Financial Statements 2019/2020
MIDDLESEX UNIVERSITY NOTES TO THE ACCOUNTS (continued)
Year Ended 31 July 2020
The forecast for 2021 indicates that one loan covenant could be breached. The University has agreed in principle with the lender to obtain a revolving credit facility of £25m which will include a reset of the covenants, which the University is expecting to meet. In the unlikely event that we are unable to agree a revised covenant the University has sufficient cash balances to repay the loan in the remote scenario that the lender would ask for repayment of the debt.
After reviewing the latest available information at its meeting on 23 November 2020 and having considered the various scenarios, based on the information known to the date of approval of this report and noted the available cash balances described above, the Board of Governors considered that the University has adequate resources to continue in operational existence for the foreseeable future. For this reason the University continues to adopt the going concern basis in preparing the Financial Statements.
C. Basis of Consolidation
The consolidated Financial Statements include the University and all of its subsidiaries for the financial year to 31 July 2020. Details of the subsidiary undertakings included are given at note 30. The subsidiaries are consolidated on a line by line basis with intra-group transactions and balances eliminated on consolidation.
The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Statement of Comprehensive Income and Expenditure from the date of acquisition or up to the date of disposal.
A 49% non-controlling interest exists in Middlesex International (Mauritius) Limited a subsidiary undertaking. The value of this minority interest has therefore been disclosed in the financial statements.
The consolidated Financial Statements do not include the income and expenditure of the Middlesex University Students’ Union (MDXSU) as the University has no financial interest, does not exert control or dominant influence over policy decisions. The grant expenditure included at note 10 represents the University contribution to MDXSU activities
D. Income Recognition
Income from the sale of goods or services is credited to the Consolidated Statement of Comprehensive Income and Expenditure when the goods or services are supplied to the external customers or the terms of the contract have been satisfied.
Tuition Fee income chargeable to students or their sponsors is stated gross of any expenditure which is not a discount and credited to the Consolidated Statement of Comprehensive Income and Expenditure over the period in which the students are studying. Where the amount of the tuition fee is reduced, by a discount for prompt payment, income receivable is shown net of the discount. Bursaries, scholarships or fees waived by the University are accounted for gross as expenditure and not deducted from income.
Investment income is credited to the Consolidated Statement of Comprehensive Income and Expenditure on a receivable basis.
Grant funding including funding body block grant and research grants from government sources and from non-government sources are recognised as income when the University is entitled to the income and performance related conditions have been met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the Statement of Financial Position and released to income as the conditions are met.
Capital grants
Government and all other source capital grants are recognised in income when the University is entitled to the funds subject to any performance related conditions being met.
E. Accounting for Charitable Donations and Endowments
Non exchange transactions without performance related conditions are donations and endowments. Donations and endowments with donor imposed restrictions are recognised in income when the University is entitled to the funds. Income is retained within the restricted reserve until such time that it is utilised in line with such restrictions at which point the income is released to general reserves through a reserve transfer.
Donations with no restrictions are recognised in income when the University is entitled to the funds.
Investment income and appreciation of endowments is recorded in income in the year in which it arises and as either restricted or unrestricted income according to the terms of the restriction applied to the individual endowment fund.
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Middlesex University
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