to-day basis. 
 
Employee Involvement
 
The University places considerable value on the involvement of its employees and on good 
communications. Newsletters are produced during the year for all staff and information and 
regular news updates are also available via ‘Campus on-line’ and ‘News’ on the University 
website and from heads of departments reporting back from Monthly Managers’ Meetings. Staff 
are also encouraged to participate in formal and informal consultation at University, faculty and 
departmental level and have regular opportunities to interact with the Vice-Chancellor at 
departmental and informal meetings and social occasions. In addition there are termly meetings 
with the recognised Trades Unions and representatives of non-union staff and managers. There 
are four elected staff representatives on Council. 
 
During 2007/08, a staff engagement survey was undertaken to which 66% of staff responded 
and results disseminated and discussed widely within the University. While identifying specific 
areas for improvement that will be addressed, the overall feedback was that 86% of staff were 
proud to work for the University. In addition, a new survey studying the quality of life for staff in 
Higher Education ranked Kent as one of the best in the country, with a rank of 13 out of 121 in 
the first-ever Halifax Times Higher Education university quality of life index. 
 
Payment of Creditors 
It is the University’s policy to obtain the best terms for all business and, thus, there is no single 
policy as to the terms used. In agreements negotiated with suppliers, the University endeavours 
to include and abide by specific payment terms. 
 
12 
UNIVERSITY OF KENT 

 
 
OPERATING AND FINANCIAL REVIEW 
 
 
Going Concern 
After making appropriate enquiries, the Council considers that the University has adequate 
resources to continue in operational existence for the foreseeable future. For this reason the 
financial statements have been prepared on a going concern basis. 
 
Conclusion 
2007/08 has been an extremely successful year for the University, with excellent financial 
results, strong student recruitment, the continued generation of high income levels, in particular 
from increased conference activity and research, and effective cost control in a period of high 
inflationary pressures. The University continues to meet students’ expectations in providing 
good facilities and a thriving learning environment, as evidenced by another excellent 
performance in this year’s National Student Survey. The completion of Woolf College, the 
University’s first postgraduate college, was a major highlight of the year, together with the 
refurbishments of a number of teaching and social facilities and the ongoing development of a 
number of other major capital projects, which will bring great benefits to students, staff and the 
local community. 
 
All of this would not have been possible without the continued expertise and enormous 
commitment of all staff across the University. I am sure Council will wish me to thank everyone 
involved in helping to make 2007/08 another tremendously successful year. 
 
 
Professor Julia Goodfellow 
Vice-Chancellor 
27 November 2008  
 
        FINANCIAL STATEMENTS 2007/08 13 

 
 
CORPORATE GOVERNANCE STATEMENT 
 
 
The Statement which follows is provided to enable readers of the Annual Report and Accounts 
of the University to obtain a better understanding of its governance and legal structure. 
 
The University endeavours to conduct its business in accordance with the seven principles 
identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, 
accountability, openness, honesty and leadership) and with the guidance to universities given by 
the Committee of University Chairmen (CUC) in its Guide for Members of HE Governing Bodies 
in the UK (November 2004). The University is committed to achieving best practice in all 
aspects of Corporate Governance. 
 
The University is an independent corporation, whose legal status derives from a Royal Charter 
originally granted in 1965. Its objects, powers and framework of governance are set out in the 
Charter and its supporting statutes, the latest version of which was approved by the Privy 
Council in 2006. 
 
The Charter and Statutes require the University to have three separate bodies, each with clearly 
defined functions and responsibilities, to oversee and manage its activities, as follows:  
•  The Council is the executive governing body, responsible for the finance, property, 
investments and general business of the University, and for setting the general strategic 
direction of the institution. Council has 25 members with a majority (17 members - 68%) 
from outside the University (described as lay members), from whom its chair and its deputy 
chair must be appointed. Members also include representatives of the staff of the University 
and the student body. Members do not receive any payment for their work in relation to the 
Council. Lay members may, however, claim reimbursement of associated travel costs and 
expenses. 
 
•  The Senate is the academic authority of the University and draws its membership (currently 
46 members) almost entirely from academic and research staff and students of the 
University. Its role is to direct and regulate the teaching and research work of the University. 
 
•  The Court is a large, mainly formal, body comprising over 400 members. It offers a means 
whereby the wider interests served by the University can be associated with the institution, 
and provides a forum where members of Court can be briefed and comment on key 
University activities and developments. The Court meets at least once a year to receive the 
Annual Report and audited financial statements of the University. In addition the Court 
appoints the Chancellor, on the nomination of the Council after consultation with Senate, 
whose role is to preside over meetings of the Court and Congregations for the conferring of 
degrees. Many members of the Court are from outside the University, representing the local 
community and other designated bodies with an interest in the work of the University. The 
membership also includes professorial staff and representatives of other staff (both 
academic and non-academic) and the student body. 
 
The Vice-Chancellor, the principal academic and administrative officer of the University, has a 
general responsibility to the Council for maintaining and promoting the efficiency and good order 
of the University. Under the terms of the Financial Memorandum between the University and the 
Higher Education Funding Council for England (HEFCE), the Vice-Chancellor is the accounting 
officer of the University and in that capacity can be summoned to appear before the Public 
Accounts Committee of the House of Commons. 
 
14 
UNIVERSITY OF KENT 

 
CORPORATE GOVERNANCE STATEMENT 
 
 
The University’s compliance with the CUC Governance Code of Practice includes the adoption 
of a Statement of the Council’s Primary Responsibilities which may be found on the Central 
Secretariat’s website. In brief this encompasses: the appointment of the senior staff and lay 
members/officers; amendments to the University’s Royal Charter, Statutes and Ordinances; 
matters relating to the University’s mission, vision and strategic aims; corporate level financial 
matters and decisions; institutional performance and other requirements arising from the 
University’s constitutional framework, institutions such as the Funding Council and legislation. 
 
Another requirement from the CUC’s Code is that the Vice-Chancellor provides an annual report 
to the Council on matters delegated to him/her by Council and arising from Statutes; this is 
completed in the Autumn Term each year and published on the Central Secretariat website. 
During 2005/06 Council agreed to undertake a review of its effectiveness and this was 
undertaken during Summer 2008 (to be considered by the Council during 2008/09). In 
December 2006 Council considered the University’s position against identified Key Performance 
Indicators (KPIs) approved in June 2006. Following review of the KPIs proposed in a report from 
CUC (November 2006) revised KPIs were adopted and Council considered the University’s 
performance against these in June 2007 and July 2008. The position will next be reviewed in 
July 2008. It is intended that overall institutional performance will be reviewed by the Council in 
2008/09. 
 
Although Council meets at least five times each academic year, much of its detailed work is 
initially handled by committees, in particular the Finance and Resources Committee, the Staff 
Policy Committee, the Lay Nominations Committee, the Remuneration Committee and the Audit 
Committee. The decisions of these committees are formally reported to the Council. These 
committees are formally constituted as committees of the Council with written terms of reference 
and specified membership, including lay members (from whom Council generally appoints 
chairs). 
 
As chief executive of the University, the Vice-Chancellor exercises considerable influence upon 
the development of institutional strategy, the identification and planning of new developments, 
and shaping of the institutional ethos. The Deputy and Pro-Vice-Chancellors, Director of 
Finance and Commercial Services and senior academic and administrative officers all contribute 
in various ways to aspects of this work but the ultimate responsibility for what is done rests with 
the Council. 
 
The Statutes of the University provide for the Council to appoint a Secretary of the Council (and 
of the Court). Any enquiries about the constitution and governance of the University should be 
addressed to the Secretary of the Council. 
 
The University maintains a Register of Interests of members of the Council and other staff which 
may be consulted by arrangement with the Secretary of the Council. 
 
Statement of Internal Control 
The University Council has responsibility for maintaining a sound system of internal control that 
supports the achievement of policies, aims and objectives, while safeguarding the public and 
other funds and assets for which the University is responsible, in accordance with the 
responsibilities assigned to the Council in the University’s Charter and Statutes and the 
Financial Memorandum with HEFCE. 
 
The system of internal control is designed to manage rather than eliminate the risk of failure to 
achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute 
assurance against material misstatement or loss. 
 
        FINANCIAL STATEMENTS 2007/08 15 

 
CORPORATE GOVERNANCE STATEMENT 
 
 
The system of internal control is based on an ongoing process for identifying, evaluating and 
managing the significant risks faced by the University. This process is designed to identify the 
principal risks to the achievement of policies, aims and objectives; to evaluate the nature and 
extent of those risks; and to manage them efficiently, effectively and economically. This process 
has been in place for the year ended 31 July 2008 and up to the date of approval of the financial 
statements, and accords with HEFCE guidance. 
 
The Council is responsible for the University’s system of internal control and for reviewing its 
effectiveness. The following processes have been established: 
•  Council meets at least five times each year to consider the plans and strategic direction of 
the University 
•  Council receives an annual report on Risk Management and the annual reports of the Audit 
Committee and the Head of Internal Audit Services evaluating the assurance provided by 
internal controls, including the principal results of risk identification, evaluation and 
management review of effectiveness 
•  The Vice-Chancellor’s Executive Group oversees risk management and receives regular 
reports on risk management activity and performance 
•  The Audit Committee receives regular reports from the Head of Internal Audit Services 
which include the Head of Internal Audit Services’ independent opinion on the adequacy and 
effectiveness of the University’s system of internal control, together with recommendations 
for improvement 
•  A University-wide prioritised risk register is maintained, linked to the achievement of 
institutional objectives and covering business, operational, compliance and financial risk, 
and it is kept up to date through an annual risk assessment exercise to review the risks 
included and the scorings applied to each 
•  Risks deemed to be significant are addressed through detailed action plans, with key 
performance data being collected termly and reported to the Executive Group 
•  Heads of Academic Departments are charged with the identification and management of risk 
under the University’s Strategic Planning Model. 
 
Council’s review of the effectiveness of the system of internal control is informed by Internal 
Audit Services, which operates to standards defined in the HEFCE Audit Code of Practice 
(Accountability and Audit). The Internal Audit Service was reviewed for effectiveness by the 
HEFCE Assurance Service in January 2005, and found to provide a high level of assurance. 
Council’s review of the effectiveness of the system of internal control is also informed by the 
work of the executive managers within the University, who have responsibility for the 
development and maintenance of the internal control framework, and by comments made by the 
External Auditors in their management letter and other reports. 
 
In 2006 the University’s Audit Committee established a working group to review the University’s 
risk management practices in the light of HEFCE best practice guidance (HEFCE 2005/11). 
Actions were agreed to refine the current system and implementation of these plans were 
managed by the Head of Internal Audit Services throughout 2007/08. 
 
16 
UNIVERSITY OF KENT 

 
STATEMENT OF THE RESPONSIBILITIES OF THE UNIVERSITY’S COUNCIL 
 
 
In accordance with the University’s Charter of Incorporation, the Council is responsible for the 
administration and management of the affairs of the University and is required to present 
audited financial statements for each financial year to the University Court. 
 
The Council is responsible for keeping proper accounting records which disclose with 
reasonable accuracy at any time the financial position of the University and to enable it to 
ensure that the financial statements are prepared in accordance with the Charter and Statutes, 
the Statement of Recommended Practice on Accounting in Higher Education Institutions and 
other relevant accounting standards.  
 
In addition, within the terms and conditions of a Financial Memorandum agreed between the 
Higher Education Funding Council for England and the Council of the University, the Council, 
through its designated office holder, is required to prepare financial statements for each financial 
year which give a true and fair view of the state of affairs of the University and of the surplus or 
deficit and cash flows for that year. 
 
In causing the financial statements to be prepared, the Council has ensured that: 
•  suitable accounting policies are selected and applied consistently 
•  judgements and estimates are made that are reasonable and prudent 
•  applicable United Kingdom accounting standards have been followed, subject to any 
material departures disclosed and explained in the financial statements 
•  financial statements are prepared on the going concern basis unless it is inappropriate to 
presume that the University will continue in operation. The Council is satisfied that the 
University has adequate resources to continue in operation for the foreseeable future; for 
this reason the going concern basis continues to be adopted in the preparation of the 
financial statements. 
 
The Council has taken reasonable steps to: 
•  ensure that funds from HEFCE are used only for the purposes for which they have been 
given and in accordance with the Financial Memorandum agreed with HEFCE and any other 
conditions which HEFCE may from time to time prescribe 
•  ensure that there are appropriate financial and management controls in place to safeguard 
public funds and funds from other sources 
•  safeguard the assets of the University and prevent and detect fraud 
•  secure the economical, efficient and effective management of the University’s resources and 
expenditure. 
 
The key elements of the University’s system of internal financial control, which is designed to 
discharge the responsibilities set out above, include the following: 
•  clear definitions of the responsibilities of, and the authority delegated to, heads of academic 
and administrative departments 
•  a comprehensive medium and short-term planning process, supplemented by detailed 
annual income, expenditure, capital and cash flow budgets 
•  regular reviews of academic performance and financial results involving variance reporting 
and updates of forecast outturns 
•  clearly defined and formalised requirements for approval and control of expenditure, with 
investment decisions involving capital or revenue expenditure being subject to formal 
detailed appraisal and review according to approval levels set by the Council 
•  comprehensive Financial Regulations, detailing financial controls and procedures, approved 
by the Finance and Resources Committee and the Council 
•  a professional Internal Audit Office whose annual programme is approved by the Audit 
Committee in line with the Full Statement of Internal Control. 
 
        FINANCIAL STATEMENTS 2007/08 17 

 
 
INDEPENDENT AUDITOR’S REPORT TO THE COUNCIL OF 
 
THE UNIVERSITY OF KENT 
 
We have audited the consolidated financial statements of the University of Kent for the year 
ended 31 July 2008, which comprise the Income and Expenditure Account, the Balance Sheet, 
the Cash Flow Statement, the Statement of Consolidated Total Recognised Gains and Losses 
and the related notes. These financial statements have been prepared under the historical cost 
convention as modified by the revaluation of certain fixed assets and the accounting policies set 
out therein. 
 
This report is made solely to the Members of the University Council, as a body, in accordance 
with the Higher Education Funding Council for England Code of Practice. Our audit work has 
been undertaken so that we might state to the Members of 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 Members of Council as a body, for our audit work, for this report, or for the opinions we 
have formed. 
 
Respective Responsibilities of Members of the Council and Auditors 
As described in the statement of the responsibilities of the University’s Council, the Council is 
responsible for the preparation of the financial statements in accordance with the Statement of 
Recommended Practice: Accounting for Further and Higher Education, applicable law and 
United Kingdom Accounting Standards. 
 
Our responsibility is to audit the financial statements in accordance with relevant legal and 
regulatory requirements and International Standards on Auditing (UK and Ireland). 
 
We report to you our opinion as to whether the financial statements give a true and fair view and 
if, in our opinion, the Report of the Chair of Finance and Resources Committee is not consistent 
with the financial statements, if the University has not kept proper accounting records, or if we 
have not received all the information and explanations we require for our audit. We also report 
to you whether, in our opinion, monies expended out of funds from whatever source 
administered by the University for specific purposes were properly applied for those purposes 
and, where relevant, managed in accordance with appropriate legislation and whether monies 
expended out of fund provided by the Higher Education Funding Council for England, the 
Learning and Skills Council or the Teachers Training Agency were applied in accordance with 
the financial memorandum and any other terms and conditions attached to them.  
  
We read the Report of the Chair of the Finance and Resources Committee and consider the 
implications for our report if we become aware of any apparent misstatement or material 
inconsistencies with the financial statements. Our responsibilities do not extend to any other 
information. 
 
Basis of Audit Opinion 
We conducted our audit in accordance with International Standards on Auditing (UK and 
Ireland) issued by the Auditing Practices Board, and the Audit Code of Practice issued by the 
Higher Education Funding Council for England. An audit includes examination, on a test basis, 
of evidence relevant to the amounts and disclosures in the financial statements. It also includes 
an assessment of the significant estimates and judgements made by the Council in the 
preparation of the financial statements, and of whether the accounting policies are appropriate 
to the University’s circumstances, consistently applied and adequately disclosed. 
 
We planned and performed our audit so as to obtain all the information and explanations which 
we considered necessary in order to provide us with sufficient evidence to give reasonable 
assurance that the financial statements are free from material misstatement, whether caused by 
fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy 
of the presentation of information in the financial statements. 
 
18 
UNIVERSITY OF KENT 

 
INDEPENDENT AUDITOR’S REPORT TO THE COUNCIL OF 
THE UNIVERSITY OF KENT 
 
Opinion
 
In our opinion: 
i. 
The financial statements give a true and fair view of the state of affairs of the University 
of Kent and the group at 31 July 2008, and of the surplus of income over expenditure, 
recognised gains and losses and cashflows of the University of Kent and the group for 
the year then ended; and the statements have been properly prepared in accordance 
with the Statement of Recommended Practice: Accounting for Further and Higher 
Education. 
 
ii. 
In all material respects, income from the Higher Education Funding Council for England, 
the Learning and Skills Council and the Training and Development Agency for Schools, 
grants and income for specific purposes and from other restricted funds administered by 
the University of Kent have been applied only for the purposes for which they were 
received. 
 
iii. 
In all material respects, income has been applied in accordance with the University of 
Kent’s statutes and where appropriate in accordance with the financial memorandum 
with the Higher Education Funding Council for England dated 1 October 2003. 
 
 
Grant Thornton UK LLP 
Chartered Accountants and Registered Auditors 
Hemel Hempstead, England 
27 November 2008 
 
        FINANCIAL STATEMENTS 2007/08 19 

 
 
CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT 
 
FOR THE YEAR ENDED 31 JULY 2008 
 
    
 
     
Restated 
 
 
Note   
2007/08 
2006/07 
    
£000 
£000 
 
INCOME 
Funding Council Grants 
 

 
  55,325  50,395 
Tuition Fees and Education Contracts 

 
  43,921  34,884 
Research Grants and Contracts 
 

 
  13,032  13,076 
Other 
Income 
 
 
4   
31,803 
28,150 
Endowment and Investment Income 

 
      1,264      1,151 
 
Total 
Income 
 
    
145,345 127,656 
 
EXPENDITURE 
Staff 
Costs 
 
 
6   
82,704 
74,413 
Exceptional Restructuring Costs 
 

 
 
645 
300 
Other Operating Expenses 
 

 
  43,421  38,111 
Depreciation 
 
 
11   
8,817 
7,781 
Interest Payable 
 

 
      4,158      4,330 
 
Total 
Expenditure 
    
139,745 124,935 
 
Surplus after Depreciation of Assets at Cost 
and before Disposal of Assets, Tax and 
Transfers in respect of Specific Endowments 
 
 
 
5,600 
2,721 
 
Taxation 
 
 
 
9   - - 
 
 
Transfers in respect of Specific Endowments 
 
 
 
92 
83 
 
 
 
 
 
 
 
                             
 
Surplus after Depreciation of Assets at Cost, 
Disposal of Assets, Tax and Transfers in respect  
of Specific Endowments 
 
 
 
     5,692     2,804 
 
There is no difference between the surplus stated above and the historical cost equivalent. 
 
All gains and losses recognised in the year are included above. 
 
All income and expenditure recognised above is derived from continuing operations. 
 
20 
UNIVERSITY OF KENT 

 
 
STATEMENT OF CONSOLIDATED TOTAL RECOGNISED GAINS AND LOSSES 
 
FOR THE YEAR ENDED 31 JULY 2008 
 
 
 
 
 
     
Restated 
  
Note  
2007/08 
2006/07 
    
£000 
£000 
Surplus on Continuing Operations after 
Depreciation of Assets at Cost, Disposal of Assets, Tax 
and Transfers in respect of Specific Endowments   
 
 
5,692 
2,804 
 
Donated Assets Received 
 
 
21 
 


 
Unrealised (Losses)/Gains on Endowment  
Asset 
Investments 
 
  
19  
(683) 
267 
 
New Endowments and Income Retained for the Year 
19 
 
98 
24 
 
Actuarial (Loss)/Gain on Pension Scheme  
 
28 
 
  (248) 
     95 
 
Total Recognised Gains and Losses on  
Continuing Operations relating to the Year  
 
 
 
4,859 3,190 
 
 
RECONCILIATION 

Opening Reserves and Endowments 
 
 
 
  54,306  51,092 
 
Prior Year Adjustment: Reclassification of Donated  
Assets Received 
 
 
 
 
            -        (33) 
 
Restated Opening Reserves and Endowments 
 
 
  54,306  51,059 
 
Transfer Reserves from Imperial College   
 
 
 
21 
57 
 
Total Recognised Gains and Losses for the Year 
 
 
    4,859    3,190 
 
Closing Reserves and Endowments 
 
 
 
  59,186 54,306 
 
 
The full impact of the Prior Year Adjustment on the University’s Consolidated Reserves and 
Endowments, as described in Note 15 of the Statement of Principal Accounting Policies, can be 
seen as follows: 
 
 
 
 
     
£000 
 
Adjustment to Opening Reserves at 1 August 2006   
 
 
 
108 
Adjustment to Endowments at 1 August 2006 
 
 
 
 
(141) 
Adjustment to Income and Expenditure Account for the  
Year Ended 31 July 2007 
 
 
 
 
 
18 
 
Other Adjustments to the Statement of Consolidated Total  
Recognised Gains and Losses for the Year Ended 31 July 2007: 
New Endowments and Income Retained for the Year 
 
 
 
  (4) 
 
Total 
Prior 
Year 
Adjustment 
     
(19) 
 
        FINANCIAL STATEMENTS 2007/08 21 

 
 
BALANCE SHEETS AS AT 31 JULY 2008 
 
 
  
Consolidated University 
  Restated Restated 
  Note 2008 2007 2008 2007 
 
 £000  
£000 £000 £000 
 
FIXED ASSETS 
Tangible Assets 
 
11 155,419 146,628 155,419 146,628 
Investments   
 
12              -             1              -             1 
 
  
155,419 146,629 155,419 146,629 
 
ENDOWMENT ASSETS 
 
13      4,446      5,031      4,446      5,031 
 
CURRENT ASSETS 
Stocks 
   
 
 534 515 534 515 
Debtors 
 
 
14 9,513 9,997 9,446 9,841 
Investments  
 
13 3,574 3,614 3,574 3,614 
Short-Term 
Deposits 
 
 145 351 145 351 
Cash at Bank and in Hand 
 
    15,072    11,644    14,978    11,544 
 
 
 28,838 26,121 28,677 25,865 
 
CREDITORS: AMOUNTS FALLING DUE  
WITHIN ONE YEAR   
 
15   (24,615)   (22,642)  (24,611) (22,638) 
 
NET CURRENT ASSETS 
 
      4,223      3,479      4,066      3,227 
 
TOTAL ASSETS LESS CURRENT LIABILITIES 
  164,088  155,139  163,931  154,887 
 
CREDITORS: AMOUNTS FALLING DUE  
AFTER MORE THAN ONE YEAR 
 
16  (63,960) (64,913) (63,840) (64,698) 
 
PROVISIONS FOR LIABILITIES AND  
CHARGES 
 
 
 
17     (1,215)      (537)    (1,215)      (537) 
 
NET ASSETS EXCLUDING PENSION LIABILITY    98,913  89,689  98,876  89,652 
 
NET PENSION LIABILITY 
 
        (474)       (325)       (474)       (325) 
 
NET ASSETS  
 
 
    98,439    89,364    98,402    89,327 
 
 
22 
UNIVERSITY OF KENT 

 
 
BALANCE SHEETS AS AT 31 JULY 2008 
 
 
  
Consolidated University 
    
    Restated  Restated 
 
 
 
 
  Note 2008 2007 2008 2007 
 
 £000  
£000 £000 £000 
 
DEFERRED CAPITAL GRANTS 
 
18  39,253 35,058 39,253 35,058 
 
ENDOWMENTS 
Expendable  
 
19 3,374 3,830 3,374 3,830 
 
Permanent 
 
 
19    1,072    1,201    1,072    1,201 
 
 
    4,446    5,031    4,446    5,031 
 
RESERVES 
Pension 
Reserve 
 
20  (474) (325) (474) (325) 
Revaluation 
Reserve 
 
21 8,431 8,431 8,431 8,431 
General Reserve 
 
22  46,783 41,169 46,746 41,132 
 
  
54,740 49,275 54,703 49,238 
 
TOTAL FUNDS 
 
 
  98,439 89,364 98,402 89,327 
 
 
The financial statements on pages 20 to 52 were approved by the Council on 27 November 
2008 and signed on its behalf by: 
 
 
Professor Julia Goodfellow 
Vice-Chancellor  

 
 
 
Richard Oldfield 
Deputy Chair of the Finance and Resources Committee 
 
 
Denise Everitt 
Deputy Vice-Chancellor (Finance and Commercial Services) 
 
 
 
        FINANCIAL STATEMENTS 2007/08 23 

 
 
CONSOLIDATED CASH FLOW STATEMENT 
 
FOR THE YEAR ENDED 31 JULY 2008 
 
 
 
 
 
     
Restated 
  
Note  
2007/08 
2006/07 
    
£000 
£000 
 
Cash Flow from Operating Activities 
 
 
23 
  18,774  13,036 
 
Returns on Investments and Servicing of Finance   
24 
 
(2,937)  (3,175) 
 
Capital Expenditure and Financial Investment 
 
25 
  (10,707) (10,349) 
 
Management of Liquid Resources 
 
 
26 
 
148 
(228) 
 
Financing 
 
 
    
 
(1,850)  (1,727) 
 
Increase/(Decrease) in Cash in the Year   
 
 
    3,428  
(2,443) 
 
 
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 
 
 
 
 
     
Restated 
    
2007/08 
2006/07 
    
£000 
£000 
 
Increase/(Decrease) in Cash in the Year   
 
 
 
3,428 
(2,443) 
 
(Inflow)/Outflow from Liquid Resources 
 
 
 
 
(148) 
228 
 
Repayment 
of 
Debt 
 
    
1,850 
1,727 
 
Current Asset Investments: Non-Cash Movements   
 
        (98)       117 
 
Change in Net Debt in the Year 
 
 
 
 
5,032 
(371) 
 
Net Debt at 1 August   
 
 
 
  (48,849) (48,478) 
 
Net Debt at 31 July 
 
 
 
27 
  (43,817) (48,849) 
 
 
24 
UNIVERSITY OF KENT 

 
 
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES 
 
 
1. 
Basis of Preparation 
These financial statements have been prepared in accordance with the Statement of 
Recommended Practice (SORP): Accounting for Further and Higher Education 2007 
and in accordance with applicable United Kingdom Accounting Standards. 
  
The financial statements have been prepared under the historical cost convention 
modified by the revaluation of certain fixed assets and investments.  
 
2. 
Basis of Consolidation 
The consolidated financial statements include the University and its subsidiary 
undertaking, Kent Enterprise Limited. Intra-group transactions are eliminated fully on 
consolidation. In accordance with FRS2, the activities of the Students’ Union have not 
been consolidated because the University does not control those activities. The activities 
of The University of Kent Development Trust have not been included, as the amounts 
involved are immaterial. 
 
3. 
Recognition of Income and Expenditure 
 
Recurrent block grants from the Higher Education Funding Council for England (HEFCE) 
are recognised in the period in which they are received. 
 
 
Fee income is stated gross and recognised over the related study period. Where the 
tuition fee has been reduced by a payment discount, the income receivable is shown net 
of the discount. Bursaries and scholarships are accounted for gross as expenditure. 
 
Income from research grants, contracts and other services rendered is included to the 
extent of completion of the contract or service concerned. This is generally equivalent to 
the sum of the relevant expenditure incurred during the year and any related 
contributions towards overhead costs. Any future predicted losses on individual long-
term contracts are recognised immediately. Any payments received in advance are 
included in the Balance Sheet within creditors.  
 
Donations with restrictions attached are recognised when the relevant conditions have 
been met. Donations which are to be retained for the benefit of the University are 
recognised in the Statement of Consolidated Total Recognised Gains and Losses and in 
endowments; other donations are recognised by inclusion as other income in the Income 
and Expenditure Account. 
 
Income from short-term deposits and current asset investments is credited to income in 
the period in which it is earned. 
 
Endowment income is credited to the Income and Expenditure Account on a receivable 
basis. Any income on restricted endowments earned in excess of that applied to the 
specific purpose is transferred from the Income and Expenditure Account to restricted 
endowments. Any realised gains or losses from dealing in the related assets are 
retained within the endowments in the Balance Sheet. 
 
Non-recurrent grants from HEFCE or other bodies received in respect of the acquisition 
or construction of fixed assets are treated as deferred capital grants and amortised in 
line with depreciation over the life of the assets. 
 
        FINANCIAL STATEMENTS 2007/08 25 

 
 
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES 
 
 
4. 
Agency Arrangements 
 
Any funds that the University receives and disburses whilst acting as agent on behalf of 
a funding body and where the University is exposed to minimal risk or enjoys minimal 
economic benefit in relation to the transaction, are excluded from the Income and 
Expenditure Account. 
 
5. 
Maintenance of Premises  
 
The University has a long-term rolling maintenance plan, which forms the basis of the 
ongoing maintenance of the estate. The cost of long-term and routine corrective 
maintenance is charged to the Income and Expenditure Account as incurred. 
 
6. 
Foreign Currency Translation 
 
Transactions denominated in foreign currencies are recorded at the rate of exchange 
ruling at the dates of the transactions. Assets and liabilities denominated in foreign 
currencies are translated into sterling either at year end rates or, where there are related 
forward foreign exchange contracts, at contract rates. All resulting exchange differences 
are taken to the Income and Expenditure Account in the period in which they arise.  
 
7. Pension 
Schemes 
 
The University has fully adopted Accounting Standard FRS17 ‘Retirement Benefits’. The 
impact of this standard has been reflected throughout the financial statements. 
  
 
Retirement benefits for most employees of the University are provided by the 
Universities Superannuation Scheme (USS) and the Superannuation Arrangements of 
the University of London (SAUL). These are defined benefit schemes which are 
externally funded and contracted out of the State Second Pension (S2P). The assets of 
both schemes are held in separate trustee administered funds. The University is unable 
to identify its share of the underlying assets and liabilities of the schemes on a 
consistent and reasonable basis and therefore, as required by FRS17, accounts for the 
schemes as if they were defined contribution schemes. As a result, the amount charged 
to the Income and Expenditure Account represents the contributions payable to the 
schemes in respect of the accounting period. Informal reviews of the position of the 
schemes are carried out between formal valuations. 
 
 
Some employees of the University participate in the local government pension fund 
which is a defined benefit scheme in which the University’s share of the underlying 
assets and liabilities have been separately identified. For this fund, the difference 
between the University’s share of the fair value of the assets held in the fund and the 
fund’s liabilities, measured on an actuarial basis using the projected unit method, is 
recognised in the University’s Balance Sheet as a pension scheme asset or liability, as 
appropriate. The pension scheme balance is recognised net of any related deferred tax 
balance. 
 
 
Changes in the defined benefit pension scheme asset or liability arising from factors 
other than cash contributions by the University are charged to the Income and 
Expenditure Account or the Statement of Consolidated Total Recognised Gains and 
Losses in accordance with FRS17.  
 
26 
UNIVERSITY OF KENT 

 
 
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES 
 
 
8. 
Tangible Fixed Assets 
 
Land and Buildings 
Land was valued on an open market existing use basis by Grimley - JR Eve (Chartered 
Surveyors) on 3 May 1995. In keeping with the transitional rules set out in FRS15 this 
land valuation is retained as the cost of that land. Freehold land is not depreciated. The 
University buildings are specialised buildings and therefore it is not appropriate to value 
them on the basis of open market value. Buildings are included in the Balance Sheet at 
cost together with subsequent refurbishment expenditure less accumulated depreciation. 
 
Depreciation on buildings is provided on a straight-line basis over their expected useful 
economic lives as follows: 
Freehold 
buildings 
   
50 
years 
Components of new buildings e.g. lift, heating, 
electrical system etc 
 
 
 
25 years 
Refurbishment of academic facilities 
 
 
15 years 
Refurbishment of accommodation   
 
 
10 years 
Refurbishment of dining and trading facilities 
 
5 years 
 
Where land and buildings are acquired with the aid of specific grants they are capitalised 
and depreciated as above. The related grants are credited to a deferred capital grant 
account and are released to the Income and Expenditure Account over the expected 
useful economic life of the related asset on a basis consistent with the depreciation 
policy. 
 
Certain buildings situated at the Universities at Medway campus are jointly owned by the 
University of Kent and the University of Greenwich. All costs associated in the purchase 
and refurbishment of these buildings have been shared equally between both parties 
and the University of Kent share of this cost has been capitalised in the Balance Sheet. 
 
Finance costs, which are directly attributable to the construction of land and buildings, 
are capitalised as part of the cost of those assets, where appropriate. 
 
A review of the impairment of a fixed asset is carried out if events or changes in 
circumstances indicate that the carrying value of the fixed asset may not be recoverable. 
 
Buildings under construction are accounted for at cost, based on the value of architects’ 
certificates and other direct costs incurred to 31 July. They are not depreciated until they 
are brought into use. 
 
 
Equipment 
 
Equipment costing less than £5,000 per individual item or group of related items is 
written off in the year of acquisition. All other equipment is capitalised at cost. 
 
Capitalised equipment is depreciated over its useful economic life as follows: 
 
General equipment and furniture   
 
 
5 to 10 years 
Computer equipment and software  
 
 
3 to 5 years 
Equipment acquired for specific research or other projects  Project  life  (generally  3 
years) 
 
 
Where equipment is acquired with the aid of specific grants it is capitalised and 
depreciated in accordance with the above policy, with the related grant being credited to 
a deferred capital grant and released to the Income and Expenditure Account over the 
expected useful economic life of the related equipment. 
 
        FINANCIAL STATEMENTS 2007/08 27 

 
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES 
 
 
9. Investments 
Fixed asset investments that are not listed on a recognised stock exchange are carried 
at historical cost less any provision for impairment of their value. 
 
Investments that form part of endowment assets are included in the Balance Sheet at 
market value and any subsequent appreciation or depreciation of endowment assets is 
added to or subtracted from the reported endowment funds. Current asset investments 
are included at the lower of their original cost and net realisable value on a portfolio 
basis. 
 
10. Stocks 
 
Stocks are stated at the lower of their cost and net realisable value. Where necessary, 
provision is made for obsolete, slow moving and defective stocks. 
 
11. Taxation 
 
The University is an exempt charity within the meaning of Schedule 2 of the Charities 
Act 1993 and as such is a charitable company within the meaning of Section 506(1) of 
the Income and Corporation Taxes Act (ICTA) 1988. Accordingly, the University is 
exempt from taxation in respect of income or capital gains received within categories 
covered by Section 505 of the ICTA 1988 and Section 256 of the Taxation of 
Chargeable Gains Act 1992, to the extent that such income or gains are applied to 
charitable purposes only, and the extent to which any such exemption is not disapplied 
by Section 505(4) in respect of non-charitable expenditure arising from non-primary 
purpose trading. In the event that non-primary purpose trading losses arise, the 
University treats the trades concerned as being carried out on a commercial basis with a 
view to realisation of gain within the larger undertaking of the University so that Section 
393A(3)(b) of the ICTA 1988 applies to allow the non-primary purpose loss to be offset 
against the surplus for which tax exemption is disapplied by virtue of the existence of the 
non-primary purpose trading loss. 
 
 
The University receives no similar exemption in respect of VAT. Irrecoverable VAT on 
inputs is included in the costs of such inputs. Any irrecoverable VAT incurred on the 
purchase of tangible fixed assets is included in the cost of these assets.  
 
 
As commercial organisations, the University’s subsidiary companies are subject to 
corporation tax and VAT. 
 
 
12. Liquid 
Resources 
 
Liquid resources include sums on short-term deposits with recognised banks and 
building societies. 
 
13. Provisions 
 
Provisions are recognised when the University has a present legal or constructive 
obligation as a result of a past event, it is probable that a transfer of economic benefit 
will be required to settle the obligation and a reliable estimate can be made of the 
amount of the obligation. 
 
14. 
Treatment of Operating Leases 
 
All operating lease payments are included in the Income and Expenditure Account in the 
period to which the payment relates. Future liabilities under such operating leases are 
disclosed as a financial commitment in the accounts.  
 
28 
UNIVERSITY OF KENT 

 
STATEMENT OF PRINCIPAL ACCOUNTING POLICIES 
 
 
15. 
Prior Year Adjustment 
 
The prior year adjustment relates to changes in the accounting for charitable donations 
in accordance with the revised guidance as issued in the Statement of Recommended 
Practice: Accounting for Further and Higher Education, effective from 1 August 2007. 
Specifically, this has included the reclassification of donated assets from the revaluation 
reserve to deferred capital grants and the reclassification of some gifts and donations, 
previously reported as specific endowments, to income or reserves as appropriate.  
 
The reclassification of donated assets to deferred capital grants has led to an increase 
in other income during the year of £12,000 (2006/07: £18,000). The reclassification of 
gifts and donations from specific endowments to other income has led to an increase in 
other income during the year of £46,000 (2006/07: £37,000) and an increase in receipts 
in advance of £1,000 (2006/07: £4,000). Transfers in respect of specific endowments 
have reduced by £45,000 (2006/07: £37,000). Overall these reclassifications have 
increased the consolidated surplus by £13,000 (2006/07: £18,000).  
 
 
Specific endowments at a cost of £146,000 at 1 August 2007 have been reclassified as 
£141,000 general reserves and £5,000 receipts in advance. The corresponding 
endowment assets stated at market value have reduced by £145,000 and have been 
transferred into the current asset pool of investments. As the previously stated market 
value of the portfolio of current asset investments exceeded cost, the unrealised loss of 
£1,000 has been netted against the overall unrealised gains. As a result, current asset 
investments have increased by £146,000 and total investments have increased by 
£1,000. Donated assets at this date included within the revaluation reserve with a net 
book value of £15,000 have been reclassified as deferred capital grants.  
 
 
The full impact of the prior year adjustment on the University's consolidated reserves 
and endowments can be seen at the foot of the Statement of Consolidated Total 
Recognised Gains and Losses. Further analysis of the prior year adjustment on 
investments, deferred capital grants, endowments, the revaluation reserve and the 
general reserve is shown in the respective notes to the accounts. 
 
        FINANCIAL STATEMENTS 2007/08 29 

 
 

NOTES TO THE ACCOUNTS 
 
 
1. 
FUNDING COUNCIL GRANTS 
 
 
 
 
 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
 
Recurrent Grant (Higher Education Funding Council) 
 
  50,913  46,638 
Specific Grants 
Joint Information Systems Committee (JISC) 
 
 
1,326 
903 
All 
Other 
Grants 
    
1,644 
1,456 
Deferred Capital Grants Released 
Buildings 
(Note 
18) 
    
1,255 
1,060 
Equipment (Note 18) 
 
 
 
       187       338 
 
    
55,325 50,395 
 
2. 
TUITION FEES AND EDUCATION CONTRACTS 
 
 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
 
Full-time 
Students 
 
    
25,654 
18,463 
Full-time Students Charged Overseas Fees 
 
 
  14,582  13,426 
Part-time 
Fees 
 
    
2,685 
2,272 
Research Training Support Grants 
 
 
 
 
451 
407 
Short Course Fees 
 
 
 
 
       549       316 
 
    
43,921 34,884 
 
3. 
RESEARCH GRANTS AND CONTRACTS   
 
 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
 
Research 
Councils 
 
    
6,416 
5,820 
UK 
Based 
Charities 
 
    
2,110 
1,753 
UK 
Industry 
 
 
    
248 
260 
European 
Commission 
    
1,118 
1,135 
Other Grants and Contracts 
 
 
 
    3,140    4,108 
 
    
13,032 13,076 
 
4. 
OTHER INCOME 
 
 
 
 
 
 
 
 
 
 
     
Restated 
    
       
2007/08 
2006/07 
    
£000 
£000 
 
Residences, Catering and Conferences 
 
 
 
  20,397  17,072 
Other 
Income-generating 
Activities 
    
2,278 
2,310 
Other 
Grant 
Income 
 
    
1,294 
1,174 
Other 
Income 
 
 
    
 
 
7,834    7,594 
 
    
31,803 28,150 
 
30 
UNIVERSITY OF KENT 

 
 
NOTES TO THE ACCOUNTS 
 
 
5. 
ENDOWMENT AND INVESTMENT INCOME 
 
 
 
 
 
 
     
Restated 
 
 
 
 
 
 
 
 2007/08 2006/07 
    
£000 
£000 
 
Income from Expendable Endowment Assets (Note 19) 
 
 
128 
139 
Income from Permanent Endowment Assets (Note 19) 
 
 
44 
42 
Other 
Investment 
Income 
    
134 
144 
Other Interest Receivable 
 
 
 
 
   958 
   826 
 
    
1,264 1,151 
 
6. 
STAFF COSTS 
The average number of persons (including senior post holders) employed by the University 
during the year expressed as full time equivalents was: 
    
       
2007/08 
2006/07 
 
 
 
 
 
 
 
 Avge  FTE Avge  FTE 
    
       
No. 
No. 
 
Academic 
Staff 
 
    
614 
564 
Research 
Staff 
 
    
139 
147 
Academic 
Related 
Staff 
    
374 
310 
Clerical 
Staff 
 
 
    
426 
442 
Manual 
and 
Ancillary 
 
    
308 
301 
Technical 
 
 
 
 
 
 
     88 
     82 
 
    
       
1,949 1,846 
 
The above figures exclude 333 FTE (2006/07: 349 FTE) in relation to employees classified as 
casual workers that are paid by timesheet. This figure includes post-graduate students who 
assist lecturers by providing part-time teaching to students. 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
Staff Costs for the above persons: 
Wages 
and 
Salaries 
 
    
69,029 
61,950 
Social 
Security 
Costs 
 
    
5,368 
4,990 
Other Pension Costs (Note 28) 
 
 
 
 
8,307 
7,473 
Exceptional Restructuring Costs 
 
 
 
       645       300 
 
    
83,349 74,713 
 
The Exceptional Restructuring Costs relate entirely to early retirements and voluntary severance 
arrangements. 
 
        FINANCIAL STATEMENTS 2007/08 31 

 
 
NOTES TO THE ACCOUNTS 
 
 
6. 
STAFF COSTS (continued) 
 
 
 
 
 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
Staff Costs by Department: 
Academic 
Departments 
    
44,815 
40,067 
Academic 
Services 
 
    
5,816 
5,102 
Research Grants and Contracts 
 
 
 
 
6,554 
6,078 
Administration 
 
 
    
14,149 
12,569 
Catering 
and 
Residences 
    
6,664 
6,036 
Premises 
 
 
    
3,614 
3,398 
Other 
 
 
 
    
 
 
 
1,092     1,163 
 
Sub-total 
 
 
    
82,704 
74,413 
 
Exceptional Restructuring Costs 
 
 
 
       645       300 
 
Total 
 
 
 
    
83,349 74,713 
 
Emoluments of the Vice-Chancellor: 
    
       
£000 
£000 
 
Salary 
 
 
 
    
188 
199 
Pension 
 
 
    
 
 
26 
  28 
 
Total Emoluments for the Year 
 
 
 
 
214 227 
 
The emoluments of the Vice-Chancellor are determined by the Remuneration Committee which 
takes into account performance during the year and data from comparable institutions. The 
emoluments are shown on the same basis as that for higher paid staff. Prior to April 2006, the 
University’s pension contributions to USS were paid at the same rate as for other academic staff 
subject to restrictions imposed by the statutory earnings cap. From April 2006, this cap was 
removed and contributions have been paid at the normal rate.  
 
Remuneration of other Higher Paid Staff, excluding employer’s  
pension 
contributions: 
 
      
    
       No. 
No. 
 
£100,000 

£109,999 
    


 
£110,000 

£119,999 
    
1 - 
 
£120,000 - £129,999 
 
 
 
 
  1 
  - 
 
There were no payments made to former Higher Paid Staff during the year (2006/07: £Nil) for 
compensation for loss of office. 
 
32 
UNIVERSITY OF KENT 

 
 

NOTES TO THE ACCOUNTS 
 
 
7. 
OTHER OPERATING EXPENSES  
 
 
 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
 
Academic 
Departments 
    
12,205 
11,061 
Academic 
Services 
 
    
3,373 
2,851 
Research Grants and Contracts 
 
 
 
 
3,786 
4,583 
Administration (including Bursary Payments) 
 
 
  10,182 
7,727 
Catering 
and 
Residences 
    
5,466 
4,506 
Premises 
 
 
    
6,729 
6,133 
Other 
Expenses 
 
    
 
 
1,680    1,250 
 
    
43,421 38,111 
 
Other Operating Expenses include: 
Auditors’ 
Remuneration 
    
41 
39 
Auditors’ Remuneration in Respect of Non-Audit Services 
 
 
26 
  31 
Rents Paid on Buildings (Operating Leases) 
 
 
 
385 661 
 
 
 
 
 
 
 
 
 
452 731 
 
8. 
INTEREST PAYABLE 
 
 
 
 
 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
 
On Bank Loans repayable wholly in more than five years 
 
 
4,151 
4,325 
FRS17 
Finance 
Costs 
 
    


Other Interest Payable 
 
 
 
 
       1 
        - 
 
    
4,158 4,330 
 
9. 
TAXATION 
 
 
 
 
 
 
 
    
       
2007/08 
2006/07 
    
£000 
£000 
UK Corporation Tax payable on the profits of the 
University and subsidiary companies 
 
 
 
 
Nil Nil 
 
10. 
SURPLUS ON CONTINUING OPERATIONS FOR THE YEAR 
 
 
The Surplus on Continuing Operations for the Year is made up as follows: 
 
 
 
 
 
     
Restated 
    
       
2007/08 
2006/07 
    
       
£000 
£000 
 
University Surplus for the Year 
 
 
 
 
5,692 
2,804 
Surplus generated by subsidiary companies 
 
 
 
        - 
        - 
 
    
       
5,692 2,804 
 
Details of the University’s subsidiary companies can be found in Note 12. 
 
        FINANCIAL STATEMENTS 2007/08 33 

 
 
NOTES TO THE ACCOUNTS 
 
 
11. 
TANGIBLE FIXED ASSETS 
 
Consolidated and University 
 
    
Freehold 
Land 
Assets 
Under 
    
and 
Buildings 
Construction 
Equipment 
 
Total 
 £000 
£000 
£000 
£000 
Cost or Valuation 
At 1 August 2007 
 
 171,560 
3,831 
29,790 
205,181 
 
Additions    
 
8,677 
-  3,113 
11,790 
Buildings Under Construction 
 

5,818 

5,818 
Transfer Buildings Under Construction 
 
3,231 
(3,231) 


Disposals 
 
 
             - 
          -  
(2,722)     (2,722) 
 
At 31 July 2008 
 
 183,468 
  6,418 30,181 220,067 
 
Depreciation 
At 1 August 2007 
 
  33,771 

24,782 
58,553 
 
Charge for the Year   
 
6,104 

2,713 
8,817 
Disposals 
 
 
             - 
          -  
(2,722)     (2,722) 
 
At 31 July 2008 
 
   39,875 
          - 24,773 
  64,648 
 
Net Book Value 
At 31 July 2008 
 
 143,593 
  6,418 
  5,408 155,419 
 
At 1 August 2007 
 
 137,789 
  3,831 
  5,008 146,628 
 
 
Financed by Capital Grant 
  34,107 
3,877 
1,233 
39,217 
Other 
   
 
109,486 
  2,541 
  4,175 116,202 
 
Net Book Value at 31 July 2008 
 143,593 
  6,418 
  5,408 155,419 
 
Land was acquired both by gift and purchase (£139,000) and is stated at valuation of 
£8,570,000 and not depreciated. The valuation was prepared by Grimley - J R Eve (Chartered 
Surveyors) on an open market existing use basis as at 3 May 1995. The land is included in the 
Balance Sheet at this valuation and the excess of the valuation over net book value (£139,000) 
has been taken to the Revaluation Reserve (Note 21). 
 
Interest of £Nil on loans used to finance the construction of buildings has been capitalised in the 
year (Note 8). Total interest capitalised to date, included in the cost of Freehold Land and 
Buildings, amounted to £852,439 at 31 July 2008. 
 
34 
UNIVERSITY OF KENT 

 
 
NOTES TO THE ACCOUNTS 
 
 
12. 
FIXED ASSET INVESTMENTS 
 
 
    
Consolidated 
and 
University 
 
    
       
2008 
2007 
    
£000 
£000 
 
Loans 
 
 
 
    
 
 
 

  1 
 
At 31 July 2008 the University held an interest in the following companies: 
Name of Company 
 
% Shareholding 
Nature of Business 
Canterbury Business School Limited 
100 
Dormant 
Invicta Technology Investments Limited 
100 
Dormant 
Kent Business School Limited 
100 
Dormant 
Kent Enterprise Limited 
100 
Scientific and Industrial 
    
  Consultancy 
Kent Management School Limited 
100 
Dormant 
Kent Property Services Limited 
100 
Dormant 
Summer Academy Limited 
100 
Dormant 
 
The financial year-end of all the subsidiaries is 31 July. All the companies are registered in 
England and Wales.  
 
13. 
ENDOWMENT ASSETS AND CURRENT ASSET INVESTMENTS 
 
   
 
Consolidated 
and 
University 
 
 
 
 
     
Restated 
    
       
2008 
2007 
    
£000 
£000 
Endowment Asset Investments: 
Cost 
Price 
 
 
    
4,945 
4,847 
Market 
Value 
 
 
    
4,446 5,031 
 
Current Asset Investments: 
Cost 
Price 
 
 
    
3,574 
3,614 
Market 
Value 
 
 
    
3,574 3,614 
 
 
        FINANCIAL STATEMENTS 2007/08 35 

 
 
NOTES TO THE ACCOUNTS 
 
 
13. 
ENDOWMENT ASSETS AND CURRENT ASSET INVESTMENTS (continued)  
    
Consolidated 
and 
University 
 
 
 
 
     
Restated 
    
       
2008 
2007 
    
£000 
£000 
Total Investment Assets: 
Balance at 1 August at Market Value as previously stated 
 
 
8,645 
8,353 
Prior Year Adjustment (Note 15 of the Statement of 
Principal Accounting Policies) 
 
 
 
 
        - 
       1 
 
Restated Balance at 1 August at Market Value 
 
 
 
8,645 
8,354 
 
Additions 
 
 
    
58 
23 
(Depreciation)/Appreciation 
    
 
 
(683) 
   268 
 
Investment Assets at Market Value 
 
 
 
 
8,020 8,645 
 
Investments comprise the following: 
Charities 
Investment 
Funds 
    
7,838 
8,521 
Equities 
 
 
    
35 
35 
Endowment-Linked 
Bank 
Deposit     
147 
89 
Subsidiary and Associated Companies 
 
 
 
 
        - 
        - 
 
    
8,020 8,645 
 
14. 
DEBTORS 
 
 
  
 
Consolidated  University 
 
 
 
 
 
 
 2008 2007 2008 2007 
 
 £000 £000 £000 £000 
 
Amounts falling due within one year: 
Debtors 
 
 
 
 4,397 5,345 4,373 5,279 
Research 
Grants 
and 
Contracts 
 
 1,279 1,616 1,279 1,616 
Owing 
by 
Subsidiaries 
   - - - 
10 
Prepayments and Accrued Income 
 
 
3,795 2,937 3,794 2,936 
 
 
 
 
 
 
 9,471 9,898 9,446 9,841 
Amounts falling due after more than one year: 
Debtors 
 
 
 
 
     42 
     99 
        - 
        - 
 
  
9,513 9,997 9,446 9,841 
 
 
36 
UNIVERSITY OF KENT 

 
 

NOTES TO THE ACCOUNTS 
 
 
15. 
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 
 
 
  
Consolidated 
University 
    
     
Restated   
Restated 
 
 2008 2007 2008 2007 
 
 £000 £000 £000 £000 
 
Bank Loans Due for Repayment 
 
 
1,980 
1,850 
1,980 
1,850 
Payments Received in Advance: Funding Councils   
1,341 
1,641 
1,341 
1,641 
Payments 
Received 
in 
Advance 
 
 8,292 6,708 8,292 6,708 
Creditors and Accrued Liabilities 
 
  10,012 
9,718  10,008 
9,714 
Taxation and Social Security 
 
    2,990    2,725    2,990    2,725 
 
  
24,615 22,642 24,611 22,638 
 
The comparative figures have been restated following a reclassification of a premium received 
in advance which was previously included within deferred capital grants (see Note 18). 
 
16. 
CREDITORS:  AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 
 
 
 
 
 Consolidated 
University 
    
    Restated  Restated 
 
 
 
 
 
 2008 2007 2008 2007 
 
 £000 £000 £000 £000 
 
Mortgages secured on University Buildings 
  62,608  64,458  62,608  64,458 
Less: Bank Loans repayable within one-year 
 
(1,980)  (1,850)  (1,980)  (1,850) 
Capital Grant Creditors 
 
    1,217            -    1,217            - 
 
 
 
 
 
 
 61,845 62,608 61,845 62,608 
 
Other Long-Term Liabilities 
 
    2,115    2,305    1,995    2,090 
 
  
63,960 64,913 63,840 64,698 
 
Payable as follows: 
Between one and two years 
 
 
2,334 
2,290 
2,214 
2,075 
Between two and five years 
 
 
8,761 
7,092 
8,761 
7,092 
After five years 
 
 
  52,865 55,531 52,865 55,531 
 
  
63,960 64,913 63,840 64,698 
 
The University has one variable rate loan of £750,000 that commenced on 3 February 2003 and 
is repayable by equal principal instalments until 6 February 2013. Interest is charged at the 
current LIBOR rate plus 0.75%. All other bank loans are at commercial fixed rates of between 
5.31% and 8.75% and are repayable by instalments falling due between 1 August 2008 and 1 
October 2030.  
 
The comparative figures have been restated following a reclassification of a premium received 
in advance which was previously included within deferred capital grants (see Note 18). 
 
        FINANCIAL STATEMENTS 2007/08 37 

 
 

NOTES TO THE ACCOUNTS 
 
 
17. 
PROVISIONS FOR LIABILITIES AND CHARGES 
    
    Consolidated 
and 
University 
 
Enhanced Voluntary Pensions 
Total 
 Pension Severance/ 
 Costs 
Early 
  
Retirement 
 
 £000 
£000   
£000  £000 
 
Balance at 1 August 2007 
 
92 
45 
400 
537 
 
Utilised in the Year 
 
 
(82) 
(40) 
(160) 
(282) 
Transferred from Income and  
Expenditure Account   
 
311 145 504 
   960 
 
Balance at 31 July 2008 
 
321 150 744 1,215 
 
The Pensions Provision relates to amounts payable to part-time members of staff following 
decisions by the European Court of Justice, pending the outcome of UK Industrial Tribunal 
cases. 
 
38 
UNIVERSITY OF KENT 

 
 
NOTES TO THE ACCOUNTS 
 
 
18. 
DEFERRED CAPITAL GRANTS 
 
 
 
 
 
 
Consolidated and University 
   
Restated 
Restated 
 Funding 
Other  Total 
 
Council 
Grants and  
 
  
Benefactions 
 
 £000  £000 
£000 
 
Balance at 1 August 2007 as previously stated 
 Buildings 
 
  20,588  15,341 35,929 
 
 
Equipment 
 
 
     393 
  1,096 
  1,489 
 
    
  20,981 16,437 37,418 
 
Balance Sheet Reclassification 
 Buildings 
 
 

(2,375) (2,375) 
 
Equipment 
 
 
          - 
       15 
       15 
 
 
 
 
 
 
          -  
(2,360)  
(2,360) 
 
Restated Balance at 1 August 2007 
Buildings  
 
20,588 
12,966  33,554 
Equipment 
 
 
     393 
  1,111 
  1,504 
 
   
  20,981 14,077 35,058 
 
Cash Received 
Buildings  
 
5,216 
1,257 
6,473 
Equipment 
 
 
       47 
     395 
     442 
 
    
   
 
5,263 
  1,652 
  6,915 
 
Released to Income and Expenditure 
Buildings  
(1,255) 
(755)  (2,010) 
Equipment 
 
    (187) 
    (523) 
    (710) 
 
 
 
 
 
 (1,442) 
  (1,278)  
(2,720) 
 
Balance at 31 July 2008 
Buildings  
 
24,549 
13,468  38,017 
Equipment 
 
 
     253 
     983 
  1,236 
 
   
  24,802 14,451 39,253 
 
The opening balance at 1 August 2007 has been restated in respect of a prior year adjustment 
of £15,000 from general reserves in relation to donated assets received and a reclassification of 
a £2,375,000 premium received in advance to long-term (£2,090,000) and short-term 
(£285,000) creditors. 
 
        FINANCIAL STATEMENTS 2007/08 39 

 
 
NOTES TO THE ACCOUNTS 
 
 
19. 
ENDOWMENTS 
 
 
 
 
 
Consolidated and University 
 
   
 
 
 
Specific 
General Total 
   
 
 
 £000 £000 £000 
 
Balance at 1 August 2007 at Market Value  
as previously stated 
 
 
 
4,696 
480 
5,176 
 
Prior Year Adjustments: 
Transferred to reserves 
 
 
 
(139) 

(139) 
Transferred to deferred income 
 
 
      (6) 
     - 
      (6) 
 
Restated Balance at 1 August 2007 at Market Value   
4,551 480 5,031 
 
Reclassified as: 
Unrestricted 
Permanent 
   - 
480 
480 
Restricted 
Permanent 
   
721 - 
721 
Restricted 
Expendable 
   
3,830 
     - 3,830 
 
   
 
 
 
4,551 480 5,031 
 
 
   
Unrestricted 
Restricted  Total 
Restricted 
Total Total 
   
Permanent 
Permanent 
Permanent 
Expendable 
2008 2007 
    
£000  £000  £000  £000 
£000 £000 
 
Restated Balances: 
Capital 
Value 
 
 
480 508 988 
3,513 
4,501 
4,244 
Accumulated Income         - 213 
   213 
   317 
   530 
   496 
 
Restated Balances  
at 1 August 
 
  480 
721 
1,201 
3,830 
5,031 
4,740 
 
 
New 
Endowments 
 
- 22 22 
168 
190 
107 
Investment 
Income 
 
16 28 44 
128 
172 
181 
Expenditure 
 
 
(16) (33) (49) 
(215) 
(264) 
(264) 
 
(Decrease)/Increase in 
Market Value of  
Investments  
  
(62)  
(84) 
  (146) 
  (537) 
  (683) 
   267 
 
Balance at 31 July 
  418 654 1,072 3,374 4,446 5,031 
 
Represented by: 
Capital 
Value 
 
 
418 446 864 
2,999 
3,863 
4,501 
Accumulated Income         - 208 
   208 
   375 
   583 
   530 
 
 
 
 
   418 654 1,072 3,374 4,446 5,031 
 
In previous years balances were analysed as general endowments and specific endowments. 
The revised headings above reflect the requirements of the revised SORP and the University’s 
accounting policies. 
 
40 
UNIVERSITY OF KENT 

 
 
NOTES TO THE ACCOUNTS 
 
 
20. 
PENSION RESERVE 
    
 
Consolidated 
and 
University 
 
 
 
 
 
 
    
2008 
2007 
    
£000 
£000 
 
Balance at 1 August   
 
 
 
 
(325) 
(520) 
 
Actuarial 
(Loss)/Gain 
 
    
(248) 
95 
Transferred to General Reserve 
 
 
 
 
  99 100 
 
Balance at 31 July 
 
 
 
 
 
(474) (325) 
 
21. 
REVALUATION RESERVE 
 
    
 
Consolidated 
and 
University 
 
 
    
       
2008 
2007 
 
 
 
 £000 £000 
 
Net Revaluation Amount at 1 August 
 
 
 
 
8,431 
8,464 
 
Prior Year Adjustment: Reclassification of Donated Assets Received   
        - 
    (33) 
 
Restated Net Revaluation Amount at 1 August 
 
 
 
8,431 
8,431 
 
Transferred to General Reserve 
 
 
 
 
        - 
        - 
 
Net Revaluation Amount at 31 July 
 
 
 
 
8,431 8,431 
 
The Revaluation Reserve relates to land valued at £8,431,363. 
 
22. 
MOVEMENT ON GENERAL RESERVES 
 
 
 
 
 
 Consolidated 
University 
 
   
£000 
£000 
Income and Expenditure Account Reserve: 
Balance at 1 August 2007 as previously stated 
 
 
41,028 
40,991 
Prior Year Adjustment (Note 15 of the Statement of  
Principal Accounting Policies) 
 
 
 
     141 
     141 
 
Restated Balance at 1 August 2007 
 
 
 
41,169 
41,132 
 
Transfer of Reserves from Imperial College 
 
 
21 
21 
 
Historical Cost Surplus after Depreciation of Assets at Cost,  
Disposal of Assets and Tax 
 
 
 
5,692 
5,692 
 
Transfer from Pension Liability 
 
 
 
      (99)        (99) 
 
Balance at 31 July 2008 
 
 
 
46,783 46,746 
 
 
        FINANCIAL STATEMENTS 2007/08 41 

 
 
NOTES TO THE ACCOUNTS 
 
 
23. 
RECONCILIATION OF CONSOLIDATED OPERATING SURPLUS  
TO NET CASH FROM OPERATING ACTIVITIES 

 
 
 
 
 
 
 
 
 
 Restated 
    
2007/08 
2006/07 
    
£000 
£000 
 
Surplus 
before 
Tax 
 
    
5,692 
2,804 
Depreciation 
(Note 
11) 
    
8,817 
7,781 
Deferred Capital Grants Released to Income (Note 18) 
 
 
(2,720)  (2,719) 
Interest and Endowments Receivable 
 
 
 
 
(1,356)  (1,234) 
Interest 
Payable 
 
    
4,158 
4,330 
(Increase)/Decrease 
in 
Stocks 
    
(19) 
22 
Decrease/(Increase) in Debtors, Prepayments and Research Grants   
487 
(161) 
Increase 
in 
Creditors 
 
    
3,136 
2,377 
Increase/(Decrease) 
in 
Provisions     
678 
(59) 
Other Non-cash Movements 
 
 
 
        (99)      (105) 
 
Net Cash Inflow from Operating Activities   
 
 
  18,774 13,036 
 
24. 
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 
 
 
     
Restated 
    
2007/08 
2006/07 
    
£000 
£000 
 
Income 
from 
Endowments 
    
172 
181 
Income from Investments and Short-Term Deposits  
 
 
1,089 
966 
Interest 
Paid 
 
 
    
(4,198) (4,322) 
 
Net Cash Outflow from Returns on Investments and  
Servicing 
of 
Finance 
 
    
(2,937) (3,175) 
 
25. 
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 
     
Restated 
    
2007/08 
2006/07 
    
£000 
£000 
 
Purchase of Tangible Fixed Assets  
 
 
 
  (17,834) (13,268) 
Investment 
Assets 
Sold 
    


Deferred Capital Grants Received 
 
 
 
 
6,915 
2,754 
Endowments 
Received 
    
190 
107 
Reserve Transfer from Imperial College 
 
 
 
         21         57 
 
Net Cash Outflow for Capital Expenditure and Financial Investment 
  (10,707) (10,349) 
 
 
42 
UNIVERSITY OF KENT 

 
 
NOTES TO THE ACCOUNTS 
 
 
26. 
MANAGEMENT OF LIQUID RESOURCES 
     
Restated 
    
2007/08 
2006/07 
    
£000 
£000 
 
Decrease/(Increase) in Current Asset Investments and  
Short-Term 
Deposits 
 
    
148 (228) 
 
 
 
 
 
 
 
 
  
Net Cash Inflow/(Outflow) from Management of Liquid Resources 
 
148 (228) 
 
27. 
ANALYSIS OF CHANGES IN NET DEBT 
    
Restated 
    
At Cash 
Other 
At 
    

August 
Flows 
Changes 
31 
July 
 
 
2007   
2008 
 
 
£000 £000 £000  £000 
 
Current Asset Investments 
 
 
3,614 
58 
(98) 
3,574 
Short-Term Deposits   
 
 
351 
(206) 

145 
Cash at Bank and in Hand 
 
 
11,644 3,428 
        - 15,072 
 
 
 
 
 
    
 
 
15,609 
3,280  (98) 
18,791 
Debt due within one year: 
Bank 
Loan 
 
 
   (1,850) 1,850 (1,980)  (1,980) 
Debt due after one year 
 
 
(62,608) 
        - 1,980 (60,628) 
 
    
 
 
(48,849) 5,130 
    (98) (43,817) 
 
        FINANCIAL STATEMENTS 2007/08 43 

 
 
NOTES TO THE ACCOUNTS 
 
 
28. 
PENSION SCHEMES 
The two principal pension schemes for the University’s staff are the Universities Superannuation 
Scheme (USS) and the Superannuation Arrangements of the University of London (SAUL). The 
University also participates in a Local Government Pension Fund.  
 
The total pension cost for the University and its subsidiaries are: 
    
2007/08 
2006/07 
    
£000 
£000 
 
Contributions 
to 
USS 
 
    
6,361 
5,703 
Contributions 
to 
SAUL 
    
1,791 
1,660 
Contributions to Other Schemes 
 
 
 
 
   155 
   110 
 
Total Pension Cost (Note 6) 
 
 
 
 
8,307 7,473 
 
The 2007/08 contributions to Other Schemes includes £100,333 (2006/07: £73,516) additional 
pension contributions payable to a local government pension scheme primarily in respect of past 
service performed. There is only one active member of the scheme employed by the University 
and no new members are admitted. 
 
USS PENSION SCHEME 
The University participates in the Universities Superannuation Scheme (USS), a defined benefit 
scheme which is externally funded and contracted out of the State Second Pension (S2P). The 
assets of the scheme are held in a separate fund administered by the trustee, Universities 
Superannuation Scheme Limited (USS Ltd). The appointment of directors to the board of the 
Trustee is determined by the company’s Articles of Association. Four of the directors are 
appointed by Universities UK; three are appointed by the University and College Union, of whom 
at least one must be a USS pensioner member; one is appointed by the Higher Education 
Funding Councils; and a minimum of two and a maximum of four are co-opted directors 
appointed by the board. Under the scheme trust deed and rules, the employer contribution rate 
is determined by the trustee, acting on actuarial advice.  
 
Because of the mutual nature of the scheme, the University is unable to identify its share of the 
underlying assets and liabilities of the scheme on a consistent and reasonable basis and 
therefore, as required by FRS17 ‘Retirement Benefits’, accounts for the scheme as if it were a 
defined contribution scheme. As a result, the amount charged to the Income and Expenditure 
Account represents the contributions payable to the scheme in respect of the accounting period. 
 
The latest actuarial valuation of the scheme was as at 31 March 2005. The valuation was 
carried out using the projected unit method. The assumptions which have the most significant 
effect on the result of the valuation are those relating to the rate of return on investments (i.e. 
the valuation rate of interest) and the rates of increase in salary and pensions and the assumed 
rates of mortality. In relation to the past service liabilities the financial assumptions were derived 
from market yields prevailing at the valuation date. It was assumed that the valuation rate of 
interest would be 4.5% per annum, salary increases would be 3.9% per annum (plus an 
additional allowance for increases in salaries due to age and promotion and a further amount of 
£800m of liabilities to reflect recent experience) and pensions would increase by 2.9% per 
annum. In relation to the future service liabilities it was assumed that the valuation rate of 
interest would be 6.2% per annum, including an additional investment return assumption of 
1.7% per annum, salary increases would be 3.9% per annum (also plus an allowance for 
increases in salaries due to age and promotion) and pensions would increase by 2.9% per 
annum.  
 
44 
UNIVERSITY OF KENT 

 
NOTES TO THE ACCOUNTS 
 
 
28. 
PENSION SCHEMES (continued) 
Standard Mortality tables were used as follows: 
Pre-retirement mortality 
PA92 rated down 3 years 
Post retirement mortality 
PA92 (c=2020) for all retired and non-retired 
members 
 
Use of these mortality tables reasonably reflects the actual USS experience, but also provides 
an element of conservatism to allow for further small improvements in mortality rates. The 
assumed life expectations on retirement at age 65 are: 
Males 
   
19.8 
years 
Females    
22.8 
years 
 
At the valuation date, the value of the assets of the scheme was £21,740 million and the value 
of the past service liabilities was £28,308 million indicating a deficit of £6,568 million. The assets 
therefore were sufficient to cover 77% of the benefits which had accrued to members after 
allowing for expected future increases in earnings. 
 
The actuary also valued the scheme on a number of other bases as at the valuation date. Using 
the Minimum Funding Requirement prescribed assumptions introduced by the Pensions Act 
1995, the scheme was 126% funded at that date; under the Pension Protection Fund 
regulations introduced by the Pensions Act 2004 it was 110% funded; on a buy-out basis (i.e. 
assuming the Scheme had discontinued on the valuation date) the assets would have been 
approximately 74% of the amount necessary to secure all the USS benefits with an insurance 
company; and using the FRS17 formula as if USS was a single employer scheme, the actuary 
estimated that the funding level would have been approximately 90%. 
 
Since 31 March 2005 the financial security of the scheme has undergone considerable volatility. 
The actuary has estimated that the funding level had increased to 91% at 31 March 2007, but 
that at 31 March 2008 it had fallen back to 77%. This fluctuation in the scheme’s funding level is 
due to the volatility of the investment returns on the schemes assets in the period since 31 
March 2005 compared to the returns allowed for in the funding assumptions and also the 
changing gilt yields, which are used to place a value of the scheme’s liabilities. These estimated 
funding levels are based on the funding levels at 31 March 2005, adjusted to reflect the fund’s 
actual investment performance and changes in gilt yields (i.e. the valuation rate of interest).  On 
the FRS17 basis, using a AA bond discount rate of 6% based on spot yields, the actuary 
estimated that the funding level at 31 March 2008 was 104%. An estimate of the funding level 
measured on a buy-out basis was approximately 78%. 
 
The institution contribution rate required for future service benefits alone at the date of the 
valuation was 14.3% of pensionable salaries but the trustee company, on the advice of the 
actuary, decided to maintain the institution contribution rate at 14% of pensionable salaries. 
 
Surpluses or deficits which arise at future valuations may impact on the institution’s future 
contribution commitment. The sensitivities regarding the principal assumptions used to measure 
the scheme liabilities are set out below: 
Assumption 
Change in Assumption 
Impact on Scheme 
Liabilities 

Valuation rate of interest 
Increase/Decrease by 0.5% 
Decrease/Increase by £2.2bn
Rate of pension increases 
Increase/Decrease by 0.5% 
Increase/Decrease by £1.7bn
Rate of salary growth 
Increase/Decrease by 0.5% 
Increase/Decrease by £0.5bn
Rate of mortality 
More  prudent  assumption  Increase by £0.8bn 
(mortality used at last 
actuarial valuation, rated 
down by a further year) 
 
        FINANCIAL STATEMENTS 2007/08 45 

 
 
NOTES TO THE ACCOUNTS 
 
 
28. 
PENSION SCHEMES (continued) 
USS is as a “last man standing” scheme so that in the event of the insolvency of any of the 
participating employers in USS, the amount of any pension funding shortfall (which cannot 
otherwise be recovered) in respect of that employer will be spread across the remaining 
participant employers and reflected in the next actuarial valuation of the scheme. 
 
The trustee believes that over the long-term, equity investment and investment in selected 
alternative asset classes will provide superior returns to other investment classes. The 
management structure and targets set are designed to give the fund a bias towards equities 
through portfolios that are diversified both geographically and by sector. The trustee recognises 
that it would be possible to select investmentsproducing  income  flows  broadly  similar  to  the 
estimated liability cash flows, however, in order to meet the long-term funding objective within a 
level of contributions that it considers the employers would be willing to make, the trustee has 
agreed to take on a level of risk relative to the liabilities. This taking of investment risk seeks to 
target a greater return than the matching assets would provide whilst maintaining a prudent 
approach to meeting the fund’s liabilities. Before deciding to take investment risk relative to the 
liabilities, the trustee receives advice from its investment consultant and the scheme actuary 
and considers the views of the employers. The strong positive cash flow of the scheme means 
that it is not necessary to realise investments to meet liabilities. The trustee believes that this, 
together with the ongoing flow of new entrants into the scheme and the strength of covenant of 
the employers enables it to take a long-term view of its investments. Short-term volatility of 
returns can be tolerated and need not feed through directly to the contribution rate. The actuary 
has confirmed that the scheme’s cash flow is likely to remain positive for the next ten years or 
more. 
 
The next formal triennial actuarial valuation was due as at 31 March 2008. The contribution rate 
will be reviewed as part of each valuation. This report is due to be made available later in the 
year. 
 
The USS pension cost for the University was £6,360,591 (2006/07: £5,702,835). This includes 
£541,477 (2007: £489,848) outstanding contributions at the balance sheet date. 
 
SAUL PENSION SCHEME 
The University participates in a centralised defined benefit scheme for all qualified employees 
with the assets held in separate Trustee-administered funds. The University has now adopted 
FRS17 for accounting for pension costs. It is not possible to identify the University’s share of the 
underlying assets and liabilities of SAUL. Therefore contributions are accounted for as if SAUL 
were a defined contribution scheme and pension costs are based on the amounts actually paid 
(i.e. cash amounts) in accordance with paragraphs 8-12 of FRS17. 
 
The scheme is subject to triennial valuation by professionally qualified and independent 
actuaries. The last available valuation was carried out as at 31 March 2005 using the projected 
unit credit method in which the actuarial liability makes allowance for projected earnings. The 
following assumptions were used to assess the past service funding position and future service 
liabilities: 
Valuation Method 
 
 
Projected Unit 
    
Past 
Service 
Future 
Service 
Investment return on liabilities 
 - before retirement 
 
 
 
5.5% pa 
6.5% pa 
 - after retirement 
 
 
 
4.5% pa 
4.5% pa 
 
Salary growth*  
 
 
 
4.15% pa 
4.15% pa 
Pension increases 
 
 
 
2.65% pa 
2.65% pa 
* excluding an allowance for promotion increases. 
 
46 
UNIVERSITY OF KENT 

 
NOTES TO THE ACCOUNTS 
 
 
28. 
PENSION SCHEMES (continued) 
The actuarial valuation applies to the scheme as a whole and does not identify surpluses or 
deficits applicable to individual Employers. As a whole, the market value of the scheme’s assets 
was £982 million representing 93% of the liability for benefits after allowing for expected future 
increases in salaries. 
 
Following the two informal funding reviews at 31 March 2004 and 31 March 2003, the Trustee of 
SAUL has undertaken a significant consultation exercise with Employers and representatives of 
Members regarding the level of contributions payable to SAUL. 
 
Following this consultation, the Employers have agreed to contribute 13.0% of salaries from 
August 2006 (previously 10.5% of salaries), an increase of 2.5% of salaries. Member 
contributions also increased by 1.0% of salaries to 6.0% of salaries with effect from the same 
date. 
 
Employers who have recently joined SAUL (“New Employers”) and certain employee groups (as 
agreed by the Trustee of SAUL), pay 19.2% of salaries per annum from August 2006 until the 
second actuarial valuation after entry (or some other period as agreed with the Trustee). 
 
A comparison of SAUL’s assets and liabilities calculated using assumptions consistent with 
FRS17 revealed the Scheme to be broadly balanced at the last formal valuation date (31 March 
2005). The next formal actuarial valuation was due as at 31 March 2008 when the above rates 
will be reviewed. A report on this valuation will be made available by 31 March 2009. 
 
The SAUL pension cost for the University and its subsidiary companies was £1,789,539 
(2006/07: £1,659,549). This includes £163,188 (2007: £148,511) outstanding contributions at 
the balance sheet date. 
 
LOCAL GOVERNMENT PENSION FUND 
The University also participates in a defined benefit local government pension fund, in which 
there is only one active member currently employed by the University and no new members are 
admitted.  
 
The fair values of the University’s share of the assets in the fund at the balance sheet date can 
be analysed as follows: 
    Long-Term 
  Long-Term 
 
 
 
  Expected Return 
Assets at  Expected Return 
Assets at 
 
 
 
at 31 July 2008 
31 July 2008 
at 31 July 2007 
31 July 2007 
   

pa 
£000 

pa 
£000 
 
Equities     7.8 
685 
8.0 
792 
Bonds 
    5.7 
176 
5.2 
125 
Property     5.7 
104 
6.0 
114 
Cash 
 
    4.8 
     73 5.1 
     97 
 
Total 
    7.0 1,038 7.2 1,128 
 
 
        FINANCIAL STATEMENTS 2007/08 47 

 
 

NOTES TO THE ACCOUNTS 
 
 
28. 
PENSION SCHEMES (continued) 
The main actuarial assumptions at the balance sheet date were as follows: 
 
 
 
 
31 July 2008 
31 July 2007 
    

pa 

pa 
 
Inflation/Pension increase rate 
3.8 
3.3 
Salary increase rate   
5.3 
4.8 
Expected return on assets 
7.0 
7.2 
Discount rate   
 
6.7 
5.8 
 
Life expectancy assumptions are based on the PFA92 and PMA92 tables, projected to calendar 
year 2033 for non pensioners and 2017 for pensioners. Based on this, the average life 
expectancies at age 65 are summarised below: 
    
 
Males  Females 
 
Current pensioners 
 
 
21.5 years 
24.4 years 
Future pensioners 
 
 
22.6 years 
25.5 years 
 
The fair value of the fund assets, the present value of the fund liabilities and the resulting deficit 
on the fund as recognised in the Balance Sheet are as follows: 
    
 
 
2008 
2007 
    
 
 
£000 
£000 
 
Fair Value of Fund Assets 
 
 
1,038 
1,129 
Present Value of Fund Liabilities 
 
 
(1,454)  (1,396) 
Present Value of Unfunded Liabilities 
 
 
   (58) 
   (58) 
 
Net Pension Liability   
 
 
 (474)  
(325) 
 
 
48 
UNIVERSITY OF KENT 

 
 
NOTES TO THE ACCOUNTS 
 
 
28. 
PENSION SCHEMES (continued) 
The movement in the deficit during the year can be analysed as follows: 
    
   
2007/08 
2006/07 
    
   
£000 
£000 
 
Defined Benefit Obligation at 1 August 
 
 
(1,454)  (1,535) 
 
Current Service Cost   
 
 
(7) 
(9) 
Interest Cost   
 
 
 
(82) 
(76) 
Contributions by Members 
 
 
(2) 
(2) 
Actuarial (Losses)/Gains 
 
 
(47) 
70 
Past Service Costs 
 
 
 
(6) 

 
Estimated Unfunded Benefits Paid 
 
 


Estimated Benefits Paid 
 
 
     81 
     94 
 
Defined Benefit Obligation at 31 July 
 
 
(1,512) (1,454) 
 
Fair Value of Employer’s Assets at 1 August 
 
1,129 
1,015 
 
Expected Return on Assets 
 
 
82 
71 
Contributions by Members 
 
 


Contributions by the University 
 
 
107 
110 
Contributions in respect of Unfunded Benefits 
 


Actuarial (Losses)/Gains 
 
 
(201) 
25 
Unfunded Benefits Paid 
 
 
(5) 
(4) 
Benefits Paid   
 
 
 
    (81)      (94) 
 
Fair Value of Employer’s Assets at 31 July  
 
1,038 1,129 
 
Net Pension Fund Deficit at 31 July 
 
 
  (474)    (325) 
 
 
        FINANCIAL STATEMENTS 2007/08 49 

 
NOTES TO THE ACCOUNTS 
 
 
28. 
PENSION SCHEMES (continued) 
The amounts recognised in the Income and Expenditure Account in the current year can be 
analysed as follows: 
    
2007/08 
 
2006/07 
 
 
£000 
% of pay 
£000 
% of pay 
 
Current Service Cost   

23.9% 

26.5% 
Interest 
Cost 
 
 
82 264.5%  76 233.0% 
Expected Return on Employer Assets 
(82) 
(264.5%) 
(71) 
(217.7%) 
Past Service Cost 
 
  6  
19.4% 
   - 
       -  
 
 
 
 
 
13  
43.3% 14  
41.8% 
 
Actual Return on Fund Assets 
(111)  
96 
 
 
Amounts for the current and previous four years are as follows: 
 
 
 
 
 
 
    
 
2007/08 
2006/07 
2005/06 
2004/05 
2003/04 
 £000 
£000 
£000 
£000 
£000 
 
Fair Value of Employer Assets 
 
1,038 
1,129 
1,015 
876 

 
Present Value of Defined Benefit Obligation 
(1,512)  (1,454)  (1,535)  (1,512) 

Deficit 
   
 (474) 
(325) 
(520) 
(636) - 
Experience (Losses)/Gains on Assets 
 
(201) 
25 
76 
99 

Experience (Losses)/Gains on Liabilities   
(62) 

(2) 


 
 
Recognised in the Statement of Consolidated Total Recognised Gains and Losses (STRGL) 
 
    
 
2007/08 
2006/07 
2005/06 
2004/05 
2003/04 
 £000 
£000 
£000 
£000 
£000 
 
Actuarial (Losses)/Gains 
 
(248) 
95 
40 
(15) 

Increase/(Decrease) in Irrecoverable Surplus 
from membership fall and other factors 
 
     - 
     - 
   - 
   - 
   - 
 
Actuarial (Losses)/Gains Recognised in STRGL  (248) 
  95 40 (15) 
   - 
 
Cumulative Actuarial (Losses)/Gains 
 
(128) 120 25 (15) 
   - 
 
 
 
50 
UNIVERSITY OF KENT 

 
NOTES TO THE ACCOUNTS 
 
 
29. 
CAPITAL COMMITMENTS 
 
    
 
Consolidated 
and 
University 
 
    
       
2008 
2007 
    
£000 
£000 
 
Contractual Commitments at 31 July 
 
 
 
 
4,023 3,390 
 
30. 
FINANCIAL COMMITMENTS 
At 31 July, there were annual commitments under non-cancellable operating leases as follows: 
    
 
Consolidated 
and 
University 
 
    
       
2008 
2007 
    
       
£000 
£000 
Land and Buildings: 
Expiring within one year 
 
 
 
 
111 

Expiring within two and five years inclusive 
 
 
 
251 
251 
Expiring in over five years 
 
 
 
 
     - 124 
 
 
 
 
 
 
 
 
 
362 375 
 
Other: 
Expiring within one year 
 
 
 
 


Expiring within two and five years inclusive 
 
 
 
    - 
    6 
 
 
 
 
 
 
 
 
 
   6 
  10 
 
31. 
CONTINGENT LIABILITIES 
CROSS-GUARANTEES 
On the 23 June 1993 the University entered into a cross guarantee for the indebtedness of Kent 
Enterprise Limited in favour of National Westminster Bank Plc. 
 
UM ASSOCIATION (SPECIAL RISKS) LIMITED 

The University is a member of UM Association (Special Risks) Limited, a company limited by 
guarantee formed as a mutual association to financially assist its members in respect of certain 
terrorism risks. The rules of the Association allow the directors of the company to make 
discretionary awards to members who suffer uninsured losses arising from a terrorism incident, 
but also allow the directors to seek a supplementary contribution from all members on a pro rata 
basis if additional resources are required to meet the discretionary awards. Up to 31 July 2008, 
no supplementary contribution has been requested from the University during the lifetime of its 
membership of the Association. 
 
        FINANCIAL STATEMENTS 2007/08 51 

 
 
NOTES TO THE ACCOUNTS 
 
 
32. 
ACCESS FUNDS 
 
 
 
 
    
2007/08 
2006/07 
    
£000 
£000 
 
Balance Unspent at 1 August 
 
 
 
 
12 
57 
 
Funding 
Council 
Grants 
    
488 
534 
Interest earned 
 
 
 
 
 
    8 
    8 
 
    
       
496 
542 
 
Disbursed 
to 
students 
 
    
(490) 
(570) 
Audit 
fees 
 
 
    
(1) 
(1) 
Access administration costs 
 
 
 
 
  (13) 
  (16) 
 
Balance Unspent at 31 July  
 
 
 
 
     4 
   12 
 
Funding Council Grants are available solely for students and the University acts only as paying 
agent. The Grants and related disbursements are therefore excluded from the Income and 
Expenditure Account.  
 
33. 
RELATED PARTY TRANSACTIONS 
KENT MAN LIMITED 
The University is one of five partners in Kent MAN Limited, a company formed on 1 April 2002 
and limited by guarantee, maintaining micro-wave radio links between Higher Education 
Institutions in Kent.  
 
SUBSIDIARY COMPANIES 
All related party transactions are between the University of Kent and its wholly owned 
subsidiaries. As such the University has taken advantage of the specific exemption given under 
Financial Reporting Standard 8 and not disclosed these transactions. 
 
52 
UNIVERSITY OF KENT 

 

University of Kent
The Registry, Canterbury
Kent CT2 7NZ
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