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8 Financial Statements 2011-12


Capital Investment


The capital investment plan is a five-year plan to address major estates issues and improvements to the IT and management information systems infrastructure. Capital investment in the year amounted to £19.6m (£14.1m in 2010-11).


Major projects underway during the year included:


n Knowledge Gateway: Completion of the infrastructure for the Knowledge Gateway site – a £7.4m project to create road and service infrastructure to enable new development including services to The Meadows student accommodation. The works have also provided for improved access from the A133, which was created over the summer and autumn of 2011;


n The Forum Southend-on-Sea: A partnership with Southend Borough Council and South Essex College to construct The Forum Southend-on-Sea building which will house a new civic library and academic library for the Council, University and College and enhanced teaching and learning facilities for the University and the College. The Forum Southend-on-Sea will be in close proximity to the University’s existing Gateway Building, thus providing a valuable extension to the Southend Campus. Construction began in February 2012 and is scheduled to be complete in August 2013. The total project cost is £26.9m, with the University contributing £10.4m.


Other major capital projects were advanced during the year:


n Student Centre and Library Extension: New £26m facilities that will house a number of student-facing services currently distributed across the Colchester Campus and create a significant extension to the Albert Sloman Library. Planning approval has been obtained and a start will be made on site in January 2013, with completion in late 2014;


n Essex Business School Building: A £21m new building at Colchester to house the Essex Business School, for which planning approval has been secured. The building will be sited adjacent to the Knowledge Gateway site and will benefit from both the completion of the infrastructure and co-location with businesses that will be accommodated on the Knowledge Gateway;


n Multi-decked car park: A £4m three storey car park, creating additional parking spaces and removing the need for temporary car park space across the Colchester Campus. Planning approval was obtained in the early summer and a start made on construction in August 2012, with completion planned for mid-February 2013.


The University has recently completed a transaction with Uliving, a consortium created to deliver new student accommodation facilities on the Colchester Campus which are to be known as The Meadows. Uliving will design, build, operate and finance The Meadows, which will provide an additional 648 rooms for the University, of which 228 will be in townhouses with the remaining 420 being en-suite. In addition, from the 2013-14 academic year, it will take on the operation of University Quays, an existing adjacent block of student accommodation which has 766 en-suite rooms. This transaction represents a substantial investment in campus facilities with operational and financial risks being transferred to Uliving.


Investments, Liquidity and Debt The investment asset allocation targets are: UK Absolute Cash


Equities


Permanent Endowments 95% -


Return Funds


Expendable Endowments 75% 20% 5% General Funds


- 5% - 100%


At 31 July 2012 £4.4m of general funds were invested in equity investments.


All UK equity investments are held in the Charishare Fund, a common investment fund managed by Blackrock. The investment objective is to outperform the FTSE All Share Index. The Fund returned -4.3% over the year compared to - 3.19% by the FTSE All Share Index (to 30 June 2012). Over the last three years the Fund marginally under- performed the benchmark by returning 12.2% per annum compared to the FTSE All Share Index of 13.8% per annum.


Cash was managed conservatively with deposits in the University’s clearing bank (LloydsTSB) and in an AAA- rated money market fund. Cash balances increased from £30.4m to £30.7m over the year. A target of holding minimum cash balances equating to 25 liquidity days (i.e. the number of days of average expenditure cash balances could support) has been set and at 31 July actual liquidity days amounted to 77 days.


Net cash flow from operating activities was £3.2m (£10.7m in 2010-11).


Total debt outstanding was £91.3m (£76.6m in 2010-11) as at 31 July. The University has drawn £78.2m of its £122m facility with Lloyds Bank. This facility includes a five-year repayment holiday which then terms out over 30 years, commencing in November 2013. A smaller loan facility with Barclays Bank loan had £12.1m outstanding as at 31 July.


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