Statement by The Board of Trinity College Dublin · The Board of Trinity College Dublin ... These surpluses are legally committed in the long term to ... through reductions in pay

Statement by

The Board of Trinity College Dublin

Financial Reporting of the University

The University sector is required by the Higher Education Authority (HEA) to prepare two sets of financial statements which are contained in this volume. These sets of statements differ from one another in two major respects: 1) The ranges of activity within the College being reported upon

and 2) The accounting principles/policies which guide their preparation. However, although the financial statements may show different accounting positions, no matter which form of accounts are reviewed, the same message is clear. The College’s finances are under pressure to meet the College’s core objective of teaching. Funding for research has increased significantly in certain disciplines in recent years but in those areas where research funding opportunities are limited, the College has no opportunity to support their development. The College will continue to make every effort to secure funding from private and other sources to meet its strategic objectives, but the provision of high quality undergraduate education must continue to be the responsibility of the Government and must be reflected in the annual core recurrent grant. The first set of statements are Consolidated Financial Statements using Generally Accepted Accounting Principles (GAAP) which cover all activities of the College and its subsidiary undertakings in the income and expenditure account and balance sheet and are akin to statements published by commercial entities. They are not generally prepared elsewhere in the non-commercial State sector although all Universities have been required to prepare accounts on this basis in respect of financial reporting periods since 2002/03. The second set of statements are Funding Statements prepared on the basis of Irish University sector harmonised principles approved by the Higher Education Authority and the Comptroller and Auditor General and cover the teaching and research activities of the College. Funding Statements are uniformly prepared across the sector. On first reading the GAAP consolidated results for the College may appear to show a significantly better financial result for the year when compared to the long established form of harmonised funding reporting. This is entirely due to the different accounting rules employed by the two methods. The financial outcome is the same regardless of the approach used to prepared the accounts. Examples of differences in accounting treatment between the two methods are: 1. Residential & Other Ancillary Services

The Funding Statements record the activity income net of the capital repayments and operational expenditures to arrive at the overall result whereas the GAAP Consolidated Financial Statements show the activity income less operational expenditure to arrive at a result. The difference (i.e. capital repayment) between the two results is reflected in the surpluses of the GAAP Consolidation. These surpluses are legally committed in the long term to capital repayments for new residential units and other capital projects.

2. Equipment In the Funding Statements, equipment purchases (normally small in individual value) are met in full from annual non pay allocations which are a charge to the income and expenditure account in arriving at the result for the year. In the GAAP Consolidated Financial Statements however, equipment is charged to the income and expenditure account over the years of the useful life of the equipment. This is a matter of timing but does, in the year of equipment purchase, give rise to a surplus on the GAAP Consolidated Financial Statements relative to the Funding Statements.

3. Non-Equipment Expenditures In the Funding Statements annual non pay budget allocations of departments

are charged to the income and expenditure account while in the Consolidated Financial Statements the spend in the year is charged in the year in which it occurs. When the accounts are compared then the difference between the two can result in a surplus or deficit (on consolidation) depending on whether the expenditure pattern in the year is less or more than the allocation. Over time this is purely a timing difference.

These examples are intended to serve as an illustration of how the application of different accounting practices reflect the same activity Accordingly the interpretation of these financial statements, not just within the University but across the University sector needs to be considered in the context of the HEA’s own cautionary note in its 2004 report on ‘The Financial Position of Irish Universities to 30 September 2003’ as follows: “The new consolidated accounts (while an accurate accounting record according with the best international standards) could be misleading in terms of providing accessible forward planning information for the Universities and funding agencies. The treatment of depreciation, which is a real cost to the University but is not funded by Government needs to be interpreted carefully. There is a danger that this can lead those unfamiliar with the accounting details to believe that the Universities are making adequate surpluses, when in fact they are not maintaining their assets on a sustainable basis.” The Consolidated Financial Statements will result in volatility in financial results not encountered previously. The surpluses arising are not “free” or discretionary funds now available for distribution. They represent timing differences between the flows of funds and the related maturing commitments and planned future expenditure. The 2004 Consolidated Financial Statements carry a qualified audit opinion from the College’s auditors, KPMG, in relation to pension costs not being accounted for in line with the relevant accounting standard. This qualification arises from the fact that pension funding levels are determined by the HEA and are not calculated in line with the accounting standard on pension. This is not within the College’s control. Accordingly it is important to note that this qualification does not arise as a consequence of issues in relation to the management of the College’s finances.

THE UNIVERSITY OF DUBLIN

TRINITY COLLEGE

CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 30 SEPTEMBER 2004

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004

CONTENTS

Page Treasurer’s Report 3 - 5 Statement of Responsibilities 6 Independent Auditor’s Report to the Board of the University of Dublin, Trinity College 7 - 8 Consolidated Financial Statements:

- Statement of Accounting Policies 9 - 11

- Consolidated Income and Expenditure Account 12

- Consolidated Statement of Historic Cost Surpluses and Deficits 13 - Consolidated Statement of Total Recognised Gains and Losses 13

- Consolidated Balance Sheet 14

- Consolidated Cashflow Statement 15

- Notes to the Consolidated Financial Statements 16 - 31 Funding Statements:

- Statement of Accounting Policies 33 - 35

- Income and Expenditure 36

- Balance Sheet 37

- Notes to the Funding Statements 38 - 44 Reconciliation of Consolidated Financial Statements to the HEA Funding Statements 45


TREASURER'S REPORT

3

Introduction I present a set of Consolidated Financial Statements of Trinity College (incorporating the Higher Education Authority (HEA) Funding Statements and the reconciliation between both statements) presented in a format compliant with external accounting requirements. These Consolidated Financial Statements are prepared in accordance with accounting standards generally accepted in Ireland (GAAP) as published by the Institute of Chartered Accountants in Ireland and issued by the Accounting Standards Board and the Statement of Recommended Practice – Accounting for Further and Higher Education Institutions. In this context the College has reviewed its accounting policies and made judgements and estimates that are prudent to ensure a true and fair view of the College’s affairs at 30 September 2004. The HEA Funding Statements presented also in this volume has been prepared on the historically agreed harmonised basis approved by the HEA and Comptroller and Auditor General (C&AG) and as adopted by all Irish universities. The Consolidated Financial Statements include the College and its subsidiary undertakings (activities which for legal or commercial reasons are more appropriately carried out by limited companies). The Financial Statements of the Trinity Foundation, Pension Fund, Trust Funds and Student Societies and Clubs have not been included as the College does not control them. The basis of preparation is explained in greater detail in the Statement of Accounting Policies on pages 9 to 11. In my view, these Consolidated Financial Statements are not readily or directly comparable with other universities because they include all university activity, publicly and privately funded, which varies considerably in breadth and structure across institutions within the university sector. Audit Qualification I draw your attention to the qualified audit opinion issued by the College auditors KPMG arising from the non compliance with accounting and disclosure requirements of Statement of Standard Accounting Practice 24 Accounting for Pension Costs. SSAP 24 requires inter alia that an additional pension charge is made to reflect the addition/reduction in funding required to address a scheme deficit/surplus over the average future working life of the employees where such a deficit/surplus exists. The College scheme is in deficit and as such compliance with SSAP 24 would require a significant additional pension cost to be charged to the Income and Expenditure account. However, as the College is restricted with regard to the level of pension contributions it can make compliance with SSAP 24 would entail recognising a cost and liability which the College would not be able to meet. Accordingly SSAP 24 has not been applied in preparing these financial statements. Therefore College will continue to account for pensions and disclose pension information as in previous years in the Funding Statements. Income and Expenditure Account The consolidated surplus for the year to 30 September 2004 was €4.969m with the main sources of this surplus set out in the Reconciliation of the Consolidated Financial Statements to the HEA Funding Statements on page 45. I must stress that the consolidated surplus as presented does not represent a true picture of the funding shortfall for the ‘core’ (teaching and unfunded research) activities of the College experienced in 2003/04 and I refer to this in more detail below. Furthermore, it does not represent ‘free’ funds for the College as these funds are fully committed to maturing commitments and future planned expenditure. The State grant allocations in 2004 were similar in cash terms to 2003 which represented a very substantial real cut in funding as the State approved pay awards (including benchmarking and sustaining progress - Phases I, II and III) and normal non-pay inflation at the same time increased the College’s cost base by approximately 10%. The College has only been in a position to comply with its obligations under Section 37 of the Universities Act 1997 through reductions in pay of €5m in areas where contracts were expiring. This ad hoc and opportunistic approach to financial management will have consequences for the achievement of objectives into the future. This financial situation must be viewed in the context of the OECD review of higher education in Ireland which indicated that expenditure in tertiary education was below the OECD average with Ireland ranking 14th among 26 countries. Allied to this, the Higher Education Authority carried out a review of “The Financial Position of Irish Universities at 30 September 2003” and concluded that the creation of surpluses is essential to enable universities to accumulate cash for strategic reasons; current levels of surplus in the sector are inadequate; universities need to make surpluses of 7-10% before depreciation and universities should plan to hold up to 60 days income in the form of cash to enable them to respond to opportunities and risks and manage their activities efficiently.


TREASURER'S REPORT

4

It is clear that over the last two years and once again in 2005 the College and university sector is encountering significant reductions in State support that is the predominant source of income upon which it is reliant. The College has for a significant period of time continued to take action to maximise at an early date non-State annual flows of income and has been successful in doing so but more income is needed. The College however finds itself in a “financial straitjacket” and its capacity to respond to financial shocks is extremely limited in the absence of the OECD recommended “multi-year” funding that is needed to provide higher education institutions with the secure base for financial planning on a year to year basis. National strategy can only be appropriately supported when strategic and financial planning are integrated and based on multi-annual timeframes. This process would enable disinvestments and redeployment to ensure optimum distribution of resources in line with academic priorities that support institutional and national objectives. Balance Sheet The Consolidated Balance Sheet as presented reflects in full the assets and the short and long-term liabilities associated with all the activities within the College with the net assets of the College amounting to €658m at 30 September 2004, an increase of €27m over 2002/03 levels. The cumulative revenue reserves of €25.3m are fully committed to past and future expenditure. Research Grants and Contracts The financial environment for research, in contrast with that for teaching as set out above, is one of significant and continued growth arising particularly from State sponsored research initiatives including SFI and PRTLI. Research activity now supports 1,349 (2002/03: 1,157) employees of whom 556 (2002/03: 496) were postgraduate students. The research community is to be congratulated for its many successes. In my report last year I welcomed the publication of the HEA/Forfás commissioned report on research overheads following consultation with a wide range of sponsors. This report however has not found extensive application across sponsors – rather one major sponsor has initiated a process that requires institutions to consider not just essential support services (overheads) but also direct investment in research infrastructure within a 30% overhead cap. It is necessary to ensure full recovery of indirect costs of increased levels of research in order that an already pressurised teaching and basic research budget does not deteriorate further. With a 127% growth in research activity since 2001, the area of technology transfer and commercialisation is now on the critical path. We must continue to focus on developing these outputs of our growing research portfolio. National priorities, the interests of society, sponsors and researchers alike are best served through effective and efficient knowledge transfer and commercialisation. Capital Investment The College continues to have significant levels of capital investment arising particularly from the HEA sponsored PRTLI programme. The position in relation to the capital programme is very positive and a significant number of major projects have now been successfully completed, largely on time and with a satisfactory financial outcome in overall terms. Capital investment during the year has seen the completion of the new nursing building in D’Olier Street and the very large Trinity Hall residences project. The building to accommodate IITAC, the Institute of Neurosciences and Statistics has reached practical completion and site works have commenced on the North East Corner to facilitate the development of a Sports Centre and the new CRANN nano-sciences facility. During the year under review the HEA published its “Review and Prioritisation of Capital Projects in the Higher Education Sector” which made specific institutional project recommendations as well as proposals regarding the higher education sector capital minor works programme to successfully maintain into the future the existing capital stock along with an equipment renewal programme. These proposals are consistent with OECD recommendations regarding the making of provisions for long-term maintenance of facilities and buildings. The College’s estate strategy is continually being reviewed in the context of rationalisation and upgrading the existing estate where the main focus has and will continue to be on the efficient and effective use of space for College activity and the possibilities of generating annual flows of income which may from time to time present themselves and be strategically important to the College.


TREASURER'S REPORT

5

Other Matters In July 2004 the Board of the College approved a change agenda to involve consideration of the restructuring of the College along with the introduction of an academically driven resource allocation model (ARAM). A detailed consultation process has concluded and proposals in relation to both restructuring and ARAM were approved by the Board in early 2005. It is imperative as we move forward to ensure that the best possible management information systems are available to facilitate the Board of the College in the integration of strategic and financial planning into the future. As part of making progress in relation to corporate governance and risk review matters, detailed consideration must be given to financially-related risk matters on an ongoing basis. However it is important to bring along in parallel non-financial risk reviews to ensure a holistic consideration, review and conclusion on all activity-related risks. Conclusion Trinity College, like other universities in the sector, is at a crossroads and in my view the College’s change agenda represents a real opportunity for the future. The OECD report “Review of National Policies for Education: Review of Higher Education in Ireland” sets out a vision for third level education through the making of specific recommendations for both the State and participating institutions. As mentioned above the HEA carried out a review of “The Financial Position of Irish Universities at 30 September 2003” and a “Review and Prioritisation of Capital Projects in the Higher Education Sector” as well as commissioning the European Universities Association (EUA) to review quality related issues across the university sector. All of these reports provide a detailed roadmap with which the partners and stakeholders, who have a “duty of care” in the delivery of third level education, need to engage promptly and constructively. Strategic objectives, target rankings and the associated integrated infrastructural and financial supports need to be identified and funded so that the framework for the medium to long term can be determined, engaged with and delivered. This is the only way that the College can earn a place of which it can be proud in international university rankings. To achieve this, the community within Trinity College must harness all its energies towards the objectives set out in the College’s strategic plan which in turn supports national priorities. GRACE DEMPSEY TREASURER January 2006

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 STATEMENT OF RESPONSIBILITIES

6

The College is required to comply with the Universities Act, 1997, and to keep in such form as may be approved of by An t-Údarás um Ard-Oideachas all proper and usual accounts of money received and expended by it. In preparing those accounts, the College is required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • disclose and explain any material departures from applicable accounting standards; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

College will continue in operation. The College is responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the College and which enable 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 College is responsible for ensuring that the business of the College 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.

7

8

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 STATEMENT OF ACCOUNTING POLICIES

9

The significant accounting policies adopted by the College are as follows:

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, modified by the revaluation of certain land and buildings.

Basis of consolidation The consolidated financial statements include the College and its subsidiary undertakings and other undertakings in which the University has a financial interest, as indicated in note 29 with the exception of the Dublin Molecular Medicine Centre (DMMC) and Haughton Institute which have not been consolidated on the grounds of immateriality. Intra-College income and expenditure are eliminated fully on consolidation.

In accordance with FRS 2, the financial statements of the Trinity Foundation, Pension Fund, Trust Funds and Capitated Bodies have not been consolidated as they are not controlled by the University.

Recognition of income Recurrent grants from the Higher Education Authority and other bodies 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 toward overhead costs.

Foreign currency translation Transactions denominated in foreign currencies are recorded at the rate of exchange ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into euro either at year end rates or, where they 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.

Tangible fixed assets

(a) Land and buildings The College’s buildings are valued on an existing use basis. Land has been valued at €126,974 per acre and

buildings have been valued at a standard cost of €2,413 per square metre. Land and buildings were revalued by the Board of the College in 1998.

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 STATEMENT OF ACCOUNTING POLICIES - continued

10

(a) Land and buildings - continued In accordance with the transitional arrangements as set out in FRS 15 “Tangible Fixed Assets”, the College

retained the book value of land and buildings, which were revalued in 1998. These values are retained subject to the requirement to test assets for impairment in accordance with FRS 11. Land and buildings acquired since the valuation are included in the balance sheet at cost (except for those held as investments). Freehold land is not depreciated. Freehold buildings are depreciated over their expected useful economic life to the College of 50 years.

Where land and buildings are acquired with the aid of specific grants they are capitalised and depreciated as above. The related grants are credited to a deferred capital grant account and are released to the income and expenditure account over the expected useful economic life of the related asset on a basis consistent with the depreciation policy.

Finance costs which are directly attributable to the construction of land and buildings are capitalised as part of the cost of those assets.

A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying amount of the fixed asset may not be recoverable.

Buildings under construction are accounted for at cost, based on the value of architects' certificates and other direct costs incurred to the financial year end. They are not depreciated until they are brought into use.

The College has considered the application of FRS 5: “Reporting the Substance of Transactions” with regard to certain assets used by the University where the legal form of the transaction would indicate that all or part of the assets are not owned by the University. The financial substance of the transaction has been reflected in the consolidated financial statements and as such the full value of these assets is included in the tangible fixed assets.

(b) Equipment Equipment costing less than €1,270 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 assets 20 years or primary lease period, if shorter Computer equipment 3 years Furniture 10 years Equipment 5 years

During the year the depreciation policy for equipment was reduced from 10 years to 5 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.

(c) Donations The College receives on occasion benefits in kind such as gifts of equipment. Items of a significant value

donated to the College, which, if purchased, the College would treat as tangible fixed assets, are capitalised at their current value and depreciated in accordance with the policy set out above. The value of the donation is treated as a deferred capital grant and amortised in the income and expenditure account over the life of the related asset.

Leased assets Leasing agreements that transfer to the College substantially all the benefits and risks of ownership of an asset 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. Rental costs under operating leases are charged to expenditure in equal annual amounts over the period of the lease.

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 STATEMENT OF ACCOUNTING POLICIES - continued

11

Financial assets Fixed asset investments are carried at historical cost less any provision for impairment in their value. Current asset investments are included in the balance sheet at the lower of their original cost and net realisable value. 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 College on books and consumable stocks financed from recurrent grants are charged to the Income and Expenditure account. Taxation As the College holds tax-exempt status, it is not liable for Corporation Tax or Income Tax on any of its charitable activities. Activities undertaken by the College, administered through its subsidiary companies, are liable to Corporation Tax. Provisions Provisions are recognised when the College 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 College funds a defined benefit pension scheme and prolonged disability income scheme. Pension costs at the date of retirement are funded by the College on the basis of charging the relevant cost of providing pensions over the period during which the College benefits from the employee's services. Pension increases after retirement are funded by the College on a pay-as-you-go basis and are charged to the Income and Expenditure Account. Maintenance of Premises

The cost of routine corrective maintenance is charge to the income and expenditure account in the period that it is incurred.

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT Year ended 30 September 2004

12

Notes

College & Consolidated

2004 €'000

College & Consolidated

2003 €'000

Income State grants 1 82,399 82,234 Academic fees 2 66,611 58,254 Research grants and contracts 3 47,791 40,120 Amortisation of deferred capital grants 19 12,786 8,281 Other operating income 4 35,715 27,537 Interest income 5 1,776

1,721

Total income 247,078

218,147

Expenditure Staff costs 6 168,337 142,716 Other operating expenses 7 48,824 44,752 Interest payable 8 3,146 8 Depreciation 12 24,585 21,459 (Profit)/Loss on disposal of fixed assets 9 (2,783)

264

Total expenditure 242,109

209,199

Surplus for the year before taxation 4,969 8,948 Taxation 10 -

-

Surplus for the year after taxation 11 4,969

8,948

The income and expenditure account is in respect of continuing activities. There are no gains or losses arising other than those dealt with above.

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 CONSOLIDATED STATEMENT OF HISTORIC COST SURPLUSES AND DEFICITS Year ended 30 September 2004

13

2004 €'000

2003 €'000

Surplus on continuing operation before taxation 4,969 8,948 Difference between historical cost depreciation and the actual

charge for the period calculated on the re-valued amount 14,481 14,481

Historical cost surplus for the period before taxation 19,450

23,429

Historical cost surplus for the period after taxation 19,450

23,429

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS Year ended 30 September 2004 2004

€’000 2003 €’000

Surplus on continuing operations after depreciation of assets at

valuation, disposal of assets and tax

4,969 8,948 Unrealised surplus on revaluation of fixed assets -

-

Total recognised gains relating to the period 4,969

8,948

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 CONSOLIDATED BALANCE SHEET Year ended 30 September 2004

14

Consolidated College

Notes 2004 €'000

2003 €'000

2004 €'000

2003 €'000

Fixed assets Tangible assets 12 676,466 638,167 645,320 620,899 Financial assets 13 131

139

131

139

676,597 638,306 645,451 621,038 Current assets Cash at bank 19,279 11,105 18,179 11,105 Debtors 14 59,028 46,248 90,679 59,997 Stocks 15 427 395 427 395 Short term deposits 63,760

48,745

63,760

48,745

142,494 106,493 173,045 120,242 Creditors: Amounts falling due within

one year 16 (108,852)

(84,840)

(108,257)

(81,321)

Net current assets 33,642

21,653

64,788

38,921

Total assets less current liabilities 710,239 659,959 710,239 659,959 Creditors: Amounts falling due after one

year 17 (51,888)

(28,354)

(51,888)

(28,354)

Net assets 658,351

631,605

658,351

631,605

Deferred capital grants 19 291,348 269,571 291,348 269,571 Revaluation reserve 20 341,648 341,648 341,648 341,648 Revenue reserves 21 25,355

20,386

25,355

20,386

21 367,003

362,034

367,003

362,034

Total 658,351

631,605

658,351

631,605

The financial statements on pages 9 to 31 were approved by the Board of the College on 26 June 2006 and signed on its behalf by: John Hegarty Grace Dempsey Provost Treasurer

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 CONSOLIDATED CASHFLOW STATEMENT Year ended 30 September 2004

15

Notes

2004 €'000

2003 €'000

Net cash inflow from operating activities 24 23,800 15,743 Returns on investments and servicing of finance 25 (438) 1,713 Capital expenditure and financial investment 26 (3,162) (427)

Net cash inflow before use of liquid resources and financing 20,200

17,029

Management of liquid resources 27 (15,015) (15,014)

Increase in cash in the period 5,185

2,015

Reconciliation of net cash flow to movement in net funds Increase in cash in the period 5,185 2,015 Increase in short term deposits 15,015 15,014 Finance lease (23,975)

(18,270)

Movement in net funds in period (3,775) (1,241) Net funds at 1 October 28 27,266

28,507

Net funds at 30 September 28 23,491

27,266

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 NOTES TO THE ACCOUNTS

16

1 State grants 2004 €'000

2003 €'000

State grants allocated for recurrent purposes 82,399

82,234

The above grant income was received from the following sources: €'000 €'000

HEA Department of Health and Children

79,956 2,443

80,462 1,772

82,399

82,234

Reconciliation of State grant received to income recognised 2004 €'000

2003 €'000

State grant received in respect of current year 86,398 86,486 State grant deferred from prior accounting year (note 15) 9,555 5,303 State grant deferred to subsequent accounting years (note 15) (13,554) (9,555) 82,399

82,234

State funding is received 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 become recognised on an accruals basis. Therefore, in any accounting year, an element of funding will be deferred to subsequent accounting periods in order to match the funding to the related expenditure.

2 Academic fees 2004

€'000 2003 €'000

Academic fee income 65,839 57,500 Miscellaneous fee income 772

754

Total fees paid by or on behalf of individual students 66,611

58,254

A total of €28,971,727 included in academic fee income was paid directly by the Higher Education Authority. The academic fee income is analysed as follows: €'000

€'000

Full time EU Full time non EU Part time EU Part time non EU Short courses

43,521 12,050 9,860 400 8

38,345 11,005 7,912 231 7

65,839

57,500

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 NOTES TO THE ACCOUNTS

17

Student Service Charge Included in academic fee income above is student service charge income as set out below and the expenditure to which it relates. 2004

€'000 2003 €'000

Income from student service charge 5,266 5,205

Expenditure Student service costs 3,569 3,284 Examination costs 1,029 1,020 Space costs associated with student facilities 1,063 1,131 Costs relating to registration, fees, admissions and records 1,116 976 Total expenditure 6,777 6,411 Shortfall

1,511

1,206

3 Research grants and contracts 2004 €'000

2003 €'000

State and semi-state 36,799 30,491 European Union 3,384 3,210 Industry 1,510 1,204 Other 6,098

5,215

47,791

40,120

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 NOTES TO THE ACCOUNTS - continued

18

4 Other operating income 2004 €'000

2003 €'000

Academic faculties and departments 4,336 4,023 Service areas 1,150 1,389 Ancillary services 708 1,046 Catering 4,120 4,151 Residences 6,914 2,587 Other rental income 4,336 4,087 Funded post income 2,866 1,861 Library 6,293 5,843 Other income 4,992

2,550

35,715

27,537

5 Interest income 2004

€’000 2003 €’000

Interest income 1,776

1,721

6 Staff costs

The average weekly number of persons (including senior post-holders) employed by the College during the period, expressed as full-time equivalent was:

2004 Number

2003 Number

Teaching and research 988 823 Technical 931 942 Central administration and services 766 667 Other 530

684

3,215

3,116

2004 €'000

2003 €'000

Salaries and wages 146,094 119,338 Social welfare costs 8,814 7,593 Other pension costs 13,429 15,785

168,337

142,716


19

7 Other operating expenses 2004

€'000 2003 €'000

Telephone and related charges 737 901 Conference fees 660 376 Consumables 7,292 6,741 Computer software and hardware 4,127 4,425 Heat, light, water and power 3,320 2,801 Books and periodicals 3,354 3,054 Repairs and general maintenance 6,760 3,398 Insurance 2,312 2,273 Audit and professional 2,075 1,568 Rent and rates 1,812 610 Print and stationery 2,091 2,091 Travel and subsistence 3,383 3,137 Hospitality and entertainment 1,013 892 Recruitment 839 643 Other expenses 9,049

11,842

48,824

44,752

Other operating expenses include:

Auditors’ remuneration: - External audit 63 60 - Internal audit - - Other services from either external or internal audit 2 39 The University of Dublin, Trinity College employs an internal auditor and these

costs have been included as part of staff costs for the year.

8 Interest payable 2004 €'000

2003 €'000

On finance leases 3,138 - Repayable within 5 years, not by instalments 8 8 Total 3,146

8


20

9 Profit on disposal of fixed assets A profit of €2.783m was made on the disposal of ground floors of 1 and 5 College Green during the year.

10 Taxation Trading activities undertaken by the College, administered through its subsidiary, are liable to corporation tax. There is no corporation tax charge for the College and its subsidiary in the current year.

11 Surplus on continuing operations for the period 2004 €'000

2003 €'000

The surplus on continuing operations for the period is made up as follows: College’s surplus for the period 4,969 8,948 Surplus generated by the subsidiary undertakings and transferred to the College -

-

Total 4,969

8,948


21

12 Tangible fixed assets Land and buildings €’000

Computer equipment €’000

Equipment €’000

Assets in course of construction €’000

Total €’000

CONSOLIDATED

Cost or valuation At 1 October 2003 640,333 17,834 75,297 17,268 750,732 Additions 37,068 2,804 10,647 15,150 65,669 Disposals (1,467)

(779)

(777)

(1,272)

(4,295)

At 30 September 2004 675,934

19,859

85,167

31,146

812,106

Depreciation At 1 October 2003 49,224 13,902 49,439 - 112,565 Depreciation for year 14,159 2,260 8,166 - 24,585 Disposals (99)

(749)

(662)

-

(1,510)

At 30 September 2004 63,284

15,413

56,943

-

135,640

Net book value At 1 October 2003 591,109

3,932

25,858

17,268

638,167

At 30 September 2004 612,650

4,446

28,224

31,146

676,466


22

12 Tangible fixed assets – continued Land and buildings €’000

Computer equipment €’000

Equipment €’000

Assets in course of construction €’000

Total €’000

COLLEGE

Cost At 1 October 2003 640,333 17,834 75,297 - 733,464 Additions 37,068 2,804 10,647 - 50,519 Disposals (1,467)

(779)

(777)

-

(3,023)

At 30 September 2004 675,934

19,859

85,167

-

780,960

Depreciation At 1 October 2003 49,224 13,902 49,439 - 112,565 Charge for year 14,159 2,260 8,166 - 24,585 Disposals (99)

(749)

(662)

-

(1,510)


15,413

56,943

-

135,640

Net book value At 1 October 2003 591,109

3,932

25,858

-

620,899

At 30 September 2004 612,650

4,446

28,224

-

645,320

Land and buildings include assets valued by the Board of the College in 1998, and the historical cost of assets carried at revaluation, amount to €346,667,000.

Land has been valued on an existing use basis at a valuation of €126,974 per acre. Buildings have been valued on an existing use basis at a standard cost of €2,413 per square metre. The College owns a considerable number of works of art including paintings, silver, sculptures and priceless manuscripts. These works of art are not included in the Financial Statements because even though they are insured for substantial amounts, it is considered that no meaningful value can be attributed to them.

In applying FRS 5 ‘Reporting the Substance of Transactions’, the College has included in Land and Buildings properties with a net value of €52m for which the related liabilities of €51,888,000 (2002/03: €28,354,000) are included in creditors due after one year and €2,357,000 (2002/03: €1,196,000) in creditors less than one year. In addition, included in land and buildings are assets with a net book value of €58,085,776 in order to report the substance of the arrangements in place rather than the legal form.

A disclosure in relation to the cost of inherited land and buildings cannot be given as their value prior to the revaluation in 1997/98 is not known.


23

13 Financial assets Consolidated College 2004

€'000 2003 €'000

2004 €'000

2003 €'000

Investments at the year end were held as follows:

Quoted investments 30 29 30 29 Unquoted investments 101

110

101

110

131

139

131

139

The University held an interest in the following subsidiary and associate undertakings, the carrying value of

these investments is nil: Subsidiary undertakings Principal activity Interest

% Registered office/place

of business Ghala Limited

Property development and refurbishment

100

30 Herbert St, Dublin 2

Associated undertakings and joint ventures

Haughton Institute Dublin Molecular Medicine

Centre

Training/Education

Education and research

33.33

50

St. James’s Hospital,

Dublin 8

Belfield, Dublin 4

14 Debtors Consolidated College 2004

€'000 2003 €'000

2004 €'000

2003 €'000

Trade debtors 3,738 2,997 3,738 2,997 Research grants and contracts receivable 12,859 11,363 12,859 11,363 State capital grants receivable 26,987 19,337 26,987 19,337 Non State capital funding receivable 8,140 3,528 8,140 3,528 Prepayments and other debtors 7,304 9,023 6,854 8,543 Amounts due from subsidiary undertakings - - 32,101 14,229 59,028

46,248

90,679

59,997

15 Stocks Consolidated and College 2004

€’000 2003 €’000

Raw materials and consumables 221 211 Finished goods for resale 206

184

427

395

There is no material difference between the balance sheet amount of stocks and its replacement cost.


24

16 Creditors: Amounts falling due within one year

Consolidated College

2004 €'000

2003 €'000

2004 €'000

2003 €'000

Trade creditors 5,705 4,726 5,705 4,726 Research grants and contracts in advance 21,117 17,861 21,117 17,861 Academic fees received in advance 17,811 16,085 17,811 16,085 State recurrent grants received in advance 13,554 9,555 13,554 9,555 Capital funding received in advance 13,059 1,101 13,059 1,101 Accruals 19,487 22,244 18,892 18,731 Bank loans and overdrafts (note 18) 5,303 2,314 5,303 2,308 Obligations under finance leases (note 18) 2,357 1,916 2,357 1,916 PAYE/PRSI 3,343 2,852 3,343 2,852 Other creditors 7,116 6,186 7,116 6,186 108,852

84,840

108,257

81,321

17 Creditors: Amounts falling due after one

year Consolidated College

2004 €'000

2003 €'000

2004 €'000

2003 €'000

Obligations under finance leases (note 18) 51,888 28,354 51,888 28,354

51,888

28,354

51,888

28,354

18 Borrowings Consolidated College 2004

€'000 2003 €'000

2004 €'000

2003 €'000

(a) Bank loans and overdrafts Bank loans and overdrafts are repayable

as follows:

Amounts due within one year 5,303 2,314 5,303 2,308

Total 5,303

2,314

5,303

2,308

The above balances represent unsecured bank overdrafts at 4.25%.


25

18 Borrowings - continued (b) Finance leases The net finance lease obligations to which the institution is committed are: Consolidated College 2004

€'000 2003 €'000

2004 €'000

2003 €'000

In one year or less 2,357 1,916 2,357 1,916 Between two and five years 10,410 10,010 10,410 10,010 Over five years 41,478

18,344

41,478

18,344

Total 54,245

30,270

54,245

30,270

19 Deferred capital grants Consolidated and College

State €'000

Other Grants and Benefactors

€'000

Total €'000

At 1 October 2003 Buildings 110,283 95,169 205,452 Equipment 31,450

32,669

64,119

Total 141,733

127,838

269,571

Cash received/receivable Buildings 20,078 4,047 24,125 Equipment 6,213

4,225

10,438

Total 26,291

8,272

34,563

Released to income and expenditure Buildings 5,811 3,742 9,553 Equipment 1,936

1,297

3,233

Total 7,747

5,039

12,786

At 30 September 2004 Buildings 124,550 95,474 220,024 Equipment 35,727

35,597

71,324

Total 160,277

131,071

291,348


26

20 Revaluation reserve Consolidated and College 2004

€'000 2003 €'000

At 1 October 341,648 341,648 Revaluations in the period - - Depreciation on revalued assets -

-

At 30 September 341,648

341,648

21 Reconciliation of movement of reserves Revenue

reserves €’000

Revaluation reserves €'000

Total €'000

Consolidated At 1 October 2003 20,386 341,648 362,034 Surplus on continuing operations 4,969 - 4,969


341,648

367,003

College At 1 October 2003 20,386 341,648 362,034 Surplus on continuing operations 4,969 - 4,969


341,648

367,003

22 Contingent liabilities

The College has given indemnities in relation to the qualification of certain expenditure for capital allowance purposes in the financing of the James Ussher Library, the Dublin Molecular Medicine Centre, Botany Bay and Trinity Hall Student Residences. A further indemnity (in relation to the qualification of certain expenditure for capital allowance purposes) was entered into post year-end associated with the financing of the INS building.

As a requirement of the planning permission for the Trinity Hall Student Residences, the College has lodged a bond with Dublin Corporation guaranteeing to pay the Corporation €444,400 in the event that the proposed landscaping works are not completed in a satisfactory manner.

23 Capital commitments and guarantees Consolidated College 2004

€'000 2003 €'000

2004 €'000

2003 €'000

Contracted for but not provided 6,464 27,202 6,464 26,585 Authorised but not contracted out 51,949

15,096

51,949

15,096

58,413

42,298

58,413

41,681


27

24 Reconciliation of consolidated operating surplus/(deficit) to net cash

inflow from operating activities 2004 €'000

2003 €'000

Surplus on continuing operations after depreciation of assets at valuation 4,969 8,948 Depreciation 24,585 21,459 Deferred capital grants released to income (12,786) (8,281) (Profit)/Loss on disposal of tangible fixed assets (2,783) 264 (Increase)/decrease in stocks (32) 43 Increase in debtors (155) (5,655) Increase in creditors 8,624 685 Interest payable 3,146 8 Interest receivable (1,776) (1,721) Unrealised losses/(gains) on investments 8 (7) Net cash inflow from operating activities 23,800

15,743

25 Returns on investments and servicing of finance 2004

€’000 2003 €’000

Other interest received 1,776 1,721 Interest paid (2,214) (8)

Net cash (outflow)/inflow from returns on investments and servicing of finance

(438)

1,713

26 Capital expenditure and financial investment 2004

€'000 2003 €'000

Purchase of tangible fixed assets (37,421) (30,741) Deferred capital grants received 34,259

30,314

Net cash (outflow) from capital expenditure and financial investment (3,162)

(427)

27 Management of liquid resources 2004

€'000 2003 €'000

Movement in short term deposits (15,015)

(15,014)


28

28 Analysis of changes in net funds At

1 October 2003 €'000

Cashflows €'000

Other changes €'000

At 30 September 2004 €'000

Cash in hand, and at bank 11,105 8,174 - 19,279 Overdrafts (2,314)

(2,989)

-

(5,303)

8,791 5,185 - 13,976 Debt due within 1 year - - - - Debt due after 1 year - - - Finance leases (30,270) - (23,975) (54,245) Short term deposits 48,745

15,015 -

-

63,760

Total 27,266

20,200

(23,975)

23,491

Major non-cash transactions: a further €23.975m arose on finance leases in relation to Trinity Hall

29 Related parties Transactions with subsidiaries of the College have been eliminated on consolidation and no disclosure of these

transactions has therefore been given. Details of related party disclosures and the College’s transactions with related parties are as follows: The Haughton Institute is a related company limited by guarantee. The main objectives of the Institute are to

facilitate the development on a combined basis with hospitals of medical postgraduate education and training and the management and funding of research. The College holds a 33.3% interest in the Haughton Institute. During the period, the College incurred expenditure of €13,037 (2002/03:€176,879) in supporting the activities of the Haughton Institute and received €52,714 (2002/03: €36,519) for services provided to the Haughton Institute. At 30 September 2004, there was an amount of €3,126 (2002/03: €16,606) due to the College from the Haughton Institute. The net assets of the Haughton Institute per the audited Financial Statements at 31 December 2003 were €377,337 (2002/03: €529,297) and the deficit for the year amounted to €151,690.

Dublin Molecular Medicine Centre (DMMC) is a related company limited by guarantee which has been

registered without the word “Limited” in its name. The company was incorporated on 26 March 2002 and its principal activities are research into molecular bases of diseases and graduate education, training, research and consultancy work in the biosciences. The University of Dublin, Trinity College holds a 50% interest in the DMMC. During the period the College incurred expenditure of €486,086 (2002/03: €46,967) in supporting the activities of the DMMC. At 30 September 2004 there was an amount of €38,173 (2002/03: €312,030) due to the DMMC. The net assets of the DMMC per audited financial statements at 30 September 2004 were €Nil (2003: €Nil) and the surplus for the year amounted to €Nil (2003: €Nil).


29

30 Retirement benefits

The College has a separately administered defined benefit pension scheme that operates under a Trust Deed and has seven Trustees including Irish Pension Trust as Corporate Trustee and Chairperson of the Trustees. Actuarial valuations of the scheme are conducted at three-year intervals with the latest formal actuarial valuation obtained for funding purposes carried out at 1 October 2001 using the projected unit method of valuation.

The pension entitlements of certain employees under the defined benefit scheme are based on final pensionable pay and are secured by contributions by the College and the employees. The College’s contribution is limited due to a restriction imposed by the HEA on the level of the College’s contribution rate and this restriction prevents the College complying with SSAP 24. Post-retirement pension increases paid to pensioners are funded by the College and charged to the Income & Expenditure account on a ‘pay as you go basis’.

The following disclosures comply with those required under FRS 17: Retirement Benefits. FRS 17 stipulates the exact assumptions to be used in calculating the scheme liabilities that may be different at a point in time compared to those used for the tri-annual actuarial valuation referred to above. In addition, as FRS 17 requires disclosure of the College’s full pension liability, the liability of the post-retirements pension augmentation payments paid to pensioners must be determined and included with the liability of the defined benefit pension scheme.

The valuation of the Scheme benefits for the purposes of FRS17 disclosures have been based on the most

recent draft actuarial valuation at 1 October 2004. The full awards due under benchmarking have also been included in the liabilities, although 75% of these awards had been paid at the accounting date. The valuation assumptions have been amended to take account of the requirements of FRS17.

The financial assumptions used to calculate the retirement liabilities in relation to the deferred benefit pension scheme under FRS17 as at 30 September 2004, 30 September 2003 and 30 September 2002 were as follows:

Financial assumptions

30 September 30 September 30 September 2004 2003 2002

Valuation method Projected Unit Projected Unit Projected Unit Discount rate 5.00% 5.50% 5.50% Inflation rate 2.50% 2.50% 2.50% Salary increases 4.50% 4.50 % 4.50 % Pension supplementation 3.50% 3.50 % 3.50 %


30

Assets are included at the mid-market valuation at the accounting date. The details of the assets have been extracted from audited pension fund financial statements for the year ended 30 September 2004. The assets have been adjusted to take account of net assets of the scheme, although for FRS17 purposes, we have allowed for a special College contribution of approximately €3m. For scheme accounting, the expected rate of return, and the schemes’ liabilities as at 30 September 2004 and for comparison purposes, 30 September 2003 and 30 September 2002, were: Expected

Return At 30

September 2004 €’000

Expected Return

At 30 September

2003 €'000

Expected Return

At 30 September

2002 €'000

.

Equities 7.50% 175,887 7.50% 147,099 7.50% 103,463 Bonds 4.00% 22,220 4.00% 39,852 4.00% 24,322 Property 6.50% 27,131 6.50% 16,066 6.50% 58,560 Cash 2.00%

8,654

1.60%

5,634

1.60%

749

Total market value of assets 233,892 208,651 187,094

Actuarial value of liability (640,601) (491,572) (426,395) Pension surplus/(deficit) (406,709) (282,921) (239,301) Related deferred tax asset - - - Net pension liability (406,709) (282,921) (239,301) Movement in (deficit) during the year 2004

€'000 2003 €'000

Deficit at beginning of year (282,921) (239,301) Current service cost (15,571) (14,461) Contributions 17,890 12,127 Past service costs (7,973) (563) Net interest cost (13,401) (10,898) Actuarial loss (104,733)

(29,825)

Deficit at end of year (406,709)

(282,921)

2004 €m

2003 €m

2002 €m

Consolidated net assets of University of Dublin, Trinity College

658 632 589

Net pension liability (FRS17) (407)

(283)

(239)

Consolidated net assets after net pension liability 251

349

350

Consolidated revenue reserves of University of Dublin,

Trinity College 25 20 11

Net pension liability (FRS17) (407)

(283)

(239)

Revenue reserves deficit after net pension liability (382)

(263)

(228)


31

If FRS17 had been fully adopted in these financial statements the pension costs for the defined benefit scheme would be: Year ending

30 September 2004 €'000

Year ending 30 September

2003 €'000

Analysis of amount charged to operating surplus

Current service cost 15,571 14,461 Past service cost 7,973 563

Total operating charge 23,544 15,024 Analysis of net return on pension fund

Expected return on pension assets (13,941) (12,690) Interest on pension liabilities 27,342 23,588

Net return 13,401 10,898 Analysis of amount recognised in statement of total recognised gains and

losses (STRGL)

Actual return less expected return on assets 5,855 7,431 Experience gains and (losses) on liabilities (4,385) (37,256) Changes in assumptions (106,203) -

Actuarial (loss) recognised in STRGL (104,733) (29,825) The last actuarial valuation of the scheme was conducted at 1 October 2001. The pension entitlements of certain other employees arise under a defined contribution pension scheme and are secured by contribution by the College and the employees to a separately administered pension fund. The pension charge for the year was €13.429m. Of this amount €135,268 relates to payments to the defined contribution scheme. 31 Approval of the Consolidated Financial Statements The Board of the College approved the Consolidated Financial Statements on ___________ 2006.

32

FUNDING STATEMENTS

YEAR ENDED 30 SEPTEMBER 2004

The University of Dublin, Trinity College Funding Statements Year ended 30 September 2004

33

Statement of Accounting Policies A. Funding Statements The Funding Statements reflect the teaching, research and related service activities of the University of Dublin, Trinity College. The Financial Statements of the Pension Funds of Trinity College, Trinity College's Trust Funds and of financially independent ancillary activities are prepared annually and audited separately. B. Accounting Convention

The Funding Statements are prepared under the historical cost convention, modified to include the revaluation of fixed assets. They are presented in accordance with the existing Harmonisation of Accounts agreement as adopted for all Irish universities.

The Harmonisation of Accounts agreement is not in agreement with generally accepted accounting principles (GAAP). A review of the harmonisation agreement by the Universities in consultation with the Higher Education Authority and the Comptroller and Auditor General, is in progress and will result in a new agreed harmonised format. The Funding Statements for the year ended 30 September 2004 will also be prepared on a consolidated basis and 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 Funding 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.

C. State Grants for Recurrent Expenditure

State Grants for recurrent expenditure are included in the Funding Statements on an accruals basis. Recurrent Grants are matched with the expenditure which they are intended to fund in the period in which the expenditure is incurred.

D. State Grants for Capital Expenditure

State Grants for capital expenditure are included in the Funding Statements of the period to the extent of cash received.

E. Fee Income

Fee Income is accounted for on an accruals basis and reported at EU fee levels. Non EU Medical and Dental fee income is included up to the EU level with any excess (up to the most recent related Unit Cost) being reported under Miscellaneous Income. Any further excess over the most recent related Unit Cost is included in the General Reserve (Medical, Dental and other Facilities Development Account).

F. Approved Allocations

The Income and Expenditure account is prepared on an accruals basis with the following exceptions: i) non pay expenditure of academic departments and certain service departments. ii) departmental equipment and minor works.

In these cases internal balances are carried forward in the Balance Sheet under Current Assets or Liabilities, as appropriate.

G. Fixed Assets and Depreciation (a) Land and buildings

The College’s buildings are valued on an existing use basis. Land has been valued at €126,974 per acre and buildings have been valued at a standard cost of €2,413 per square metre. Land and buildings were revalued by the Board of the College in 1998.

Freehold land is not depreciated. Freehold buildings are depreciated over their expected useful economic life to the College of 50 years.

The University of Dublin, Trinity College

Funding Statements Year ended 30 September 2004

34

Statement of Accounting Policies

(a) Land and buildings - continued Where land and buildings are acquired with the aid of specific grants they are capitalised and depreciated as above. Finance costs which are directly attributable to the construction of land and buildings are capitalised as part of the cost of those assets. A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying amount of the fixed asset may not be recoverable. Buildings under construction are accounted for at cost, based on the value of architects' certificates and other direct costs incurred to the financial year end. They are not depreciated until they are brought into use. The College has considered the application of FRS 5: “Reporting the Substance of Transactions” with regard to certain assets used by the University where the legal form of the transaction would indicate that all or part of the assets are not owned by the University. The financial substance of the transaction has been reflected in the consolidated Funding Statements and as such the full value of these assets is included in the tangible fixed assets. (b) Equipment Equipment costing less than €1,270 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 assets 20 years or primary lease period, if shorter Computer equipment 3 years Furniture 10 years Equipment 5 years Where equipment is acquired with the aid of specific grants it is capitalised and depreciated in accordance with the above policy. The depreciation policy on equipment reduced from 10 years to 5 years in 2003/04.

H. Leased assets Leasing agreements that transfer to the College 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. Assets held under finance leases are depreciated over the shorter of the lease term or the useful economic lives of equivalent owned assets. Rental costs under operating leases are charged to expenditure in equal annual amounts over the period of the lease.

I. Financial assets Financial asset investments are carried at historical cost less any provision for impairment in their value.

J. Research Grants and Projects Contract research expenditure is shown net of contribution to indirect costs. Income from contract research grants is included in the Income and Expenditure Account to the extent that the related expenditure has been incurred and to the extent that such income is recoverable. Contract research contributions to the University's indirect costs are included in Other Income. Fixed Assets financed from contract research grants are capitalised in the Balance Sheet.


35

Statement of Accounting Policies K. Foreign Currency

Costs denominated in foreign currencies are translated at the exchange rates ruling at the dates of the transactions. Assets and liabilities denominated in foreign currencies are translated into Euro at the rate of exchange ruling at the Balance Sheet date. The resulting profits or losses are dealt with in the Income and Expenditure Account.

L. 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 College on books and consumable stocks financed from recurrent grants are charged to the Income and Expenditure account. Land is valued on an existing use basis.

M. Taxation No provision has been made for taxation as the University holds tax exempt status. N. Retirement Benefits

The University funds a defined benefit pension scheme and prolonged disability income scheme. Pension costs at the date of retirement are funded by the University on the basis of charging the relevant cost of providing pensions over the period during which the University benefits from the employee's services. Pension increases after retirement are charged to the Income and Expenditure Account. Trinity College is aware that there are substantive funding issues to be addressed in particular in relation to funded pension schemes, before the manner in which FRS17 is applied is clear. It is our view that this can only be finalised when it is determined who is ultimately responsible for the related pension liabilities notwithstanding the different pension structures in place. Until such time, Trinity College will continue to account for pensions and disclose pension information in accordance with the policy above.

O. General Reserve The General Reserve represents the value of funding applied for capital purposes together with the balance on ancillary service activities. P. Ancillary Services Ancillary Services are services provided on campus, on a cost recovery basis. The net outturn on such activities is transferred to the General Reserve Account.


36

Income and Expenditure Account 2004 2003 Notes €'000 €'000Income

State Grants 1 81,810 79,638

Student Fees 2 60,671 54,609

Other Income 3 12,324 9,256 __________ __________ 154,805 143,503

Research Grants & Projects 4 53,409 45,864 __________ __________ TOTAL 208,214 189,367 __________ __________ Expenditure

Academic Faculties & Departments 5 80,534 80,710

Academic and Other Services 6 17,085 16,366

Premises 7 23,689 20,355

Amount Allocated for Capital Purposes 8 2,627 2,475

Central Administration & Services 9 10,732 9,812

General Educational Expenditure 10 6,040 6,049

Student Services 11 4,297 3,900

Miscellaneous Expenditure 12 6,928 4,729 _________ _________ 151,932 144,396

Research Grants & Projects 13 56,412 45,864 _________ _________ TOTAL 13 208,344 190,260 _________ _________ (Deficit) on Activities before Amortisation of Capital Reserves and Grants, Ancillary Services and Depreciation of Fixed Assets

(130) (893)

Surplus on Ancillary Services 14 4,326 5,416

Depreciation of Fixed Assets 15 (24,585) (21,459)

General Reserve Movement 16 20,259 16,043 __________ __________ Net (Deficit) for year 23 (130) (893) ______ ______

The Statement of Accounting Policies (Pages 33 to 35) and Notes to the Funding Statements (Pages 38 to 44) form part of these Funding Statements. ___________________________ _______________________________ PROVOST TREASURER


37

Balance Sheet 2004 2003 Notes €'000 €'000

Fixed Assets 17 648,238 623,601

Financial Assets 18 131 139

Current Assets Bank and cash balances 81,939 61,850

Debtors and prepayments 19 58,061 37,397 Stocks 379 348 _________ _________ 140,379 99,595 _________ _________

Current Liabilities

Creditors and accrued expenditure 20 (119,740) (102,639)

Bank balances (5,303) (2,308) _________ _________ (125,043) (104,947) _________ _________

Net Current Assets/(Liabilities) 15,336 (5,352)

Long Term Liabilities

Creditors due after one year 21 (51,888) (28,354) _________ _________

611,817 590,034 _________ _________

Represented by:

General Reserve 22 611,836 589,915

Investments 21 29

Revenue Reserve 23 (40) 90 _________ _________ 611,817 590,034 _________ _________

The Statement of Accounting Policies (Pages 33 to 35) and Notes to the Funding Statements (Pages 38 to 44) form part of these Funding Statements. ____________________________________ ____________________________________ PROVOST TREASURER


38

Notes to the Funding Statements

2004 2003 €'000 €'000

1. State Grants

Recurrent grant 74,689 72,965

Nursing 2,443 1,772

Targeted funding for special initiatives 4,471 4,673

Minor works 207 228 ___________ ___________

81,810 79,638 ___________ ___________

2. Student Fees

Academic 60,066 53,989

Miscellaneous fee income 605 620 ___________ ___________

60,671 54,609 ___________ ___________ A total of €28,971,727 included in academic fee income was paid directly by the Higher Education

Authority.

3. Other Income

Interest receivable (net) 1,809 1,690

Funded posts and donations 1,030 801

Research grants and projects contribution 3,157 1,547

Non EU fees 3,150 2,850

Miscellaneous income 3,178 2,368 ___________ ___________

12,324 9,256 ___________ ___________

4. Research Grants and Projects

Research grants 53,409 45,864 ___________ ___________


39

Notes to the Funding Statements (cont'd..)

2004 2003 Staff Costs Non Pay Total Total €'000 €'000 €'000 €'000

5. Academic Faculties & Departments

Academic 58,158 - 58,158 55,233

Technical 9,447 - 9,447 8,725

Administrative support 5,986 - 5,986 5,519

Departmental grants - 6,237 6,237 10,582

Miscellaneous - 706 706 651 ___________ ___________ ___________ ___________

73,591 6,943 80,534 80,710 ___________ ___________ ___________ ___________

6. Academic and Other Services

Library 6,796 2,000 8,796 8,167

Information systems services 4,160 2,025 6,185 6,314

Bio resources unit 534 75 609 525

Audio-visual & media services 341 314 655 664

Centre for microscopy and analysis 235 79 314 265

Innovation services 371 155 526 431 ___________ ___________ ___________ ___________

12,437 4,648 17,085 16,366 ___________ ___________ ___________ ___________

7. Premises

Premises maintenance 3,480 3,511 6,991 6,578

General services 9,494 1,584 11,078 8,306

Minor works - 200 200 229

Rent & rates - 184 184 396

Insurance - 2,087 2,087 2,145

Energy 42 3,107 3,149 2,701 ___________ ___________ ___________ ___________

13,016 10,673 23,689 20,355 ___________ ___________ ___________ ___________

8. Amount Allocated for Capital Purposes

Capital projects - 2,627 2,627 2,475

Equipment - - - - ___________ ___________ ___________ ___________

- 2,627 2,627 2,475 ___________ ___________ ___________ ___________


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2004 2003 Staff Costs Non Pay Total Total €'000 €'000 €'000 €'000

9. Central Administration & Services

Administration 7,935 - 7,935 6,703

Expenses - 942 942 917

Professional charges - 967 967 1,239

Miscellaneous - 888 888 953 ___________ ___________ ___________ ___________

7,935 2,797 10,732 9,812 ___________ ___________ ___________ ___________

10. General Educational Expenditure

Examination expenses 88 639 727 726

Scholarships, prizes & fellowships - 3,470 3,470 2,634

Miscellaneous expenses - 1,843 1,843 2,689 ___________ ___________ ___________ ___________

88 5,952 6,040 6,049 ___________ ___________ ___________ ___________

11. Student Services

Capitation grants - 1,094 1,094 1,039

Student services 530 651 1,181 1,065

Careers advisory service 508 156 664 606

Sports & recreation 331 24 355 319

Health & counselling 765 238 1,003 871 ___________ ___________ ___________ ___________

2,134 2,163 4,297 3,900 ___________ ___________ ___________ ___________

12. Miscellaneous Expenditure

Pensions 5,232 - 5,232 4,332

Miscellaneous expenses - 1,696 1,696 397 ___________ ___________ ___________ ___________

5,232 1,696 6,928 4,729 ___________ ___________ ___________ ___________

13. Total Expenditure

Academic & related services 114,433 37,499 151,932 144,396

Research grants & projects 30,949 25,463 56,412 45,864 ___________ ___________ ___________ ___________

145,382 62,962 208,344 190,260 ___________ ___________ ___________ ___________


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14. Surplus on Ancillary Services

Income Expenditure/Allocation

Surplus/ (Deficit)

2003

€'000 €'000 €'000 €'000

Catering 4,953 4,527 426 281

Student residences 5,767 4,069 1,698 1,015

Conferences 2,723 1,916 807 1,288

Library shop 2,565 2,565 - -

Other 172 343 (171) 145

Enterprise centre 2,284 2,004 280 848

Copying service 46 54 (8) 3

Day nursery 351 320 31 11

Diagnostics 404 416 (12) 108

Medical/dental and other facilities development account

1,272

-

1,272 2,080

University company proceeds and royalties account

3

-

3

(363)

___________ ___________ ___________ ___________

20,540 16,214 4,326 5,416 ___________ ___________ ___________ ___________

15. Depreciation of Fixed Assets 2004 2003 €'000 €'000

Land and buildings 14,159 11,649

Equipment 10,426 9,810 ___________ ___________

24,585 21,459 ___________ ___________

16. General Reserve Movement (See Note 22) 2004 2003 €'000 €'000

Amortisation in line with depreciation 24,585 21,459

Surplus on ancillary services from Income & Expenditure account to General Reserve

(4,326) (5,416)

___________ ___________

20,259 16,043 ___________ ___________


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17. Fixed Assets

Land and Buildings

Equipment

2004

€'000 €'000 €'000

Cost/Valuation at 1 October 2003

Valuation 440,607 5,452 446,059

Cost 200,517 89,590 290,107 ___________ ___________ ___________

Total 641,124 95,042 736,166 ___________ ___________ ___________

Additions at Cost 37,209 13,527 50,736

Disposals (1,467) (1,557) (3,024)

Cost/Valuation at 30 September 2004

Valuation 439,942 5,452 445,394

Cost 236,924 101,560 338,484 ___________ ___________ ___________

Total 676,866 107,012 783,878 ___________ ___________ ___________

Depreciation

At 1 October 2003 49,224 63,341 112,565

Less Accumulated Depreciation on Disposals (99) (1,411) (1,510)

Depreciation for Year 14,159 10,426 24,585 ___________ ___________ ___________

At 30 September 2004 63,284 72,356 135,640 ___________ ___________ ___________

Net Book Value at 1 October 2003 591,900 31,701 623,601 ___________ ___________ ___________

Net Book Value at 30 September 2004 613,582 34,656 648,238 ___________ ___________ ___________

Land has been valued on an existing use basis at a valuation of €126,974 per acre. Buildings have been valued on an existing use basis at a standard cost of €2,413 per square metre.

The College owns a considerable number of works of art including paintings, silver, sculptures and priceless manuscripts. These works of art are not included in the Funding Statements because even though they are insured for substantial amounts, it is considered that no meaningful value can be attributed to them.

In applying FRS 5 ‘Reporting the Substance of Transactions’, the College has included in Land and Buildings properties for which the related liabilities of €51,888,000 (2002/03:€28,354,000) are included in creditors due after one year and €2,357,000 (2002/03: €1,916,000) in creditors less than one year. In addition, included in land and buildings are assets with a net book value of €58,085,776 in order to report the substance of the arrangements in place rather than the legal form.


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18. Financial Assets 2004 2003 €'000 €'000

Quoted investments 30 29

Unquoted investments 101 110 ___________ ___________

131 139 ___________ ___________

Quoted Investments relate to Iona Technologies, formerly a campus company of the University. The above valuation relates to the 10,000 shares held by the University.

19. Debtors and Prepayments 2004 2003 €'000 €'000

Contract research grants & projects recoverable 12,386 11,893

Staff house loans 213 201

Internal balances 2,906 1,694

Trade debtors 3,738 2,997

Prepayments 4,105 5,294

Other debtors 2,612 1,089

Amount due from subsidiary undertaking 32,101 14,229 ___________ ___________

58,061 37,397 ___________ ___________

20. Creditors and Accrued Expenditure 2004 2003 €'000 €'000

Contract research grants and projects unexpended 21,317 18,800

Trade creditors 5,630 4,726

State grants for recurrent expenditure received in advance 23,178 18,588

Academic fees received in advance 17,811 16,085

Accruals 16,215 9,641

PAYE/PRSI 3,343 2,853

Internal balances 14,006 18,222

Obligations under finance lease 2,357 1,916

Other creditors and accruals 15,883 11,808 ___________ ___________

119,740 102,639 ___________ ___________

21. Creditors due after one year 2004 2003 €'000 €'000

Lease creditor 51,888 28,354 ___________ ___________

The lease creditor relates to the financing arrangement for Trinity Hall which has the substance of a finance lease.


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22. General Reserve

Total to 30 September

2003

Movement

in year

Total to 30 September

2004 €'000 €'000 €'000

Valuation – Fixed Assets 369,768 11,590 381,358

State capital grants - HEA 113,419 5,866 119,285

Recurrent funding transfer 24,321 2,627 26,948

Capital donations 112,548 19,876 132,424

Other (includes transfer of surplus on ancillary services - Note 16) 99,115 8,061 107,176 ___________ ___________ ___________

719,171 48,020 767,191

Disposals (16,691) (3,024) (19,715)

Amortisation

Amortisation at 1 October 2003 (112,565) -

Accumulated amortisation on disposals 1,510

Amortisation in line with depreciation (24,585)

Amortisation on 30 September 2004 (135,640) ___________ ___________ ___________

589,915 21,921 611,836 ___________ ___________ ___________

23. Revenue Reserve 2004 2003 €'000 €'000

Opening balance 90 983

(Deficit) for year (130) (893) ___________ ___________

Closing balance (40) 90 ___________ ___________

University of Dublin, Trinity College Consolidated Financial Statements Year ended 30 September 2004 RECONCILIATION OF CONSOLIDATED FINANCIAL STATEMENTS TO HEA FUNDING STATEMENTS Year ended 30 September 2004

45

2004 €'000

2003 €'000

Surplus per Consolidated Financial Statements before Taxation 4,969 8,948

Less: (Profit)/loss on disposal of Fixed Assets (2,783) 264 Transfers to recurrent from capital - (1,040) Unexpended academic departmental funds 2,363 (3,462) Unexpended non-academic departmental funds (1,549) (3,210) Transfers to capital/reserves from recurrent (3,899) (5,886) Recurrent equipment non-capitalised (4,881) (4,760) Unincorporated ancillary activities (6,789) (3,836) Other 640

(1,089)

(11,929) (14,071) Addback:

Difference between depreciation and amortisation 11,799

13,178

Deficit as per HEA Funding Statements (130)

(893)

Documents

Statement by The Board of Trinity College Dublin · The Board of Trinity College Dublin ... These surpluses are legally committed in the long term to ... through reductions in pay