Dear colleagues,
The University is today publishing our Financial Statements for 2018-19, which can be found here.
Overall, the University produced another strong financial performance in 2018/19, thanks to good financial management and with the support and hard work of staff across the University, producing a surplus of £22.2m. This is a positive outcome, but a surplus of only 3.8 per cent of income is not a cause for complacency and continuing care ahead will be required.
Cash generation from operating activity was strong, to allow us to continue to invest confidently in the University, and in particular to increase our investment in our people.
However, like other universities who are members of the USS pension scheme, our accounts this year make for potentially confusing reading because of accounting rules about presenting our financial statements.
The accounts also show that we made a loss of £105.7m. However, this is after the impact of two large exceptional provisions totalling £127.9 million in respect of both our main pension schemes, USS and PASNAS. This may concern some colleagues and be misinterpreted by some in the media.
For USS, we are required to account for our financial commitment to the agreed recovery plan to clear the scheme deficit, representing the employer contribution of 5 per cent of salaries for 17 years to June 2034. This totals £93.2 million which has to be accounted for as an up-front staff cost this year. For PASNAS, the accounting valuation of the scheme as at July 2019 showed a deficit of £137.9 million (£91.8 million in the previous year) which as we are the principal employer of this scheme is shown in full in our financial statements.
Whilst we expect the USS provision to reduce in next year’s accounts due to the 2018 valuation of USS, which produced a lower deficit and thus lower deficit contributions, this highlights how the escalating cost and volatility of pension schemes impacts the sustainability of Higher Education Institutions in an already challenging and uncertain financial environment.
This does not, however, signal any immediate issues with the University’s finances. Our positive operating cash flow this year reflects our continuing focus on robust financial management, with the support of staff across the University, to ensure we can continue providing and investing in the best learning, research and working experiences for our students and staff.
Further information on University finances can be found here.
Sarah Pook
Executive Director, Finance and Planning
