Financial Statements 2019/2020


FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2020 (continued)


The increase in the provision reflects the assumptions used by the independent LGPS actuary at 31 July 2020. This increase is primarily driven by a significantly lower net discount rate of 1.4% (2.1% at 31 July 2019) based on AA Corporate bond yields that have fallen due to the low interest environment and economic growth prospects combined with a rise in the projected life expectancy of current and future pensioners has served to increase the value of fund obligations by £32.1m.


Furthermore there have been adverse returns on the fund assets which decreased by £12.8m. Over time the balance sheet liability and the cash contributions available to fund the pension obligation have diverged and so greater reliance is being placed on asset returns to fund the obligations.


Overall these changed actuarial assumptions result in a £44.9m negative movement in the Statement of Other Comprehensive Income.


Net current assets have increased by £4.5m to £72.2m due to the combined effects of increased cash, short term deposit and investment balances. These are offset by smaller increases in creditors and in debt balances that continue to reflect effective credit control measures in the year. The 31 July 2020 figure represents net liquidity of 178 days to meet short-term obligations.


Cash Flow and Treasury Management


The level of group cash and cash equivalents (note 24) and current investments (note 19) increased by £2.5m at the end of the financial year to £99.2m. Cash equivalents are short term deposit balances held with Lloyds Bank on fixed short term (less than 3 months) deposit and AAA credit rated cash investment funds managed by Royal London Asset Management. Current investments are deposits held with Lloyds Bank with more than three months maturity at the Statement of Financial Position date.


Cash and Current Investments Balance £m


120 100 80 60 40 20 0


2016/2017 2017/2018 2018/2019 2019/2020


Year ended


64


Middlesex University


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