LONDON METROPOLITAN UNIVERSITY ENTERPRISES LIMITED LONDON METROPOLITAN UNIVERSITY ENTERPRISES LIMITED DIRECTORS' REPORT AND FINANCIAL STATEMENTS DIRECTORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2005 FOR THE YEAR ENDED 31 JULY 2005
Registered in the United Kingdom: registration number 2447470
Registered Office: 166 -220 Holloway Road London N7 8DB
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London Metropolitan University Enterprises Limited Directors' Report and Financial Statements for the year ended 31 July 2005
Contents Page Senior Officers and Advisers Directors' Report Report of the Independent Auditors Profit and Loss Account Balance Sheet Notes to the Financial Statements 3 4 6 7 8 9-14
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London Metropolitan University Enterprises Limited Senior Officers and Advisers as at 31 July 2005
Directors Mr. W. Clark Mr S. John Mr. R. Patel Mr A. Rahim Mr B. A. Roper Mr C. Topley Mrs. S. Proudfoot (Appointed 1 November 2004)
Company Secretary
Mr. J. P. McParland BA (Hons) DMS
External Auditors
Grant Thornton UK LLP Registered Auditors and Chartered Accountants The Explorer Building Fleming Way Manor Royal Crawley West Sussex RH10 9GT
Internal Auditors
Mazars Neville Russell Chartered Accountants 24 Bevis Marks London EC3A 7NR
Solicitors
Lawford & Co Watchmaker Court 65 St John Street London EC1M 4HQ
Bankers
Barclays Bank plc Holloway & Kingsland Business Centre P O Box 3628 London E8 2JT
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London Metropolitan University Enterprises Limited Directors' Report
The directors present their report and audited financial statements for the year ended 31 July 2005. 1. Review of Activities The principal activities of the company during the year were the provision of research, short courses, consultancy services and the operation of a Print Centre. The company has been awarded a grant from the London Development Agency of £1.5 million towards the capital cost of establishing a Digital Manufacturing Centre, to be called Metropolitan Works. Refurbishment of the space which will be occupied by the Centre was undertaken during 2004/05, and purchasing of equipment commenced. Metropolitan Works will open during 2005/06. Its main activity will be to provide state-of-the-art digital manufacturing prototyping equipment available for use by local businesses and by London Metropolitan University students and staff. Turnover for the year is £5,078k (2004 £5,131k). The profit on ordinary activities before Gift Aid and taxation amounts to £157k (2004 £295k) a decrease of 47%. One factor contributing to the reduced profit is that, from 2004/05, London Metropolitan University is charging the company for its use of space. This change has been made in order to ensure that the relationship between the two entities is on an arm's-length basis, with regard to new rules on inter-company transfer pricing introduced in the Finance Act 2004. The movement in fixed assets is disclosed in note 6. The directors do not recommend the payment of a dividend.
2. Directors The directors who served during the year were as follows: Mr. W. Clark Mr S. John Mr. R. Patel Mr A. Rahim Mr B. A. Roper Mr C. Topley Mrs. S. Proudfoot (Appointed 1 November 2004) Mr B. A. Roper, as Vice-Chancellor and Chief Executive of London Metropolitan University, holds 1 ordinary share in the company, as nominee for London Metropolitan University. None of the directors had a participating interest in the shares of the company.
3. Subsequent Events There were no subsequent events which would materially affect the financial statements.
4. Statement of Directors' Responsibilities Company law requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of the affairs of the company and of the profit or loss of the company for that period. The directors are required to prepare the financial statements on the going concern basis, unless it is inappropriate that the company will continue in business.
The directors confirm that suitable accounting policies have been used and applied consistently; prudent judgements and estimates have been made and applicable accounting standards have been followed in preparing the financial statements for the year ended 31 July 2005. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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The directors take responsibility for the maintenance and integrity of the website and the fact that uncertainty regarding legal requirements is compounded, as information published on the internet is accessible in many countries with different legal requirements relating to the preparation and dissemination of financial statements.
5. Donations Under Gift Aid arrangements, the company will make a donation of £157k (2004 £295k) to London Metropolitan University, an exempt charity. 6. Appointment of the Auditors In accordance with Section 384 of the Companies Act 1985, a resolution to appoint Grant Thornton UK LLP as auditors of the company will be proposed at the annual general meeting.
By order of the board
J P McParland Company Secretary 166-220 Holloway Road London N7 8DB Date: 14 December 2005
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London Metropolitan University Enterprises Limited Report of the Independent Auditors to the Members of London Metropolitan University Enterprises Limited
We have audited the financial statements for the year ended 31 July 2005 which comprise the profit and loss account, the balance sheet and the related notes including a statement of principal accounting policies. This report is made solely to the company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the directors' report and the financial statements in accordance with United Kingdom law and accounting standards are set out in the statement of directors' responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom auditing standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors' report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions is not disclosed. We read other information contained in the directors' report, and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with auditing standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of the company's affairs at 31 July 2005 and of its profit for the year then ended, and have been properly prepared in accordance with the Companies Act 1985.
GRANT THORNTON UK LLP REGISTERED AUDITORS CHARTERED ACCOUNTANTS GATWICK
Date:
14 December 2005
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London Metropolitan University Enterprises Limited Profit and Loss Account for the year ended 31 July 2005
NOTE 2005 £'000 2004 £'000
Turnover Cost of sales Gross profit Administrative expenditure
2
5,078 (2,710) 2,368 (2,233)
5,131 (2,587) 2,544 (2,264)
Profit on ordinary activities before interest Other income and interest receivable
135 22
280 15
Profit on ordinary activities before Gift Aid and taxation Gift Aid payable to London Metropolitan University
157
295
(157)
(295)
Profit on ordinary activities before taxation Taxation Profit on ordinary activities after taxation for the year
3 5
0 0 0
0 0 0
Movement on Profit and Loss account (Loss) brought forward Profit for the year (Loss) carried forward (101) 0 (101) (101) 0 (101)
All of the company's activities are continuing. The company has no recognised gains or losses other than those dealt with in the Profit and Loss Account. The notes on pages 8 to 13 form part of the financial statements. There is no difference between the profit on ordinary activities before taxation and the retained loss reported above, and the historical cost equivalent figures.
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London Metropolitan University Enterprises Limited Balance Sheet as at 31 July 2005
2005 £'000 2005 £'000 2004 £'000 2004 £'000
NOTE
Fixed Assets
6
608
410
Current Assets Stocks Debtors Cash and Short term deposits 7 8 22 550 1,104 43 619 364
1,676 Creditors Amounts due within one year 9 (1,013)
1,026 (1,087)
Net Current Assets / (Liabilities)
663
(61)
Total Assets Less Current Liabilities
1,271
349
Represented by: Deferred Capital Grants Capital and Reserves Called up share capital Profit and Loss account 12 450 (101) 450 (101) 11 922 0
Equity Shareholders' Funds
1,271
349
Approved by the Board and signed on their behalf by
S John Director Date: 14 December 2005
B A Roper Director Date: 14 December 2005
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London Metropolitan University Enterprises Limited Notes to the Financial Statements for the year ended 31 July 2005
1. Accounting Policies Accounting Convention These financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. Turnover Turnover, representing the invoiced value of goods and services supplied during the year exclusive of value added tax, is drawn from the activities described in the Directors' Report. Income Recognition Income from government and other grants is included in the financial statements in accordance with the accruals concept. The grants are recognised in the Profit and Loss Account in the same year as the expenditure to which they relate is charged. Grants received in advance are carried forward as deferred income or, where of a capital nature, as deferred capital grant, for recognition in the future periods to which they relate. Tangible Fixed Assets Equipment costing less than £6,000 per individual item or group of items is written off to the Profit and Loss account in the year of acquisition. All other equipment is capitalised. Prior to 2002/03 depreciation was charged on a reducing balance basis at the rates of 33% per annum for computers and 20% per annum for plant and equipment. Since 2002/03, depreciation for computers and plant has been charged on a straight line basis at 20% per annum or, for assets brought into use prior to 2002/003, 20% of net book value at 1 August 2002. Building improvements previously depreciated on a straight line basis over 50 years are now depreciated over 20 years. These changes of accounting policy from 2002/03 were made to bring the company's policies into line with those of its parent company, London Metropolitan University. Stock Stocks are stated at the lower of cost and net realisable value. Debtors Debtors are shown in the Balance Sheet net of provision for doubtful debts. It is the company's policy to provide in full for all outstanding debtors of one year or more. Taxation All profits of London Metropolitan University Enterprises Limited are paid under Gift Aid to London Metropolitan University, therefore no liability to taxation arises on the profits for the year. London Metropolitan University is an exempt charity. Cash Flow Statement No cash flow statement has been included in the financial statements as the company is a wholly-owned subsidiary undertaking of London Metropolitan University, whose consolidated financial statements include a consolidated cash flow statement. Consolidated accounts can be obtained from London Metropolitan University at its Registered Office; 31 Jewry Street, London EC3N 2EY.
2. Analysis of Turnover Turnover 2005 £'000 Print Centre Research Education Fees and Contracts Consultancy services & similar activities Microwave equipment 3,195 150 1,027 653 53 2004 £'000 3,198 280 941 648 64 Gross Profit 2005 £'000 914 102 806 513 33 2004 £'000 1,201 258 535 503 47
5,078
5,131
2,368
2,544
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London Metropolitan University Enterprises Limited Notes to the Financial Statements for the year ended 31 July 2005
3. Profit on Ordinary Activities before Taxation This is stated after charging: 2005 £'000 Auditors' remuneration Depreciation - owned assets - leased assets Operating lease rentals 4 77 13 151 2004 £'000 10 54 14 131
4. Operating Leases At 31 July 2005 the company had annual commitments under non-cancellable operating leases as set out below: 2005 £'000 Operating leases which expire: within one year in the second to fifth years inclusive over five years Total 148 27 0 175 2004 £'000 129 69 0 198
5. Taxation 2005 £'000 All profits of the company are paid under Gift Aid to the University. Profits on ordinary activities before taxation multiplied by tax rate in the UK (19%) Effects of: Expenses not deductible for tax purposes Accelerated capital allowances and other timing differences Set-off against tax losses brought forward Group relief surrendered not paid Current tax charge 0 13 (13) 0 0 0 0 3 (3) 0 0 0 2004 £'000
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London Metropolitan University Enterprises Limited Notes to the Financial Statements for the year ended 31 July 2005
6 Fixed Assets
Building Improvements £'000 Cost At 1.8.2004 Additions 254 43
Plant & Equipment £'000 418 223
Computer Equipment £'000 320 22
Total £'000 992 288 1,280
At 31.7.2005
297
641
342
Depreciation At 1.8.2004 Charge for the year
40 13
307 46
235 31
582 90 672
At 31.7.2005
53
353
266
Net Book Value At 31.7.2005 244 214 288 111 76 85 608 410
At 31.7.2004
Building improvements include the costs of refurbishing 81A Benwell Road to relocate the activities of the Print Centre. The building at Benwell Road is a freehold property owned by London Metropolitan University. Additions in 2004/05 are for the development of Metropolitan Works, at the University's Commercial Road building.
7. Stocks 2005 £'000 Stocks are stated at the lower of cost and net realisable value and comprise: Work in progress Finished goods and goods purchased for resale 5 17 22 2004 £'000 8 35
43
8. Debtors 2005 £'000 432 84 34 2004 £'000 497 58 64
Trade debtors Prepayments and accrued income VAT
550
619
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London Metropolitan University Enterprises Limited Notes to the Financial Statements for the year ended 31 July 2005
9. Creditors: Amounts due within one year 2005 £'000 478 158 351 26 1,013 2004 £'000 465 400 222 0 1,087
Trade creditors Due to group undertakings Accruals and deferred income Other Creditors
10. Provisions for Liabilities and Charges 2005 £'000 0 0 0 2004 £'000 46 0 (46)
Provision for Building Contract at 1st August Provision during the year Utilised during the year
Provision at 31st July
0
0
No provision for liabilities has been necessary for the current period.
11. Deferred Capital Grants 2005 £'000 As at 1 August Buildings Equipment 0 0 0 Cash received Buildings Equipment 0 922 922 As at 31 July Buildings Equipment 2004 £'000 0 0 0 0 0 0
0 922 922
0 0 0
The grant will be recognised in the Profit and Loss Account in the same year as the fixed assets to which it relates are depreciated in the financial statements.
12. Called Up Share Capital 2005 £'000 Authorised, issued and fully paid: 450,000 Ordinary Shares of £1 each 450 450 2004 £'000
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London Metropolitan University Enterprises Limited Notes to the Financial Statements for the year ended 31 July 2005
13. Employee Information No staff were employed by London Metropolitan University Enterprises Limited during the year. Staff are employed by the parent company (London Metropolitan University) and costs recharged to London Metropolitan University Enterprises Limited. No director received any remuneration for services as a director, or has any financial interest in any contract of the company. 14. Capital Commitments 2005 £'000 Commitments contracted at 31 July Authorised but not contracted at 31 July 609 749 1,358 0 2004 £'000 0
15. Contingent Liabilities There were no contingent liabilities at 31 July 2005 or 31 July 2004.
16. Reconciliation of Movements in Equity Shareholder's Funds 2005 £'000 Shareholders Funds at 1st August Profit for the year Shareholders funds at 31st July 349 349 2004 £'000 349 349
17. Movement in Reserves 2005 £'000 Loss at 1 August Retained profit for the financial year Retained loss at 31st July 101 101 2004 £'000 101 101
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London Metropolitan University Enterprises Limited Notes to the Financial Statements for the year ended 31 July 2005
18. Ultimate Controlling Party The Directors consider that the parent and the ultimate controlling undertaking is London Metropolitan University by virtue of London Metropolitan University's majority shareholding in the Company. The largest and smallest group of undertakings for which group financial statements are drawn up is that headed by London Metropolitan University. The financial statements for London Metropolitan University can be obtained from the University Secretary at the Registered Office.
19. Related Party Disclosures The Company has taken advantage of the exemption in FRS 8 by which a 90% subsidiary undertaking does not need to disclose transactions with entities that are part of the same group, and its results are included in the publicly available financial statements of the group. During 2004/05, London Metropolitan University Enterprises Limited was used to register the University's office in China and continue the office operation. Accordingly, office accommodation has been acquired in the name of London Metropolitan University Enterprises Limited and a bank account opened in the company's name, although the payment of rent and other related expenses is discharged through the University. There is no financial impact on these financial statements from this development of the University's overseas operations. London Metropolitan University is a Company Limited by Guarantee and does not have share capital. It is registered in the United Kingdom. Its Registered Office is: 31 Jewry Street London EC3N 2EY London Metropolitan University is an exempt charity under the Charities Act 1993. The results of the company are included in the consolidation of the group.
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This page does not form part of the audited financial statements.
London Metropolitan University Enterprises Limited Detailed Profit and Loss Account for the year ended 31 July 2005
2005 £'000 Turnover Cost of sales Gross profit Administrative expenditure Wages & salaries Travel Advertising & publicity Printing & stationery Postage & telephones Repairs and Maintenance Professional Fees Bank Charges Depreciation Provision for bad debts Space charge 2005 £'000 5,078 (2,710) 2,368 2004 £'000 2004 £'000 5,131 (2,587) 2,544
1,443 25 65 325 54 18 19 3 90 52 139 2,233
1,488 27 56 437 84 33 38 3 68 30 0 2,264 280 15
Profit on ordinary activities before interest Other income and interest receivable Profit on ordinary activities before Gift Aid and taxation Gift Aid payable to London Metropolitan University
135 22
157 (157)
295 (295)
Profit on ordinary activities before taxation Taxation Profit on ordinary activities after taxation
0 0
0 0
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