Financial Statements 2019/2020
FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2020 (continued)
Tuition Fees and Education Contracts account for 76.2% of the University’s total income. Of this, 65.2% relates to fees from home and EU full-time students. Although recruitment targets were at a lower level than the previous year, the University met these. In addition, income from full-time International students increased significantly by 34.3% year-on-year. This increase was driven by a large intake of students starting programmes in January 2020, linked to the Government’s re-introduction in late 2019 of two-year post-study work visa for International students. Income from CPD and short courses has remained in line with the previous year, with much of the delivery able to continue online during the pandemic.
Funding Body Grants represent 8.5% of total income, a small increase from 2018/19. The Recurrent Teaching Grant has decreased slightly but there were increases in Higher Education Innovation Fund (HEIF) and Research Funding, the latter partly due to some accelerated Quality-Related (QR) funding released as part of the Government response to support Universities during the COVID-19 outbreak.
Research Grant income is £3.4m (1.6% of total income), a reduction of £1.1m compared with the previous year due to the reduced number and value of grants for which income has been recognised in-year, which has been partly due to delayed projects as a result of COVID-19.
Other operating income (including investment income and new endowments) totals £29.4m and represents 13.8% of total income; this has decreased by £3.1m compared with the prior year. A number of our ancillary income streams were adversely impacted by the COVID-19 pandemic, with the major one being the reduction of accommodation income due to the decision to waive rent for the third term for students who decided to leave halls.
Operating Expenditure
Expenditure in the year, including costs of the LGPS FRS102 pension charge, totalled £216.8m, a 5.1% increase over the prior year.
Staff costs (excluding restructuring costs) increased against the previous year by £3.8m (3.3%) to £121.1m. These costs represent 56.0% of total expenditure. All of the increase in cost is attributable to rising LGPS and Teacher’s Pension Scheme (TPS) costs. If these costs were excluded, there would be a £0.1m decrease in staff costs year-on-year, reflecting the fact that average staff numbers have decreased by 60 in 2019/20 compared with the prior year.
Spend on other operating expenses increased by £6.6m to £75.3m compared with the previous year, and represents 34.7% of total expenditure. The most significant increases are due to increased agents’ commission payable as a result of the increase in International students, and an increase in our provision for bad and doubtful debts due to the impact of COVID-19 on the University’s ability to recover outstanding fees and trade debt. We also incurred some one-off estate costs in the course of terminating the lease of one of our buildings. Our transition to remote working led to some savings in a few other expenditure categories such as travel and hospitality, but these were marginal in terms of overall costs.
Depreciation has increased to £13.0m, a 12.4% increase from 2018/19. £0.9m of the increase relates to a finance lease the University took out as part of a major project to transform our networking and telephone infrastructure and equipment. Depreciation makes up 6.0% of total expenditure in 2019/20, reflecting the significant investment the University has made over the last few years in our infrastructure at the Hendon campus.
Interest and other finance costs have increased by £0.2m against last year to £7.0m. This reflects an increase in the ongoing interest expense relating to the bank loans utilised to fund the Hendon campus estate infrastructure developments, which this year was £4.6m.
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Middlesex University
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