1. Tuition fees and education contracts

2. Funding body grants

3. Research grants and contracts

4. Other income

5. Other services rendered

6. Investment income

7. Donations and endowments

8. Staff costs

Further information on staff costs is included within the Annual Report of The Remuneration Committee.

9. Analysis of expenditure by activity

Read our published access and participation plan (APP).

Access investment

We have underspent by £573k, which reflects the fact we were unable to deliver a significant element of our face-to-face access activity because of the pandemic at a key point in the cycle (March through to August 2020) as well as planned expenditure for travel and participation in external events. In particular the costs associated with an extensive programme of residential summer schools were not required. In response to the pandemic the University was able to move much of this activity online, which was able to be delivered at a much lower cost to a much higher number of participants than originally intended. The University also opted to vire some resource indicated in the APP (e.g. AAP note 90 - funding for a proposed initiative with Generating Genius which did not pass internal scrutiny when subject to the tender process) to other planned outreach activity (expansion of sustained contact summer schools (APP note 85) and curriculum enhancement activity with the Brilliant Club (APP note 82).

Financial support

Actual financial support at £4,294k is £470k above the financial support APP submission of £3,824k. Financial support now includes payments in respect of placements, specific care leavers, PGT bursaries and young carers for which the budget was £468k and was budgeted for (and previously reported) as part of Progression and Student Success. For 2019/20 we raised the household income threshold to qualify for the Gold Scholarship and Bath Bursary to £25k/year (note 50 in the APP) which increased the number of eligible recipients, and also attracted some additional external funding for additional Income Contingent Scholarships. These amendments also contributed to the overall increase in financial support spend from the budget.

Research and evaluation

Costs incurred in 2019-20 for Research and Evaluation have been included under Access Investment as this was not recorded as a separate expenditure in the 2019-20 Access and Participation Plan but from 2020-21 has its own budget line.

10. Related party transactions

The financial statements of the University include transactions with related parties. In accordance with FRS 102 these are disclosed where members of the University of Bath’s Council or Key Management Personnel (KMP) disclose an interest in a body with whom the University undertakes transactions which are considered material to the University’s Financial Statements and/or the other party. Due to the nature of the University’s operations and the composition of the Board, being drawn from local public and private sector organisations, it is inevitable that transactions will take place with organisations in which a member of Council or KMP may have an interest. All transactions involving organisations in which a member of Council or KMP may have an interest, including those identified below, are conducted at arms length and in accordance with the University’s Financial Regulations and usual procurement procedures.

An updated register of the interests of the members of Council is maintained.

The University has taken advantage of the exemption within FRS 102 and has not disclosed transactions with other group entities where it holds 100% of the voting rights. Included within the financial statements are the following transactions with related parties:

Student Loans Company

The Student Loans Company administers loans and grants to students in universities and colleges in the UK. One member of Council is a director of the company.

University of Bath Students’ Union

The Students’ Union provides a range of services and facilities to the University’s student body. Two members of Council sit of the governing body of the Students' Union.

Reimbursements to members of Council for expenditure incurred whilst carrying out their duties amounted to £5,015 (2018/19 £7,249). 11 members of Council (2018/19 14) claimed expenses during the year.

11. Interest and other finance cost

12. Capital commitments

13. Fixed assets

We revalue our freehold and leasehold Land and Buildings on a rolling basis with approximately 25% of the Estate valued each year. This valuation is carried out by Eddisons Commercial Limited, an external Chartered Surveyor on the basis of Existing Use, Depreciated Replacement Cost or Market Valuation according to the nature and use of each building. The valuation was prepared in accordance with the Valuation Standards published by the Royal Institute of Chartered Surveyors.

The 31 July 2020 Valuation from Eddisons Commercial Limited of a selection of buildings decreased their fair value by £15.4 million.

The movement in land and buildings values following the revaluation is written back through the reversal of accumulated depreciation charged since the previous valuation exercise.

Freehold and Leasehold Land and Buildings measured by valuation at 31 July 2020 includes the following historical cost:

Leasehold land and buildings includes land with a value of £85.8 million at 31 July 2018.

Equipment includes assets donated to us, these are valued at market value as at the date when they were received.

14. Non current asset investments

15. Trade and other receivables

Debtors due in more than one year are all Other receivables.

16. Current asset investments

Investments measured at market value includes Quoted investments of £89.4m (£115.9m) and those held in unit funds where a market value can be determined of £47.0m (£12.0m).

Investments measured at cost include those held in money market funds, certificates of deposit and fixed deposits.

Current Asset investments include £5.2m held in respect of Endowments as disclosed in note 22.

17. Creditors: amounts falling due within one year

Deferred income

Included in deferred income are the following items which have been deferred until specific performance related conditions are met.

18. Creditors: amounts falling due after more than one year

Deferred income

Included in deferred income are the following items which have been deferred until specific performance related conditions are met.

19. Borrowings

20. Derivatives

The University is using hedge accounting for its interest rate swaps and foreign exchange options and as a result determined the effectiveness of the hedging arrangements. The analysis below shows the results of this assessment:

Interest rate swaps are hedging instruments associated with the University’s loan portfolio with Lloyds Bank plc and Barclays Bank plc.

Foreign Exchange options are hedging instruments associated with our current asset investments in USD denominated funds.

The movement in market value for 2019/20 is a loss of £0.7m (2018/19 loss of £3.4m) is reported as follows:

21. Provisions

Obligations to fund deficit on USS Pension

The obligation to fund the past deficit on our Superannuation Scheme (USS) arises from the contractual obligation with the pension scheme for total payments relating to benefits arising from past performance. Management have assessed future employees within the USS scheme and salary payments over the 15 year period of the contracted obligation in assessing the value of this provision and these are disclosed below:

Defined benefit obligations (LGPS)

As a multi-employer scheme where the share of assets and liabilities applicable to each employer can be defined, we have accounted for the scheme under FRS 102 as a defined benefit scheme based on a full actuarial valuation of the Fund as at 31 March 2019.

22. Endowments

Restricted net assets relating to endowments are as follows:

23. Restricted reserves

Reserves with restrictions are as follows:

24. Contingent Liability

We have entered a number of nomination agreements with three organisations whereby we underwrite the shortfall in the letting of a number of student residences. At 31 July 2020 the maximum value of the underwriting is £17,017,320 (£4,650,702 July 2019), summarised below. We do not expect any liability to be incurred as a result of these contracts as we expect all residences will be fully let as per the nomination agreements.

25. Lease obligations

The University had total operating lease commitments in respect of leased property as follows:

Operating leases are held for six properties used by us as student accommodation. As we do not control the significant residual value in these properties upon the expiry of the lease period they have not been accounted for as Service Concession Arrangements.

The lease arrangements for student accommodation expire between 2024 and 2032 and include six properties, the lease payments are reported in other operating expenses.

26. Pensions

Universities Superannuation Scheme

We participate in the Universities Superannuation Scheme (USS), a hybrid pension scheme, providing defined benefits (for all members), as well as defined contribution benefits. The assets of the scheme are held in a separate fund administered by the trustee, Universities Superannuation Scheme Limited. USS has over 202,000 members and we had 2,342 (2,339) active members at 31 July 2020.

Because of the mutual nature of the scheme, its assets are not attributed to individual Universities and a scheme-wide contribution rate is set, at the balance sheet date this was 21.1% (19.5%). We are exposed to actuarial risks associated with other Universities' employees and are unable to identify our share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis, therefore, as required by FRS 102 (28), we account for the scheme as if it were a defined contribution scheme.

Since we have entered into an agreement (the Recovery Plan) that determines how each employer within the scheme will fund the overall deficit, we recognise a liability for the contributions payable that arise from the agreement (to the extent that they relate to the deficit) and therefore an expense is recognised.

The latest available complete actuarial valuation of the Retirement Income Builder is at 31 March 2018 (the valuation date), which was carried out using the projected unit method. The valuation as at 31 March 2020 is underway but not yet complete. The assumptions that 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), rates of increase in salary and pensions and the assumed rates of mortality.

The 2018 valuation was the fifth valuation for the scheme under the scheme-specific funding regime introduced by the Pensions Act 2004, which requires schemes to adopt a statutory funding objective, which is to have sufficient and appropriate assets to cover their technical provisions. At the valuation date, the value of the assets of the scheme was £63.7 billion and the value of the scheme’s technical provisions was £67.3 billion indicating a shortfall of £3.6 billion and a funding ratio of 95%.

The key financial assumptions used in the 2018 valuation are described below. More detail is set out in the Statement of Funding Principles.

Pension increases (CPI)

Term dependent rates in line with the difference between the Fixed Interest and Index Linked yield curves, less 1.3% p.a

Discount rate (forward rates)

• Years 1-10: CPI +0.14% reducing linearly to CPI –0.73%
• Years 11-20: CPI +2.52% reducing linearly to CPI +1.55% by year 21
• Years 21+: CPI +1.55%

The main demographic assumption used relates to the mortality assumptions. These assumptions are based on analysis of the scheme’s experience carried out as part of the 2018 actuarial valuation. The mortality assumptions used in these figures are as follows:

The current life expectancies on retirement at age 65 are:

A new deficit recovery plan was put in place as part of the 2018 valuation, which requires payment of 2% of salaries over the period 1 October 2019 to 30 September 2021 at which point the rate will increase to 6%. The 2020 deficit recovery liability reflects this plan. The liability figures have been produced using the following assumptions:

*Institutions should use their own discount rate and pensionable growth rate.

To illustrate how sensitive the funding level is to experience being different from assumed, the table below shows how the valuation results at 31 March 2017 would have differed given small changes in the key assumptions.

*Assumes member life expectancy is consistent with someone one year younger than their current age (i.e. a 60 year old is observed to have the life expectancy of someone aged 59).

USS is 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.

Local Government Pension Scheme

We participate in the Avon Pension Fund which is a funded defined benefit pension scheme with the assets held in separate trustee administered funds. The assumptions which have the most significant effect on the determination of contribution levels are as follows:

The contributions payable by us were equal to 15.10% of total pensionable salaries for the period to 31 March 2020 and 16.2% for the balance of the period to the end of the financial year.

As a multi-employer scheme where the share of assets and liabilities applicable to each employer can be defined, we have accounted for the scheme under FRS 102 as a defined benefit scheme based on a full actuarial valuation of the Fund as at 31 March 2019, updated to 31 July 2020 by a qualified independent actuary.

The material assumptions used by the actuary for FRS 102 at 31 July 2020 were:

The sensitivities regarding the principal assumptions used to measure our share of the scheme liabilities as at the valuation on 31 July 2020 are set out below: