TREASURER'S REPORT Result for the Year · PDF fileCentre and the International Foundation Courses and English Language ... and academic focus and to streamline ... set out in Section

SCHOOL OF ORIENTAL AND AFRICAN STUDIES

2002 2001£'000 £'000

Operating Income 33,945 32,808

Operating Expenditure (35,457) (33,868)

Operating (deficit)/surplus before depreciation of premisesand exceptional items (1,512) (1,060)

Depreciation of premises at historical cost (387) (393)

Operating (deficit) before exceptional items (1,899) (1,453)

Exceptional costs: Restructuring (173) (198) Redemption charges payable on disposal of fixed assets - (335)

(Loss) / Gain on disposal of fixed assets (64) 6,006

Result for the year on a historical cost basis (2,136) 4,020

TREASURER'S REPORT

Result for the Year

The income and expenditure for the year to 31st July 2002 after historical cost premises depreciation is shown below:

The School made a deficit, on a historical cost basis, of £2,136,000 in the year to 31 July 2002 compared with a surplus of £4,020,000 in the year to 31 July 2001. However, the surplus in the year to 31 July 2001 included £6,006,000 profit on the sale of student residences. The position before exceptional items of income and expenditure and before charges for the depreciation of buildings was an operating deficit of £1,512,000. £407,000 of the operating deficit is attributable to non-recurring items such as investment of surpluses from sale of residences in academic initiatives and final rents on properties vacated following rationalisation of the estate. Therefore, on an underlying basis, there was an operating deficit of £1,105,000. The equivalent underlying operating deficit for the previous year was £488,000.

Income

Total operating income increased by 3.47 percent compared with the previous year. Grants from the HEFCE, recognised in 2002, decreased by 0.01 percent and income from tuition fees increased by 3.42 percent. Most of the growth in tuition fee income was generated by the Language Centre and the International Foundation Courses and English Language Studies department. Recruitment to core programmes was below budget. However, research income increased by 14.73 percent. Expenditure

Total expenditure before exceptional items increased by 3.49 percent. Staff costs increased by 6.43 percent while other operating costs increased by 1.22 percent. The increase in staff costs was attributable to a cost of living pay award of 4 percent and increases in the number of part-time staff teaching on Language Centre and International Foundation courses.

Restructuring Expenses

£173,000 of expenditure was incurred in respect of the voluntary severance and early retirement scheme.

Exceptional Redemption Costs

Exceptional loan redemption costs of £335,000 were incurred as a consequence of selling Paul Robeson House in the year to 31 July 2001. There were no exceptional redemption costs in 2002.

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TREASURER'S REPORT - Continued

Investment Performance

Invested endowment funds carried at market value stood at £14,566,000 at the year-end, a decrease of 14.8 percent, having decreased by 14.9percent in the previous year. The funds are professionally managed and their performance is monitored by reference to a charities fund index. Theinvestment strategy has been to maximise growth in the long-term. Growth stocks were the hardest hit in the down-turn of the stock market. In July2002 the School's Investment Committee decided that at least 27.5 percent of the funds should be held in high quality fixed interest securities orcash to provide some protection against further falls in the market. On 31 August 2002, management of the funds passed from Henderson GlobalInvestors to Newton Investment Managers. The School's Investment Committee, with advice from independent consultants, is currently reviewingits investment strategy.

Fundraising

The School has received grants for new scholarships, fellowships and donations for new academic posts. The School is grateful to theseorganisations and individuals.

Capital Projects

At the start of the 2001/2002 academic session the School opened a major academic and administrative building at Vernon Square. The buildingand site cost £8,600,000 and was substantially refurbished at a cost of £5,000,000. The space provided by the Vernon Square Campus allowed theSchool to vacate leasehold premises, improve facilities, reduce the cost per square metre occupied and provide for future growth.

Cash Flow

Setting aside movements in creditor and debtor balances, there was a net cash outflow on operating activities of £1,517,000. The School is takingimmediate steps to improve cash flow performance in the 2002/2003 financial year and beyond.

Conclusion

In financial terms, 2001/2002 was a difficult year for the School largely due to a shortfall in student recruitment against target.

The School undertook an academic restructuring which created three faculties from fifteen academic departments and three full fee academiccentres. Faculty Deans and administrators were appointed to provide management and academic focus and to streamline administrative systems.The School's Governing Body endorsed this investment in a faculty structure as it believes that the re-organisation will enable the School to realiseits academic potential and achieve financial stability.

The School is making strenuous efforts to improve the operating deficit for 2002/2003. This improvement will have to be achieved throughenhanced student recruitment and stringent expenditure controls. Faculty business plans are being developed in order to at least break-even atthe operating level by 2003/2004 and generate a modest surplus, on a historical cost basis, by 2004/2005. As is well known, there are seriouschallenges now facing British universities and SOAS is no exception. However, this is a time when the SOAS mission has never been moreimportant. It must be hoped that a successful implementation of these measures will be achieved and so enable the School to build a more securefinancial future.

Lastly, I would like to thank the School's staff, both academic and non-academic, for their hard work and commitment during the past year.

R.D.A. PickHonorary Treasurer

6 December 2002

Page 2


CORPORATE GOVERNANCE

The School is committed to exhibiting best practice in all aspects of corporate governance. This summary describes the manner in which theSchool has applied the principles set out in Section 1 of the Combined Code on Corporate Governance issued by the London Stock Exchange inJune 1998. Its purpose is to help the reader of the financial statements understand how the principles have been applied.

The School's Governing Body is responsible for the School's system of internal control and for reviewing its effectiveness. Such a system isdesigned to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absoluteassurance against material misstatement or loss.

The School’s Governing Body comprises lay members and academics appointed under the Charter of the School. The matters specificallyreserved to the Governing Body for decision are set out in the Charter of the School, by custom and under the Financial Memorandum with theHigher Education Funding Council for England. The Governing Body holds to itself the responsibilities for the ongoing strategic direction of theSchool, approval of major developments and the receipt of regular reports from executive officers on the day to day operations of the School. The Governing Body meets three times a year. It has a Finance and General Purposes Committee, Remuneration Committee and AuditCommittee, all of which have significant lay membership. All of these committees are formally constituted with terms of reference. The Finance and General Purposes Committee meets four times a year. It recommends to the Governing Body the annual budget and monitorsits performance. It evaluates and recommends capital expenditure programmes and keeps the estates strategy under review through a sub-committee. It reviews the School's corporate plan annually in terms of progress against objectives and it develops guidance andrecommendations for the future.

The Audit Committee meets termly and reports directly to the Governing Body. It receives the annual accounts from the School's managementwith a report from the external auditors . It has responsibility, delegated by the Governing Body, to implement the School's risk managementstrategy, the aim of which is to ensure that the Governing Body is aware of significant risks and receives assurance that these risks are beingproperly managed. Audit Committee has approved a strategy to comply with the Turnbull Committee guidance on internal control, commencing in2002/2003. In addition it agrees the annual internal audit programme and receives regular internal audit reports.

Members of the academic staff are members of the Governing Body and Finance and General Purposes Committee. Under the terms of theCharter the Governing Body is required to seek the advice of the Academic Board on certain matters. Student representatives attend meetings ofthe Governing Body by invitation.

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STATEMENT OF GOVERNORS' RESPONSIBILITIES

The Governing Body has taken reasonable steps to :

The key elements of the School's system of internal financial control, which is designed to discharge the responsibilities set out above, include the following :

The School's Governing Body is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time thefinancial position of the School and enable it to ensure that the financial statements are prepared in accordance with the Royal Charter, theStatement Of Recommended Practice: Accounting in Further and Higher Education Institutions, and other relevant accounting standards. Inaddition, within the terms and conditions of a Financial Memorandum agreed between the Higher Education Funding Council for England andthe Governing Body of the School, the Governing Body, through its designated office holder, is required to prepare financial statements foreach financial year which give a true and fair view of the state of affairs of the School and of the surplus or deficit and cash flows for that year.

In causing the financial statements to be prepared, the Governing Body has to ensure that:

a) ensure that funds from the Higher Education Funding Council for England are used only for the purposes for which they have beengiven and in accordance with the Financial Memorandum with the Higher Education Funding Council for England, the Education ReformAct 1988 and any other conditions which the Funding Council may from time to time prescribe;

b) ensure that there are appropriate financial and management controls in place to safeguard public funds and funds from other sources;

c) safeguard the assets of the School and to prevent and detect fraud;

d) secure the economical, efficient and effective management of the School's resources and expenditure.

a) suitable accounting policies are selected and applied consistently;

b) judgements and estimates are made that are reasonable and prudent;

c) applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financialstatements;

d) financial statements are prepared on the going concern basis unless it is inappropriate to presume that the School will continue inoperation.

a) clear definitions of the responsibilities of, and the authority delegated to, heads of academic and administrative departments;

b) a comprehensive medium and short term planning process, supplemented by detailed annual income, expenditure, capital and cashflow budgets;

c) regular reviews of academic performance and monthly reviews of financial results involving variance reporting and updates of forecastoutturns;

d) clearly defined and formalised requirements for approval and control of expenditure, with investment decisions involving capital orrevenue expenditure being subject to formal detailed appraisal and review according to approval levels set by the Governing Body;

e) comprehensive Financial Regulations, detailing financial controls and procedures, approved by the Audit Committee and GoverningBody;

f) a professional Internal Auditor whose annual programme is approved by the Audit Committee.

Any system of internal financial control can, however, only provide reasonable, but not absolute, assurance against materialmisstatement or loss.

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INDEPENDENT AUDITOR'S REPORT TO THE GOVERNING BODY OF THE SCHOOL OF ORIENTAL AND AFRICAN STUDIES

DELOITTE & TOUCHEChartered Accountants andRegistered AuditorsSt Albans

We have audited the financial statements of the School of Oriental and African Studies for the year ended 31 July 2002 which comprise the incomeand expenditure account, the balance sheet, the cash flow statement, the statement of recognised gains and losses, the statement of historicalcosts and surpluses and deficits and the related notes 1 to 28.

Respective responsibilities of the Governing Body and auditors

As described in the statement of governors' responsibilities the Governing Body is responsible for the preparation of financial statements inaccordance with applicable United Kingdom law and accounting standards. Our responsibilities as independent auditors are established by statute,the Auditing Practices Board, the Higher Education Funding Council for England and our profession's ethical guidance.

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 theStatement of Recommended Practice on Accounting in Further and Higher Education Institutions. We also report whether income from fundingbodies, grants and income for specific purposes and other restricted funds administered by the School have been properly applied only for thepurposes for which they were received and whether income has been applied in accordance with the Statutes and, where appropriate, with theFinancial Memorandum with the Higher Education Funding Council for England.

We also report to you if, in our opinion, the Treasurer’s Report is not consistent with the financial statements, if the School has not kept properaccounting records, the accounting records do not agree with the financial statements or if we have not received all the information andexplanations we require for our audit. We read the other information contained in the Treasurer’s Report, including the corporate governance statement, and consider the implications forour report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of audit opinion

We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board and the Audit Code ofPractice issued by the Higher Education Funding Council for England. An audit includes examination, on a test basis, of evidence relevant to theamounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by theGoverning Body in the preparation of the financial statements, and of whether the accounting policies are appropriate to the School’scircumstances, 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 withsufficient evidence to give us reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud orother irregularity or error. In forming our opinions we have evaluated the overall adequacy of the presentation of information in the financialstatements.

Opinion

In our opinion:

a. the financial statements give a true and fair view of the state of the affairs of the School as at 31 July 2002 and of the income and expendituredeficit and cash flows for the year then ended and have been properly prepared in accordance with the Statement of Recommended Practice onAccounting in Further and Higher Education;

b. in all material respects, income from the Higher Education Funding Council for England, grants and income for specific purposes and from otherrestricted funds administered by the School have been applied for the purposes for which they were received;

c. in all material respects, income has been applied in accordance with the School’s statutes and, where appropriate, with the financialmemorandum dated August 2000 with the Higher Education Funding Council for England.

Page 5


STATEMENT OF PRINCIPAL ACCOUNTING POLICIES

1. Basis of Preparation

These financial statements have been prepared in accordance with both the Statement of Recommended Practice (SORP): Accounting inFurther and Higher Education Institutions and applicable United Kingdom accounting standards.

Consolidated accounts have not been prepared as the subsidiary undertaking, SOAS Enterprises Limited, has been dormant since incorporation.In accordance with FRS2, the activities of the Student's Union have not been consolidated because the School does not control those activities.

2. Accounting Convention

The Financial Statements have been prepared under the historical cost convention as modified by the revaluation of endowment assetinvestments and certain land and buildings for which the cost is not readily ascertainable.

3. Recognition of Income

Income from research grants, contracts and other services rendered is included to the extent of the completion of the contract or serviceconcerned. This is generally equivalent to the sum of the relevant expenditure incurred during the year and any related contributions towardsoverhead 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 anyrelated contributions towards overhead costs.

Recurrent grants from the Funding Council are recognised in the period in which they are receivable.

Non-recurrent grants from Funding Council or other bodies received in respect of the acquisition or construction of fixed assets are treated asdeferred capital grants and amortised in line with depreciation over the life of the assets.

4. Pension Schemes

Retirement benefits for most employees of the School are provided by the Universities Superannuation Scheme (USS) and the SuperannuationArrangements of the University of London (SAUL). These are defined benefit schemes which are externally funded and contracted out of theState Earnings Related Pension Scheme. Contributions to the scheme are determined by qualified actuaries on the basis of triennial valuationsusing the Projected Unit method. Reviews of the scheme position are carried out in the period between valuations.

5. Land and Buildings

Properties under development are shown at cost. Buildings are depreciated at 1 or 2 percent per annum. Building refurbishments aredepreciated at 5 or 10 percent per annum depending upon estimates of their useful economic life. Freehold land is not depreciated as it isconsidered to have an indefinite useful life.

Interest costs incurred in the course of constructing properties are capitalised as part of the cost of the relevant asset.

6. Equipment

Equipment costing less than £10,000 is written off in the year of acquisition. All other equipment is capitalised, stated at cost, and depreciatedover its approximate lifespan. Where equipment is acquired with the aid of a specific grant it is capitalised and depreciated as above. Therelated grant is treated as a deferred capital grant and released to income over the expected useful life of the equipment.

Page 6


STATEMENT OF PRINCIPAL ACCOUNTING POLICIES - Continued

7. Investments

Endowment asset investments are included in the balance sheet at market value. Variations at market value are reflected in the relevantendowment fund.

8. Cash Flow and Liquid Reserves

Cash flows comprise increases or decreases in cash. Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits arerepayable on demand if they are in practice available within 24 hours without penalty. No investments, however liquid, are included as cash.

Liquid resources comprise assets held as a readily disposable store of value. They include term deposits, government securities and loan stockheld as part of the School's treasury management activities. They exclude any such assets held as endowment asset investments.

9. Maintenance of Premises

The School has a five-year rolling maintenance plan that is reviewed on an annual basis. The cost of long term and routine correctivemaintenance is charged to the income and expenditure account as incurred.

10. Taxation Status

The School is an exempt charity within the meaning of Schedule 2 of the Charities Act 1993 and as such is a charity within the meaning ofSection 506 (1) of the Taxes Act 1988. Accordingly, the School is potentially exempt from taxation in respect of income or capital gains receivedwithin categories covered by Section 505 of the Taxes Act 1988 or Section 256 of the Taxation of Chargeable Gains Act 1992 to the extent thatsuch income or gains are applied to exclusively charitable purposes. The School receives no similar exemption in respect of Value Added Tax.

11. Reserves

Specific endowment reserves are established by benefactors of the School. These funds may only be used for the purposes specified by thedonor.

General endowment reserves may be used by the School for any purpose that is within the School's powers.

Page 7


INCOME AND EXPENDITURE ACCOUNT

For the year ended 31st July 2002

Note 2002 2001INCOME £'000 £'000

Funding Council grants 1 10,956 10,957 Tuition fees and support grants 2 15,726 15,206 Research grants and contracts 3 2,445 2,131 Other income 4 4,005 3,401 Endowment and investment income 5 714 972 Deferred capital gifts and grants released 6 99 141

Total income 33,945 32,808

EXPENDITURE

Staff costs 7 21,419 20,125 Exceptional restructuring costs 7 173 198 Other operating expenses 8 13,057 12,900 Interest payable 9 447 164 Exceptional loan redemption costs payable on disposal of fixed assets 9 - 335 Depreciation - equipment 12 534 679 - premises 12 591 597

Total expenditure 36,221 34,998

DEFICIT ON CONTINUING OPERATIONS AFTER DEPRECIATIONOF FIXED ASSETS AT VALUATION (2,276) (2,190)

(Loss) / gain on disposal of fixed assets 11 (64) 6,006

(DEFICIT) / SURPLUS ON CONTINUING OPERATIONS AFTER DEPRECIATION OF FIXEDASSETS AT VALUATION AND DISPOSAL OF ASSETS - BEFORE AND AFTER TAX (2,340) 3,816

STATEMENT OF HISTORICAL COST SURPLUSES AND DEFICITS


2002 2001£'000 £'000

(Deficit) / surplus after depreciation of assets at valuation before and after tax (2,340) 3,816

Difference between historical cost depreciationand the actual charge for the yearcalculated on the revalued amount 21 204 204

Historical cost (deficit) / surplus after tax (2,136) 4,020

Page 8


BALANCE SHEET

As at 31st July 2002

Note 2002 2001£'000 £'000

FIXED ASSETSTangible assets 12 53,683 52,571

ENDOWMENT ASSET INVESTMENTS 14 14,566 17,105

CURRENT ASSETSDebtors 15 1,885 2,560 Short term deposits 2,201 1,213 Cash at bank and in hand 870 21

4,956 3,794 CREDITORS : AMOUNTS FALLING DUEWITHIN ONE YEAR 16 (7,348) (8,569)

NET CURRENT LIABILITIES (2,392) (4,775)

TOTAL ASSETS LESS CURRENT LIABILITIES 65,857 64,901

CREDITORS : AMOUNTS FALLING DUEAFTER MORE THAN ONE YEAR 17 (9,887) (4,441)

NET ASSETS 55,970 60,460

DEFERRED CAPITAL GIFTS AND GRANTS 18 8,521 8,132

ENDOWMENTSSpecific 19 7,738 7,712 General 19 6,828 9,393

14,566 17,105 RESERVES

Revaluation reserve 21 18,303 18,507 Income and expenditure account 22 14,580 16,716

32,883 35,223

TOTAL 55,970 60,460

R.D.A. Pick A. Keeble Prof. C. BundyHonorary Treasurer Director of Finance and Administration Director and Principal

The financial statements on pages 6 to 22 were approved by the Governing Body on 6th December 2002and signed on its behalf by :

Page 9


CONSOLIDATED CASH FLOW STATEMENT


Note 2002 2001£'000 £'000

As restated

CASH FLOW FROM OPERATING ACTIVITIES 24 (2,024) 1,175

Returns on investments and servicing of finance 25 191 545 Capital expenditure and financial investment 25 (1,813) (4,298) Management of liquid resources 25 (988) 5,478 Financing 25 5,468 (2,803)

INCREASE IN CASH 834 97

RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT

Increase / (decrease) in cash 26 834 97 Cash (inflow) / outflow from long term mortgages (5,468) 2,803 Cash outflow / (inflow) from short term deposits 988 (5,478)

Change in net debt (3,646) (2,578) Net debt at 1st August (3,537) (959)

NET DEBT AS AT 31 JULY 2002 26 (7,183) (3,537)

Page 10


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES


2002 2001Note £'000 £'000

(Deficit) / surplus after depreciation of assets at valuation and tax (2,340) 3,816

Depreciation of endowment asset investments 14 (3,691) (3,897) Endowment income retained for year 14 (76) 72 Endowment capital additions less withdrawals 14 1,228 1,090

TOTAL RECOGNISED (LOSSES) / GAINS RELATING TO THE YEAR (4,879) 1,081

Reconciliation

Opening reserves and endowments 52,328

Total recognised gains and losses for the year (4,879)

Closing reserves and endowments 47,449

Page 11


NOTES TO THE ACCOUNTS

1. FUNDING COUNCIL GRANTS 2002 2001£'000 £'000

Recurrent grants Teaching 5,485 3,611 Research 3,815 3,964 Teaching and research moderation - 95 Minority subjects (included within teaching 2002) - 1,845 Libraries, museums and galleries 1,166 1,137

Specific grants Chinese studies 154 154 Other specific grants 336 151

10,956 10,957

2. TUITION FEES AND SUPPORT GRANTS 2002 2001£'000 £'000

Full-time students - home and European Union 2,989 2,976 Full-time students charged overseas fees 5,614 5,378 Part-time fees 591 640 Research training support grants 20 16 Full fee course fees 6,512 6,196

15,726 15,206

3. RESEARCH GRANTS AND CONTRACTS 2002 2001£'000 £'000

Research councils 764 403 UK based charities 737 687 European Commission 1 34 Other grants and contracts 943 1,007

2,445 2,131

4. OTHER INCOME Note 2002 2001£'000 £'000

20 As restated

Rent received 762 460 Room lettings 330 331 Library fees 96 97 Residences, catering and conferences 972 939 Resales and reimbursements 295 272 Scholarships, donations and other funded activities 1,334 845 Other income 216 457

4,005 3,401

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NOTES TO THE ACCOUNTS - Continued

5. ENDOWMENT AND INVESTMENT INCOME Note 2002 2001£'000 £'000

Income from specific endowments 19 319 313 Income from general endowments 19 300 262 Interest on short term deposits 95 397

714 972

6. DEFERRED CAPITAL GIFTS AND GRANTS RELEASED 2002 2002£'000 £'000

Release in respect of depreciation of Brunei Gallery 88 141

Release in respect of depreciation of assets funded by capital grants 11 -

7. STAFF Note 2002 2001£'000 £'000

Staff costs :Wages and salaries 18,002 16,886 National Insurance 1,405 1,377 Pension costs 27 2,012 1,862

21,419 20,125

173 198

Average Full Time Equivalent Staff Numbers by Major Category : Number Number

Academic 267 259 Academically related 127 104 Clerical and manual 128 155

522 518

Accruals for compensation to senior employees whose posts were restructured totalled £100,000. This has been funded from private income and reserves, not from public monies, and results in savings to the School.

The geography department, comprising eight academic members of staff, transferred to Kings College London during the year. A number of staff formerly shown as clerical and manual were re-classified as academically related.

In 1998 the School launched a voluntary severance and early retirement scheme. The costs of this scheme amounted to :

Page 13



2002 2001 £ £

Remuneration of the Director and Principal for the year. 112,293 97,423

The number of other higher paid staff who received emoluments (excluding employer's national insurance and pension contributions) in the following ranges was: Number Number

£50,000 - £59,999 7 8 £60,000 - £69,999 4 2 £70,000 - £79,999 1 2 £80,000 - £89,999 1 -

8. OTHER OPERATING EXPENSES Note 2002 2001£'000 £'000

20 As restated

Research grants and contracts 1,059 798 Non SOAS staff 1,316 1,192 Teaching and course development 327 415 Fellowships, scholarships and other fees 829 721 Published materials 956 1,160 Information technology 711 607 Marketing and student recruitment costs 504 438 Student related costs 380 281 Grant to SOAS Students' Union 44 44 Grant to University of London Students' Union 55 71 Conferences and catering 608 697 Consumables 372 355 Furniture and equipment 160 155 Repairs and maintenance 650 642 Rent, rates and insurance 1,038 1,120 Heat, water and power 351 245 Security, caretaking and cleaning 1,142 975 Telecommunications and postage 521 508 Staff recruitment and development 544 526 Audit fees 28 28 Legal and professional fees 229 279 Other expenses 1,233 1,643

13,057 12,900

The remuneration of the Director and Principal excludes employer's national insurance contribution of £11,951 (2001: £8,807), and employer'spension contribution which is paid at the same rate as for other academic and related staff, and amounted to £13,440 (2001: £8,694). Thepost of Director and Principal was vacant for three months during 2001.

Page 14



9. INTEREST PAYABLE 2002 2001£'000 £'000

Loans repayable wholly or partly in more than five years 447 164

Exceptional loan redemption charges payable on disposal of fixed assets - 335

10. ANALYSIS OF EXPENDITURE BY ACTIVITY

Staff/ OtherRestructuring Operating Interest

Costs Expenses Payable Dep'n. Total£'000 £'000 £'000 £'000 £'000

Academic departments 15,558 3,378 - - 18,936 Administrative departments 2,837 3,170 - - 6,007 Library and information technology 2,539 1,663 - 534 4,736 Catering and conferences - 1,018 - - 1,018 Premises 320 3,512 447 591 4,870 Other expenditure 338 315 - - 652

Total per income and expenditure account 21,592 13,057 447 1,125 36,221

The depreciation charge has been funded by :Note

Revaluation reserve released 21 204 Deferred capital gifts and grants released 18 99 General income 822

1,125

11. (LOSS)/GAIN ON DISPOSAL OF FIXED ASSETS

In accordance with paragraph 40 of FRS 3, £335,000 of early redemption charges that became payable on the sale of Robeson House were shown as an exceptional item in 2001.

In 2002 furniture and internal building works at Lynton House and 46/47 Russell Square were disposed of at a loss of £64,000 after theserented premises were vacated.

In 2001 the student residence, Paul Robeson House, was disposed of generating a profit of £4,446,000. The registered charity and limitedcompany AFSIL founded by the School in association with several other schools of the University of London was dissolved. The School'sshare of the surplus on winding up amounted to £1,560,000.

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12. TANGIBLE FIXED ASSETS Land and BuildingsLeasehold

in course of Longconstruction Freehold leasehold Equipment Total

£'000 £'000 £'000 £'000 £'000Valuation / cost At 1st August 2001Valuation - - 24,250 - 24,250 Cost 2,602 11,811 15,023 3,850 33,286

Total 2,602 11,811 39,273 3,850 57,536

Additions 305 995 358 724 2,382 Disposals - - (5) (208) (213)

At 31st July 2002Valuation - - 24,250 - 24,250 Cost 2,907 12,806 15,376 4,366 35,455

Total 2,907 12,806 39,626 4,366 59,705

Depreciation At 1st August 2001 - 65 3,352 1,548 4,965 Charge for year - 85 506 534 1,125 Eliminated in respect of disposals - - - (68) (68)

At 31st July 2002 - 150 3,858 2,014 6,022

Net Book Value

At 31st July 2002 2,907 12,656 35,768 2,352 53,683

At 31st July 2001 2,602 11,746 35,921 2,302 52,571

13. INVESTMENTS

The School owns 100% of the issued share capital of 1,000 ordinary shares of SOAS Enterprises Limited, a company registered in Englandand Wales. This company is dormant.

Long Leasehold

The College building and the Philips building are held on a 999 year lease expiring in 2938. The Brunei Gallery is held on a 98 year leaseexpiring in 2091. 23/24 Russell Square is held on a 99 year lease expiring in 2094. All three leases are granted by the University of London.

The valuation of the main college buildings is based on a revaluation report as at 31st July 1995 prepared by Jones Lang Wootton, CharteredSurveyors.

Freehold

The Vernon Square campus is owned freehold by the School.

Deferred Capital Gifts and Grants (note 18)

£8,800,000 of the Brunei Gallery was funded by a capital gift from the Sultan of Brunei. This is being released to the income and expenditureaccount over the life of the Gallery to fund the depreciation charge. £88,000 was released during the year.

£44,000 of equipment was funded by a capital grant from the HEFCE. This is being released to the income and expenditure account over the lifeof the equipment to fund the depreciation charge. £11,000 was released during the year. A further £444,000 that relates to capital projects inprogress at year end was deferred. No depreciation was charged on these projects.

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14. ENDOWMENT ASSET INVESTMENTS 2002 2001Specific General Total Total

£'000 £'000 £'000 £'000

Balance at 1st August 2001 7,712 9,393 17,105 28,113 Additional capital invested with fund manager 1,228 - 1,228 1,020 Transfer of Brunei Gallery to deferred capital gifts - - - (8,273) Unrealised depreciation of investments (968) (2,087) (3,055) (3,051) Realised loss on disposal of investments (158) (478) (636) (846) Movement in cash balances held at SOAS (76) - (76) 142

Balance at 31st July 2002 7,738 6,828 14,566 17,105

Fixed interest stocks - fund manager 2,741 261 3,002 1,896 Equities - fund manager 3,569 6,211 9,780 14,159 Bank balances - fund manager 621 1,326 1,947 1,138 Bank balances - SOAS 807 (970) (163) (88)

Total endowment asset investments 7,738 6,828 14,566 17,105

Fixed interest stocks and equities at cost 13,471 14,971

15. DEBTORS 2002 2001£'000 £'000

Amounts falling due within one year :

General debtors less provision for bad debts 713 1,292 Research grants and contracts in arrears 388 608 Prepayments and accrued income 715 596 Staff loans 69 64

1,885 2,560

16. CREDITORS : AMOUNTS FALLING DUE WITHIN ONE YEAR 2002 2001£'000 £'000

Loans repayable within one year 203 181 Overdrafts - 61 Trade creditors and accruals 1,879 3,071 Other creditors 900 1,384 National Insurance and other tax payable 478 477 Access funds (note 28) 15 8 Research grants and contracts in advance 1,320 1,308 Deferred income 2,552 2,079

7,348 8,569

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17. CREDITORS : AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR2002 2001£'000 £'000

Barclays Bank loans secured on property :

Loan secured on 23/24 Russell Square at 9.99% (fixed interest rate) repayable by September 2007 1,078 1,228 Loan secured on 23/24 Russell Square at 8% (fixed interest rate) repayable by September 2007 212 244 Loan secured on Vernon Square at LIBOR plus 0.66% (variable interest rate) repayable by September 2027 8,500 3,000

9,790 4,472

University of London grant for development of MSc Finance and Financial Law 300 150 - interest free repayable by August 2009

10,090 4,622

Less due within one year (203) (181)

9,887 4,441

2002 2001£'000 £'000

The principal on these loans is repayable as follows :

First two years 708 501 Between two and five years 2,064 1,129 In more than five years 7,318 2,992

10,090 4,622

Less due within one year (203) (181)

9,887 4,441

18. DEFERRED CAPITAL GIFTS AND GRANTS

Brunei Gallery £'000

As at 1st August 2001 8,132 Released to income and expenditure account (88)

As at 31st July 2002 8,044

HEFCE £'000

As at 1st August 2001 - Deferred during the year 488 Released to income and expenditure account (11)

As at 31st July 2002 477

Total deferred capital gifts and grants 8,521

A swap contract was signed with Barclays Bank on 19 October 2001 in order to reduce the School's exposure to interest rate fluctuations on the variable rate Vernon Square loan. The effective start date of the contract was 28 June 2002. The value of the swap at year end was £4,000,000 amortising in line with the first £4,000,000 of loan repayments. The swap rate is 5.38%. This is compared to the three month LIBOR rate and the difference is payable to / by Barclays Bank. £4,981 of interest expense in the accounts relate to interest accrued on the swap contract.

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19. ENDOWMENTS Specific General Total£'000 £'000 £'000

At 1st August 2001 7,712 9,393 17,105 Additions 1,291 - 1,291 Depreciation of endowment asset investments (1,126) (2,565) (3,691) Capital withdrawals (63) - (63) Income for year 243 300 543 Transferred to income and expenditure account (319) (300) (619)

At 31st July 2002 7,738 6,828 14,566

Classified as:Note

Endowment investment assets held by fund manager 14 6,931 7,798 14,729 Cash balance held at SOAS 14 807 (970) (163)

7,738 6,828 14,566

20. PRIOR YEAR RESTATEMENT

21. REVALUATION RESERVE Note 2002 2001£'000 £'000

At 1st August and 31st July 20,407 20,407

Contributions to depreciation

At 1st August 1,900 1,696 Released in year 10 204 204

At 31st July 2,104 1,900

Net revaluation amount

At 31st July 18,303 18,507

At 1st August 18,507 18,711

Other operating income (note 4) and other operating expenses (note 8) have been re-classified. They are now more closely in line with the disclosure requirements of the HESA finance statistics return.

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22. INCOME AND EXPENDITURE ACCOUNT 2002 2001£'000 £'000

Balance at 1st August 16,716 12,696

Surplus after depreciation of assets at valuation and tax (2,340) 3,816 Release from revaluation reserve to fund depreciation charge 21 204 204

Balance at 31st July 14,580 16,716

23. CAPITAL COMMITMENTS 2002 2001£'000 £'000

Commitments contracted but not provided for at 31st July - 1,525

24. RECONCILIATION OF DEFICIT AFTER DEPRECIATION OF ASSETS AT VALUATION BEFORE AND AFTER TAX TO NET CASH (OUTFLOW) / INFLOW FROM OPERATING ACTIVITIES

Note: 2002 2001£'000 £'000

As restated

Deficit after depreciation of assets at valuation before and after tax (2,276) (2,190) Depreciation charges 12 1,125 1,276 Deferred capital grants released to income 18 (99) (141) Investment income (714) (972) Interest payable 9 447 499 Decrease in debtors 15 675 667 (Decrease) / increase in creditors 16 (1,182) 2,036

Net cash (outflow) / inflow from operating activities (2,024) 1,175

The School administers the Percival David Foundation Collection and Library on behalf of the University of London, under the guidance of thePercival David Foundation Council. A self insurance fund has been established for the collection, it is valued at £119,000 and is included in theincome and expenditure account.

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25. GROSS CASH FLOWS Note 2002 2001£'000 £'000

Returns on investments and servicing of financeIncome from endowments 19 543 647 Income from short term deposits 5 95 397 Interest paid 9 (447) (499)

191 545

Capital Expenditure and Financial InvestmentPayments to acquire tangible assets, less interest capitalised 12 (2,382) (16,204) Receipts from disposal of tangible assets 12 81 11,836 Payments to acquire endowment assets (1,228) (1,020) Receipts from endowment donations less capital withdrawals 1,228 1,090 Deferred capital gifts and grants received 488 -

(1,813) (4,298)

Management of liquid resourcesReleases from short term deposits (988) 5,478

FinancingNew secured loans 17 5,650 3,150 Mortgages (repaid) 17 (182) (5,953)

5,468 (2,803)

26. ANALYSIS OF CHANGES IN DEBTAt 1 August Cash Flows At 31 July

2001 2002£'000 £'000 £'000

Cash in hand and at bank 21 849 870 Overdrafts (61) 61 - Endowment asset investments held as cash (note 19) (88) (76) (164)

834

Short term deposits 1,213 988 2,201

Debt due within one year (181) (22) (203) Debt due after one year (4,441) (5,446) (9,887)

(3,537) (3,646) (7,183)

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27. PENSION SCHEMES

SAUL USS

Latest actuarial valuations 31/3/99 31/3/99Investment returns per annum 4.5% 4.5%Salary scale increases per annum 4.1% 3.6%Pension increases per annum 2.6% 2.6%Market value of assets at date of last valuation £846.6m £18,870mProportion of members' accrued benefits covered by the actuarial value of the assets 120% 108%

The total pension cost for the School was: 2002 2001£'000 £'000

Contributions to SAUL 273 263 Contributions to USS 1,739 1,599

Total pension cost 2,012 1,862

28. ACCESS FUNDS £'000

Balance unspent at 1st August 2001 8 Funding Council grants 194 Disbursed to students (187)

Balance retained at 31st July 2002 (note 16) 15

The School is a member institution in two pension schemes for university employees which are managed by trustees: the UniversitiesSuperannuation Scheme (USS) for academic and academic related staff and the Superannuation Arrangements of the University of London(SAUL) for all other staff.

Employer contributions are determined by the trustees on the advice of the scheme actuary. The tri-annual actuarial valuation for SAUL waslast calculated as at 31st March 1999 and the contribution rate is currently 10.5 percent. The tri-annual actuarial valuation of USS was carriedout as at 31st March 1999 and the contribution rate is currently 14 percent.

The School has now adopted FRS17 for accounting for pension costs. It is not possible to identify the School's share of the underlying assetsand liabilities of the schemes. Therefore contributions are accounted for as if the schemes were defined contribution schemes and pension costsare based on the amounts actually paid (i.e. cash amounts) in accordance with paragraphs 8-12 of FRS 17.

Details of the two schemes are as follows :

Funding Council grants are available solely for students; the School acts only as paying agent. The grants and related disbursements aretherefore excluded from the income and expenditure account.

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TREASURER'S REPORT Result for the Year · PDF fileCentre and the International Foundation Courses and English Language ... and academic focus and to streamline ... set out in Section