Middlesex University
Financial Statements 2016/17
Financial Review for the year ended 31 July 2017
Cash flow and Treasury Management The level of cash and short term investments was £72.1m increasing from £67.1m in the prior year, reflecting the strong operating performance.
The University’s cash and short term deposit levels fluctuate throughout the year due to the timing of tuition fee receipts and expenditure on capital infrastructure programmes. The average monthly cash balance in the year increased from £52.3m in 2015/16 to £58.0m this year, with the daily balance ranging from a minimum of £37.7m to £88.1m over the year.
Cash balances at the year end include those held on short- term deposit with secure AA rated banks and building societies through Royal London Cash Management. Funds are also invested in fixed term deposits with Lloyds Bank. The long-term policy is to maintain a minimum working capital cash level at 2 months of expenditure, which equates to approximately £33m. Going forward the University will maintain this working capital year on year.
The University’s bank loan profile utilised to fund the long term developments in the London Campus infrastructure is detailed below:
Loan Balances
Barclays Bank Lloyds Bank
Total secured loans
Total Debt 2016-17 £m
30.8 51.6 82.4
Total Debt 2015-16 £m
32.5 53.0 85.5
Risks
The University is exposed to a number of risks due to external factors including changes in Government policy and legislation, our future relationship in the European Union and increased competition for student recruitment.
Key amongst these is the maximum level of tuition fee the University can charge home and EU undergraduate students, set by the Government. It was anticipated this would increase by an inflationary factor on an annual basis, linked to results in the Teaching Excellence Framework (TEF) exercise, however a recent government policy decision has meant the maximum fee for new students in 2018/19 will remain fixed at the current (2017/18) level.
Action is taken to mitigate those risks that threaten the achievement of the University’s strategic aims. The University has a well established set of procedures to assess and manage risks at both the corporate and departmental level which includes the corporate risk register.
The key risks which could directly threaten financial sustainability are described below:
• Failure to achieve student recruitment and retention targets
Tuition fees are a significant proportion of total income being dependent on both strong recruitment and retention to ensure a level of surplus in line with forecast.
The University will mitigate the risk of volatility in the UK/ EU undergraduate student cohort through the continuous review of its course portfolio, assessing our areas of strength, identifying the areas at risk and deciding on the most sustainable curriculum.
A key aim of the University strategy is designed to improve the student learning experience, including providing an inspiring choice of courses and learning pathways that empower students with ambition, skills and knowledge to succeed
• Failure to optimise opportunities and incomes from overseas campuses and global partnerships
Our combined income from operating on three campuses overseas and working collaboratively with 90 partners to deliver Middlesex programmes in the UK and around the world is now greater than the income received in funding body grants.
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