Consolidated Financial Statements Contents Page(s) General Information 1 Report of the Bursar 2-3 Statement of Responsibilities 4 Independent Auditors Report 5-6 Statement of Accounting Policies 7-9 Consolidated Income and Expenditure Account 10 Statement of Total Recognised Gains and Losses 11 Consolidated and University Balance Sheets 12 Consolidated Cash Flow Statement 13 Notes to the Financial Statements 14-29 Reconciliation of Harmonisation of Accounts Funding Statement with Consolidated Income and Expenditure Account 30-32 Harmonisation of Accounts Funding Statement 33 59
Consolidated Financial Statements General Information Auditors Deloitte & Touche, Deloitte & Touche House, Earlsfort Terrace, Dublin 2. Statutory Auditors Office of the Comptroller and Auditor General, Treasury Block, Dublin Castle, Dublin 2. Bankers Allied Irish Banks Plc, Main Street, Maynooth, Co. Kildare. Legal Advisers McCann FitzGerald, Solicitors, 2 Harbourmaster Place, Custom House Dock, Dublin 1. 1 1
Consolidated Financial Statements Report of the Bursar I have the pleasure to present the Consolidated Financial Statements of the National University of Ireland Maynooth for the year ended 30 th September 2006 prepared using Generally Accepted Accounting Principles (GAAP). The GAAP Consolidated Financial Statements are accompanied by a reconciliation between these statements and the previously published Harmonisation of Accounts Statements for the same period as well as the Harmonisation of Accounts Statements themselves. There are a number of differences in accounting treatments between the two formats (e.g. subsidiary companies, incorporated ancillary activities, student fees, amortisation and depreciation of capital items, research income, interest income, accruals) and explanatory notes attached to the reconciliation explain the key items in more detail. The process of adjustment is an accounting (and presentation) exercise which does not change the underlying resources available to the university. The effect of the adjustments is to report a larger deficit under the GAAP Consolidated Accounts. Review of the year: The final outcome for the year indicates a deficit of 9,215,195, which compares with a restated deficit of 6,306,138 in the previous year. This deficit arises almost exclusively from the adoption of Financial Reporting Standard 17 Retirement Benefits (FRS 17) in the Consolidated Financial Statements for the first time. The 2004/05 outturn has been restated to reflect FRS 17. The effect of this is to increase the deficit from the previously reported amount of 837,138 to a restated amount of 6,306,138. Note 25 on pages 25-28 sets out the full disclosure obligations of the university under FRS 17. Income for the year amounted to 82.5m which represents an increase of 12.8% over the previous year. State grants provided 29.1m representing 35% of total income. Tuition fees increased by 3.6m to 27.8m representing a 15% increase over the previous year. Fee increases accounted for 2.2m of this with the remainder arising from increased student numbers. Other income at 6.3m represents 7.6% of total income. This is up from 5.1m in the previous year. Expenditure increased by 12.4m or 15.6% in the year. Additional staff costs accounted for 10.3m of this increase. The represents a 21% increase on the previous year. Other operating expenses increased by 1.2m or 5.4% on the previous year. I am particularly delighted to report this modest increase on other operating expenses. It demonstrates the commitment of the university to tight cost management in a period of expansion. Cost increases generally have been biased towards academic departments and academic support services. Research Grants and Projects showed continued growth with an increase of 1m or 6.8% over the previous year. Research Grants and Projects, at 15.4m represent 18% of total university income. This is 1.1% less than in the previous year. Growth in research income is a key strategic objective of NUI Maynooth and a renewed focus will be given to growing research income during 2007. Capital expenditure during the year amounted to just 900k. This was mainly capital equipment (including research equipment). This amount is low and a indicative of the fact the Government has not funded capital equipment in universities for a number of years. Pensions: The NUI Maynooth Pension Plan remains in deficit. In the prior year an additional employer contribution of 1.5m was made to the scheme. This was to bring the funding rate to 24.6% of pay costs for members of the scheme, as recommended by the Scheme Actuary. In my Bursar s Report last year I mentioned that the HEA had established a Working Group to examine all pension issues facing the university sector, including pension scheme deficits. During the year progress has been made to the extent that the Department of Finance have acknowledged that a serious deficit situation exists and that they have a part of play in the resolution of the problem. Armed with this acknowledgement I asked the Trustees of the Pension Plan to allow the university to return to normal pension contribution levels for a two-year period. They agreed to this in May 2006. However FRS 17 demands full disclosure of our pension obligations and liabilities. Whereas we believe that the obligations identified in Note 25 rest with the State we have no legally enforceable guarantee of this. As such we have 2 2
Consolidated Financial Statements Report of the Bursar fully provided for pension costs in the income and expenditure account and fully recognised our pension obligations in the balance sheet. The effect is to generate negative revenue reserves on the balance sheet of 102m and a negative net asset position of almost 16m. I have noticed certain publicly funded bodies have created a notional debtor equivalent to the total net pension liability under FRS 17 ( 116m). Without the legally enforceable guarantee mentioned earlier I feel it would be wrong for NUI Maynooth to include such a debtor in our balance sheet. Once the effects of the GAAP requirement of reporting under FRS 17 became clear I wrote to the HEA (May 2004) setting out the position NUI Maynooth would find itself in if action was not taken. The passage of 32 months without a resolution to this problem is difficult to understand. While I do recognise the HEA Working Group has made some progress I believe the university and its Governing Authority have been placed in an intolerable situation where they are being asked to approve a set of accounts which state the university has a negative asset position on the balance sheet and that the university has incurred a substantial loss over the year to 30 th September 2006. If the expected State guarantee is forthcoming then NUI Maynooth can show a strong balance sheet and a healthy income and expenditure account. Strategic Plan 2006-2011 During the year the university made a number of advances in implementing the Strategic Plan. Resources were made available to support the reform agenda proposed by Academic Council which provides an expanded role for Deans, Faculties, Schools and Departments. In addition extra funds were provided to support postgraduate research and to foster a research culture at NUI Maynooth. These investments, which will continue in 2006/07, will bear fruit in future years. New posts created by the further rapid growth in student numbers were prioritised based on the contribution the appointment whether academic or other services would make to the achievement of the strategic intent of the university. It was heartening to witness the universal support of all within NUI Maynooth to this important initiative. Further strategic investments will be made in the years ahead. Looking forward The financial year 2006/07 will be an interesting challenge to NUI Maynooth. This is the second year of a three year transition process from the old discredited university funding method to the new HEA developed Recurrent Grant Allocation Model (RGAM). It is expected the income impact of this will exceed 1m in 2006/07 something that is to be welcomed. This financial year (2006/07) will see critical decisions taken about essential capital developments at the university. If we are to achieve our strategic intent we will need to be bold and imaginative in our approach to capital funding. On the negative side the extraordinary growth in student numbers seen in recent years will not re-occur in 2006/07. For a number of reasons, mainly the national reduction in the cohort of school leavers, our student numbers for 2006/07 will be the same as 2005/06. The university has taken a decision to compete more aggressively for undergraduate students in future years, but without compromising academic standards. A publicity and advertising campaign called The Maynooth Experience has already begun and additional resources for direct student recruitment have been deployed. The academic year 2006/07 will also be the first full year in which our revised academic structures will operate. Whereas we are confident we have the best structures for the management and governance of our university undoubtedly teething problems - from which we will learn will arise. The financial year 2006/07 will also see a renewed focus on winning additional research contracts. Conclusion The university managed its affairs well to effectively breakeven this year (before the effect of FRS 17). I expect we will breakeven again in 2006/7 (excluding FRS 17). I hope to develop and agree a score card with Governing Authority which will allow readers of the Annual Accounts determine how well we are doing in implementing our Strategic Plan. I hope to report on this next year. Finally I wish to thank staff in my own office for their unstinting efforts in getting the Consolidated Financial Statement for 2005/06 finalised. M.F. O Malley, Bursar 3 3
Consolidated Financial Statements Statement of Responsibilities The university is required to comply with the Universities Act 1997, and to keep in such form as may be approved of by An túdarás Um Ard-Oideachas, all proper and usual accounts of money received and expended by it. In preparing those Accounts, the university is required to: - select suitable accounting policies and apply them consistently - make judgements and estimates that are reasonable and prudent - prepare the financial statements on the going concern basis unless that basis is inappropriate - follow applicable accounting standards, subject to any material departures being disclosed and explained in the financial statements. The university is responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the university and which enables it to ensure that its financial statements comply with the Universities Act 1997, the Statement of Recommended Practice Accounting for Further and Higher Education Institutions and are prepared in accordance with accounting standards generally accepted in Ireland. The university is also responsible for ensuring that the business of the university is conducted in a proper and regular manner and for safeguarding all assets under its operational control and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Signed on behalf of the Governing Authority on (12 th February 2007). Professor J.G. Hughes President M.F. O Malley Bursar 4 4
Consolidated Financial Statements Independent Auditors Report to the Members of the Governing Authority of National University of Ireland Maynooth We have audited the consolidated financial statements of National University of Ireland Maynooth for the year ended 30 September 2006 which comprise the Statement of Accounting Policies, the Consolidated Income and Expenditure account, the Consolidated Statement of Total Recognised Gains and Losses, the Consolidated and University Balance Sheets, the Consolidated Cash Flow Statement and the related Notes 1 to 30. These financial statements have been prepared under the accounting policies set out in the Statement of Accounting Policies. This report is made solely to the members of the Governing Authority of National University of Ireland Maynooth, as a body. Our audit work has been undertaken so that we might state to the members of the Governing Authority those matters we state to them in our auditors 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 members of the Governing Authority, as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the university and auditors The university is responsible for preparing the financial statement, including as set out in the Statement of Responsibilities, the preparation of the financial statements in accordance with applicable Irish law and accounting standards issued by the Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland). Our responsibility, as independent auditors, 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 are properly prepared in accordance with Generally Accepted Accounting Practice in Ireland. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. 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 university 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 evaluated the overall adequacy of the presentation of information in the financial statements. Continued on the next page/ 5 5
Consolidated Financial Statements /Continued from previous page Independent Auditors Report to the Members of the Governing Authority of National University of Ireland Maynooth Opinion In our opinion the financial statements: give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of affairs of the university and its subsidiaries as at 30 September 2006 and of its deficit for the year then ended. We have obtained all the information and explanations we considered necessary for the purpose of our audit. The university s balance sheet is in agreement with the books of account. Deloitte & Touche Chartered Accountants and Registered Auditors Dublin 6 6
Consolidated Financial Statements Statement of Accounting Policies Basis of Preparation The financial statements have been prepared in accordance with accounting standards generally accepted in Ireland and the Statement of Recommended Practice Accounting for Further and Higher Education Institutions. Accounting standards generally accepted in Ireland in preparing financial statements giving a true and fair view are those published by the Institute of Chartered Accountants in Ireland and issued by the Accounting Standards Board. Accounting Convention The accounts have been prepared under the historical cost convention. Change in Accounting Policy The consolidated financial statements have been prepared using the same accounting policies as set out in the financial statements for the year ended 30 th September 2005, with the exception of the accounting policy on retirement benefits following the adoption of FRS 17 Retirement Benefits. In prior years, the university complied with the transitional disclosure requirements of this standard by way of note. For accounting periods commencing on or after 1 st January 2005 the FRS requires that pension liabilities be provided in full. This represents a change in accounting policy and the comparative figures have been restated accordingly. The effect of the change in accounting policy on retirement benefits was to decrease the consolidated surplus for the year by 11,106,000 (2005: 5,469,000), comprising an increase in staff costs of 7,499,000 (2005: 2,708,000) and an increase in other finance costs of 3,607,000 (2005: 2,761,000), and to recognise an actuarial gain in the statement of total recognised gains and losses of 468,000 (2005: loss 28,985,000). The effect of this change in accounting policy on the consolidated balance sheet was to introduce the pension liability of 105,518,000 in 2005, with a corresponding reduction in the income and expenditure account reserve. Basis of Consolidation The consolidated financial statements include the university and its subsidiary undertakings and other undertakings in which the university has a financial interest, as indicated in Note 12. Intra-group sales and profits are eliminated fully on consolidation. Joint venture undertakings are accounted for on an equity basis. In accordance with FRS2, the activities of the Students Unions have not been consolidated because the university does not control those activities. The financial statements of the University Foundation and Pension Fund are also excluded, as they are not controlled by the university. Recognition of Income Recurrent grants from the Higher Education Authority are recognised in the period in which they are receivable. Non-recurrent grants from the Higher Education Authority 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. Income from research grants, contracts and other services rendered is included to the extent of the completion of the contract or service concerned. This is generally equivalent to the sum of the relevant expenditure incurred during the year and any related contributions towards overhead costs. All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned. Income from specific endowments and donations is included to the extent of the relevant expenditure incurred during the year, together with any related contributions towards overhead costs. 7 7
Consolidated Financial Statements Statement of Accounting Policies (Continued) Fixed Assets and Depreciation Land is valued at cost and is not depreciated. Depreciation is calculated to write off the book value of each tangible fixed asset during its useful economic life on a straight-line basis at the following rates: Buildings Equipment and Furniture Computer and Related Equipment Leased Assets 50 years 10 years 3 years 20 years or lease period if shorter on life of asset Assets are not depreciated until fully commissioned. Equipment and Minor Works Equipment costing less than 10,000 per individual item is written off to the income and expenditure account in the year of acquisition. All other equipment is capitalised at cost. Capitalised equipment is depreciated over its useful economic life as follows: Leased Equipment Computer Equipment Equipment and Minor Works 20 years or primary lease period, if shorter 3 years 10 years Where equipment is acquired with the aid of specific grants it is capitalised and depreciated in accordance with the above policy, with the related grant being credited to a deferred capital grant account and released to income and expenditure account over the expected useful economic life of the related equipment. Leased Assets Leasing agreements that transfer to the university substantially all the benefits and risks of ownership of assets are treated as if the asset had been purchased outright. The assets are included in fixed assets and the capital element of the leasing commitments is shown as obligations under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is charged to the income and expenditure account in proportion to the reducing capital element outstanding. Assets held under finance leases are depreciated over the shorter of the lease term or the useful economic lives of equivalent owned assets. Assets which are held under hire purchase contracts which have the characteristics of finance leases are depreciated over their useful lives. Rental costs under operating leases are charged to expenditure in equal annual amounts over the period of the lease. Financial Assets Financial assets are held at cost less provision for impairment. 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 stock. Expenditure incurred by the university on books and consumable stocks financed from recurrent grants are charged to the income and expenditure account. 8 8
Consolidated Financial Statements Statement of Accounting Policies (Continued) Taxation As an exempt charity, the university is not liable for Corporation Tax or Income tax on any of its charitable activities. It is registered for Value Added Tax, but since the supply of education is an exempt activity on which no output tax is charged it is unable to recover input tax on the majority of its purchases. Trading activities undertaken by the university are administered through its subsidiary companies, which as commercial organisations are liable to Corporation Tax. Deferred Taxation In subsidiary companies, who do not hold a charitable status, deferred taxation is provided on all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are temporary differences between profits as computed for taxation purposes and profits as stated in the financial statements which arise because certain items of income and expenditure in the financial statements are dealt with in different periods for taxation purposes. Deferred tax is measured at the tax rates that are expected to apply in the years in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is not discounted. 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. Retirement Benefits The university operates a defined benefit pension scheme, the assets of which are held separately from those of the university. Pension costs are accounted for on the basis of charging the cost of providing pensions over the period during which the university benefits from the employees' services. Full actuarial valuations of the scheme are conducted at three-year intervals, and are reviewed annually by the Actuary and updated to reflect current conditions. The university adopted the full provisions of FRS 17 Retirement Benefits in 2006. Pension scheme assets are measured at fair value. Pension scheme liabilities are measured on an actuarial basis using the projected unit method. An excess of scheme liabilities over scheme assets is presented on the balance sheet as a liability. The pension charge in the Income and Expenditure Account comprises the current service cost and past service cost plus the difference between the expected return on scheme assets and the interest cost on the scheme liabilities. Actuarial gains and losses arising from changes in actuarial assumption, and from experience surpluses and deficits, are recognised in the statement of total recognised gains and losses for the year in which they occur. Foreign Currency Translation Transactions denominated in foreign currencies are recorded using the average rate of exchange for the period. Monetary assets and liabilities denominated in foreign currencies are translated into euro either at year-end rates or, where there are related forward foreign exchange contracts, at contract rates. The resulting exchange differences are dealt with in the determination of income and expenditure for the financial year. 9 9
Consolidated Financial Statements Consolidated Income and Expenditure Account 2006 2005 (As restated) Notes INCOME State Grants 1 29,093,562 25,599,936 Student Fees 2 27,825,029 24,198,717 Research Grants and Contracts 3 15,427,458 14,443,272 Amortisation of Deferred Capital 18 2,696,693 2,607,315 Grants Other Operating Income 4 6,251,624 5,149,218 Interest Income 5 1,158,332 1,077,943 Total Income 82,452,698 73,076,401 EXPENDITURE Staff Costs 6 52,685,712 47,169,808 FRS 17 Impact 25 7,499,000 60,184,712 2,708,000 49,877,808 Other Operating Expenses 7 23,445,552 22,229,520 Interest Payable and similar charges 8 665,377 682,698 FRS 17 Impact 25 3,607,000 4,272,377 2,761,000 3,443,698 Depreciation 11 3,990,252 3,921,329 Total Expenditure 91,892,893 79,472,355 (Deficit) before Joint Venture Surplus (9,440,195) (6,395,954) Share of Joint Venture Surplus 12 225,000 89,816 (Deficit) before Tax (9,215,195) (6,306,138) Tax 9 - - (Deficit) after Tax 10 (9,215,195) (6,306,138) The Statement of Accounting Policies (Pages 7 to 9), Cash Flow Statement (Page 13) and Notes to the Financial Statements (Pages 14 to 29) form part of these Financial Statements. The deficit for the year arose solely from continuing operations. Professor J.G. Hughes President M.F. O Malley Bursar 10 10
Consolidated Financial Statements as at 30th September 2006 Statement of Total Recognised Gains and Losses 2006 2005 (As restated) Notes (Deficit) for the year 10 (9,215,195) (6,306,138) Actuarial Gain/(Loss) 25 468,000 (28,985,000) Total Recognised losses in the year (8,747,195) (35,291,138) Prior year adjustment adoption of FRS 17 25 (105,518,000) Total Gains and Losses Recognised for the financial year (114,265,195) The Statement of Accounting Policies (Pages 7 to 9), Cash Flow Statement (Page 13) and Notes to the Financial Statements (Pages 14 to 29) form part of these Financial Statements. Professor J.G. Hughes President M.F. O Malley Bursar 11 11
Consolidated Financial Statements as at 30th September 2006 Consolidated and University Balance Sheets Consolidated 2006 2005 (As restated) University 2006 2005 (As restated) Notes Fixed Assets Tangible Assets 11 121,372,727 124,449,925 117,860,810 120,823,678 Financial Assets 12 356,220 131,220 5 5 121,728,947 124,581,145 117,860,815 120,823,683 Current Assets Stocks 13 10,209 11,760 10,209 11,760 Debtors 14 4,983,914 6,657,191 5,799,115 6,927,499 Bank 22,402,982 28,696,822 22,035,157 28,581,232 27,397,105 35,365,773 27,844,481 35,520,491 Current Liabilities Creditors (Amounts due within 1 year) 15 (28,894,959) (38,547,962) (28,813,890) (38,342,352) Net Current Liabilities (1,497,854) (3,182,189) (969,409) (2,821,861) Total Assets Less Current Liabilities 120,231,093 121,398,956 116,891,406 118,001,822 Creditors (Amounts due after 1year) 16 (19,899,021) (21,212,486) (18,205,578) (19,588,328) Net Assets excluding Pension Liability 100,332,072 100,186,470 98,685,828 98,413,494 Pension Liability 25 (116,156,000) (105,518,000) (116,156,000) (105,518,000) Net Assets including Pension Liability (15,823,928) (5,331,530) (17,470,172) (7,104,506) Deferred Capital Grants 18 86,322,273 88,067,476 84,567,829 86,273,179 Represented by: Revenue Reserves 19 (102,146,201) (93,399,006) (102,038,001) (93,377,685) Total (15,823,928) (5,331,530) (17,470,172) (7,104,506) The Statement of Accounting Policies (Pages 7 to 9), Cash Flow Statement (Page 13) and Notes to the Financial Statements (Pages 14 to 29) form part of these Financial Statements. Professor J.G. Hughes President M.F. O Malley Bursar 12 12
Consolidated Financial Statements Consolidated Cash Flow Statement Notes 2006 2005 Net Cash (Outflow)/Inflow from Operating Activities 20 (5,622,561) 8,521,336 Distribution from Joint Venture - 100,000 Returns on Investments and Servicing of Finance 21 492,955 395,245 Capital Expenditure and Financial Investment 22 38,436 (1,598,484) Net Cash (Outflow)/Inflow before Financing (5,091,170) 7,418,097 Financing 23 (1,202,670) (1,065,014) (Decrease)/Increase in Cash in Period (6,293,840) 6,353,083 Reconciliation of Net Cash (Outflow)/Inflow to Movement in Net Funds/(Debt) (Decrease)/Increase in Cash in Period (6,293,840) 6,353,083 Cash Inflow from Increase in Debt and Lease Finance 1,202,670 1,065,014 Change in Net (Debt)/Funds resulting from Cashflows (5,091,170) 7,418,097 Movement in Net (Debt)/Funds in year 24 (5,091,170) 7,418,097 Net Funds/(Debt) at beginning of year 24 6,409,712 (1,008,385) Net Funds at end of year 24 1,318,542 6,409,712 13 13
Consolidated Financial Statements Notes to the Financial Statements 2006 2005 1. State Grants State Grants allocated for Recurrent Purposes (Received from Higher Education Authority) 29,093,562 25,599,936 2. Academic Fees Academic Fee Income 27,773,263 24,142,646 Miscellaneous Fee Income 51,766 56,071 Total Fees Paid by or on behalf of Individual Students 27,825,029 24,198,717 3. Research Grants and Contracts State and Semi-State 12,959,065 10,832,454 European Union 1,234,197 1,299,894 Industry 462,824 144,432 Other 771,372 2,166,492 15,427,458 14,443,272 4. Other Operating Income Catering 1,433,334 1,272,250 Conferences and Residences 915,058 672,803 Other Income 3,903,232 3,204,165 6,251,624 5,149,218 5. Interest Income Interest Receivable 1,158,332 1,077,943 14 14
Consolidated Financial Statements Notes to the Financial Statements 2006 2005 6. Staff Costs Average weekly number of persons (Including Senior Post Holders) employed by the university during the period: No. No. Teaching and Research 601 600 Technical 33 33 Central Administration and Services 187 188 Other 105 99 Total 926 920 (As restated) Salaries and Wages 44,064,742 38,450,768 Social Welfare Costs 2,649,032 2,413,377 Pension Costs 13,470,938 9,013,663 60,184,712 49,877,808 7. Other Operating Expenses Consumables 2,435,683 2,767,733 Repairs and General Maintenance 2,679,719 1,683,230 Heat, Light, Water and Power 1,191,679 1,041,679 Books & Periodicals 1,203,836 1,297,135 Catering and Residence Operations 2,469,231 2,250,314 Audit and Professional 337,068 257,333 Rent and Rates 1,132,083 1,152,352 Capitation 860,870 783,541 Scholarships 591,800 690,900 Other Expenses 10,543,583 10,305,303 23,445,552 22,229,520 Other Operating Expenses Include: External Audit 79,550 78,935 Internal Audit 5,000 15,270 Other Services from either External or Internal Audit 8,712-15 15
Consolidated Financial Statements Notes to the Financial Statements 2006 2005 7. Other Operating Expenses (Continued) Student Service Charge Income from student service charge 3,318,159 3,042,912 Less: Reduction in State grant (950,000) (950,000) 2,368,139 2,092,912 Expenditure Student service costs (2,468,025) (2,058,999) Examination costs (477,271) (480,090) Space costs associated with student facilities (830,065) (822,234) Costs relating to registration, fees, admissions and records (1,396,498) (1,440,108) Total expenditure (5,171,859) (4,801,431) Shortfall (2,803,720) (2,708,519) Income from the student service charge represents a contribution towards the cost of student services provided by the university. During the year a capital levy was collected from students to fund Capital expenditure on student buildings amounting to 561,621 (2005: 444,308). This amount is included as a capital grant in Note 18. 8. Interest Payable and Similar Charges (As restated) On Bank Loans, Overdrafts and Other Loans Repayable wholly or partly in more than 5 years 665,377 682,698 Pension Finance Charge 3,607,000 2,761,000 Interest is payable on loans taken out to build Student Accommodation. 9. Taxation No surplus arose on activities liable to Corporation Tax. 10. (Deficit) on Continuing Operations for the Period The Surplus/(Deficit) on continuing operations for the period is made up as follows: 4,272,377 3,443,698 University (Deficit) for the period (9,399,325) (6,445,745) (Deficit)/Surplus generated by Subsidiary undertakings (40,870) 49,791 Share of Joint Venture surplus 225,000 89,816 (9,215,195) (6,306,138) 16 16
Consolidated Financial Statements Notes to the Financial Statements 11. Tangible Fixed Assets Land & Leased Buildings Equipment Equipment Total Consolidated Cost at 1/10/05 132,373,050 13,497,763 69,764 145,940,577 Additions at Cost 687,206 225,848-913,054 Cost at 30/9/06 133,060,256 13,723,611 69,764 146,853,631 Depreciation at 1/10/05 11,724,373 9,696,515 69,764 21,490,652 Depreciation for Year 2,546,543 1,443,709-3,990,252 Depreciation at 30/9/05 14,270,916 11,140,224 69,764 25,480,904 Net Book Value At 30/09/05 120,648,677 3,801,248-124,449,925 At 30/9/06 118,789,340 2,583,387-121,372,727 During the Year ended 30th September 2004, the university completed the building of student residences River Apartments Phase II. The apartments were part financed by a group of investors availing of Section 50 tax relief on eligible expenditure under Part 11a of Taxes Consolidation Act 1997. In applying Financial Reporting Standard 5 reporting the substance of transactions the university has accounted for the apartments in fixed assets on the basis of the commercial substance rather than the legal form. Under the legal form the university has restricted bank balances of 5.0m on deposit with a financial institution. This deposit will generate funds to enable the university to acquire full ownership of the building. As part of the agreement, the university has entered into an option agreement under which it is expected that the university will acquire the building, at cost in 2013. The related lease liability is included in Note 16. During the year ended 30 th September 2003, the university completed the financing arrangements for the BioSciences Building in accordance with Section 843(4) of the Taxes Consolidation Act, 1997 and as amended in Section 51 of the Finance Act 1999. In applying Financial Reporting Standard 5 reporting the substance of transactions the university has accounted for the BioSciences Building in fixed assets on the basis of the commercial substance rather than the legal form. Under the legal form the university has restricted bank balances of 8.1m on deposit with a financial institution which will generate sufficient funds to acquire full ownership of the building. As part of the agreement, the university is leasing the building from the financial institution, and has entered into an option agreement under which it is expected that the university will acquire the building, at cost in 2009. The lease liability is included in Note 16. 17 17
Consolidated Financial Statements Notes to the Financial Statements 11. Tangible Fixed Assets (Continued) During the year ended 30 th September 2003, the university completed the building of student residences River Apartments Phase I. The apartments were part financed by a group of investors availing of Section 50 tax relief on eligible expenditure under Part 11a of Taxes Consolidation Act 1997. In applying Financial Reporting Standard 5 reporting the substance of transactions the university has accounted for the apartments in fixed assets on the basis of the commercial substance rather than the legal form. Related liabilities of 9.9m (2005: 10.4m) are included in creditors. The loan is repayable by December 2012. Land & Leased Buildings Equipment Assets Total University Cost at 1/10/05 128,589,153 13,111,196 69,764 141,770,113 Additions at Cost 687,206 225,848-913,054 Cost at 30/9/06 129,276,359 13,337,044 69,764 142,683,167 Depreciation at 1/10/05 11,345,983 9,530,688 69,764 20,946,435 Depreciation for Year 2,470,865 1,405,057-3,875,922 Depreciation at 30/9/06 13,816,848 10,935,745 69,764 24,822,357 Net Book Value At 30/09/05 117,243,170 3,580,508-120,823,678 At 30/9/06 115,459,511 2,401,299-117,860,810 18 18
Consolidated Financial Statements Notes to the Financial Statements Consolidated University 2006 2005 2006 2005 12. Financial Assets Subsidiary undertakings - - 5 5 Share of Joint Venture Net Assets At start of year 131,220 141,404 - - Income for year 225,000 89,816 - - Distribution - (100,000) - - - At end of year 356,220 131,220 5 5 The university held an interest in the following subsidiary undertakings: Subsidiary undertaking Principal activity Interest Maynooth University Enterprise Holds intellectual property associated with 100% Development Limited filed patents NUIM Development Limited NUIM Facilities One Limited NUIM Facilities Two Limited NUIM Finance Limited Construction of Student Accommodation at NUI Maynooth Provision of finance facilities in connection with student accommodation Provision of maintenance and rental collection services for student accommodation Provide finance for student residential accommodation 100% 100% 100% 100% The registered office of all of the above companies is NUI Maynooth, Maynooth Co Kildare. Joint venture Maynooth Campus Conference Accommodation is a campus facility arrangement between NUI Maynooth and St Patrick s College, Maynooth to utilise the resources of both institutions in providing conference and accommodation facilities. 19 19
Consolidated Financial Statements Notes to the Financial Statements Consolidated University 2006 2005 2006 2005 13. Stocks Consumables 10,209 11,760 10,209 11,760 There is no material difference between the balance sheet amount of stock and its replacement cost. 14. Debtors Contract Research Grants and Projects Receivable 1,817,952 2,064,565 1,817,952 2,064,565 Staff House Loans 386,818 252,901 386,818 252,901 Other Debtors and Prepayments 2,779,144 4,339,725 2,765,622 3,951,439 Amounts due from Subsidiary Undertakings - - 458,983 253,072 Amounts due from Joint Venture - - 369,740 405,522 4,983,914 6,657,191 5,799,115 6,927,499 15. Creditors (Amounts falling due within 1 year) Bank Loan (Note 17) 531,067 421,802 450,000 350,000 Lease Obligations 654,352 652,822 654,352 652,822 Contract Research Grants and Projects Unexpended in Advance 6,365,663 6,823,676 6,365,663 6,823,676 Deferred Income (Note 15(i)) 3,613,093 8,055,495 5,156,293 8,055,495 Academic Fees received in Advance 5,402,470 11,645,765 5,402,470 11,645,765 Trade Creditors 2,358,204 2,128,350 2,358,204 2,128,350 Accruals 1,456,135 1,934,642 1,456,137 1,713,760 Other Creditors 7,276,076 5,896,758 5,732,872 5,896,758 PAYE/PRSI 1,237,899 988,652 1,237,899 988,652 Amounts due to Subsidiary Undertakings - - - 87,074 Total 28,894,959 38,547,962 28,813,890 38,342,352 20 20
Consolidated Financial Statements Notes to the Financial Statements Consolidated & University 15(i) 2006 2005 Deferred Income State grant received in respect of current year 24,651,160 27,037,600 State grant deferred from prior accounting year 8,055,495 6,617,831 State grant deferred to subsequent accounting years (3,613,093) (8,055,495) State grant per financial statements (Note 1) 29,093,562 25,599,936 State funding is allocated on a calendar year basis. The university financial year is based on the academic year from October to September. In accordance with the university s accounting policies recurrent grants have been recognised on an accruals basis. In any accounting year therefore, an element of funding will be deferred to subsequent accounting periods in order to match the funding to the related expenditure. Consolidated University 2006 2005 2006 2005 16. Creditors (Amounts due after 1 year) Bank Loan 11,162,294 11,809,795 9,468,850 10,037,637 Lease Obligations 8,736,727 9,402,691 8,736,728 9,402,691 Amounts due to Subsidiary Undertaking - - - 148,000 19,899,021 21,212,486 18,205,578 19,588,328 The bank loan in Notes 16 and 17 refers to a loan taken out by the university on behalf of NUIM Development Limited to fund the construction of student residences River Apartments Phase I at NUI Maynooth. 17. Borrowings Banks Loans and Overdrafts are Repayable as follows: In One Year or Less 531,067 421,802 450,000 350,000 Between One and Two Years 613,692 483,812 500,000 400,000 Between Two and Five Years 2,085,694 1,723,400 1,650,000 1,324,050 In Five Years or More 8,462,908 9,602,583 7,318,850 8,313,587 11,693,361 12,231,597 9,918,850 10,387,637 21 21
Consolidated Financial Statements Notes to the Financial Statements Other Grants State & Benefactors Total 18. Deferred Capital Grants - Consolidated At 1 st October 2005 Buildings 44,573,436 41,809,536 86,382,972 Equipment 69,079 1,615,425 1,684,504 Total 44,642,515 43,424,961 88,067,476 Cash Received Buildings 198,377 561,621 759,998 Equipment - 191,492 191,492 Total 198,377 753,113 951,490 Released to Income & Expenditure Buildings 840,657 1,010,946 1,831,603 Equipment 47,143 797,947 845,090 Total 887,800 1,808,893 2,696,693 At 30 th September 2006 Buildings 43,931,156 41,360,211 85,291,367 Equipment 21,936 1,008,970 1,030,906 Total 43,953,092 42,369,181 86,322,273 Deferred Capital Grants - University At 1 st October 2005 Buildings 44,573,436 40,015,239 84,588,675 Equipment 69,079 1,615,425 1,684,504 Total 44,642,515 41,630,664 86,273,179 Cash Received Buildings 198,377 561,621 759,998 Equipment - 191,492 191,492 Total 198,377 753,113 951,490 Released to Income & Expenditure Buildings 840,657 971,093 1,811,750 Equipment 47,143 797,947 845,090 Total 887,800 1,769,040 2,656,840 At 30 th September 2006 Buildings 43,931,156 39,605,767 83,536,923 Equipment 21,936 1,008,970 1,030,906 Total 43,953,092 40,614,737 84,567,829 22 22
Consolidated Financial Statements Notes to the Financial Statements 2006 2005 19. Reconciliation of Movement in Revenue Reserves Notes Consolidated At 1 st October as originally stated 12,118,994 12,956,132 Prior year adjustment on implementation of FRS 17 (105,518,000) (71,064,000) At 1 st October, as restated (93,399,006) (58,107,868) (Deficit) for the year (9,215,195) (6,306,138) Actuarial Profit/(Loss) on pension scheme 468,000 (28,985,000) At 30 th September (102,146,201) (93,399,006) University At 1 st October as originally stated 12,140,315 12,991,419 Prior year adjustment on implementation of FRS 17 (105,518,000) (71,064,000) At 1 st October, as restated (93,377,685) (58,072,581) (Deficit) for the year (9,128,316) (6,320,104) Actuarial Profit/(Loss) on pension scheme 468,000 (28,985,000) At 30 th September (102,038,001) (93,377,685) 20. Reconciliation of Consolidated Operating (Deficit)/Surplus to Net Cash (Outflow)/Inflow from Operating Activities (Deficit) for the Year (9,440,195) (6,395,954) Difference between pension charge and cash contribution 7,499,000 2,708,000 Pension Finance Charge 3,607,000 2,761,000 Depreciation 3,990,252 3,921,329 Deferred Capital Grants released to Income (2,696,693) (2,607,315) Interest Payable 665,377 682,698 Decrease in Stock 1,551 10,319 Decrease/(Increase) in Debtors 1,673,277 (2,045,507) (Decrease)/Increase in Creditors (9,763,798) 10,564,709 Interest Receivable (Outflow)/Inflow (1,158,332) (1,077,943) Net Cash (Outflow)/Inflow from Operating Activities (5,622,561) 8,521,336 21. Returns on Investments and Servicing of Finance Interest Receivable 1,158,332 1,077,943 Interest Payable (665,377) (682,698) Net Cash Inflow from Returns on Investments and Servicing of Finance 492,955 395,245 23 23
Consolidated Financial Statements Notes to the Financial Statements 2006 2005 22. Capital Expenditure and financial investment Purchase of Tangible Fixed Assets (913,054) (4,368,738) Deferred Capital Grants Received 951,490 2,770,254 38,436 (1,598,484) 23. Financing Increase in Short Term Borrowings 109,265 118,747 (Decrease) in Long Term Borrowings (647,501) (630,401) (Decrease)/Increase in Lease Obligations (664,434) (553,360) (1,202,670) (1,065,014) At 1/10/05 Cashflows At 30/09/06 24. Analysis of Changes in Net Funds/(Debt) Cash in Hand and at Bank 28,696,822 (6,293,840) 22,402,982 Debt due within 1 Year (421,802) (109,265) (531,067) Debt due after 1 Year (11,809,795) 647,501 (11,162,294) Lease Obligations (10,055,513) 664,434 (9,391,079) (22,287,110) 1,202,670 (21,084,440) Total 6,409,712 (5,091,170) 1,318,542 24 24
Consolidated Financial Statements Notes to the Financial Statements 25. Retirement Benefits The university operates a defined benefit pension scheme for all eligible employees the assets of which are held separately from those of the university. The pension cost is assessed using the projected unit method. For accounting periods beginning on or after 1 st January 2005, FRS 17 Retirement Benefits requires financial statements to reflect, at fair value, the assets and liabilities arising from an employer s obligations and any related funding and to recognise the costs of providing pension benefits in the accounting periods in which they are earned by employees. Previous to this, transitional arrangements existed within FRS 17 requiring certain information to be given by way of note only. This is the first set of financial statements in which the university has implemented FRS 17 in full. Comparative figures for 2005 have been restated accordingly and the impact was as follows. Income and Expenditure Account 2005 (Deficit) on ordinary activities after taxation (837,138) Prior year adjustment FRS 17 (5,469,000) Restated (6,306,138) Balance Sheet Pension liability As previously report - Prior year adjustment FRS 17 (105,518,000) Restated (105,518,000) Revenue Reserves: As previously report 12,118,994 Prior year adjustment FRS 17 (105,518,000) Restated (93,399,006) Net Assets As previously report 100,186,470 Prior year adjustment FRS 17 (105,518,000) Restated (5,331,530) A full report on the Actuarial Valuation of the Fund was carried out on the 1 st October 2003 by Mercer Limited and updated by the Actuary to take account of the requirements of FRS 17 in order to assess the liabilities (including the liability of past retirement pension supplementation payments) as at 30 th September 2006. 25 25
Consolidated Financial Statements Notes to the Financial Statements 25. Retirement Benefits (Continued) The financial assumptions used to calculate the retirement liabilities in relation to the defined benefit pension scheme under FRS17 as at 30 th September 2006 and 30 th September 2005 were as follows: 2006 2005 2004 Financial Assumptions Rate of increase in Salaries 4.00% 4.00% 4.00% Rate of increase in Pensions in payment 4.00% 4.00% 4.00% Discount Rate for Scheme Liabilities 4.60% 4.20% 5.00% Inflation Assumption 2.25% 2.25% 2.25% The market value of the assets in the scheme and the expected rates of return were as follows: Long-Term Market Long-Term Market Long-Term Market Rate of Return Value at Rate of Return Value at Rate of Return Value at Expected at 30/09/06 Expected at 30/09/05 Expected at 30/09/04 30/09/06 000 30/09/05 000 30/09/04 000 Equities 7.4% 54,179 6.6% 45,890 7.6% 33,852 Bonds 3.8% 6,042 3.1% 5,118 4.6% 5,034 Property 6.4% 2,376 4.6% 2,013 5.6% 1,395 Other 2.0% 5,296 2.0% 4,485 2.0% 1,876 Total Market Value of Assets 67,893 57,506 42,157 Present Value of Scheme Liabilities (184,049) (163,024) (113,221) Deficit in the Scheme (116,156) (105,518) (71,064) Net Pension Liability (116,156) (105,518) (71,064) 26 26
Consolidated Financial Statements Notes to the Financial Statements 25. Retirement Benefits (Continued) The requirements of FRS 17 are now fully adopted in 2005/06 and the following movements are reflected in the financial statements. Analysis of the amount charged to the Income and Expenditure Account 2006 2005 '000 000 Staff costs Current service cost (10,874) (8,527) Past service cost (775) - Total charge to operating expenses (11,649) (8,527) Other finance charges Interest on pension scheme liabilities (7,076) (5,853) Expected return on scheme assets 3,469 3,092 Net finance charge (3,607) (2,761) Analysis of the amount charged to Statement of Total Recognised Gains and Losses Actual return less expected return on scheme assets 3,511 7,284 Experience losses (11,292) (8,678) Change in actuarial assumptions 8,249 (27,591) Actuarial gain/(loss) 468 (28,985) Analysis of the movement in deficit during the year is as follows: Current service cost (10,874) (8,527) Past service cost (775) - Contributions 4,150 5,819 (7,499) (2,708) Expected net finance charge (3,607) (2,761) (11,106) (5,469) Actuarial gain/(loss) 468 (28,985) Net (deficit) at beginning of year (105,518) (71,064) Net (deficit) at the end of year (116,156) (105,518) 27 27
Consolidated Financial Statements Notes to the Financial Statements 25. Retirement Benefits (Continued) History of experience gains and losses is as follows: 2006 2005 2004 Difference between the expected and actual return on scheme assets 000 '000 '000 Amount 3,511 7,284 1,423 Percentage of scheme assets 5.2% 12.7% 3.4% Experience gains and losses on scheme liabilities Amount (11,292) (8,678) (511) Percentage of scheme liabilities (6.1%) (5.3%) (0.1%) Changes in Actuarial Assumptions Amount 8,249 (27,591) (6,006) Percentage of scheme liabilities 4.5% (16.9%) (5.3%) 26. Related Parties Transactions with subsidiaries of the university have been eliminated on consolidations and no disclosure of these transactions has therefore been given. The university has the following related party transactions. Maynooth Campus Conference & Accommodation Maynooth Campus Conference & Accommodation is a campus facility arrangement between NUI Maynooth and St. Patrick s College, Maynooth to utilise the resources of both institutions in providing conference and accommodation facilities. The balance due to the university at 30 th September 2006 was 369,740 (2005: 405,522). 27. Capital Commitments Commitments Contracted at 30 th September 2006 (2005: Nil) - Total - Commitments authorised but not contracted at 30 th September 2006 (2005: Nil) - 28 28