University for the Creative Arts

Financial Statements

for the year ended 31 July 2019

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University for the Creative Arts Financial Statements for the year ended 31 July 2019 Contents Page Strategic Report 2-19 Details of Board of Governors 20 Responsibilities and Corporate Governance Statement 21-25 Independent Auditor’s Report 26-27 Consolidated and University Statement of Comprehensive Income 28

Consolidated and University Balance Sheets 29

Consolidated Statement of Cash Flows 30

Consolidated and University Statement of Changes In Reserves 31

Statement of Principal Accounting Policies 32-37

Notes to the Financial Statements 38-58 This document constitutes the annual report

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University for the Creative Arts Strategic Report The University is a Higher Education Corporation (HEC) and an exempt charity under the terms of the Charities Act 2011. This review summarises the Board’s assessment of how we have delivered our charitable purposes for public benefit and of our overall performance in 2018/19. In preparing this review, the Board of Governors has had regard to the Charity Commission’s guidance on public benefit. The University’s Beneficiaries The University’s charitable objects, derived from the Education Reform Act 1988: Section 124, are the advancement of further and higher education (FE and HE) and research. Our students are the University’s primary beneficiaries. However, our beneficiaries also include employers and businesses within the creative industries sector and beyond; external researchers and members of the public who visit our galleries and the Crafts Study Centre, a specialist museum, charity and research centre on our Farnham campus; and school children, local communities and our alumni who attend educational events organised by the University and make use of its academic facilities. We do not believe that UCA carries out any activities that could harm its beneficiaries and we are not aware of views amongst others that such harm might arise. No serious incidents of material significance were reported in 2018/19. The University’s 10 Year Strategy Since the arrival of its Vice-Chancellor, Professor Bashir Makhoul, in June 2017, the University has sought to build on its activity over the previous five years, which saw it significantly raise its profile and reputation, to pursue a strategic direction that will ensure its resilience and financial stability, as well as enhancing still further its educational offer. The University is seeking to build on what it does best, with its focus being set on the broader needs of the creative industries, as exemplified by its creation of a Business School for the Creative Industries – the first of its kind in the UK. Pursuit of the two key objectives of recruitment and enhancement will enable the University to invest in its future development, whilst working in partnership with its students and other organisations to co-create the student experience, expansion overseas, and robust recruitment pipelines. Following the arrival of the new Vice-Chancellor, a review of the University’s Strategic Plan has taken place. This signals a change in the positioning of the University and identifies that it intends to be:

• Recognised as a global authority on creative arts, creative technologies and business for the creative industries.

We will:

• Grow our student numbers, increasing the profile and reputation of the University nationally and internationally and developing mutually beneficial partnerships, to deliver a sustainable financial position and more resilient organisation.

• Build upon what we do well, reviewing our portfolio and ensuring that the activities we undertake are effective, coherent and viable, both educationally and financially.

• Review the use of our resources, including the quality of our estate, to ensure our total offer is attractive to students and provides a meaningful educational experience.

Modern University of the Year, League Table Performance and TEF In September 2018 UCA was named the Modern University of the Year in The Times and The Sunday Times Good University Guide 2019. In addition to receiving this accolade, the University achieved the following rankings in the Guide’s league table:

• Top creative specialist institution • Top 10 for teaching quality • Top 40 for social inclusion • Joint top modern university

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• Highest climber, up 25 places This was followed later in the year by the news that UCA had also been ranked as the top creative specialist institution in both the Complete University Guide and the Guardian University Guide, with an overall position of 13th amongst all UK universities in the latter table. 2018/19 culminated in the University being awarded Gold under the Teaching Excellence and Student Outcomes Framework (TEF), the panel identifying ‘outstanding levels of stretch that ensure all students are significantly challenged to achieve their full potential.’. Open College of the Arts On 1 November 2016, the distance learning provider Open College of the Arts (OCA), became a wholly owned subsidiary of the University. OCA is a charitable company limited by guarantee established in 1987. In line with the University’s academic strategy, this new member of the group adds distance learning and online degrees at undergraduate and postgraduate level to UCA’s course portfolio and secures the University’s vision of opening up access to creative arts education at university level to everyone, wherever they are in the UK and beyond. UCA has validated all of OCA’s undergraduate and postgraduate qualifications since 2012. This relationship between two long-established creative arts providers means more choice and flexibility for students, providing opportunities for undertaking undergraduate or postgraduate courses to develop their career and/or improve their quality of life. OCA’s mission remains “To be at the forefront of student-led creative arts education through innovative open, enhanced, & supported distance learning, for an evolving society.” OCA has an Academic Strategy and complimentary Digital Transformation Strategy which set the agenda for the organisation for the next three years and form an element within UCA’s ten-year Strategic Plan. This year OCA has established a corporate annual plan which sets out the work that will be undertaken towards meeting these goals; key objectives include:

• Deliver an ambitious strategic plan that establishes “UCA Open” whilst maintaining OCA charitable purpose for social impact and widening access to arts education;

• Conduct reviews of OCA, and OCA functions, to understand and improve organisational alignment within the UCA group;

• Establish a digital transformation strategy that provides a new student experience, more peer learning support, increased opportunity for community and collaboration, online portfolios and enhanced practice around feedback and assessment;

• Improve financial, HR and operating processes, with appropriate auditing and control; • Embed new marketing, market research and sales approach to improve enquirer conversion and

increase enrolments; • Implement “projects” for knowledge exchange; • Establish a pipeline for external funding and Enterprise to mitigate reduction in grant funding and to

diversify income; • Improve offers and awards (including short courses, Level 3 foundational studies and wider post-

graduate offers); • Establish new curriculum and assessment models with a focus on digital assessment; • Refresh the curriculum through periodic review in 2020; • Introduce Learning Design across all programmes to improve course production; • Establish a focus on digital pedagogy, in partnership with UCA.

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Business School for the Creative Industries The Business School for the Creative Industries, established to articulate and support the needs of the creative industries in terms of business professionals, has successfully completed its first full year of operation. At its inception, the School commenced delivery of 3 new courses and continued the teaching of others realigned to it from elsewhere in the University – specifically those that already had a focus on business disciplines such as marketing. In its first full year, the School successfully implemented the migration of courses, with student satisfaction at least maintained and, in many cases, improving. The School was also given its own location within the Epsom campus, which provided it with a good initial opportunity to cohere. The new Director of the Business School arrived at UCA in May 2019 and has begun a strategic development review to articulate a full plan for the growth and implementation of the Business School over the next 3 - 5 years. The start of this process has been the engagement over the previous 3 months with several external bodies and a wide range of employers within the creative industries to develop an understanding of their needs and requirements for courses. The first stage of these new developments will be the proposal of a new School portfolio for 2020/21 entry. This development seeks to align the portfolio to the wider UCA portfolio and educational offering, as well as providing an opportunity to meet the ambitious student recruitment targets for the Business School as a whole. UCA International College UCA and the Holmes Education Group have jointly agreed to the set-up and operation of the UCA International College (UCAIC) which will be based within the Epsom campus. The UCAIC offers a Stage 0 course which articulates into most UCA undergraduate and postgraduate taught courses. The courses have been approved by the University and offer students the opportunity to develop their understanding of art and design or business, and to develop their English for Academic Purposes in advance of their choice of undergraduate or postgraduate course. The first intake of students arrived in September 2019, and in advance of this UCA and UCAIC worked together to implement an operational model to welcome the students and ensure that the courses support the broad strategic growth objectives of the University. Students In 2018/19 the University saw an overall increase in student numbers. This was due to significant growth in overseas numbers, especially at postgraduate level, as a result of increased investment, targeted strategic recruitment and new collaborative arrangements, especially within China. Overseas numbers have now increased for the sixth year in succession, rising by over 148% since 2013/14. Recruitment to undergraduate and postgraduate programmes has risen by 50% in the last year. Postgraduate recruitment alone has almost doubled in one year (+94%). The Home/EU undergraduate (UG) market remains competitive and recruitment has slipped by just -0.7%. Postgraduate (PG) numbers at Home/EU level have increased once again on the previous year and more than doubled in the last six years, but this remains a challenging market, with recruitment levels still relatively low. There was a decrease in recruitment at pre-degree/further education (FE) level continuing the downward trend over the last six years; this included a sharp decrease in Home/EU numbers, largely due to falling demographics. In response to these trends, student recruitment and retention continued to be a priority throughout the year. Further demand-orientated portfolio development has also increased the breadth of postgraduate provision in the Business School for the Creative Industries and design-related subjects (Interiors, Graphics and Fashion) and together with the establishment of new collaborative overseas partners has resulted in increased recruitment across all these portfolio areas. A drive to increase FE recruitment has led to the introduction of several Extended Diploma programmes to meet increasing local demand at ages 16-19. We expect to see these initiatives bear fruit in the 2019/20 and 2020/21 recruitment cycles.

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Student Numbers (FTE) UCA

Category 2018/19* 2017/18 2016/17 2015/16 2014/15 2013/14 Higher Education: Home/EU Undergraduate 3,977 4,006 4,020 3,981 3,936 4,397 Home/EU Postgraduate 129 115 114 72 83 64 Overseas Undergraduate 409 303 277 231 204 169 Overseas Postgraduate 208 107 108 88 94 80 Higher Education total 4,723 4,531 4,519 4,372 4,317 4,710 Further Education: Home/EU 931 995 1,002 1,104 1,117 1,118 Overseas 40 38 40 25 43 45 Further Education Total 971 1,033 1,042 1,129 1,160 1,163 Total Students 5,694 5,564 5,561 5,501 5,477 5,873

*Provisional figures, subject to Higher Educat ion Stat is t ics Agency (HESA) student return (31 October 2019). Actual figures available in November 2019.

OCA** Category 2018/19 2017/18 Higher Education: Home/EU Undergraduate 394 396 Home/EU Postgraduate 3 2 Overseas Undergraduate 88 86 Overseas Postgraduate 4 2 Higher Education total 489 486 Total Students 489 486

**These figures include all distance learning students (excluding withdrawals) who were studying on a module at any point during the 2018/19 academic year. Some of these students will have completed a module during the year and not yet progressed onto a new module but remain within their registration period and so remain registered on the course of study.

Outreach UCA believes that a diverse community is an essential foundation of creativity. The University is committed to providing a range of long-term outreach activities targeted at groups that are under-represented in HE, working collaboratively to raise student attainment in creative areas, including art, design, technology, music and performing arts. The University’s policy and practice regarding Widening Participation (WP) in HE is guided by the National Strategy published in 2014 by the Department for Business, Innovation & Skills (BIS) which emphasised the role HE institutions should play in ensuring that “students from disadvantaged backgrounds can access higher education, get the support they need to succeed in their studies and progress to further study and/or employment suited to their qualifications and potential.” The University is fully committed to the Government’s policy to see “a society becoming less stratified by socio-economic class” and is proud of its record on WP. Our internal records show in 2018/19, 9.9% (2017/18: 12.4%) of our students came from Low Participation Neighbourhoods (POLAR 3, Ward 1) and 10.8% (2017/18: 13.8%) were in receipt of Disabled Students’ Allowance. UCA is committed to delivering sustained and coordinated outreach activity across the South East to a network of wide-reaching partner schools and colleges. The University has built partnership agreements with schools and colleges to deliver sustained engagement with appropriate learners, breaking down barriers to enable

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progression to further and higher education. Through these creative partnerships we also provide schools and colleges with access to creative careers tools, resources, events and activities. We have offered a range of subject-specific workshops and taster days, and on-campus Easter and Summer School programmes. Our WP activities include Saturday Clubs on all four campuses, as well as a developed range of creative workshops delivered both in schools and on campus for all year groups, and an extended mature learners project. Our overarching ambition is to ensure an institution-wide commitment to eliminating equality gaps, being systematic in the ways that we do this to ensure the opportunities for students when they leave UCA are also equal. This commitment is aligned to the work of UCA’s Equality, Diversity & Inclusivity Committee and UCA will support the goals of other strategic stakeholders, such as Arts Council England, to align with the ‘Creative Case for Diversity’, ensuring that creative industries employers are also supporting the agenda for equality and that collectively we develop a more diverse sector. Additionally, UCA Students’ Union (UCASU) has identified sector practice at other students’ unions regarding children of asylum seekers and supporting their access to HE, and has stated that this is something that it wishes to support through its work in Medway. It has also recognised opportunities for a buddy scheme to be promoted and supported by the SU. UCA is a member of the United Kingdom Arts and Design Institutions Association (UKADIA) Widening Participation Group, a partnership of specialist institutions whose attention is focused on supporting specialist arts teachers to raise attainment in under-represented groups and deliver specialist continuing professional development (CPD) workshops and opportunities. UCA is also a member of the Care Leavers Progression Partnership in Kent which is committed to improving post-16 experience for children in care and care leavers. UCA has a significant commitment to FE, with a population of just under 1,000 students (17% of UCA’s student population), providing 16-18 Extended and Foundation Diplomas in Art and Design. These provide an alternative route for students who find it difficult to access the more traditional A Level route or who may not have sufficient confidence or knowledge of the creative arts to determine their choice of HE study at 18 years old. Our cohort of 16-18 learners are mainly local to the campuses, providing an opportunity for those who want to stay at home throughout their studies to do so. These courses provide a vital and strong internal progression route to UCA’s HE provision. The Financial Assistance Fund (FAF) is funded by UCA to support Home UG and PG students who may be at risk of not completing their course due to financial hardship. Awards are generally given as grants but short-term loans are also available. Eligible students must have taken their full entitlement to any statutory funding and demonstrate a financial need. In 2018/19 the University paid £92k to eligible students. Following our merger with OCA in November 2016 the University’s part-time and distance-learning offer is now more accessible. OCA, as a provider of high-quality HE courses in partnership with the University, has an obligation to encourage attainment and to push the boundaries of WP to ensure that more students than ever before gain qualifications by operating an open access policy and allowing students to complete a UG degree at a pace more suited to demanding and varied domestic circumstances. The College population consists entirely of part-time distance-learning students with a forecast headcount of 1,650 enrolments for the 2019/20 academic year. Student Experience Learning Environment The University’s Capital Investment Programme (CIP) is updated on a quarterly basis and reviewed by Governors to ensure that it aligns with the agreed estate and infrastructure developments, the academic strategy, and bank covenants. Major estate developments which have taken place during 2018/19 are as follows:

Canterbury Campus: - Means of Escape upgrades to Blocks D, F, G. - £0.20m Epsom Campus: - Kitchen flooring and ventilation upgrades - £0.13m

- Courtyard Improvements - £0.40m - Provision of Non-Gender Specific WC’s to Main Building – £0.15m Farnham Campus: - Completion of new Film & Media Centre including Conference Facilities -

£5.30m

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- New Kiln and Ceramics Room - £0.42m - New Jewellery Workshop including Gemmology and Hammer Room - £0.65m - Completion of design for Courtyard improvements and implementation of new

platform lifts to improve accessibility - £0.13m - Provision of new staff accommodation (in Car Park A) - £1.50m - Provision of new infrastructure (electricity, gas and water) supplies to meet

growing demand - £0.50m Rochester Campus: - Provision of a new Hair & Makeup Salon - £0.38m

In addition to new build and refurbishment projects the University has completed works on boiler and lift replacements at Farnham and Epsom during the summer of 2019. Student residences at Rochester, Canterbury and Farnham will also continue with their refurbishment and modernisation programmes. In addition, works are ongoing by external developers to provide 99 new bedrooms at Bradford House, Epsom by August 2020. Looking forward, the two main estates projects for 2019/20 and beyond will be focussing on:

Epsom Campus: - the new Business School for the Creative Industries, including ancillary projects.

Farnham Campus: - the provision of 252 new student residences and the improvement to the central courtyard for new student support.

In addition to the Estates developments, the University has invested £1m in its IT infrastructure, digital services and cybersecurity. During 2018/19, the University invested £500k into high-end computing facilities to support digital arts and £200k into enhancing the network infrastructure and improving the University’s cybersecurity position. An investment of £90k was made to provision the IT Infrastructure and network connectivity for the Film and Media Centre and new Modular Building in car park A and an investment of £110k was allocated to the continued development and enhancement of University digital services including the learning management system, finance system, service management system and library systems. The value of this investment is included in the assets in the course of construction and equipment categories within tangible assets. Teaching and Learning UCA is a centre of excellence supporting the UK’s world-leading reputation across the full breadth of creative professions at its four campuses and through partnerships. UCA prepares students for employment in the creative industries through the provision of intensive, studio-based education supported by staff that are eminent in research and professional practice in their disciplines. UCA’s signature pedagogies are enshrined in its creative education strategy offering a distinctive balance of conceptual and critical thinking skills and highly accomplished professional, production and making skills. Creative practice is at the core of learning, teaching and assessment practice and the curriculum is designed to be holistic and inclusive, challenging and developmental. Courses recognise the diversity of students and their needs so are designed to be inclusive in their support for learning. To support teaching staff in their reflective teaching practice, the newly formed Teaching and Learning Development team was formed in March 2019. The new team brings together teacher development and learning development within the newly formed department of Research and Education. The team of educational developers now offer a range of educational enhancement tools to support quality teaching and are on hand to meet with course teams looking to address retention and achievement issues. To support dispersed teaching and learning communities, the new Creative Education online resource is organised around the TEF categories (Teaching on my course, Assessment and feedback, Academic support, Continuation, Employment or Further Study, Highly skilled employment or further study). Each area now includes case studies, webinars, videos and inclusive teaching materials designed to help busy teaching teams put strategies in place to address teaching and learning issues. The team are currently working on the development of their core offer and a three-day course to introduce teaching staff to learning, teaching and assessment practice.

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Careers & Employability The Careers & Employability team deliver a comprehensive range of inclusive services aimed at preparing students and recent graduates for professional success. The last year has seen a strong focus on promoting internationalisation, inclusion and wellbeing. Effective and relevant employability events have been organised at all campuses jointly with academic course leaders and these have enabled students to engage with prospective creative industry employers and alumni in discipline-specific contexts. The highly successful ‘Creative Charge’ career and recruitment fair 2019, was delivered at Epsom jointly with the School of Fashion and was attended by 200+ students and brands including ASOS, River Island, White Stuff, Urban Outfitters, IBM, The Army and many more. Popular events at Rochester included ‘Animate your Future,’ organised collaboratively with the Computer Animation Arts Course Leader and a Fashion Design Careers day run with the FD course leader, which attracted graduates as well as current students. Two ‘Design your Future’ events were delivered at Canterbury with Graphic Design and at Farnham, a ‘Film Focus’ event offering specialist advice on getting into the film industry was organised with the BA Film Production programme. A ‘Take-off’ careers event with industry-led Q&As was also successful. SPECTRA (standing for Skilled, Professional, Employable, Commercially Aware, Talented, Resilient, Adaptable) is an innovative programme of workshops and this year has included events on digital identity, freelancing, networking and the wider opportunities for creative graduates. Themed weeks were also celebrated which complemented the embedded programme of career initiatives and included an ‘Emerging Artist Week’ at Canterbury. Work on embedding careers and employability into the curriculum is progressing significantly across campuses. A new careers platform, Job Teaser, was launched and provides students with access to exclusive job vacancies in the UK and abroad, bespoke careers resources and the ability to book appointments with careers advisors. A designated career online resource utilises social media networks, including a new UCA LinkedIn Alumni Network Group aimed at supporting alumni and recent graduates in their professional development. One-to-one guidance is available through face-to-face appointments or online through Skype. Current students also have access to a wide variety of online learning resources via the virtual learning environment (VLE). Mental health and wellbeing have been important themes with the organisation of workshops on confidence and careers resilience. An outside speaker, Imogen Dell, author of the ‘Creative Breakdown Insurance’ zine visited each campus to discuss mental health and self-employment. These events proved to be greatly appreciated by students. Supporting the career development of UCA’s black, Asian and minority ethnic (BAME) students has also been a focus with the launch of a new partnership with Creative Access, an organisation based at ITV studios which works to support young people from BAME backgrounds to secure jobs and paid training in creative companies. The team has also been engaged in globalising the careers offer which has involved promoting international work experience and organising workshops aimed at helping international students and at understanding global markets. The end of the year saw the team working with the new Head of Education and the Graduate Communications Officer on a UCA Graduate Professional Development Programme for launch in September 2019. The team’s move to Research and Education will provide further opportunities to integrate careers and employability into the curriculum and to enhance the student experience through an increased focus on key themes of internationalisation, inclusion and wellbeing. Internationalisation The University is in the process of implementing an Internationalisation Strategy. This is designed to enrich the on-campus and in-country (Transnational Education – TNE) experience for students and staff through greater staff and student mobility within our developing partner network, creating reciprocal, richer learning environments; and enhancing programmes through curriculum development adopting a global context. Several TNE agreements were signed during 2017/18 for a 2018/19 start. These range from progression agreements, articulation agreements and franchise of foundation programmes which lead to subsequent progression to the UK, validation or franchise of UG and PG provision in-country. Further discussions are underway with a range of potential partners for a 2019/20 start. We have already developed relationships with over 75 potential partners in more than 15 different countries, including China, India, Cyprus, Hong Kong, Pakistan, Singapore, Russia, Malaysia, Taiwan, Iceland and so on.

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Investment has been made into a new International Studies Department, responsible for international student recruitment and support, the development of international collaborative partnerships and the delivery of TNE projects overseas, the delivery of foundation programmes to international students in the UK, pre-sessional and in-sessional English language courses throughout the year, as well as staff and students mobility through Erasmus plus and international partnerships. Consideration is being given not only to recruitment, but to the support required to ensure international students have a good experience – this includes through the creation of the new Academic Plan in support of the new University Strategy which reinforces the critical importance of successful internationalisation of the University’s activities and culture. The pattern of recruitment is spread across the University’s four campuses to ease requirement on space and accommodation. The University believes that creativity is stimulated by cultural diversity and that this is a necessary phase of its intellectual development over the next 10 years. Professional Recognition and Accreditation The University has a portfolio of associations with professional, statutory and regulatory bodies. These include: Broadcast Journalism Training Council (BJTC), Creative Skillset, British Kinematograph Sound and Television Society, CILECT, the British Academy of Film and Television Arts (BAFTA), Albert, the Higher Education Academy (HEA – see below), the Architects Registration Board (ARB) and the Royal Institute of British Architects (RIBA). The University re-accredited its continuing professional development (CPD) provision for teaching staff with Advance HE in June 2018. Teaching staff can now undergo more flexible taught and experiential routes to teaching qualification and professional recognition through our new Creative Education Professional Development Framework. To achieve a teaching qualification, academic staff are offered a fully funded place on our PG Certificate in Creative Education. The PGCert is offered as an online experience (rather than a day release model) to fit in with busy teaching schedules. Our Creative Education CPD Scheme (D1-D3) provides a route to professional recognition for all experienced teaching staff and now includes a new dialogue route, where a claimant submits a lite submission and is then invited for a dialogue with a specially convened professional recognition panel. Since 2016, the University professional recognition scheme has supported over 140 teaching staff to gain teaching qualifications and/or professional recognition. Student Retention The University uses the Annual Academic Monitoring (AAM) of courses and the production of the University Quality Report (HE) and the Self-Assessment Report (FE) to examine the student life cycle and track the performance of students across groups with protected characteristics, domiciles and level of study. There is a longer time frame on the reporting of retention; the most recent complete dataset refers to the 2017/18 academic year. In the last cycle, this analysis resulted in a BAME Achievement Group being established and a focused remit for the Student Access, Wellbeing and Inclusion Group to support stronger outcomes for students and address equality gaps. This has resulted in formalised policies for induction and the development of induction activities and a new personal tutoring policy that will provide further support for the retention of students, with particular focus on students at HE level 4. On-course and individualised support for learners is at the heart of our retention strategy in two essential ways: through academic course teams and through Gateway Services (the physical and on-line services that support students). The retention of students has been largely consistent, with a 1% improvement in the largest, undergraduate group.

• FE – 88% (89% retention in 2016/17) • UG – 92% (91% retention in 2016/17) • PG – 92% (equal to 2016/17 retention)

Data taken across the entire population (O/S and Home) at each level. The University uses the AAM of courses and the production of the University Quality Report to examine the student life cycle and track the performance of students across groups with protected characteristics. In the last cycle, this analysis stimulated revisions to the terms of reference for our quality committees and identified actions for 2017-20 to support retention, achievement and employability of students. The Quality Report also stimulated a strategic review of employability in 2017, recognising the need to review employability approaches in the curriculum and within professional services to support stronger outcomes for students and address equality gaps. Further initiatives emanating from the Quality Report include a review of the University Credit

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Scheme to ensure assessment practice does not over penalise very small elements of failure when the learning outcomes for an early stage of learning have been met. The University uses Quality Monitoring as a proactive means of changing practice across the University to support progression and success for all. On-course support for learners is at the heart of our retention strategy in two essential ways: through academic course teams, and through Gateway Services (the physical and on-line services that support students). The academic teams have responsibility for academic and pastoral support of students. In creative arts education these often combine to provide the underpinning of highly individualised creative practice. Recently the approach to providing tutorial provision was reviewed giving particular emphasis to ‘Induction Tutoring’ to ensure there is a higher level of tutorial support in the early phases of level 4. Providing sufficient on-course support, particularly pastoral support for learners with complex needs is one of the greatest challenges facing our academic communities. Non-continuation of students continues to be a major factor in retention: 25% (87) of all attrition at first degree level in 2016/17 was due to students not returning to studies in 2017/18. The factors contributing to this figure were explored in 2017/18 by the Student Success Committee and a substantial piece of work on interruption and its impact on attrition is underway. Gateway Services act as the first point of contact for UCA students and staff seeking to access the integrated services and support delivered by Library & Student Services, covering Advice & Student Finance, Counselling Services, Careers & Employability, Disability & SpLD and Learning Services. The Gateway campus teams specialise in answering enquiries and providing support both in person and online. They respond to a wide range of questions and will triage queries and signpost enquirers to other UCA staff and services and/or to external organisations who can provide appropriate support. Student Outcomes The graduating students of 2018/19 achieved well at 74%* of graduates achieving a First or Upper Second-class degree. This is one percentage point below 2017/18 graduates and on par with 2016/17 graduates. This levelling out was anticipated as ‘good degrees’ increased in the years preceding this following introduction of cross parity exercises across the University, renewed focus upon a consistent grade band and improving entry profiles, formalised through the introduction of higher standard entry criteria in November 2015. The University saw a significant increase in the number of 2016/17 graduates in graduate level employment six months after graduation: 74%, up 9 percentage points from the 2015/16 graduates. This followed a significant University wide project in 2016/17 and 2017/18 to review employability at UCA. * Provisional results, subject to HESA student return (31 October 2019). Actual figures available in November 2019. Student Satisfaction As a specialist creative arts institution, in competition with other specialists nationally and strong multi-disciplinary universities regionally, UCA must provide its students with an outstanding experience, sustained industry engagement and excellent studio and workshop facilities, all supported by experienced technical and academic staff who need to be resourceful teachers and creative researcher practitioners. This model of provision is replicated in differing forms across the four campuses at Canterbury, Epsom, Farnham and Rochester in order to ensure an appropriate and equitable experience for students. The success of the provision has been demonstrated by the results of TEF 2019. In granting the prestigious ‘Gold’ award to UCA, the panel noted:

- an institutional culture, which facilitates, recognises and rewards excellent teaching, embedded across the provider;

- outstanding levels of stretch that ensure all students are significantly challenged to achieve their full potential, including the use of assessment methods involving self, peer and tutor reflection for formative and summative feedback;

- the nature and design of the curriculum for ensuring a highly specialised professional, personal, supportive and immersive experience;

- an institutional strategy for employability embedded across all curricula, linked to project work and significant contact with employers that frequently engages students in developments from the forefront of professional practice.

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This performance is echoed in the ranking of the University as the top creative specialist institution in all three national league tables, its 13th place amongst all UK universities in the Guardian University Guide 2020, and the award of ‘Modern University of the Year 2019’ by The Times and The Sunday Times Good University Guide. UCA continues the practice of using internal student experience surveys for all year groups to support enhancement activities. Results from these surveys have been largely consistent with previous years and it is positive to see year on year improvement of Postgraduate Research Students satisfaction that now stands at 85%. The National Student Survey (NSS) of Year 3 (as a measure of the overall satisfaction of our UG student body with the quality of their time at UCA, enabling direct sector comparisons) maintained at the level achieved in 2017/18 at 83% with an 87% response rate, in-line with sector average. Satisfaction varies from course to course and UCA has in place enhancement plans to bring about more consistent levels of satisfaction across all provision. Further mechanisms are being introduced to ensure that courses not achieving targets have robust action plans in place, the implementation and effectiveness of which will be assessed throughout the year through a new Student Experience Board chaired by the Deputy Vice-Chancellor (Academic). Departments will also be asked to provide quality enhancement plans to the Academic Quality Committee for underperforming areas. Teaching Qualifications and CPD The University continued its strong trajectory of professional recognition for teaching with qualification successes in 2017/18. 40 UCA staff achieved HEA professional recognition at D1, D2 and D3 of the UK Professional Standards Framework (UKPSF). Of these, 28 came through the non-credit bearing units and 12 came through the credit bearing teacher qualification routes. These results were a positive contribution to achieving the target of 60% of the teaching staff holding teaching qualifications. More significantly, staff successes in these areas are enabling the development of more reflective cultures of teaching and learning across campuses, disciplines and professional boundaries. A full programme of CPD opportunities around teacher development has been offered to UCA staff from 2017. These are promoted via UCA Workplace and via the Creative Education wordpress site https://creativeeducationnetwork.com/. They include a programme of activities to support staff interested in applying for HEA Fellowship and various workshops and webinars on aspects of student engagement and inclusivity. In addition, bespoke enhancement activities are offered to various academic teams, often focused around course quality process recommendations. These included topics like BAME attainment, creative teaching, inclusive practice and assessment and feedback. The Head of Teaching, Learning & Student Engagement also facilitated student engagement activities around Value for Money and developing the university strategy. More recently, a successful Course Leader Development event around BAME attainment and a collaborative learning and teaching day for UCA and OCA colleagues were held. Research The organisational context to Research support and direction in the University has changed considerably. In January 2018 the Leadership Team gave its support for a new structure, creating a new department of Research and Education under a permanent full-time Director of Research and Education who commenced employment on 1 August 2018 and oversees three teams: an Education team, a Research team and a Galleries team. This new structure has been implemented in stages during 2018/19, with the Head of Education (who leads the Education team) joining the University in June. Education teams that have moved from elsewhere in the University (Careers and Employability, Creative Education, Learning Development) are now in the new department, and a new Galleries staffing structure has also been achieved, as of summer 2019. During 2018/19 the Research Office has continued to deliver its core functions, directed to the support and leadership of staff research and research degrees. Preparations for the Research Excellence Framework (REF) 2021 have been continued, with considerable efforts directed to the Academic Career Fields scheme. This is an integral part of REF planning, as it forms the basis for identifying which staff have ‘significant responsibility for research’ for the REF, and whose outputs will be submitted. The Academic Career Fields scheme is the basis for UCA’s REF Code of Practice, which was submitted in June 2019 and has been approved subject to two requested clarifications. 2018/19 saw training delivered for professors and readers in the review of REF outputs, and this process of review is now well underway. Impact case studies have been identified and are in

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development. 2018/19 has also seen a process to recruit Professorial Fellows, bringing in to UCA highly experienced staff with excellent research achievements who can support and stimulate the research culture in each school. As of September 2019, seven appointments have been made, due to start work in the coming term. The new research degrees partnership with UAL that was successfully implemented during 2017/18 has continued to work well during 2018/19. There has been a significant increase in Research Degree Applications, and 15 new students are due to start their studies in September 2019. Intensive preparations are now under way for UCA’s application for our own Research Degree Awarding Powers. Funding and Staff Research Achievements The table below indicates the total amount of external funding awarded in 2018/19 (which will go through UCA finance processes). This amount may be awarded over the lifetime of the project and so the actual amount of external funds received by UCA in 2018/19 is also shown. There is a decrease of successful awards from the previous year (which was also boosted by inclusion of awards that went directly to researchers) but the new post of External Research Developer, who started in April 2019, will look to support researchers and UCA in applying and achieving successful bids.

2018/19 2017/18 2016/17 2015/16 2014/15 2013/14 Total amount awarded* £149,869 £305,677 £775,010** £111,062 £500,500 £143,157 Number of bids 12 38** (26) 11 14 16 10 Number of successful bids 3 26** (15) 4 1 5 3 Number of unsuccessful bids 9 4 6 10 7 3 Number of bids outcome pending 0 8 1 3 4 4 External grant funding received into UCA project accounts £131,884

* Please note that funding from the National Collaborative Outreach Programme (NCOP) is included in this total. ** Please note the higher amount reflects the total number of bids from UCA staff including those that are awarded directly to the researcher. The amended number in brackets is the number of bids where funds will go through UCA finance. Included in the above table for 2018/19 is UCA’s successful participation in a bid led by Royal Holloway, University of London, to the Arts and Humanities Research Council’s (AHRC’s) Creative Industries Clusters programme. UCA will derive £60,522 from this source over three years, contributing a match of £12,104 (20%) in staff time and resources. The project, known as StoryFutures, is one of just nine bids to receive funding from the AHRC programme, and will bring together universities and world leading creative and technology companies with the region’s small and medium-sized enterprises (SMEs). The project will tackle the challenge of next-generation storytelling: how the creative sector will harness technologies including augmented, virtual, mixed and cross Reality (AR, VR, MR, XR), smart devices, and artificial intelligence to engage audiences in new experiences. Other staff research highlights during the year include the publication of books such as The Punishment of Luxury by the Vice-Chancellor, Professor Bashir Makhoul, to accompany his exhibition at the Umm el-Fahem Art Gallery, Phytopia by Ed Chell to accompany his exhibition at Glynn Vivian Art Gallery, Ship to Shore: Art and the Lure of the Sea, by Professor Jean Wainwright, So to Speak by Steffi Klenz, BLINK, a new photobook by Professor Anna Fox, Cheap Street: London’s street markets and the cultures of informality, c.1850–1939 by Professor Victoria Kelley, and Encompassing Research, UCA’s School of Crafts and Design research publication. Successful research symposiums during 2018/19 include Craft(ing) the Body at the Crafts Study Centre, run by Professor Simon Olding and Professor Lesley Millar with a keynote from Catherine Harper, Professor of Textiles and Deputy Vice-Chancellor of University of Chichester; Spatial Mutuality organised by Dr Stephen Connolly: Has Documentary Failed? organised by Dr Silke Panse with Documentary Now! at Birkbeck, University of London and a new research collaboration between bookRoom and the Audio Research Cluster which resulted in the here.here concert series, curated by Emmanuelle Waeckerle and Dr Harry Whalley.

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Conferences included Sustainable Innovation 2019 | Road to 2030: Sustainability, Business Models, Innovation and Design, the 22nd International Conference run by Professor Martin Charter at the Business School, and the first Experimental & Expanded Animation Conference, organised by Professor Nicky Hamlyn. The Fast Forward: women in photography research project based at UCA continues its impactful work, and offered workshops in Lagos, Nigeria and London and mentorship programmes developed for women photographers in West Africa and China. A research presentation on the Memory Tracks project (funded by the Consortium for Research Excellence, Support and Training (CREST)) was held at The Health Foundry in London, delivering findings into the impact of memorable songs connected to daily tasks to help those living with dementia, with a research team from UCA, Glyndwr University and Manchester Metropolitan University. From the Kitchen Table: Drew Gallery Projects 1984-90 was a major touring exhibition, organised by the School of Fine Art and Photography, which brought together original and related works from the Drew Gallery Projects archive (gifted to and digitised by UCA) celebrating Sandra Drew’s visionary legacy to a whole new generation. Other exhibitions include Women in Photography: A History of British Trailblazers at The Lightbox, Woking, with images from Professors Anna Fox (Country Girls) and Karen Knorr (India Song) and 20 new and archival interviews from Professor Jean Wainwright, who also curated a major group exhibition, Powerful Tides, bringing together the work of major artists, dead and living, around the theme of the sea, as part of the celebrations for Chatham Dockyard’s 400-year anniversary. Steffi Klenz exhibited Paradise can Make Itself Scarce in London, 30 years after the Fall of the Berlin Wall, and Amanda Couch created a performance-presentation for the Wellcome Library Insights Series, continuing her ongoing research concerned with bodily processes. UCA acted as host for the 5th Annual European Sculpture Network ‘start19’, with keynote from Andrea Gregson on the Afterlife of Objects, and Anthony Heywood was selected to exhibit his new sculpture series, Iconic Buildings at the Wells Contemporary at Wells Cathedral. Ed Thompson was shortlisted for the Sony World Photo Award, Professor Karen Knorr was selected for the RA Summer Exhibition, and Professor Anna Fox was honoured at the Royal Photographic Society Awards. UCA Professors, Readers and Lecturers continue to exhibit their work globally including Professor Ori Gersht “La Fleur de l’art” in Paris, Andrew Kötting at Berlin Film Festival Critics Week, and Professor Karen Knorr in France, Austria and the USA. The above researchers have all received support from the University’s Research Fund, as well as drawing in external funding from a variety of funding bodies in the UK and Europe.

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Human Resources (HR) Supporting Strategy The University aims to be recognised as an ‘Employer of Choice’ shaping and achieving our potential through partnership and co-creation and harnessing the innovation and creativity of our staff. The HR department continues to provide professional advice and support across the University, working with key stakeholders to support the achievement of UCA’s strategic plan through its people. An updated People Strategy, approved by the Board of Governors, builds on the outcomes of the 2017 staff survey, placing a focus on;

• Attracting and retaining staff - building a diverse community of staff with the skills to excel in their role and contribute to the achievement of the Strategic Vision;

• Supporting, developing and sustaining high-performing teams - engendering a culture of continuous development, engagement and collaboration;

• Retaining, recognising and rewarding staff - encouraging and nurturing everyone’s potential and celebrating success.

Leading and Managing Change The action plan which emerged from the last staff survey focused on three key areas – Effective Performance Management, Culture and Values, and Dignity and Respect and was endorsed by the Vice-Chancellor and championed by members of the Leadership Team. Four principle UCA Values and associated behaviours have been developed in consultation with staff and work to embed these will be ongoing over the forthcoming academic year. Significant focus was placed on the completion of staff appraisal with an overall completion rate in excess of 95%. All Academic staff at UCA are now aligned to one of three Academic Career Fields: Creative Education, Research or Professional Practice. The aim of the Academic Career Fields is to provide clarity and equity for all academic staff in those activities that they engage in to enhance the delivery of education at UCA. The Academic Career Fields approach provides equivalent expectations, frameworks and support across several areas of enhancement, and is an important mechanism for workload planning and career progression and support. It is a particularly challenging time for the sector and UCA like many other universities faced significant short-term financial challenges. A shortfall in undergraduate recruitment projected for 2019/20, together with unprecedented cost increases, mainly outside the University’s control, led to a projected saving requirement of c£5m being identified. In light of the continued external pressures and year on year staffing and other cost increases, the University took action to address the short-term savings required to mitigate the impact on the University’s financial resilience. In taking this action to deliver staff and other operating cost savings, the University has placed itself in the best possible position for projected growth from 2020/21. Reflecting and embedding learning We continue to place emphasis on the development of our staff, equipping all staff with the capacity and capability to respond with agility to the constantly changing environment. The culture of self-directed learning continues to gain momentum, supported by an increasing demand for bespoke programmes that tailor a range of development opportunities to roles and individual staff. HR works closely with the Leadership Team to ensure all development relates directly to University objectives. The University was awarded the Staff Development Forum (SDF) Developing Excellent Practice Award 2018 for its commitment to implementing a strategic workplace learning framework that boosts individual, team and organisational performance ‘A whole systems approach to staff Learning & Development at UCA’ Equality, Diversity and Inclusivity The University has continued to promote equality, diversity and inclusion during 2018/19 including our on-going commitment to AccessAble, Stonewall (LGBT) and the Living Wage. Dignity and respect workshops were held on all campuses and an advocate scheme drafted to support and encourage the reporting and addressing of inappropriate behaviour. Following the statutory publication of the Gender Pay Gap data, the University is

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continuing to work to reduce the identified median pay gap, which stands at 6.8% as reported in March 2019, compared to 8.4% in the previously year. Continued emphasis is being placed on supporting mental health, enhancing resilience and inclusive practice through the Mental Health First Aider training programmes. Financial Review Summary Financial Statements to 31 July 2019 The Financial Statements for the year ended 31 July 2019 have been prepared to comply with the Statement of Recommended Practice (2015 SORP) “Accounting for Further and Higher Education”. Presentation of the primary Financial Statements for the year to 31 July 2019 is summarised as follows:

2019 Restated 2018

£’000 £’000 Extracts from Consolidated Statement of Comprehensive Income Total income 66,175 62,427 Total expenditure + (66,432) (62,888) (Deficit)/Surplus for the year (257) (461) (Deficit)/Surplus for the year as a % of total income -0.39% -0.74%

Extracts from Consolidated Statement of Financial Position Net current assets 6,212 5,979 Pension provision (39,753) (25,809) Total net assets 34,705 45,478 Extracts from Consolidated Statement of Cashflow Net cash flow from operating activities 7,101 5,890 Increase in cash and cash equivalents 1,002 2,463

+ including restructuring costs of £1,174k (2018: £464k). Total income has increased by £3.7m, an increase of 6%. Tuition fee income has increased by £4.2m, which includes £1.9m of tuition fee income from OCA. In the main, the increase in tuition fee income is attributed to HE/PG Overseas students (54%). Total expenditure increased by £3.5m, an increase of 6%. The increase in expenditure is predominantly in staff costs (up by £2.1m), which includes restructuring costs of £1.2m, the annual pay award of 2.0% with a minimum of £425 for spine points 2 to 15 and incremental pay increases. FRS 102 defined benefit pension accounting adjustments (non-cash) account for ‘current and past service costs’ of £2.7m and £735k (2018: £882k) interest costs during the year. A small deficit of £257k, after accounting for the FRS 102 pension adjustments above, was achieved through tight cost control, supported by Value for Money initiatives. These disciplines will continue to be important for the years ahead.

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Financial Strategy The Financial Strategy has continued to aim for a resilient financial position that supports the University’s core activities, and which assists strategic development. The strategy focuses on increasing income and maximising efficiency to achieve and exceed a net cash inflow from operating activities of 8.0% in future years. The Strategy targets annual capital investment of at least 2.5% of the Reinstatement Value of the estate. Key Performance Indicators (KPIs) A number of financial and non-financial KPIs have been identified by the Board of Governors and are reported to it on a quarterly basis. The values for the financial KPIs are shown below. The Board pays particular attention to cash-related Performance Indicators (highlighted in the table below), where comparisons can be drawn across the sector.

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2019 2018 Liquidity days 97 95 % % Current assets as a percentage of current liabilities (‘current ratio’) 148 152

External borrowing as a percentage of total income (‘gearing’) 13.2 8.8

Surplus for the year as a percentage of total income -0.39 -0.74

Unrestricted reserves as a percentage of total income 51.8 72.2

Total net assets as a percentage of total income 52.4 72.8

Staff costs as a percentage of total income (excluding restructuring costs of £1,174k, 2018: £464k)

57.4 58.7

Cash generated from operating activities as a percentage of total income 10.7 9.4

Cash generated from operating activities during the year £7,101k £5,890k

Pension Costs and Liabilities Annually, the University considers and agrees the assumptions used by the Actuaries to calculate the University's pension costs and liabilities in accordance with the requirements of Financial Reporting Standard 102 (FRS 102) and these are reported in Note 23 of these Financial Statements. This year the assumptions include an adjustment for the “McCloud” judgement, resulting in an increase in past service costs of £285k. The Actuaries have calculated the University's long-term pension liabilities in the context of FRS 102 at 31 July 2019 as £39,167k (2018: £25,182k); the increase is primarily a result of actuarial losses in both the Surrey and Kent Local Government Pension Schemes. Managing Risks and Uncertainty The funding environment in the last six years has become more uncertain for all universities. The changes in the HE funding regime that took place in 2012/13, when relatively predictable levels of government-funded grants were replaced by student tuition fees, have had an effect on patterns of student recruitment across the HE sector. At the same time, the removal of the student numbers cap and the fall in the number of young people in the UK has intensified the competition between universities. For UCA, where some 19% of students are on FE courses, the impact of these changes has been compounded by recent adjustments to the Education & Skills Funding Agency (ESFA) methodology and the material reduction in the ESFA grant. In the short to medium term, the risk continues that public capital funding of higher education will continue to be constrained and that the tuition fees charged to students will be affected by the recommendations in the Augar review of post 18 education and funding. The referendum decision in June 2016 for the UK to exit the European Union has not yet affected our activities but has implications for future EU enrolments dependent in part on government policy. The biggest risk for the University emanating from these changes and uncertainties is the reduction, over time, in the University’s Home/EU student population leading to more volatile fee income. On the expenditure side, increasing pension fund deficits are forcing employers to address the funding gaps leading to upward pressure on costs. The University is dependent on its capacity to generate sufficient surpluses on teaching and other income streams to invest adequately in infrastructure, to enhance teaching and research and to address previous under-investment. The University continues to manage risk pro-actively, shaping strategy and policy in anticipation of and response to the external environment. The University’s Risk Register is maintained by the Strategic Risk

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Management Group reporting to the University Executive Group and Leadership Team and reviewed by the Audit & Risk Committee through an on-going process of risk analysis, in line with the University’s Risk Management Policy. To address our primary risks the University has diversified its target markets by increasing numbers of post-graduate and overseas students and by expanding its portfolio to encompass business studies subjects. The University opened its Business School for the Creative Industries in 2017, the first of its kind in the UK. Alongside this, we have embarked on an extensive partnership programme with colleges throughout the country to secure the pipeline of home undergraduates. Advancing the international agenda remains a top priority for the University. The institutional strategy is to secure growth in overseas students and transnational education programmes through the extension of collaborative arrangements with overseas institutions. These approaches are complemented by the extension of market reach through joint development of distance, blended and on-line learning techniques with our subsidiary OCA targeting both UK and international recruitment. Keeping a focus on quality is equally important. The University is intent on maintaining and, where possible, improving all quality metrics, including those in the TEF. Improving graduate employability, is a key objective and the University is pleased with the recent improvements to this in 2019. Continuing investment in infrastructure is vital to the University in ensuring attractiveness to domestic and overseas students and thus long-term sustainability in an increasingly competitive market. The University’s Capital Investment Programme has resulted in the draw down of the £9m term loan. The full borrowing facility of £20m falls within bank covenants and is not considered to be a significant institutional risk. The University is exploring alternative sources of funding capital projects in addition to public funding and bank facilities. The most recent example is the adoption of an ‘income strip’ (sale and lease back) solution to fund new student residences at Farnham. Going Concern The activities of the Group and the University, together with the factors and risks likely to affect its future development and performance, are set out in the Strategic Report. The financial position of the Group and the University, its cashflow, liquidity and borrowings are described in the Financial Statements and accompanying Notes. The University currently has a £9m sterling money market facility used for capital expenditure on teaching facilities and office accommodation, repayable by 31 July 2026. Additionally, there is a £11m sterling revolving credit facility available for working capital until 1 August 2022. The University also has approval for a £100k overdraft facility. The University is concluding arrangements to fund additional student accommodation on its Farnham campus to accommodate 252 students. It is anticipated that the funding costs will be provided through an “income strip” arrangement whereby part of the income will fund the annual rentals once the accommodation is occupied. The costs of completing this accommodation is expected to be funded by an institutional investor. The future financial success of the University depends on its ability to maintain and improve its student recruitment and retention numbers in a changing marketplace. Given these uncertainties, the University regularly updates its financial forecasts and projections, which extend over a five-year period in accordance with Office for Students requirements. Currently, these forecasts indicate that it will be able to operate within existing facilities and their covenants over this period. Accordingly, the University has a reasonable expectation that it has adequate resources to continue in operational existence for the foreseeable future, and for this reason will continue to adopt the going concern basis in the preparation of its Financial Statements.

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Conclusion The Board of Governors is content with the financial outturn and satisfied that, although the University has realised a modest deficit, it has nonetheless improved against its original budget. This is particularly gratifying considering the exceptional costs relating to the organisational re-structure. The work we have undertaken to review our staffing structures to make them more efficient and effective will, in future, support the continued financial health of the University whilst meeting students’ needs and expectations in this changing landscape. On this basis, the Board has approved a plan to return to surplus in 2019/20 which aligns with the academic strategy and combines overseas student recruitment activity and TNE developments with further operating efficiencies. The University’s medium-term financial forecasts show an increasing level of operating surplus. The Board of Governors is particularly pleased with the academic and student achievements throughout the year that have culminated in the University being awarded TEF Gold and positioned as the highest ranked creative specialist institution in all three major national league tables, following the Sunday Times naming UCA as Modern University of the Year 2019. Once again, the Board wishes to express its thanks for the dedication and hard work of all staff, without whom these successes could not have been achieved. Pauline Waterhouse OBE Deputy Chair of the Board of Governors 26 November 2019 University for the Creative Arts Falkner Road, Farnham, Surrey GU9 7DS

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Board of Governors Independent Robert Taylor (Chair) Pauline Waterhouse OBE (Deputy Chair) Patrick Bradley Dr Emma Buckby Appointed 1 August 2018 Professor Marie Conte-Helm OBE Mark Eastwood Resigned 28 March 2019 Chris Lawrence Appointed 1 August 2019 Johnny Luk Appointed 1 August 2018 Kate McGavin Appointed 1 August 2019 Alan Newton John Oliver Retired 31 July 2019 Christopher Rachlin Andrew Ramsay Sarah Reardon Appointed 1 August 2018 Co-opted Lesley Adams (Staff) Patricia Ambrose David Edwards Appointed 1 August 2019 Dr Stephen Hampson Appointed 1 August 2019 Tim Savage (Staff) Appointed 1 August 2018 Serge Vidal Appointed 1 August 2019 Vice-Chancellor Professor Bashir Makhoul Academic Board Nominee Professor Colin Holden Retired 31 July 2019 Professor Terry Perk Appointed 1 August 2019 Student Governors Annie Durwood Appointed 1 July 2018; Resigned 30 June 2019 Amy Kemp-Jones Appointed 1 July 2019 Callum Mitchell Appointed 1 October 2019 Marta Szurmiej Appointed 1 July 2018; Retired 30 June 2019 Katie Taylor Appointed 1 July 2019; Resigned 30 September 2019 Bankers Barclays Bank plc, 28th Floor, 1 Churchill Place, Canary Wharf, London, E14 5HP Auditors Internal Auditors: BDO LLP, 55 Baker Street, London, W1U 7EU External Auditors: Grant Thornton UK LLP, 30 Finsbury Square, London, EC2A 1AG Professional Advisors – Solicitors: Eversheds Sutherland LLP, One Wood Street, London, EC2V 7WS

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Responsibilities and Corporate Governance Statement In accordance with the Education Reform Act 1988, the Governing Body of the University for the Creative Arts Higher Education Corporation is responsible for the administration and management of the affairs of the University. These responsibilities are set out fully in the Articles of Government and are summarised in the Statement of Primary Responsibilities as: • To approve the mission and strategic vision of the institution, long-term academic and business plans

and key performance indicators, and to ensure that these meet the interests of stakeholders.

• To delegate authority to the Vice-Chancellor for the academic, corporate, financial, estate and human resource management of the institution, and to establish and keep under regular review the policies, procedures and limits within such management functions as shall be undertaken by and under the authority of the Vice-Chancellor.

• To ensure the establishment and monitoring of systems of control and accountability, including financial and operational controls and risk assessment, and procedures of handling internal grievances and for managing conflicts of interest.

• To ensure processes are in place to monitor and evaluate the performance and effectiveness of the institution against the plans and approved key performance indicators, which should be, where possible and appropriate, benchmarked against other comparable institutions.

• To establish processes to monitor and evaluate the performance and effectiveness of the governing body itself.

• To conduct its business in accordance with best practice in higher education corporate governance and with the principles of public life drawn up by the committee on Standards in Public Life.

• To safeguard the good name and values of the institution.

• To appoint the Vice-Chancellor and Deputy Vice-Chancellors and to put in place suitable arrangements for monitoring their performance.

• To appoint a Clerk to the governing body and to put in place suitable arrangements for monitoring his/her performance and to ensure that, if the person appointed has managerial responsibilities in the institution, there is an appropriate separation of the lines of accountability.

• To be the employing authority for all staff in the institution and to be responsible for establishing a human resources strategy.

• To be the principal financial and business authority of the institution, to ensure that proper books of account are kept and to approve the annual budget and financial statements.

• To have overall responsibility for the institution’s assets, property and estate and be responsible for establishing an estate strategy.

• To be the institution’s legal authority and, as such, to ensure that systems are in place for meeting all the institution’s legal obligations, including those arising from contracts and other legal commitments made in the institution’s name.

• To make such provision as it thinks fit for the general welfare of students, in consultation with the Academic Board.

• To act as trustee for any property, legacy, endowment, bequest or gift in support of the work and welfare of the institution.

• To ensure that the institution’s constitution is followed at all times and the appropriate advice is available to enable this to happen.

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Responsibilities of the Board of Governors The Governing Body is required to present audited financial statements for each financial year and is responsible for keeping proper accounting records, which disclose with reasonable accuracy, at any time, the financial position of the University Group and enable it to ensure that the financial statements are prepared in accordance with the University’s Charter of Incorporation, the Statement of Recommended Practice (SORP 2015) “Accounting for Further and Higher Education” and other relevant Accounting Standards. In addition, within the Office for Students (OfS)’ Terms and Conditions of Funding for Higher Education Institutions, the University is required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the University Group and of the surplus or deficit and cash flows for that year. When preparing the financial statements, the Board of Governors ensures that: • suitable accounting policies are selected and applied consistently;

• judgements and estimates are made that are reasonable and prudent;

• applicable accounting standards have been followed, subject to any material departure disclosed and explained in the financial statements;

• financial statements are prepared on the going concern basis unless it is inappropriate to presume that the University will continue in operation. The Board of Governors is satisfied that the University has adequate resources to continue in operation for the foreseeable future: for this reason the going concern basis continues to be adopted in the preparation of the financial statements.

The Board of Governors has taken reasonable steps to: • ensure that funds from the Higher Education Funding Council for England (HEFCE), the OfS, Research

England and the Education and Skills Funding Agency (ESFA) are used only for the purposes for which they have been given and in accordance with the Memorandum of Assurance and Accountability with HEFCE, the OfS’ Terms and Conditions of Funding for Higher Education Institutions, the Terms and Conditions of Research England Grant, the Funding Agreements with the ESFA, and any other conditions which these funding bodies may from time to time prescribe;

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

• safeguard the assets of the University and the prevention and detection of fraud, bribery and other irregularities;

• secure the economical, efficient and effective management of the University’s resources and expenditure.

Corporate Governance Principles and ethos of the University The University endeavours to conduct its business in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership), and with the guidance to institutions of higher education which has been provided by the Committee of University Chairs (CUC) in its Higher Education Code of Governance, published in December 2014 and revised in June 2018. A Register of Interests of governors and senior managers is regularly maintained.

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Constitution and structural organisation The University is an independent corporation, established as a Higher Education Corporation under the terms of the Education Reform Act 1988 and the Further and Higher Education Act 1992. It is also an exempt charity under the Charities Act 2011. The University’s objects, powers and framework of governance are set out in the Articles of Government which were approved by the Board of Governors of the predecessor institution on 8 November 1995. Amendments to the Articles were approved by the Privy Council on 22 July 2005, on 26 July 2006, on 13 May 2008, on 16 August 2012 and on 8 August 2014. The University’s Board of Governors comprises 22 members appointed under the Instrument and Articles of Government of the University, the majority of whom are non-executive. The Board conducted a review of its effectiveness in 2017/18 in accordance with the Effectiveness Framework approved in October 2006. It concluded that the outcomes of the review provide appropriate confidence that the Board’s responsibilities are being appropriately fulfilled. The matters specifically reserved to the Board for decision are set out in the Articles of Government of the University. The Board holds to itself the responsibilities for the on-going strategic direction of the University, approval of annual estimates of income and expenditure, ensuring the solvency of the University and the safeguarding of its assets. The Clerk is appointed under the Articles of Government to act as Secretary to the Board and its committees. The Board of Governors normally meets four times a year and conducts its business through four committees: Audit & Risk, Employment & Finance, Remuneration and Nominations. Each of these Committees is formally constituted with terms of reference and comprises mainly lay members of the Board. The Chairman of the Board is a member of the Remuneration and Nominations Committees. The Audit & Risk Committee meets at least four times a year and comprises of lay members of the Board and a co-opted member, none of whom serves on the Employment & Finance Committee. The University’s internal and external auditors are in attendance and, although Senior Officers of the University also attend committee meetings, the members meet the auditors without the officers present immediately before each committee meeting. The Committee considers detailed reports from the auditors, which include recommendations for the improvement of the University’s systems of internal control, together with management responses and implementation plans. It also receives and considers guidance from the OfS through the Audit Code of Practice as it affects the University’s business and monitors adherence to the regulatory framework. Amongst its responsibilities it keeps under review the effectiveness of the risk management arrangements and provides an opinion on the adequacy of the management and quality assurance of data submitted to the Higher Education Statistics Agency (HESA), the Student Loans Company, HEFCE, the OfS, Research England, ESFA and other bodies. The Committee scrutinises the annual statement of compliance for the Research Concordat and receives an annual report on donations made to the University, as well as considering the annual report for the Prevent Duty and the annual Modern Slavery and Human Trafficking Statement in draft before recommending their approval to the Board. The Internal and External Auditors have direct access to the Chair of the Board of Governors, the Chair of the Audit & Risk Committee and the Vice-Chancellor at any time. The Employment & Finance Committee meets at least four times a year. It reviews, on behalf of the Board, the annual revenue, capital and cash flow budgets and monitors performance in relation to the approved budgets through the management and annual accounts. As per expectations set out in the CUC’s HE Code of Governance, on a risk-led basis the Committee advises the Board of Governors on reputational or financial implications of proposed partnerships or collaborations. It considers and approves the University’s Equality & Diversity action plan in addition to monitoring its progress. The Committee advises the Board on the remuneration and terms and conditions of all staff, with the exception of the holders of senior posts, as defined in the Articles of Government. The Remuneration Committee determines the remuneration of the holders of senior posts and monitors their performance. In 2018/19 these were the Vice-Chancellor, Deputy Vice-Chancellors, University Secretary and Clerk to the Board of Governors. The Nominations Committee considers nominations for all vacancies for members of the Board of Governors under the appropriate Articles of Government and has responsibility for seeking and considering nominations

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for the University’s Chancellor and recommending an appointment to the Board of Governors. In line with expectations of the CUC’s HE Code of Governance, the University has made explicit its commitment to Equality and Diversity in its recruitment practices and literature, in order to appoint governors who will represent its diverse student population. The Board of Governors has ensured that a properly constituted Board of Trustees exists for OCA, the University’s wholly-owned subsidiary, and the former approves appointments to the latter on the recommendation of Nominations Committee. UCA’s Board of Governors is responsible for approving OCA’s strategic direction, and its Employment & Finance Committee receives financial reports in respect of the College. Reports on OCA risks are received by its Board of Trustees, which provides an annual statement of assurance to the Audit & Risk Committee; in the period of report the College was encompassed by the University’s internal audit programme. Internal control The Board of Governors has responsibility for maintaining a sound system of internal control that supports the achievement of policies, aims and objectives, while safeguarding the public and other funds and assets for which it is responsible, in accordance with the responsibilities assigned to the governing body in the Instrument and Articles of Government and the OfS’ Terms and Conditions of Funding for Higher Education Institutions, and the Terms and Conditions of Research England Grant. This system is based on an on-going process designed to identify the principal risks to the achievement of the University’s aims and objectives; to evaluate the likelihood and impact of those risks; and to manage them efficiently, effectively and economically. This process has been in place for the year ended 31 July 2019 and up to the date of approval of the financial statements and accords with OfS guidance. The key elements of the University's systems of risk management and internal control, which are designed to discharge the responsibilities set out above, include the following: • oversight of risk management by the Leadership Team;

• annual review of the University’s Risk Management Policy & Strategy by the Audit & Risk Committee;

• annual review of risk management effectiveness and risk appetite by the Audit & Risk Committee and the Board of Governors;

• the integration of risk management into the annual planning cycle of the University covering all business, operational, financial and compliance risks. This process is informed by detailed annual income, expenditure, capital and cash flow budgets;

• the maintenance of an institutional Risk Register which is updated annually in accordance with the Strategic Plan and assessed on a quarterly basis. The Register includes an evaluation of the likelihood and impact of risks, and identifies mitigation measures;

• a Risk Management Group, reporting to the Leadership Team, that keeps the Risk Register under review, adding new risks where necessary and monitoring the status of current risks against progress with the action plans;

• clear definitions of the responsibilities and delegated authority of heads of academic and administrative departments including responsibility for identifying and managing operational risks at a departmental level and escalating significant risk to the Risk Management Group;

• regular reviews of key performance indicators and quarterly reviews of financial results involving variance reporting and updates of forecast out-turns;

• clearly defined and formalised requirements for approval and control of expenditure, with investment decisions involving capital or revenue expenditure being subject to formal detailed appraisal and review according to approval levels set by the Board of Governors;

• comprehensive financial regulations, detailing financial controls and procedures, recommended to the Board of Governors by the Audit & Risk Committee in consultation with the Employment & Finance Committee.

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.

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The Board of Governors has responsibility for reviewing the effectiveness of the systems of risk management and internal control. The following processes have been established: • the Board meets at regular intervals to consider the plans and strategic direction of the University;

• the Audit & Risk Committee, through its consideration of the Risk Register at each meeting, provides oversight of the risk management process and requires regular reports from the University’s management on the steps being taken to manage risks, including progress reports on key risks, systems for identifying significant risks facing the University, identifying actions required to minimise risk and regularly evaluating risks, using key risk and performance indicators;

• a professional Internal Audit team, whose annual programme is risk-based and approved by the Audit & Risk Committee, reports regularly to Audit & Risk Committee on specific areas of internal control, which include an independent opinion on the adequacy of the effectiveness of the University’s systems of internal control together with recommendations for improvement;

• management makes regular reports and presentations to the Audit & Risk Committee on internal control and risk mitigation actions;

• the Chair of the Audit & Risk Committee reports to the Board at each meeting on the status of the Risk Register and the findings of the Internal Audit Team.

The Governing Body’s review of the effectiveness of the system of internal control was informed during the year by the Internal Auditors, BDO LLP, who operate to standards defined in the OfS Audit Code of Practice. The Internal Auditors provide the Board of Governors with an annual report, which provides an independent opinion on the adequacy and effectiveness of the University’s system of internal control with recommendations for improvement. The Board’s review is also informed by the work of the senior managers within the University, who have responsibility for the development and maintenance of the internal control framework, and by comments made by the External Auditors, Grant Thornton, in their Management Letter and other reports. In the opinion of Governing Body there were no significant internal control weaknesses or failures arising during the year ended 31 July 2019 and up to the date of approval of the financial statements. Signed _______________________ Signed Professor Bashir Makhoul Pauline Waterhouse OBE Vice-Chancellor Deputy Chair of the Board of Governors 26 November 2019 26 November 2019

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INDEPENDENT AUDITOR’S REPORT TO THE BOARD OF GOVERNORS OF UNIVERSITY FOR THE CREATIVE ARTS

Opinion We have audited the financial statements of University for the Creative Arts (the ‘university') and its subsidiaries (the 'group') for the year ended 31 July 2019, which comprise the consolidated and university statements of comprehensive income and expenditure, the consolidated and university balance sheets, the consolidated and university statements of cash flows, the consolidated and university statements of changes in reserves, the statement of principal accounting policies and notes to the financial statements. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice). In our opinion, the financial statements: • give a true and fair view of the state of the group's and the university’s affairs as at 31 July 2019 and of the

group's and university's income and expenditure, gains and losses, changes in reserves and cash flows for the year then ended; and

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice and the Statement of Recommended Practice: Accounting for Further and Higher Education published in March 2014.

Basis for opinion We have been appointed as auditor under the Education Reform Act 1988 and report in accordance with the requirements of that Act. We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are independent of the group and university in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • the Board of Governors’ use of the going concern basis of accounting in the preparation of the financial

statements is not appropriate; or

• the Board of Governors has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the university’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information The Board of Governors is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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Opinion on other matters prescribed by the Office for Student’s (‘OfS’) Terms and conditions of funding for higher education institutions (issued March 2018) and the OfS’s accounts direction (issued June 2018) In our opinion, in all material respects: • funds from whatever source administered by the university for specific purposes have been properly

applied to those purposes and managed in accordance with the relevant legislation;

• funds provided by the OfS and Research England have been applied in accordance with the relevant terms and conditions, and any other terms and conditions attached to them, and

• the requirements of the OfS’s accounts direction (issued June 2018) have been met.

Responsibilities of the Board of Governors for the financial statements As explained more fully in the Responsibilities of the Board of Governors set out on page 22, the Board of Governors is responsible for the preparation of the financial statements and for being satisfied they give a true and fair view, and for such internal control as the Board of Governors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Governors is responsible for assessing the group’s and the university’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Board of Governors either intends to liquidate the group or the university or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report This report is made solely to the university's Board of Governors, as a body, in accordance with the terms of our engagement letter dated 25 March 2019. Our audit work has been undertaken so that we might state to the university's Board of Governors those matters we are required to state to it in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the university and the university's Board of Governors as a body, for our audit work, for this report, or for the opinions we have formed. Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London November 2019

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Financial Statements Consolidated and University Statement of Comprehensive Income For the year ended 31 July 2019 2019 Restated 2018 Group University Group University Note £'000 £'000 £'000 £'000 Income Funding body grants

1 7,727 7,540 8,699 8,507

Tuition fees and education contracts

2 48,690 46,790 44,445 42,860

Research grants and contracts

3 226 226 42 42

Other operating income

4 9,435 9,657 9,077 9,179

Endowment income 5 3 3 107 107 Investment income 5 94 94 57 57

Total income 66,175 64,310 62,427 60,752 Expenditure Staff costs (including restructuring costs of £1,174k, 2018: £464k)

6

39,159 38,275

37,105 36,284

Other operating expenses

8 22,852 22,033 22,005 21,199

Depreciation

3,465 3,452 2,820 2,808

Interest and other finance costs 9 956 956 958 958 Total expenditure 7 66,432 64,716 62,888 61,249 (Deficit) for the year (257) (406) (461) (497) Other comprehensive income Transfers from restricted endowments

16 (3) (3) (107) (107)

Actuarial (loss)/gain in respect of pension schemes

15 (10,513) (10,513) 9,528 9,528

Total comprehensive (expenditure)/income for the year

(10,773) (10,922) 8,960 8,924

Represented by: Endowment comprehensive (expenditure) for the year

16 (3) (3) (107) (107)

Restricted comprehensive (expenditure) for the year

17 (3) (3) (388) (388)

Unrestricted comprehensive (expenditure)/income for the year

(10,767) (10,916) 9,455 9,419

(10,773) (10,922) 8,960 8,924

The income and expenditure of the Group relates wholly to continuing operations. The notes on pages 32 to 58 form part of the financial statements.

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Consolidated and University Balance Sheets As at 31 July 2019

2019 Restated

2018 2018 Group University Group University Note £'000 £'000 £'000 £'000 Non-current assets Fixed assets 10 76,933 76,912 70,802 70,782 Endowment assets 16 61 61 64 64 76,994 76,973 70,866 70,846 Current assets Stock 261 255 256 251 Trade and other receivables 12 2,321 1,912 1,570 1,264 Cash and cash equivalents 16,637 16,325 15,635 15,339 19,219 18,492 17,461 16,854 Creditors: amounts falling due within one year 13

(13,007) (12,113)

(11,482) (10,560)

Net current assets 6,212 6,379 5,979 6,294 Total assets less current liabilities 83,206 83,352 76,845 77,140 Creditors: amounts falling due after more than one year 14

(8,736) (8,736)

(5,500) (5,500)

Provisions Pension provision 15 (39,753) (39,753) (25,809) (25,809) Other provisions 15 (12) (12) (58) (58) Total net assets 34,705 34,851 45,478 45,773 Restricted reserves Income and expenditure reserve - endowment reserve 16

61 61

64 64

Income and expenditure reserve - restricted reserve 17

363 363

366 366

424 424 430 430 Unrestricted reserves Income and expenditure reserve - unrestricted 34,281 34,427 45,048 45,343 Total reserves 34,705 34,851 45,478 45,773

The financial statements were approved by the Board of Governors on 26 November 2019 and signed on its behalf by: Professor Bashir Makhoul Pauline Waterhouse OBE Vice-Chancellor Deputy Chair of the Board of Governors The notes on pages 32 to 58 form part of the financial statements.

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Consolidated and University Statement of Cash Flows

For the year ended 31 July 2019 2019 2018 Group University Group University Note £'000 £'000 £'000 £'000 Net cash flow from operating activities 20 7,101 7,071 5,890 5,912 Cash flows from investing activities Purchase of fixed assets (9,604) (9,590) (7,865) (7,843) Receipt of capital grants 378 378 457 457 Interest received 94 94 57 57 Net cash outflow from investing activities (9,132) (9,118) (7,351) (7,329) Cash flows from financing activities Interest paid (203) (203) (76) (76) New secured loans 8,736 8,736 4,000 4,000 Repayments of loans (5,500) (5,500) - - Net cash outflow from financing activities 3,033 3,033 3,924 3,924 Increase in cash and cash equivalents 1,002 986 2,463 2,507 Cash and cash equivalents at the beginning of the year 15,635 15,339 13,172 12,832 Cash and cash equivalents at the end of the year 16,637 16,325 15,635 15,339

The notes on pages 32 to 58 form part of the financial statements.

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Consolidated and University Statement of Changes in Reserves

For the year ended 31 July 2019 Group Income and expenditure account Total

Endowment Restricted Unrestricted

£’000 £’000 £’000 £’000

Balance at 1 August 2017 - restated 171 754 35,593 36,518 (Deficit) from the income and expenditure statement - 146 (607) (461)

Other comprehensive expenditure - - 9,528 9,528

Release of restricted funds spent in year (107) (534) 534 (107) Total comprehensive income/(expenditure) for the year -restated

(107) (388) 9,455 8,960

Balance at 1 August 2018 - restated 64 366 45,048 45,478 (Deficit) from the income and expenditure statement - (3) (254) (257)

Other comprehensive income - - (10,513) (10,513)

Release of restricted funds spent in year (3) - - (3) Total comprehensive income/(expenditure) for the year (3) (3) (10,767) (10,773)

Balance at 31 July 2019 61 363 34,281 34,705 University Income and expenditure account Total

Endowment Restricted Unrestricted

£’000 £’000 £’000 £’000

Balance at 1 August 2017 171 754 35,924 36,849 (Deficit) from the income and expenditure statement - 146 (643) (497)

Other comprehensive expenditure - - 9,528 9,528

Release of restricted funds spent in year (107) (534) 534 (107) Total comprehensive income/(expenditure) for the year (107) (388) 9,419 8,924

Balance at 1 August 2018 64 366 45,343 45,773 (Deficit) from the income and expenditure statement - (3) (403) (406)

Other comprehensive income - - (10,513) (10,513)

Release of restricted funds spent in year (3) - - (3) Total comprehensive income/(expenditure) for the year (3) (3) (10,916) (10,922)

Balance at 31 July 2019 61 363 34,427 34,851

The notes on pages 32 to 58 form part of the financial statements.

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Statement of Principal Accounting Policies 1 Basis of Preparation These financial statements have been prepared in accordance with the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education 2015 and in accordance with Financial Reporting Standards (FRS 102). They conform to guidance published by OfS. The financial statements are prepared in sterling which is the functional currency of the group and rounded to the nearest £000. The University is a public benefit entity and therefore has applied the relevant public benefit requirement of FRS 102. The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements, except as noted below. 2 Basis of Accounting The financial statements are prepared under the historical cost convention modified by the revaluation of certain fixed assets. The Group financial statements have been adjusted for a prior period error correcting the calculation of deferred income in accordance with the requirements of FRS102. 3 Going Concern The activities of the Group and the University, together with the factors and risks likely to affect its future development and performance, are set out in the Strategic Report. The financial position of the Group and the University, its cashflow, liquidity and borrowings are described in the Financial Statements and accompanying Notes. The University currently has a £9m sterling money market facility used for capital expenditure on teaching facilities and office accommodation, repayable by 31 July 2026. Additionally, there is a £11m sterling revolving credit facility available for working capital until 1 August 2022. The University also has approval for a £100k overdraft facility. The University is concluding arrangements to fund additional student accommodation on its Farnham campus to accommodate 252 students. It is anticipated that the funding costs will be provided through an “income strip” arrangement whereby part of the income will fund the annual rentals once the accommodation is occupied. The costs of completing this accommodation is expected to be funded by an institutional investor. The future financial success of the University depends on its ability to maintain and improve its student recruitment and retention numbers in a changing marketplace. Given these uncertainties, the University regularly updates its financial forecasts and projections, which extend over a five-year period in accordance with Office for Students requirements. Currently, these forecasts indicate that it will be able to operate within existing facilities and their covenants over this period. Accordingly, the University has a reasonable expectation that it has adequate resources to continue in operational existence for the foreseeable future, and for this reason will continue to adopt the going concern basis in the preparation of its Financial Statements. 4 Basis of Consolidation The consolidated financial statements include the University’s wholly owned subsidiaries, Open College of the Arts, UCA Enterprises Ltd and UCA Ventures Ltd for the year ended 31 July 2019. Intra-group transactions are eliminated on consolidation. The consolidated financial statements do not include the income and expenditure of the Students’ Union as the University does not exert control or dominant influence over policy decisions.

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Statement of Principal Accounting Policies (Continued) 5 Income Recognition Income from the sale of goods or services is credited to the Consolidated Statement of Comprehensive Income when the goods or services are supplied to the external customers or the terms of the contract have been satisfied. Fee income is stated gross of any expenditure which is not a discount and credited to the Consolidated Statement of Comprehensive Income over the period in which the students are studying. Tuition fee income from distance learning foundation and undergraduate students, who benefit from flexible start and end course dates, is credited to the Statement of Comprehensive Income in proportion to the percentage of completion of service provided to the student. In assessing the percentage of completion of the service the Group has evaluated the value of the service provided and the expected costs of completing the service. The Group is eligible to the income when a student:

• enrols and as each course assignment is completed, or • withdraws or is withdrawn from the course, or • is unable to complete the course as the maximum time allowed has passed.

Where the amount of the tuition fee is reduced, by a discount for prompt payment, income receivable is shown net of the discount. All bursaries and scholarships, which are not normally used for University services, are accounted for gross as expenditure and not deducted from income. Investment income is credited to the Consolidated Statement of Comprehensive Income on a receivable basis. Funds the University receives and disburses as paying agent on behalf of a funding body are excluded from the income and expenditure of the University where the University is exposed to minimal risk or enjoys minimal economic benefit related to the transaction. Grant funding Grant funding including Office for Students block grant, research grants from government sources and grants (including research grants) from non-government sources are recognised as income when the University is entitled to the income and performance related conditions have been met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the balance sheet and released to income as the conditions are met. Donations and endowments Non exchange transactions without performance related conditions are donations and endowments. Donations and endowments with donor imposed restrictions are recognised in income when the University is entitled to the funds. Income is retained within the restricted reserve until such time that it is utilised in line with such restrictions, at which point the income is released to general reserves through a reserve transfer. Donations with no restrictions are recognised in income when the University is entitled to the funds. Investment income and appreciation of endowments is recorded in income in the year in which it arises as either restricted or unrestricted income according to the terms applied to the individual endowment fund. There are four main types of donations and endowments:

1. Restricted donations – the donor has specified that the donation must be used for a particular objective. 2. Unrestricted permanent endowments – the donor has specified that the fund is to be permanently

invested to generate an income stream for the general benefit of the University. 3. Restricted expendable endowments – the donor has specified a particular objective other than the

purchase or construction of tangible fixed assets, and the University has the power to use the capital. 4. Restricted permanent endowments – the donor has specified that the fund is to be permanently

invested to generate an income stream to be applied to a particular objective.

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Statement of Principal Accounting Policies (Continued) 5 Income Recognition (continued) Capital grants Capital grants are recognised in income when the University is entitled to the funds subject to any performance related conditions being met. 6 Accounting for Retirement Benefits The three principal pension schemes for the University’s staff are the Teachers’ Pension Scheme (TPS) for academic staff; the Surrey Pension Fund and the Kent Pension Fund for non-academic staff. All schemes are defined benefit schemes, which are externally funded and were contracted out of the State Earnings-Related Pension Scheme up until 5 April 2016. The TPS is a multi-employer scheme for which it is not possible to identify the assets and liabilities to University members due to the mutual nature of the scheme and therefore this scheme is accounted for as a defined contribution retirement benefit scheme. A liability is recorded within provisions for any contractual commitment to fund past deficits within the TPS scheme. The University’s subsidiary OCA operates a defined contribution pension scheme, payments are charged to the Statement of Comprehensive Income and Expenditure as they become payable. Defined Benefit Plan Defined benefit plans are post-employment benefit plans other than defined contribution plans. Under defined benefit plans, the University’s obligation is to provide the agreed benefits to current and former employees, and actuarial risk (that benefits will cost more or less than expected) and investment risk (that returns on assets set aside to fund the benefits will differ from expectations) are borne, in substance, by the University. The Group should recognise a liability for its obligations under defined benefit plans net of plan assets. This net defined benefit liability is measured as the estimated amount of benefit that employees have earned in return for their service in the current and prior periods, discounted to determine its present value, less the fair value (at bid price) of plan assets. The calculation is performed by a qualified actuary using the projected unit credit method. Where the calculation results in a net asset, recognition of the asset is limited to the extent to which the University is able to recover the surplus either through reduced contributions in the future or through refunds from the plan. These plans are valued every three years by professionally qualified independent actuaries. Enhanced Pensions Provision The actual cost of the enhanced element of an on-going pension to any former member of staff, as a result of a severance or similar agreement, is paid by the University. An estimate of the expected future cost of any enhancement to the on-going pension of a former member of staff is charged in full to the University’s income and expenditure account in the year that the member of staff retires. In subsequent years, an adjustment is made to provisions in the balance sheet based on an actuarial valuation. 7 Employment Benefits Short term employment benefits such as salaries and compensated absences are recognised as an expense in the year in which the employees render service to the Group or University. Any unused benefits are accrued and measured as the additional amount the Group and University expects to pay as a result of the unused entitlement.

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Statement of Principal Accounting Policies (Continued) 8 Leases Finance leases Leases in which the Group or University assume substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Leased assets acquired by way of finance leases and the corresponding lease liabilities are initially recognised at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Operating leases Costs in respect of operating leases are charged on a straight-line basis over the lease term. Any lease premiums or incentives are spread over the minimum lease term. 9 Stocks Stocks are valued at the lower of cost or net realisable value. 10 Foreign Currency Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arsing on translation are recognised in within the income and expenditure for the year. 11 Tangible Fixed Assets Land and buildings Land that had been revalued to market value on or prior to the date of transition to the 2015 FE HE SORP is measured on the basis of deemed cost, being the revalued amount at the date of that revaluation. Land is not depreciated as it is considered to have an indefinite useful life. Buildings are stated at cost and depreciated over their expected useful lives of 50 years on a straight line basis. A full year depreciation is charged in the year a building is brought into use. Equipment and Plant Equipment and plant, including computers and software, costing less than £3,000 per individual item is recognised as expenditure. All other equipment and plant is capitalised. Capitalised equipment and plant is stated at cost and depreciated over its expected useful life of 4 years for equipment and 10 years for plant on a straight line basis. Depreciation methods, useful lives and residual values are reviewed at the date of preparation of each Balance Sheet. A full year depreciation is charged in the year an asset is brought into use.

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Statement of Principal Accounting Policies (Continued) 11 Tangible Fixed Assets (continued) Assets in the Course of Construction (AICC) Assets in the course of construction are accounted for at cost, based on the value of architect’s certificates and other direct costs, incurred to 31 July. They are not depreciated until they are brought into use, at this point they receive a full year depreciation charge. 12 Taxation The University and OCA are exempt charities within the meaning of Part 3 of the Charities Act 2011. They are therefore charities within the meaning of Paragraph 1 of Schedule 6 to the Finance Act 2010 and accordingly, the University and OCA are potentially exempt from taxation in respect of income and capital gains received within the categories covered by Sections 478-488 of the Corporation Tax Act 2010 (CTA 2010) or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied to exclusively charitable purposes. The University receives no similar exemption in respect of Value Added Tax. Irrecoverable VAT on inputs is included in the costs of such inputs. Any irrecoverable VAT allocated to fixed assets is included in their cost. The University’s other subsidiaries are liable to Corporation Tax in the same way as any commercial organisation. Any surplus arising in the active subsidiaries is gift aided to the University to the extent that any corporation tax that may become assessable is extinguished. 13 Cash and Cash Equivalents Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable on demand if they are in practice available within 24 hours without penalty. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of change in value. Liquid resources comprise assets held as a readily disposable store of value. They comprise short term deposits (maximum period or term of 3 months) held as part of the University’s treasury management activities. They exclude assets held as Endowment Asset Investments. 14 Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised when:

a) The Group or University has a present obligation (legal or constructive) as a result of a past event; b) it is probable that a transfer of economic benefits will be required to settle the obligation; and c) a reliable estimate can be made of the amount of the obligation.

A contingent liability arises from a past event that gives the Group or University a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Group or University. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. A contingent asset arises where an event has taken place that gives the Group or University a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Group or University. Contingent assets and liabilities are not recognised in the Balance Sheet but are disclosed in the notes.

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Statement of Principal Accounting Policies (Continued) 15 Investments Investments within the Financial Statements relate primarily to subsidiaries which are eliminated upon consolidation, deficits on combinations transacted at nil value are recorded immediately within the Statement of Comprehensive Income and Expenditure. Investments in subsidiary undertakings are shown at the lower of cost or net realisable value. Listed investments held as fixed assets or endowments assets are shown at market value. 16 Financial Instruments The financial assets and liabilities held qualify as basic financial instruments as described in Section 11 of FRS 102. Basic financial instruments, comprising trade debtors, cash and cash equivalents and trade payables, are initially recognised at transaction value and subsequently measured at their settlement value. Cash is held on deposit in Barclays Bank. Trade debtors and trade creditors consist of balances outstanding at the financial year end. Loans are measured at the amortised cost using the effective interest rate method. 17 Reserves Reserves are classified as restricted or unrestricted. Restricted endowment reserves include balances which, through endowment to the University, are held as a permanently restricted fund which the University must hold in perpetuity. Other restricted reserves include balances where the donor has designated a specific purpose and therefore the University is restricted in the use of these funds. 18 Key Estimates and Judgements Pension provisions – annually the University agrees the assumptions used in calculating the pension liability based on the actuaries’ experience of the schemes. The key actuarial assumptions used in the valuation of the Local Government Pension Schemes including discount rates, salary and pension increases, and mortality rates are reported in note 23 Pension schemes. Tuition fee income from distance learning foundation and undergraduate students is credited to the Statement of Comprehensive Income once performance conditions have been met. The Group has assessed the performance conditions for those students entitled to continue a course based on the course’s terms and conditions to be when a student enrols and as each course assignment is completed.

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Notes to the Financial Statements 1. Funding Body Grants 2019 2018 Group University Group University £'000 £'000 £'000 £'000 Recurrent Grants: OfS/Research England 2,732 2,545 3,243 3,051 ESFA 4,547 4,547 4,929 4,929 Specific Grants: Research England 70 70 70 70 OfS/Research England capital grant 378 378 457 457 7,727 7,540 8,699 8,507

2. Tuition Fees and Education Contracts 2019 Restated

2018 2018 Group University Group University £'000 £'000 £'000 £'000 UK & EU Higher Education Students 38,684 37,103 37,714 36,406 Non EU Higher Education Students 9,049 8,861 5,913 5,747 UK & EU Further Education Students 631 503 680 585 Non EU Further Education Students 98 95 76 60 Short Course Fees 228 228 62 62 48,690 46,790 44,445 42,860 3. Research Grants and Contracts 2019 2018 Group University Group University £'000 £'000 £'000 £'000 UK based Charities 48 48 42 42 UK central government, local authorities, health & hospital authorities 10 10 - - EU government bodies 167 167 - - Other grants and contracts 1 1 - - 226 226 42 42

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Notes to the Financial Statements (Continued) 4. Other Operating Income 2019 2018 Group University Group University £'000 £'000 £'000 £'000 Residences, catering and conferences 6,448 6,448 6,077 6,077 Other services 723 723 501 620 Project income 642 642 529 529 Other income 1,622 1,844 1,970 1,953 9,435 9,657 9,077 9,179 5. Endowment and Investment Income 2019

2018

Group University Group University £'000 £'000 £'000 £'000 Transferred from restricted permanent endowments (Note 16) 2 2

101 101

Transferred from restricted expendable endowments (Note 16) 1 1

6 6

Other interest receivable 94 94 57 57 97 97 164 164

6. Staff 2019 2018

Group University Group University £'000 £'000 £'000 £'000 Staff Costs: Wages and salaries 28,694 27,923 27,033 26,304 Social security costs 2,640 2,569 2,536 2,476 Apprenticeship levy 125 120 119 116 Other pension costs 7,700 7,663 7,417 7,388 39,159 38,275 37,105 36,284

Average full-time equivalent staff numbers by major category: Number Number Number Number Academic departments 409 406 401 398 Academic services 223 209 225 213 Administration and Central Services 100 96 104 101 Premises 34 34 32 32 Research and development 7 7 11 11 Residences and catering 24 24 27 27 797 776 800 782

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Notes to the Financial Statements (Continued) 6. Staff (continued) Emoluments of the Vice Chancellor In common with other universities, UCA is operating within an increasingly challenging market, both in terms of sector competition for the recruitment of students following removal of the student number cap, and the fall in the number of young people in the UK, which is not due to reverse until 2022. Student recruitment and retention therefore continues to be a priority. The funding environment in the last six years has become more uncertain for all universities. The changes in the HE funding regime that took place in 2012/13, when relatively predictable levels of government-funded grants were replaced by student tuition fees, have had an effect on patterns of recruitment across the sector, and competition has intensified. For UCA, where some 19% of students are on FE courses, the impact of these changes has been compounded by recent adjustments to the Education & Skills Funding Agency (ESFA) methodology and material reduction in ESFA grant. In the short to medium term, the risk continues that public funding of HE will continue to be constrained and that the tuition fees charged to students may be affected by the recommendations in the Augar review of post-18 education and funding. The referendum decision in June 2016 for the UK to exit the European Union has not yet affected our activities but has implications for future EU enrolments dependent in part on government policy. The Vice-Chancellor’s remuneration for the 2018-19 financial year was considered by Remuneration Committee at its meeting on 10 July 2018. This was informed by external benchmarking data drawn from the Universities and Colleges Employers Association (UCEA) Remuneration survey for comparable institutions (all universities with an income between £24m and £70m; new (post-1992) universities in the same income band; and universities in London and the South East with income up to £70m), together with data drawn from the annual Times Higher Education vice-chancellor pay survey. The set of benchmark institutions for the latter was comprised of specialist arts institutions and universities with a similar level of income. In addition to considering the Vice-Chancellor’s salary against these benchmarks, Remuneration Committee also had regard to the multiple that it represented in relation to the median staff salary, and to institutional performance. Taking all of these factors into account, the Committee determined that the Vice-Chancellor’s base salary should be raised in line with the nationally agreed cost of living increase, anticipated to be 2%. Institutional achievements under the leadership and management of the Vice-Chancellor during 2017/18 are set out in the Operating and Financial Review section of the University’s 2017/18 Financial Statements, which are available on its website. In addition, as part of the profile raising activities for the University, costs of £4,719 (2018: £7,173) were borne in relation to an exhibition at which the Vice Chancellor’s work was exhibited.

2019 2018 £ £ Salary and benefits 214,200 210,000 Pension contributions 35,300 34,608 Other taxable benefits: Healthcare 1,115 - Life Assurance 569 535 251,184 245,143

The Vice-Chancellor’s pension contributions are on the standard terms of the Teachers’ Pension Scheme. The Vice-Chancellor is a member of a joint life assurance scheme and the value of the contributions on behalf of the Vice-Chancellor have been estimated. The Vice Chancellor’s basic salary is 7 times (2018: 6.8) the median pay of staff, where the median pay is calculated on a full-time equivalent basis for the salaries paid to established and sessional staff.

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Notes to the Financial Statements (Continued) 6. Staff (continued) The Vice-Chancellor’s total remuneration is 7.7 times (2018: 7.2) the median total remuneration of staff, where the median total remuneration is calculated on a full-time equivalent basis for the total remuneration. The median pay and total remuneration exclude casual and agency staff as the information regarding the full-time equivalent of these staff is not held by the University.

Basic salary of other higher paid staff 2019 2018

Group and University

Number

Number £110,000 - £114,999 1 1 £115,000 - £119,999 1 - £125,000 - £129,999 - 1 2 2

2019 2018 £ £ Compensation for loss of office to former higher paid staff - 135,031 Key management personnel Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the University. Staff costs includes compensation paid to key management personnel. 2019 2018 £ £

Key management personnel 625,417 787,728

Governors No Governor has received/waived remuneration from the group during the year (2018: – none). The total expenses paid to or on behalf of 19 Governors was £8k (2018: £6k to 22 Governors). This represented travel and subsistence expenses of £4k (2018: £3k) incurred in attending Committee meetings and other training events and £4k (2018: £3k) for attendance at various events in their official capacity as a Governor.

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Notes to the Financial Statements (Continued) 7. Analysis of expenditure by activity Other operating Staff costs Costs Total 2019 2018 2019 2018 2019 2018 £'000 £'000 £'000 £'000 £'000 £'000 Group Academic departments 17,788 16,583 3,524 3,674 21,312 20,257 Academic services 9,382 9,020 5,685 5,253 15,067 14,273 Administration and central Services 9,282 * 8,679 * 3,490 2,957 12,772 11,636 Premises 1,311 1,156 5,239 5,058 6,550 6,214 Research and development 373 634 214 322 587 956 Residences and catering 1,023 1,033 4,700 4,741 5,723 5,774 39,159 37,105 22,852 22,005 62,011 59,110 Depreciation - - 3,465 2,820 3,465 2,820 Interest and other finance costs - - 956 958 956 958 39,159 37,105 27,273 25,783 66,432 62,888

£'000 £'000 £'000 £'000 £'000 £'000 University Academic departments 17,479 16,348 3,112 3,132 20,591 19,480 Academic services 8,993 8,668 5,601 5,193 14,594 13,861 Administration and central Services 9,096 * 8,445 * 3,250 2,808 12,346 11,253 Premises 1,311 1,156 5,156 4,998 6,467 6,154 Research and development 373 634 214 322 587 956 Residences and catering 1,023 1,033 4,700 4,746 5,723 5,779 38,275 36,284 22,033 21,199 60,308 57,483 Depreciation - - 3,452 2,808 3,452 2,808 Interest and other finance costs - - 956 958 956 958 38,275 36,284 26,441 24,965 64,716 61,249

* Includes FRS 102 pension adjustment for the difference between actual pension payments and the Actuary’s calculated current service cost and losses on curtailments £2,735k (2018: £2,410k) and staff restructuring costs of £1,174k (2018: £464k), including redundancy, holiday and pension payments.

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Notes to the Financial Statements (Continued) 8. Other Operating Expenses 2019 2018 Group University Group University £'000 £'000 £'000 £'000 Equipment, furniture and computing costs 1,491 1,479 2,038 2,026 Audit fees (including VAT): Remuneration for external audit services 64 48

62 52

Remuneration to external audit firm for services in respect of the Teachers Pension Scheme and US Loans certification

5 5

5 5 Remuneration for internal audit services 44 44 39 39 Operating lease rentals: Land and buildings 2,381 2,352 2,454 2,425 Other 579 579 559 559 Long term maintenance costs 1,442 1,442 1,184 1,184 Other expenses 16,846 16,084 15,664 14,909 Total 22,852 22,033 22,005 21,199 9. Interest And Other Finance Costs (net)

On loans wholly repayable within five years 203 203 76 76 Net interest charge on pension liability (Note 23) 735 735 882 882 Enhanced Pension – Interest cost (Note 15) 18 18 - - 956 956 958 958

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Notes to the Financial Statements (Continued) 10. Tangible Assets Freehold Assets in the Land and course of Buildings Plant Construction Equipment Total Group £'000 £'000 £'000 £'000 £'000 Cost At 1 August 2018 77,224 3,570 5,348 18,665 104,807 Additions at cost - - 9,590 14 9,604 Reclassification in year 8,956 613 (11,751) 2,182 - Disposals - (460) - (3,161) (3,621) At 31 July 2019 86,180 3,723 3,187 17,700 110,790 Depreciation At 1 August 2018 15,753 2,450 - 15,802 34,005 Charge for year 1,294 333 - 1,838 3,465 Disposals - (452) - (3,161) (3,613) At 31 July 2019 17,047 2,331 - 14,479 33,857 Net book value at 31 July 2019 69,133 1,392 3,187 3,221 76,933 Net book value at 31 July 2018 61,471 1,120 5,348 2,863 70,802

University £'000 £'000 £'000 £'000 £'000 Cost At 1 August 2018 77,224 3,570 5,348 18,624 104,766 Additions at cost - - 9,590 - 9,590 Reclassification in year 8,956 613 (11,751) 2,182 - Disposals - (460) - (3,148) (3,608) At 31 July 2019 86,180 3,723 3,187 17,658 110,748 Depreciation At 1 August 2018 15,753 2,450 - 15,781 33,984 Charge for year 1,294 333 - 1,825 3,452 Disposal - (452) - (3,148) (3,600) At 31 July 2019 17,047 2,331 - 14,458 33,836 Net book value at 31 July 2019 69,133 1,392 3,187 3,200 76,912 Net book value at 31 July 2018 61,471 1,120 5,348 2,843 70,782

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Notes to the Financial Statements (Continued) 10. Tangible Assets (continued) Group and University Land & Buildings includes land held at a deemed cost of £21,455k (2018: £21,455k). University Land and buildings transferred at incorporation were financed by exchequer funds, now reflected in Group Reserves. Should the University cease to exist as a university, it may be liable, under the terms of the Memorandum of Assurance and Accountability with the OfS, to repay the funds. 11. Investments The University has an investment of £1 and £2 respectively in the wholly owned subsidiaries UCA Enterprises Ltd and UCA Ventures Limited, both registered in England and Wales. In the period covered by these financial statements these companies have not traded. As at 1 November 2016 the University acquired the Open College of the Arts, a charitable company limited by guarantee for nil consideration. The principal activity of the organisation is the provision of on-line education and training in the field of arts and crafts and related skills. The financial statements of these subsidiaries have been consolidated using the acquisition basis of accounting. Details of the subsidiaries will be filed with the Registrar of Companies. 12. Trade and other receivables 2019 2018 Group University Group University £'000 £'000 £'000 £'000 Amounts falling due within one year: Trade receivables 949 581 673 388 Prepayments and accrued income 1,351 1,310 884 863 Other receivables 16 16 13 13 Access Funds (Note 24) 5 5 - - 2,321 1,912 1,570 1,264

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Notes to the Financial Statements (Continued) 13. Creditors: amounts falling due within one year

2019 Restated

2018 2018 Group University Group University £’000 £’000 £’000 £’000 Trade creditors 2,626 2,617 3,081 3,014 Other Tax Payable & Social Security 924 902 720 698 Other creditors 3,813 3,130 2,128 1,448 Funds received in advance 880 880 860 860 Access Funds (Note 24) 166 166 141 141 Accruals 4,598 4,418 4,552 4,399 13,007 12,113 11,482 10,560

14. Creditors: amounts falling due after more than one year 2019 2018 Group University Group University £’000 £’000 £’000 £’000 Barclays Bank Loan (see Note (1) below) - - 5,500 5,500 Barclays Bank Loan (see Note (2) below) 8,736 8,736 - - 8,736 8,736 5,500 5,500 Borrowing facilities are secured and incur variable interest rates. Borrowing facilities available are (1) Bank Loan A: A sterling money market facility up to an amount of £11m, for a term ending on 1 August

2022. No amounts were drawn down at the year-end (2018: £5.5m). (2) Bank Loan B: A sterling money market facility up to an amount of £9m, with a final repayment date of 31

July 2026. There was a £8,736k drawn down at the year-end (2018: nil).

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Notes to the Financial Statements (Continued) 14. Creditors: amounts falling due after more than one year (continued) The repayment of the University’s loans falls due as follows: Total Total Loans Loans 2019 2018 £'000 £'000 Loan repayments: - in one year or less - - - one to two years - 5,500 - two to five years - - - five years or more 8,736 - 8,736 5,500 15. Provisions for Liabilities and Charges

Enhanced

Pension

Defined benefit

obligation (note 23)

Total pension

provision Other Total other

Group and University £'000 £'000 £'000 £'000 £'000 As at 1 August 2018 627 25,182 25,809 58 58 Utilised in period (56) (3,067) (3,123) (29) (29) Additions in 2018/19 - - - 12 12 Transfer from income and expenditure 17 6,537 6,554 (29) (29) Actuarial (gain)/loss (2) 10,515 10,513 - - At 31 July 2019 586 39,167 39,753 12 12 The enhanced pension provision relates to the estimated liability for enhanced pension arrangements agreed as part of staff severance conditions. In 2019, the enhanced pension liability has been recalculated in accordance with guidance issued for the Association of Colleges. The principal assumptions for this calculation are:

2019 2018 Interest Rate 2.4% 2.8% Inflation Rate 2.4% 2.4%

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Notes to the Financial Statements (Continued) 16. Endowment Funds Restricted Restricted 2019 2018 Permanent Expendable Total Total Group and University £’000 £’000 £’000 £’000 At 1 August 2018 58 6 64 171 Investment income - - - - Transferred to Income & Expenditure Account (Note 5)

(2) (1) (3) (107)

Endowment Assets at 31 July 2019

56 5 61 64

Endowment capital 117 5 122 123 Accumulated income (61) - (61) (59) Endowment Funds at 31 July 2019 56 5 61 64 All Endowment Assets are held as cash in deposit accounts. 17. Restricted Reserves

Unspent capital grants

Other

restricted funds

2019 2018 Total Total Group and University £’000 £’000 £’000 £’000 At 1 August 2018 - 366 366 754 New grants 378 776 1,154 1,001 Capital grants utilised (378) (378) (1,385) Expenditure - (658) (658) - Transferred to unrestricted reserves - (121) (121) (4) Total restricted comprehensive (expenditure)/income - (3) (3) (388) At 31 July 2019 - 363 363 366 2019 2018 Total Total £’000 £’000 Analysis of other restricted funds /donations by type of purpose: Scholarships/Bursaries 38 35 Research support 132 94 Study abroad - 33 Widening participation 177 195 General 16 9 363 366

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Notes to the Financial Statements (Continued) 18. Lease Obligations At 31 July 2019, the University had total future minimum lease payments in respect of properties, vehicles and IT equipment under non-cancellable operating leases payable as follows: 2019 2018 Group University Group University £’000 £’000 £’000 £’000 Within one year 3,156 3,124 3,040 3,017 Between two and five years 9,824 9,811 9,016 8,992 More than five years 9,550 9,550 10,841 10,841 22,530 22,485 22,897 22,850 19. Capital Commitments Provision has not been made for the following capital commitments at 31 July 2019: 2019 2018 Group University Group University £’000 £’000 £’000 £’000 Commitments contracted at 31 July 1,735 1,735 5,906 5,906 Authorised but not contracted at 31 July 4,066 4,066 2,681 2,681 5,801 5,801 8,587 8,587

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Notes to the Financial Statements (Continued)

20. Reconciliation of surplus to net cash flow from operating activities

2019 Restated

2018 2018 Group University Group University

£’000 £’000 £’000 £’000 (Deficit) for the year (257) (406) (461) (497) Adjustments for non-cash items HEFCE funds prepaid - - (91) (91) Depreciation 3,465 3,452 2,820 2,808 Loss on Disposal of Asset 8 8 - - (Increase) in stock (5) (4) (20) (19) (Increase)/decrease in debtors (666) (599) 330 316 Increase in creditors 1,490 1,554 928 1,011 (Decrease) in provisions (3,220) (3,220) (3,842) (3,842) Defined Benefit pension scheme service costs 5,802 5,802 5,782 5,782 Net interest on Defined Benefit pension liability 735 735 882 882 Enhanced pension interest costs 18 18 - - Adjustments for investing or financing activities Interest payable 203 203 76 76 Interest receivable (94) (94) (57) (57) Capital grants received (378) (378) (457) (457) Total adjustments 7,358 7,477 6,351 6,409 Net cash flow from operating activities 7,101 7,071 5,890 5,912 21. Reconciliation of net cash flow to net change in debt 2019 2018

Group University Group University £’000 £’000 £’000 £’000

Increase in Cash in the Period 1,002 986 2,463 2,507 (Decrease) in endowment asset investments (3) (3) (107) (107) Loan repaid in the year 5,500 5,500 - - Loan (drawdown) in the year (8,736) (8,736) (4,000) (4,000)

Total change in net debt (2,237) (2,253) (1,644) (1,600)

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Notes to the Financial Statements (Continued)

22. Analysis of changes in net debt At 1 August

2018 Net cash

flows Other non-

cash changes At 31 July

2019 £'000 £'000 £'000 £'000 Group Cash at bank and in hand 15,635 1,002 - 16,637 Endowment asset investments 64 (3) - 61 Debt due after one year (5,500) (3,236) - (8,736) Net cash 10,199 (2,237) - 7,962

£'000 £'000 £'000 £'000 University Cash at bank and in hand 15,339 986 - 16,325 Endowment asset investments 64 (3) - 61 Debt due after one year (5,500) (3,236) - (8,736) Net cash 9,903 (2,253) - 7,650 23. Pension Schemes Retirement benefits for employees of the University are provided by defined benefit schemes, which are funded by contributions from the University and employees. Payments are made to the Teachers' Pension Scheme (TPS) for academic staff and to Surrey Pension Fund for non-academic staff. In 2005/06, Kent based non-academic staff ceased making payments to the KCC Fund and commenced payments to the Surrey Pension Fund. The assets and liabilities relating to the Kent staff then employed within the KCC Fund were transferred to the Surrey Pension Fund during 2005/06. These are all independently administered schemes. (a) Teachers’ Pension Scheme

The Teachers' Pension Scheme (TPS or scheme) is a statutory, unfunded, defined benefit occupational scheme, governed by the Teachers' Pensions Regulations 2010 (as amended), and the Teachers’ Pension Scheme Regulations 2014 (as amended). These regulations apply to teachers in schools and other educational establishments, including academies, in England and Wales that are maintained by local authorities. In addition, teachers in many independent and voluntary-aided schools and teachers and lecturers in some establishments of further and higher education may be eligible for membership. Membership is automatic for full-time teachers and lecturers and, from 1 January 2007, automatic too for teachers and lecturers in part-time employment following appointment or a change of contract. Teachers and lecturers are able to opt out of the TPS. The Teachers' Pension Budgeting And Valuation Account Although members may be employed by various bodies, their retirement and other pension benefits are set out in regulations made under the Superannuation Act (1972) and Public Service Pensions Act (2013) and are paid by public funds provided by Parliament. The TPS is an unfunded scheme and members contribute on a ’pay as you go ‘basis – contributions from members, along with those made by employers, are credited to the Exchequer under arrangements governed by the above Acts. The Teachers' Pensions Regulations 2010 require an annual account, the Teachers' Pension Budgeting and Valuation Account, to be kept of receipts and expenditure (including the cost of pension increases). From 1 April 2001, the Account has been credited with a real rate of return, which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return.

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Valuation Of The Teachers' Pension Scheme The latest valuation of the Teachers’ Pension Scheme has now taken place, in line with directions issued by HM Treasury and using membership data as at 31 March 2016. As a result of this valuation TPS employers will pay an increased contribution rate of 23.68% from September 2019 (this includes the administration levy of 0.8%). The timing of the implementation is to align its introduction with employers’ budget planning cycles. Until then, employers will pay the current rate of 16.48%. A copy of the latest valuation report can be found by following this link to the Teachers’ Pension Scheme website. Scheme Changes The arrangements for a reformed Teachers’ Pension Scheme, in line with the recommendations made by Lord Hutton, in particular the introduction of a Career Average Revalued Earnings (CARE) scheme, were implemented from 1 April 2015. In December 2018, the Court of Appeal held that transitional protection provisions contained in the reformed judicial and firefighter pension schemes, introduced as part of public service pension reforms in 2015, gave rise to direct age discrimination and were therefore unlawful. The Supreme Court, in a decision made in June 2019, have rejected the Government’s application for permission to appeal the Court of Appeal’s ruling. The case will now be referred to an Employment Tribunal for a decision regarding the remedy which will need to be offered to those members of the two schemes who were subject of the age discrimination. HM Treasury are clear that the ruling has implications for the other public service schemes, including the Teachers’ Pension Scheme. Those implications are currently being considered and any impact on scheme costs is expected to be looked at within the next scheme valuation, which is currently scheduled to be based on April 2020 data and implemented in April 2023. The pension costs paid to TPS in the year amounted to £2,674k (2018: £2,517k). The amount outstanding at the year-end was £204k (2018: nil). FRS 102 Under the definitions set out in The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), the TPS is a multi-employer pension scheme. The University is unable to identify its share of the underlying assets and liabilities of the scheme. Accordingly, the University has taken advantage of the exemption in FRS 102 and has accounted for its contributions to the scheme as if it were a defined-contribution scheme. The University has set out above the information available on the scheme and the implications for the University in terms of the anticipated contribution rates.

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Notes to the Financial Statements (Continued) 23. Pension Schemes (continued) (b) Surrey and Kent Local Government Pension Schemes For non-academic staff the University participates in the Surrey County Council and Kent County Council LGPS which are defined benefit statutory schemes, administered in accordance with the Local Government Pension Scheme Regulations 2013. They are contracted out of the State Second Pension. They are final salary schemes. Active members of the Kent scheme were transferred to the Surrey scheme on 1 April 2006. On 26 October 2018, the High Court handed down a judgment involving the Lloyds Banking Group’s defined benefit pension schemes. The judgment concluded the schemes should be amended to equalise pension benefits for men and women in relation to guaranteed minimum pension benefits, “GMP”. The Government will need to consider this outcome in conjunction with the Government’s recent consultation on GMP indexation in public sector schemes before concluding on any changes required to LGPS schemes. The latest triennial actuarial valuations for the SCC and KCC are dated 31 March 2016. The Schemes have been grouped for the purpose of these notes, and the University’s share of the schemes’ obligations and assets as calculated by the actuaries Hymans Robertson LLP and Barnett Waddingham are shown below. The amounts recognised in the Balance Sheet are as follows: 2019 2018 £’000 £’000 Present value of funded obligations 133,176 112,480 Fair value of plan assets (94,087) (87,337) Net underfunding in funded plans 39,089 25,143 Present value of unfunded obligations 78 39

Net Liability 39,167 25,182

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Notes to the Financial Statements (Continued) 23. Pension Schemes (Continued) Analysis of movement in the present value of liabilities: 2019 2018 £’000 £’000 Present value of liabilities at the start of the year 112,519 109,721 Current service cost (net of member contributions) 5,465 5,779 Past service cost (including curtailments) 334 - Interest cost on defined benefit obligation 3,194 3,005 Actual member contributions 987 971 Actuarial gain/(loss) 12,838 (5,067) Actual benefit payments (2,083) (1,890)

Present value of liabilities at the end of the year 133,254 112,519 Analysis of movement in the fair value of scheme assets: 2019 2018 £’000 £’000 Fair value of assets at the start of the year 87,337 78,303 Return on assets excluding interest 2,323 4,461 Other actuarial loss - - Interest income on plan assets 2,459 2,123 Actual member contributions 987 971 Actual employer contributions 3,067 3,372 Actuarial gain/(loss) - - Actual benefit payments (2,083) (1,890) Administrative expenses (3) (3)

Fair value of assets at the end of the year 94,087 87,337

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Notes to the Financial Statements (Continued) 23. Pension Schemes (Continued) The amounts charged in Income and Expenditure are as follows: 2019 2018 £’000 £’000 Current service cost 5,468 5,782 Past service cost (including curtailments*) 334 -

Total operating charge 5,802 5,782 Interest cost on defined benefit obligation 3,194 3,005 Interest income on plan assets (2,459) (2,123) Net charge to interest and other finance costs 735 882 Total charge to statement of comprehensive income and expenditure (note 15) 6,537 6,664 *Curtailments arise from early payment of accrued pensions (including augmentations) in respect of any redundancies effected during the year ended 31 July 2019. Within the past service costs, an allowance of £285k has been made for the “McCloud” judgement. The amount recognised in Changes in Reserves is as follows: 2019 2018 £’000 £’000 Actuarial (loss)/gain (10,515) 9,528 Total charge to statement of changes in reserves (note 15) (10,515) 9,528 No amounts in respect of pensions were included in the cost of an asset during the year (2018: nil) The Board of Governors will continue to monitor both the affordability and sustainability of the defined benefit pension schemes in the medium to longer term taking account of, among other things, the projected contribution rates based on the triennial valuations carried out by the Schemes' Actuaries and discussions with the Schemes' Trustees. The University expects to contribute £2,915,000 to the Local Government Pension Schemes in the next financial year. The major categories of Employer Assets as a percentage of Total Employer Assets are as follows: 2019 2018 Equities 72% 72% Bonds 16% 16% Property 8% 7% Cash 3% 4%

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Notes to the Financial Statements (Continued) 23. Pension Schemes (Continued) Principal Actuarial Assumptions at the Balance Sheet date (expressed as weighted averages): 2019 2018 Discount Rate 2.1% 2.8% Future Salary Increase Rate 2.7% 2.8% Future Pension Increase Rate 2.4% 2.4% The Actuary of each fund makes assumptions on life expectancy based on the fund’s experience. Currently, life expectancy post retirement for current and future pensioners are: Males Females Current Pensioners 22.5 – 23 years 24.6 – 25.1 years Future Pensioners 24.1 – 25.2 years 26.4 – 27.4 years An allowance is included for 25% of future retirements to elect additional tax-free cash up to HMRC limits for pre-April 2008 service and 63% of the maximum tax-free cash for post April 2008 service. (c) OCA Defined Contribution Scheme From 1 April 2016 OCA started a defined contribution scheme administered by Royal London. Contributions of £37k (2018: £29k) were paid in the year. 24. Access Funds 2019 2018 £'000 £'000 Balance unspent/(prepaid) at beginning of year 141 80 Funding council grants – ESFA 119 169 Adjustment (1) (6) 259 243 Disbursed to Students – ESFA (98) (102) Balance unspent at end of year

161

141

Funding Council grants are available solely for students: the University acts only as paying agent. The grants and related disbursements are therefore excluded from the Income and Expenditure Account.

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Notes to the Financial Statements (Continued) 25. Related Party Transactions Due to the nature of the University's operations and the composition of the Board of Governors (being drawn from public and private sector organisations) it is inevitable that transactions occasionally take place with organisations in which a member of the Board of Governors has an interest. Such interests are required to be disclosed and all transactions involving organisations in which a member of the Board of Governors may have an interest are conducted at arm’s length and in accordance with the University's financial regulations and normal procurement procedures. Johnny Luk a Governor is also the Head of Policy and Strategy of Adecco UK & Ireland Limited, a provider of temporary staffing: during the year £19k was paid to the company for the provision of staffing. During the year £50k was paid to Canterbury Christ Church University being the contribution to the Kent & Medway Progression project, the spouse of the Vice-Chancellor is the Dean of International at Canterbury Christ Church University. During the year £82k was paid to Farnham Maltings Limited for venue hire and other services (2018: £115k): the spouse of the Deputy Vice-Chancellor (Academic Development), is the Chief Executive of Farnham Maltings Limited. The University pays a grant to the Student Union, the amount allotted in the year was £392k (2018: £369k). £369k (2018: £369k) was paid during the year and £23k was owing to the Student Union as at 31 July 2019 (2018: nil). A separate charity: the Student Union Sabbatical Officer is the Student Governor of the University. The University provides museum space and facilities to The Craft Study Centre, a separate charity. A joint agreement exists between the two parties. 26. Carrying amount of financial instruments The carrying amounts of the financial assets and liabilities include: 2019 2018 Group University Group University £’000 £’000 £’000 £’000 Assets measured at cost less impairment * 18,016 17,335 16,790 16,209 Liabilities measured at amortised cost (8.736) (8,736) (5,500) (5,500) Liabilities measured at cost less impairment (3.575) (3,550) (3,828) (3,767) * Bank overdraft has been offset against cash held at bank as the University has a legally enforceable right to do so and the intention to settle on a net basis.

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Notes to the Financial Statements (Continued) 27. Correction of Group prior period error

The method of calculating deferred income for foundation and undergraduate students has been corrected within UCA’s subsidiary OCA’s financial statements. Previously income was deferred over the average time a student takes to complete a course, however as there is no set time to complete a course, although there is a maximum time, this is not appropriate. Instead income is recognised as performance conditions are met, the performance measures are described within the accounting policy for income recognition. The Group results have been restated to reflect this correction.

Group Previously

stated 2018

Prior period adjustment for deferred

income

Restated 2018

Statement of Comprehensive income £000

£000

£000

Tuition fees and education contracts 44,433

12

44,445

Total comprehensive income for the year (473)

12

(461)

Balance Sheet

Creditors: amounts falling due within one year 11,294

188

11,482

Unrestricted reserves 45,236

(188)

45,048

Statement of Changes in Reserves

Balance at 1 August 2017 36,718

(200)

36,518 Total comprehensive income/(expenditure) for the year 8,948

12

8,960

Balance as at 31 July 2018 45,666

(188)

45,478