NEWCASTLE UNIVERSITY DEVELOPMENT TRUST TRUSTEES REPORT FOR THE PERIOD ENDED 31 MARCH 2015

Transcription

1 Document 3 NEWCASTLE UNIVERSITY DEVELOPMENT TRUST TRUSTEES REPORT FOR THE PERIOD ENDED 31 MARCH 2015 The Trustees have changed the Trust s accounting date to 31 March and therefore present their report of the Trust for the eight month period ended 31 March STRUCTURE, GOVERNANCE AND MANAGEMENT Governing document The Trust was established for the benefit of the University of Newcastle upon Tyne and is governed by a Deed dated 10 May Appointment of Trustees The Trust Deed allows for a minimum of six and a maximum of twelve Trustees. The Trustees, who were in post at 31 March 2015 and at the date of this report are set out on page 2. Mrs H Parker (Chair) and Mrs J Robinson retired as Trustees on 23 March 2015 and Mr P Woods was appointed as a Trustee on 18 March Professor TE Cawston retired on 28 April 2015 and Professor CP Day was appointed as a Trustee on 29 April The Council of the University appoints up to four of the total number of Trustees, excluding the Vice-Chancellor, and at the date of this report three of these posts were filled. The Vice-Chancellor of the University is an ex-officio Trustee. The remaining non exofficio Trustees are recruited from individuals recommended by the existing Trustees. No Trustees, whether ex-officio or non ex-officio, receive benefits from the Trust in their capacity as Trustees other than occasional out of pocket expenses. Under the Trust Deed, Trustees may serve two consecutive three-year terms of office. They can be nominated to serve further terms but only after one year has elapsed from the date of the termination of their previous appointment. Mr JC FitzPatrick, Mrs O Grant, Professor E Ritchie and Mr N Swales are currently serving their second consecutive term of office. Trustee induction and training On appointment, new Trustees receive an induction pack and are offered the opportunity to attend relevant courses. The induction pack contains, inter alia, copies of: the Trust Deed, the Trustee Act 2000 Policy Statement, the Trust Risk Register, the last two sets of the Trust Report and Accounts, minutes of recent Trustee meetings and Sub-Committee meetings, and the Charity Commission booklet The Essential Trustee. During their term of office Trustees are encouraged to attend courses and conferences appropriate to their roles. Organisational structure and decision making Trustees Meetings are held twice each year and at such other times as the administrative requirements of the Trust dictate. An Investment Sub-Committee holds meetings at least twice each year with the Investment Managers. The Sub-Committee is chaired by Mr JC FitzPatrick. Mr N Swales and Mr P Woods are also Trustee members. The meetings are attended by the Trust Manager and the University Executive Director of Finance. The Sub-Committee reports to the full Board of Trustees twice each year. The Trustees form additional sub-committees in cases where the administration of Endowments warrants them and such committees all report to the full Board of Trustees. There are currently subcommittees involved in the administration of the WE Harker Foundation, the Randerson Foundation and the Robinson Library/Marjorie Robinson Bequest Funds. The Harker/Randerson Foundations Sub- Committee is chaired by Professor Chris Day and Dr KJ Beacham is also a member of the Sub- Committee. The Robinson Library/Marjorie Robinson Bequest Sub-Committee is chaired by Dr VA Hammond, with Mr JC FitzPatrick as a second Trustee member. Ms JN Catterall is the Trust Manager and is employed by the Trust on a part-time basis. The Trust s 1

2 accounts are prepared by the University s Finance Office and the Trust Manager Related party The Trust is a registered charity, independent of the University. The Trust holds funds received from donors for the benefit of the University, but only distributes these funds to the University after checking compliance with the donors wishes. Risk Register The Trustees have prepared and approved a Risk Register which meets the requirements of SORP 2005, confirming that the major risks to which the charity is exposed, as identified by the Trustees, have been reviewed and systems have been established to mitigate those risks. This is reviewed on an annual basis by the full Board of Trustees. OBJECTIVES AND ACTIVITIES Public Benefit Following the introduction of provisions regarding public benefit in the Charities Act 2011, the Trustees have reviewed the objectives and activities of the Trust in the context of the published guidance on public benefit produced by the Charity Commission. The Trustees consider that the objectives and activities of the Trust comply with this guidance and that, specifically, they support the University in the advancement of education for the public benefit. Objects The Trust was established to raise, receive and administer funds for the benefit of the University. The objects of the Trust remain as defined in the original Trust Deed: such purposes as are exclusively charitable according to the Law of England and Wales and are deemed to further the work of the University. The role of fund raising was assigned to the University Development and Alumni Relations Council on its creation in With the growth of the Development Office and the dissolution of the Development and Alumni Relations Council, fundraising is now led by the Development Team. As provided in the Trust Deed, all funds are held solely for the benefit of the University. Grants are not made to any other individuals, organisations or charities. Aims The long term aims of the Trust are: To receive and invest donations to support the goals of the University and to distribute the funds to the University, within the context of the wishes of the donors and in accordance with Charity Law. To maximise the benefit derived from those donations received through the effective and efficient management and investment of funds. Main objectives for the period The Trust s main objectives for the period ended 31 March 2015 were as follows: To continue to monitor closely the performance of the Investment Managers, in particular the overseas equity managers. To continue with the review of individual Endowments that support posts and, where appropriate, to explore potential opportunities for realignment with the current needs of the University through discussions with donors. To continue to implement the changes agreed from the above review and obtain the permission of the Charity Commission to change the objects of the endowments where necessary. Strategy to deliver objectives 2

3 Review with the relevant Investment Managers at the six monthly Investment Sub-Committee meetings the investment performances of the Endowment Funds and report the discussions to the full Trustees meetings. Continue discussions with donors and/or the Charity Commission to update endowment names and objects where necessary. Continue to explore opportunities within the University to use the Korean Lectureship Endowment and discuss with the Charity Commission the future use of the funds. ACHIEVEMENTS AND PERFORMANCE Versus long term aims The Trust funds have been invested to achieve a level of total return which has enabled the Trust to maintain the distribution rate of 4.5% of Fund value to the University. Overall the Investment Managers have continued to deliver satisfactory performances. Whereas our Overseas Managers, Aberdeen Asset Management plc (AAM) and Newton Investment Management Ltd (Newton) fell short of their benchmarks, they still delivered a satisfactory return overall. The investment performance is reviewed in more detail in the Financial Review section below. Funds have been distributed to the University once during the period in accordance with the donors wishes. The Trustees encourage feedback from beneficiaries. The Trustees received a number of letters and reports from students who have received scholarships or bursaries from the Trust, all of which were very appreciative. Extracts from a few of these are included here: I am a part-time, self-funding PhD student, who was awarded a Robinson Bequest Studentship last academic year, and again this academic year. I can honestly say that the Studentship has helped me immensely, and has provided me with opportunities that wouldn't have been available otherwise. As a History student, I had always been interested in working directly with the archival and rare book materials that make up the source materials of my research, and the Studentship provided me with an opportunity to do that. I have enjoyed this to an extent that I am considering this as a career choice in the future. Financially, the Studentship helped to alleviate financial concerns relating to studying part-time, and allowed me to concentrate on my research as well as gain the direct experience mentioned above. In all, the Studentship has been fantastic for me, and has genuinely provided new opportunities and opened new doors for my personal and professional development". Robinson Library Bequest Student, studying PhD History I feel the studentship has helped me enormously - obviously from an economic perspective the grant is very helpful and really helps to put minds at ease, especially when students (like me) are self-financing their studies. But it has also introduced me to facilities that I never really got to access in my time as an undergraduate, and this I feel is another great benefit of the studentship, both in terms of opening new avenues of research for students, but also merely having the ability to handle the collections. Robinson Library Bequest Student, studying PhD Archaeology Overseas student: I have great aspiration in making the marine field safer, making important contribution in terms of regulations working for RINA, IMO, or famous insurance company such as Allianz or Lloyd s where even Charles Letts worked for.. Obtaining the Charles Letts Memorial Postgraduate Scholarship would be an excellent financial help to reward all my sacrifices; both for me and my 3

4 mother since we have lost my father two years ago and we had to face many troubles from then on. According to this, my mom is the only person that can help me (economically) in my UK adventure and having this scholarship would be significant to me for having postgraduate experiences and possibilities abroad like other students. It seems a trivial idea, but is not. On behalf of all the students working to overcome financial difficulties to achieve their dreams, I would like to thank you again for all that you are doing. Charles Letts Scholar, studying MSc in Naval Architecture Versus objectives for the period Following regular reviews, it was apparent that AAM s performance had fallen short of their benchmark in recent years, therefore an Overseas Funds review was undertaken. Shortly after the start of the period, tenders were invited from two other overseas equity managers and AAM. After presentations by all three managers, whereas the Trustees were satisfied with AAM s overall investment strategy, performance had fallen short of comparators and it was decided to divide the Funds held by AAM and for 50% ( 4.6 million) to be transferred to Artemis Fund Managers Ltd (Artemis) for investment in the Artemis Institutional Global Capital Fund and for 50% to remain with AAM. The transfer took place in January Changes to the names and objects of five Northern Counties Kidney Research Fund (NCKRF) endowments were agreed with the NCKRF Trustees during last year and an application for a Scheme was made to the Charity Commission shortly after the beginning of the period. The Scheme was issued on 16 October Last year, the Charity Commission approved in principle the change in use of the Korea Foundation endowment from supporting a lectureship to supporting scholarships within the original spirit of the endowment, for students to learn the language and understand the culture and society. The details of the proposal from the University were still being worked on at the period-end. FINANCIAL REVIEW Introduction and Principal Funding Sources As background, all the funds held by the Trust are applied for specific purposes in connection with the University s work. Accordingly, it is the Trustees aim to invest these funds to maximise the total return (capital and income) from the funds, in accordance with prudent investment principles. This maximises the payments that can be made to the University whilst aiming to preserve the real value of the funds. Thus, the principal funding sources for the Trust are investment income and realised and unrealised gains and losses on investments. In addition, the Trust receives donations and gifts which are designated for particular University purposes. As previously indicated, however, the Trust is not engaged in fund raising and so has no direct control over the level of donations and gifts received. Nature of the funds held All but one of the funds have been given by donors for specific ring-fenced purposes and are typically utilised to support the salary costs of individual posts such as Chairs, Lectureships and Assistantships and also to support student-related scholarships and awards in various academic Schools within the University. The largest Fund, the Marjorie Robinson Bequest, was given for the benefit of the Library. Funds have usually been received in response to specific appeals, or in the form of bequests for the benefit of particular aspects of the University s teaching or research. There were 100 Funds held at 31 March 2015 which were categorised as follows: 4

5 25 Permanent Endowment Expendable Endowment 46 Restricted Income - Supporting Endowment 26 - No supporting Endowment 2 Unrestricted It can be seen that a minority of Funds comprise Income Funds but, similar to the Endowments, all but one of these are Restricted, i.e. donors have given directions as to how the monies are to be spent. In the case of Restricted Income Funds which are linked to Endowments the Trustees do not seek to hold reserves but rather to hold income in a designated fund until detailed spending proposals have been received in order to be sure that expenditure fully complies with the terms of the Endowment. In the case of Restricted Income Funds which are not linked to an Endowment ( 5,000), monies have been received for expenditure over the short-term so has not been invested within the Trust s Endowment portfolio. The Trustees keep all Funds under review, receiving detailed reports twice each year, and take such action as is necessary to ensure that donors conditions continue to be met. Results for the period The period was generally positive in global economies and financial markets. Reflecting this, the Trust s portfolio delivered a rate of return of 8.6% (2014: 5.6%) net of fees deducted in the period. The Trustees continued to believe that their on-going assumption, that the portfolio can deliver at least a long term real rate of return of 4.5% per annum, was still valid. Accordingly the Trustees agreed to make payments to the University at that rate. The payments made to the University during the 8 month period amounted to 744,000 (2014: 1,739,000) As a consequence of the above, and after absorbing the costs of the Trust, total Funds increased by 3,118,000 during the period to 53,352,000 (2014: 50,234,000). These are represented by Endowment Funds of 52,213,000 (compared to 49,404,000 at the beginning of the period) and Income Funds of 1,139,000 (compared to 830,000 at the beginning of the period). Investment Policy and Objectives Since 1994 the Trust has operated a total return policy (capital and income) for its Endowment Funds. This was formalised by the Charity Commission through a sealed order from 6 August 2003 onwards. The Charity Commission also formalised, through a sealed order, the Trust s pooling scheme from 24 October 2003 onwards. This scheme authorises the Trust to combine its individual Permanent and Expendable Endowment Funds into one pooled fund and, separately, to also combine its Income Funds into one pooled fund. The Charity Commission has also confirmed that the base date for the purpose of calculating the unapplied total return for the Permanent Endowment Funds can be the date on which donations have been received and the accounts have been prepared on this basis. The anticipated long term real rate of return from the Trust s Endowment Funds is 4.5% per annum. The annualised rate of 4.5% is unchanged from last year. The Investment Sub-Committee continues to monitor this rate closely in conjunction with the Investment Managers, in order to balance the needs of both present and future beneficiaries. This is to ensure that annual distributions from Permanent Endowments will not exceed the anticipated long term real rate of return. Majedie Asset Management Limited (Majedie) actively manages the UK equity portion of the Trust s portfolio through its UK Equity Fund and its Tortoise Fund. BlackRock Investment Management (UK) Ltd (BlackRock) passively manages the Trust s fixed interest portfolio. The overseas investments of the Trust are actively managed by AAM via its Global Fund, by Newton via its Global Higher Income Fund and Artemis via its Institutional Global Capital Fund. The performance objectives set are, in the case of the UK Equity Fund, to outperform the benchmark by +3% per annum over rolling three year periods. In 5

6 the case of the Tortoise Fund, it is to generate total returns in excess of cash and the FTSE All Share Index. In the case of the AAM Global Fund, it is to outperform the MSCI World Index, for the Newton Global Higher Income Fund, it is to outperform the FTSE-World Index and for the Artemis Institutional Global Capital Fund, it is to outperform MSCI All Country World Index. For Bonds the objective is to achieve the performance of the UK Corporate Bond Index. Majedie and BlackRock met benchmarked objectives during the period. While AAM and Newton did not, the Trustees took into account that the overall returns from the Overseas managers were satisfactory and that the benchmark indices reflected a higher level of risk than the Overseas Managers were prepared to take on investors behalf. Payments to the University The final payment to the University for the year ended 31 July 2014 was paid during this period. An interim payment for the period ended 31 March 2015 in respect of the Endowment Funds was made to the University just after the end of the period, based on 2.25% of the portfolio value at 31 July Adjustments were made to reflect inactive Funds i.e. those where the wishes of the donor could not be met temporarily, such as an academic post that was vacant. The total amount due for the period is 1,482,000 (2014: 2,195,000) of which 883,000 (2014: 1,131,000) was payable directly to the University, 499,000 (2014: 742,000) was transferable to Restricted Income Funds and 100,000 (2014: 323,000) was withheld due to vacant posts. Payments to the University from Income Funds totalled 191,000 (2014: 608,502). Reserves Policy The Trust has a less well-developed Reserves policy than many charities because of the ring-fenced nature of the majority of Funds it administers. In practice, should the income from a particular Fund prove insufficient to meet fully the costs of the designated area of activity within the University (e.g. the relevant academic salary), the University itself meets that shortfall from its own funds. The Trust holds an Undesignated Fund, valued at 47,000 in these accounts. Trustee Policy Act Statement The Trust s Trustee Policy Act Statement, is reviewed and approved annually. It includes detailed statements on: The Trust s aim in investing its Endowment Funds Balance between capital growth and income generation Investment powers and restrictions Consideration of risk The timing of payments to the University Social, environmental and ethical practices Review of the Policy Statement. PLANS FOR FUTURE PERIODS To continue to monitor closely the performance of the Investment Managers. To continue with the review of individual Endowments that support posts and where appropriate to explore potential opportunities for realignment with the current needs of the University, through discussions with donors and the Charity Commission. To commission an investment strategy review and implement its recommendations over the next two years. 6

7 STATEMENT OF TRUSTEES RESPONSIBILITIES The Trustees are responsible for preparing the Trustees Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The law applicable to charities in England and Wales requires the Trustees to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Trust and of the incoming resources and application of resources of the Trust for that period. In preparing these financial statements, the Trustees are required to: select suitable accounting policies and then apply them consistently; observe the methods and principles in the Statement of Recommended Practice: Accounting and Reporting by Charities (SORP 2005); make judgments and estimates that are reasonable and prudent; state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Trust will continue in operation. The Trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Trust and enable them to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008 and the provisions of the Trust Deed. They are also responsible for safeguarding the assets of the Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Approved by the Trustees and signed on their behalf by: Nick Swales, Chair 10 September