Published on 04 January 2022
The University of Sunderland is evolving, growing and transforming the lives of tens-of-thousands of students while investing millions in its campuses, according to its 2020-21 Annual Report and Financial Statements.
Published this week, the report sets out the University’s financial position over the past year and details many of its achievements.
The report notes that the University has:
· shown year-on-year improvement in the key financial metrics of operating surplus, operating cash generation and cash balance over the last four years;
· invested £70m over five years in facilities for both students and staff;
· grown student numbers;
· played a pivotal role in helping in the pandemic recovery and ongoing vaccination programme;
· strengthened ties with the Sunderland Students’ Union (SU);
· expanded the University of Sunderland in London;
· opened new transnational partnerships across the world, enabling more students to study for Sunderland qualifications oversees; and
· been shortlisted for the THE (Times Higher Education) University of the Year award.
The University has continued to champion social inclusion and diversity and this was recognised through being named The Times/The Sunday Times University of the Year for Social Inclusion.
As well as restating its life-changing purpose, the report also provides an update on the financial position of the University.
Speaking as the report was published, Sir David Bell, Vice-Chancellor and Chief Executive of the University, said: “Once again, we have demonstrated that our finances are in good shape with an improving underlying surplus and better-than ever cash generation. This is due to robust financial planning and forecasting, and careful management of our costs. Pleasingly too, we have which build on our recent track record of improvements, including our highest-ever cash reserves.
"Student numbers are growing, new courses are being opened and we are investing £70m over five years in high-quality facilities for students and staff.”
On the issue of being in deficit and having net liabilities, Sir David adds: “Both these factors are a direct consequence of accounting for movements in pension liabilities, associated with its defined benefit pension schemes. These are above and beyond the University’s control and mask the strength of our underlying financial performance."
University leaders say they are now in a strong position to emerge from the pandemic and, at the same time, maintain long-term financial sustainability.
Sir David added: “I take great comfort in the fact that our success in 2020-21 has been the result of collective endeavour, and a shared belief that the University is a great place in which to study and work.
“As we move into 2022, we are building on our richly deserved reputation for academic excellence, friendliness and constructive debate.”
The full annual report can be viewed here.
Annual report Q&A
What does the University consider to be the highlights/stand-out points of this year's annual report?
Students and staff have been incredibly resilient and adaptable in the second year of the pandemic. Evidence from the National Student Survey suggests that students have been broadly satisfied with the way we have handed the various restrictions, not least in the way that we have maintained continuity of learning and teaching throughout.
The past 12 months has seen:
• growing student numbers as new academic programmes were launched;
• strengthened ties with the Sunderland Students’ Union (SU);
• the University shortlisted for the THE (Times Higher Education) University of the Year award; and
• expansion of the University of Sunderland in London and transnational education partnertships.
We have also delivered a good financial performance for 2020/21. The key highlights include:
• year-on-year improvement in the key financial metrics of operating surplus, operating cash generation and cash balance over the last four years;
• a strengthened cash position by a further £15.7m, ending the year with cash reserves of £43.3m;
• finishing in a £3m net cash (cash reserves higher than debt) position having been in a £15m net debt position in the prior year; and
• maintaining an undrawn £6.5m of a £20m revolving credit facility (RCF), despite a £13.5m investment in high quality facilities for students and staff.
How has the University coped during the pandemic?
Remarkably well. From medical, pharmacy, and nursing students helping with the vaccine roll out, to cutting-edge equipment being loaned to the NHS, the University’s staff and students have played a significant role during the height of the pandemic – and continue to so now as it evolves.
Academics and students quickly adapted to online working and study, while researchers, manufacturers and business, all associated with the University, were key in supporting healthcare efforts.
From a financial perspective, how does this year's report compare to previous years?
It compares well. As noted above, 2020/21 has delivered continued improvement of our financial position, with our operating surplus, cash position and balance sheet all strengthening compared to the 2019/20 outturn.
Overall, how would you sum-up the current financial position of the University?
Good and improving. We have improved our financial performance over the last few years, with the aim of moving into a stronger, post-COVID financial footing. We want to grow our underlying surplus and maintain cash reserves. This will enable us to invest further in people and buildings, as well as providing protection against future challenges.
If finances are so good, why does this report show a deficit and net liabilities reserves?
Both these aspects are direct consequence of rules which govern how we account for pension liabilities, and which are above and beyond the University’s control.
The higher education sector as a whole has to account for several large, multi-employer, ‘funded’ defined benefit pension schemes. The liabilities associated with these schemes are calculated using actuarial assumptions, like life expectancy – that extend over many years into the future – and corporate bond rates that are impacted by economic factors. These liabilities will not crystallise for many, many years into the future. In summary, they do not impact on our day-to-day and year-to-year operating performance and our ability to grow and thrive as an institution.
What about the restructuring costs; what is that about?
The restructuring costs relate to a voluntary severance scheme that was undertaken during the 2020-21 financial year.
At just over 50% of the income that we generate, staffing costs represent a significant proportion of our overall expenditure. So, managing these costs carefully is an important focus for us as part of the management of our financial performance.
And Vice-Chancellor's pay - that seems well above the median?
The Vice-Chancellor’s pay is set by the Remuneration Committee, made of independent, non-executive governors. The Vice-Chancellor plays no part in determining his own pay.
As for the level of pay, the Remuneration Committee considers a number of factors, and draws data from a range of sources, in making decisions. It also has to make public its rationale for the decisions it makes - which it has done by way of the inclusion of an Annual Remuneration Statement in its Annual Report and Financial Statements.
When recruiting a new Vice-Chancellor in 2018/19, the Board of Governors, on advice from its Remuneration Committee, took a strategic decision to offer a basic salary which was within the higher range of the median for other post-92 universities. The rationale for this decision, which was fully documented at that time, took into account a range of factors and is kept under regular (annual) review.
What about the future? Is the University confident that it can handle financial strains in the coming years?
Yes, absolutely confident about the future. We enjoy a strong level of operating performance, are proving successful in generating cash and are compliant with our lender’s covenants.
We have robust financial plans and forecasts, which build on our recent track record of improvements in our financial performance, including our highest-ever cash reserves, and our ability to take corrective action in a timely manner.
Student numbers are growing, new courses are being opened – both in the UK and overseas – and we are investing £70m-plus over five years in high-quality facilities for students and staff.