2013 University Finances

As part of its annual report, the University publishes its audited financial statements, in line with mandatory federal government guidelines.

The University also publishes a ‘financial review’ as part of the report, which includes an explanation of the University’s income and expenditure.

This page summarises the financial review of 2013.

  • The overview explains the University’s overall financial position, including how it is restricted in how it can use much of its revenue.
  • The section on the University’s operating revenue explains where our funds come from. The principal sources of revenue are income from students, federal and state government funding, income from research and consultancy activities, and income from private sources (such as philanthropic income).
  • The section on operating expenses breaks down what the University needed to spend to fund continuing operations.
  • The section on expenditure on assets breaks down 2013 spending as part of the University’s long-term capital expenditure plan to assure its future sustainability as a leading research-intensive university.

The full financial review can be found on pages 68 to 73 of the annual report. Download the financial review of 2013 (105 KB, PDF).


Overview

The University of Sydney’s financial statements for the year ended 31 December 2013 show a modest net available operating surplus of $9.6 million (2012: deficit $46.3 million). This operating surplus excludes quarantined items that cannot be spent on day-to-day operations.

The achievement of a modest operating surplus in 2013 reflects the results of greater financial transparency, efforts to control expenditure across the University under the current strategic plan, and some growth in student numbers. By achieving an underlying surplus sooner than expected, the University is in a strong position to invest in our teaching and research so that we continue to attract and retain the best students, researchers and staff.

Including quarantined items (such as unspent funds relating to specific research grants, philanthropic funds allocated by donors to certain purposes, and funds that must be spent on specific capital investment projects), the University recorded a 2013 operating result of $248.5 million. This represented growth of $112.4 million, or 82.6 percent, over the 2012 operating result of $136.1 million.

While this result reflects the University’s financial position in accordance with Australian accounting standards as required by the federal government, it does not represent a surplus that can be spent freely.

 

2013

$M

2012

$M

CHANGE

$M

CHANGE

%

Operating revenue1 1,883.2 1,736.5 146.7 8.4
Operating expenses2 1,634.7 1,600.4 34.3 2.1
Operating result 248.5 136.1 112.4 82.6
Adjusted for:        
Philanthropic funds3 (158.2) (78.0) (80.2) (102.8)
Investment funds3 (35.8) (29.1) (6.7) (23.0)
Capital grants3 (9.6) (53.9) 44.3 82.2
Specific purpose grants3 (35.3) (21.4) (13.9) (65.0)
Net available operating margin 9.6 (46.3) 55.9 120.7

1. For further information, see Section 1 on operating revenue.
2. For further information, see Section 2 on operating expenses.
3. Figures include internal rate of return and reflect net margin. Certain philanthropic and investment funds are restricted and unavailable for general use.


Growth in the overall operating result can be largely attributed to strong investment returns on the University’s investment portfolios including endowments, significant growth in non-government derived fees and charges, disciplined control over expenditure, and a modest increase in discretionary employee-related costs.

Much of the overall operating result was driven by income growth in ‘quarantined categories’ that include the following.

  • Philanthropic funds A large proportion of the philanthropic funds managed by the University must be invested in perpetuity. Under the terms of many of the endowments, some investment income derived from these investments must be retained to maintain the real value of the endowment and is not therefore available to fund day-to-day operations. In addition, in 2013, due to substantial improvements in market performance, the net investment return on the University’s philanthropic endowments totalled more than $70 million. Eventually, these funds are applied according to the wishes of the donors towards our research activities, scholarship programs and other important activities aligned with the University’s core strategy.
  • Capital grants A number of capital grants have been received to fund specific infrastructure projects, such as the Charles Perkins Centre and the Australian Institute for Nanoscience.
  • Unspent research and education funds A range of research and education grants must be applied to specific projects including National Health and Medical Research Council and Australian Research Council grants and student scholarship funds.
  • Investment funds Must be held in reserve to meet NSW Treasury requirements for a collateral fund to support the University’s debt and protect against any unforeseen circumstances. These reserves also support our obligation to meet employee entitlements, and will assist in providing accommodation for our students.

Funding provided by the Commonwealth, which predominantly contributes to the University’s net available operating margin and funding for day-to-day operations, continues to shrink as a proportion of the overall income generated by the University. This places increasing reliance on income generated from other sources in order to meet the University’s ongoing operating expenditures, capital works requirements and other needs that will ensure the future sustainability of its teaching and research activities.


Operating revenue

The 2013 operating revenue of $1,883.2 million was $146.7 million more than in 2012. The following table and chart show the major components of this increased revenue.

 

2013

$M

2012

$M

CHANGE

$M

CHANGE

%

Income from students (incl. HECS and FEE-HELP)  679.5 600.4 79.1 13.2
Research and consultancy activities  521.6 492.6 29.0 5.9
Commonwealth Government operating grants  312.9 294.1 18.8 6.4
Income from private sources  360.5 275.8 84.7 30.7
Capital grants  6.3 70.9 (64.6) (91.1)
NSW Government operating grant  2.4 2.7 (0.3) (11.1)
Total  1,883.2 1,736.5 146.7 8.4
A pie chart showing the breakdown of operating revenue sources.

Income from students

Growth in the number of overseas full fee-paying students (FFPS) accelerated in 2013 and this cohort continues to provide significant income to the University. Once again, overseas FFPS income accounted for a larger proportion of income than that derived from HECS-HELP payments.

The 2013 growth in income from students of $79.1 million was mainly attributable to additional course fees generated from full fee-paying overseas students of $50.3 million – an increase of 17.7 percent.

A pie chart showing the breakdown of student income sources.

Income from students 2002–13 ($M)

Commonwealth Government funding

The University continues to feel financial pressure as a result of the continuing decline in federal financial support as a percentage of total revenue. The overall level of federal funding decreased by $35.3 million in 2013 to $725.9 million, a fall of 4.6 percent.

This decrease was driven mainly by the receipt of lower capital funding in 2013 of $6.3 million, compared to $70.9 million in 2012 when the University received significant grants in respect to the Charles Perkins Centre and the Australian Institute for Nanoscience. No similar quantum of capital grants were received in 2013. Teaching and learning operating grants received in 2013 increased by $18.8 million in comparison to 2012. Research funding from other Commonwealth agencies increased by $8.9 million.


The continued growth in income from student fee income and HECS - HELP, together with the relative decline of funding received from Commonwealth operating grants, means that the proportion of University revenue received from HECS and student fee income taken together has grown considerably since 2002 (2013: 39.1 percent; 2002: 28.6 percent). A majority of this increase is attributable to increases in student income, particularly from overseas students. By contrast the proportion of University revenue received through Commonwealth operating grants has experienced a gradual decline over the same period (2013: 18.0 percent; 2002: 19.5 percent).

 

2012

$M

2012

$M

CHANGE

$M

CHANGE

%

DIISRTE research funding  149.2  149.5  (0.3)  (0.2)
Other Commonwealth agencies – research  153.5  144.6  8.9  6.2
Australian Research Council  76.5  76.4  0.1  0.1
Scholarships  27.5  25.7  1.8  7.0
Commonwealth research funding  406.7  396.2  10.5  2.7
Teaching and learning operating grants  312.9  294.1  18.8  6.4
Capital funding  6.3  70.9  (64.6)  (91.1)
Total Commonwealth funding  725.9  761.2  (35.3)  (4.6)

Research and consultancy activities

Income received by the University for research, collaborative research and consultancy activities increased by $29 million in 2013, or 5.9 percent, to $521.6 million. Commonwealth research funding of $406.7 million represented 78 percent of the total funding in this category.

 

2013

$M

2012

$M

CHANGE

$M

CHANGE

%

Commonwealth research funding 406.7 396.2 10.5 2.7
Industry research grants 19.1 10.5 8.6 81.9
Foundations and individual research grants 37.1 31.3 5.8 18.5
NSW Government research grants 22.1 15.8 6.3 39.9
Local collaborative research funds 15.0 15.6 (0.6) (3.8)
Overseas collaborative research funds 13.1 15.2 (2.1) (13.8)
Consultancies  8.5  8.0 0.5 6.3
Total research and consultancy income 521.6 492.6 29.0 5.9

NSW Government grants

Grants provided by the NSW Government increased by $6.1 million – or 33 percent – to $24.6 million in 2012, which included a $6 million grant from the Cancer Institute NSW.

  2013
$M
2012
$M
CHANGE
$M
CHANGE
%
Research grants 22.1 15.8 6.3 39.9
Operating grants 2.5 2.7 (0.2) (7.4)
Total NSW Government grants 24.6 18.5 6.1 33.0

Income from private sources

The major components of this income group were as follows:

 

2013

$M

2012

$M

CHANGE

$M

CHANGE

%

Investment income 178.3 116.4 61.9 53.2
Philanthropic income 57.6 50.8 6.8 13.4
Commercial and other activities 65.8 56.0 9.8 17.5
Contributions from external organisations 35.5 29.8 5.7 19.1
Other fees and charges 18.2 17.2 1.0 5.8
Sponsorship income 5.1 5.6 (0.5) (8.9)
Total income from private sources 360.5 275.8 84.7 30.7

Investment income increased significantly in 2013 due to substantial improvements in domestic and foreign investment market performance across the University’s investment portfolio. As at 31 December, of the total investment income of $178.3 million (2012: $116.4 million), $117.9 million (2012: $47.5 million) represented non-cash unrealised gains on investments held by the University at balance date. This element of the University’s reported operating profit (non-cash unrealised investment gains) is not available to support day-to-day operations as it represents ‘paper gains’ rather than realised cash profits.

Philanthropic income pledged

2013 marked a new phase for philanthropy at the University of Sydney. We continued to break national fundraising records for the higher education sector and publicly launched INSPIRED – The Campaign to Support the University of Sydney, which aims to raise $600 million from our supporters in the period up to 2017.

In 2013, the University surpassed its fundraising record for the third consecutive year, raising $82.5 million from 12,225 donors.

The University continues to rely heavily on the significant generosity of a small number of donors. 60 percent of funds raised came from 11 donors who collectively represent less than 0.1 percent of all donors who contributed gifts during 2013.

Bequest income reached $21.2 million, making it the fourth consecutive year that it has exceeded $20 million. This places the University’s bequest income well ahead of other Group of Eight universities.

With 12,225 donors making a gift in 2013, the University has more supporters than any other Australian university, and approximately twice as many donors than its closest competitor. For the second consecutive year, the number of donors increased by 16 percent.


Operating expenses

The 2013 operating expenditure of $1634.7 million was $34.3 million, or 2.1 percent, higher than in 2012.

 

2013

$M

2012

$M

CHANGE

$M

CHANGE

%

Salaries 716.4 710.9 5.5 0.8
Payroll on-costs 243.6 232.4 11.2 4.8
Total employee benefits 960.0 943.3 16.7 1.8
Other operating expenses 236.2 235.5 0.7 0.3
Teaching/research grants and scholarships 216.2 201.5 14.7 7.3
Depreciation and amortisation 117.5 108.9 8.6 7.9
Buildings and grounds maintenance 62.1 59.5 2.6 4.4
Consultants and contractors 42.1 35.5 6.6 4.4
Impairment 0.6 16.2 (15.6) (96.3)
Total expenses 1,634.7 1,600.4 34.3 2.1

The University’s researchers, teachers and professional staff are one of its most important assets, and this is reflected in its major operating expenses. In 2013, total staff benefits comprised just under half of the University’s total operating and capital expenditures. Total employee benefits increased by $16.7 million or 1.8 percent in comparison to 2012.

Other operating expenses, including procurement of a range of services, were tightly controlled – increasing by 0.3 percent compared to 2012.

During 2012, a number of assets (including a number of buildings which are due to be replaced as a result of the University’s capital works program) were retired. There was no requirement for similar write-downs in 2013.


Expenditure on assets

In accordance with its 2011–15 Strategic Plan the University has committed to a long-term capital expenditure plan to assure its future sustainability as a leading research-intensive university and to provide its researchers and students with facilities befitting that status. This includes funding for state-of-the-art buildings, information and communications technology and library infrastructure to support the University’s core teaching and research activities.

In 2013, the University incurred capital expenditure of $397.6 million, which represented growth of $144.8 million or 57.3 percent in comparison to 2012.

 

2013

$M

2012

$M

CHANGE

$M

CHANGE

%

Land and buildings 28.2 6.6 21.7 331.3
Equipment 26.0 15.6 10.4 66.6
Capital works – software 29.6 29.4 0.2 0.6
Capital works – buildings 313.4 192.6 120.8 62.7
Other 0.4 8.7 (8.3) (95.4)
Total capital expenditure 397.6 252.9 144.8 57.3

The substantial increase in capital expenditure in 2013 (in comparison to 2012 which represented a significant increase over 2011) was due to the continuing investment in major projects such as the research and education hub for the Charles Perkins Centre, the commencement of the Abercrombie Precinct Redevelopment for the Business School, and the commencement of the Australian Institute for Nanoscience building. We also made significant improvements to the library, student learning spaces and IT services during 2013.

Including above, the University has entered into capital expenditure commitments for property, plant and equipment totalling $286 million (2011: $223.9 million).