Annual Financial Review

The University’s financial reporting and preparation of financial statements is done in accordance with International Financial Reporting Standards (IFRS), as well as the Department of Higher Education and Training (DHET) reporting requirements for Higher Education Institutions.

The core income stream of the University, namely subsidies and tuition fees, has continued to increase in 2021 as a result of: • An increase in the subsidy factor applied by DHET, resulting in an increase of 3,7%; and • An increase of 12,4% applied to gross tuition fees due to the mix of programmes.

The level of student debt for unfunded students continues to grow. The pattern of payments from unfunded students has not improved in 2021, and other options need to be considered in 2022 to encourage payment.

This has resulted in an increase in the provision for bad debts of R41m, based on the three-year cycle. The University has been fortunate that the quality and frequency of payments for NSFAS funded students has continued to improve the financial sustainability of the University when compared to prior years.

In 2021, the University completed two major projects, namely the Navarre Residence Extension in Wellington, and the Bulk Water Upgrade in Bellville.

Backlog maintenance has continued to be addressed as a priority, and a large number of other projects have been completed across the various campuses.

Student accommodation in Wellington has been increased by 212 beds with the completion of the Navarre Residence Extension. The overall leased residential offering has been marginally decreased with the removal of a block in New Market Junction, Woodstock.

A number of existing leases were renewed at a favourable escalation rate in terms of the parameters set by CPUT.

Management continues to set budget directives annually for the next budget year, which are based on achieving the Vision 2030 priority projects, and the CPUT Strategy. It has thus been possible to achieve our plans due to the improved certainty of the University’s cash flow, despite the challenges of reduced funding resulting from the economic impact faced by the country as a whole.

Key highlights

• The investments held by the University have performed well in 2021, and this resulted in the growth of 15% from R1,444bn to R1,667bn. • The work of the Investment Sub-Committee has continued to be very effective, which has resulted in the desired investment outcomes being achieved. • Strict cost management processes have continued to be maintained in respect of staffing appointments and the renewal of staff contracts.

This is an area that will have to be closely monitored in 2022. • All contractual expenditure was met for the year. • The cash flow management processes followed by the University have ensured that it remains financially stable and that there was no need to disinvest reserves to support the ongoing operations.

The University’s Management wishes to thank Council’s Finance, and Audit & Risk Oversight Committees for their continued guidance and commitment in steering the Institution.

A special word of thanks is also extended to the staff of the Finance Department for their selfless efforts and continued commitment in serving CPUT.

A selected list of financial ratios and extracts from the financials for the past years follows below:

2021 2020 2019 2018 2017

Current ratio

Quick ratio

Cash ratio

1.94:1 1.47:1 1.62:1 2.74:1 1.54:1

1.92:1 1.45:1 1.63:1 2.72:1 1.52:1

1.25:1 0.95:1 1.02:1 1.78:1 0.56:1

Student debt turnover ratio

1.10:1 1.10:1 1.17:1 1.29:1 1.51:1

Net gain/(loss) on residences (million)

(R16,72) (R31,34) R6,20 R10,19 (R0,78)

Salaries as % of recurring income 57,0% 55,5% 56,4% 57,4% 56,0% Other current operating expenses as % of recurring income 22,4% 18,2% 23,3% 29,7% 41,2% State subsidies as % of recurring income 54,0% 55,3% 56,5% 54,6% 48,1% Tuition and other fee income as % of recurring income 41,5% 38,8% 37,2% 36,4% 41,9% Private gifts & donations as % of recurring income 0,2% 0,5% 0,2% 0,3% 0,3%

Sustainability ratio (Council controlled reserves only) (Council-controlled reserves/ annual recurrent expenditure on Councilcontrolled expenditure)

1,06 0,87 0,93 1,02 0,72

Sustainability ratio (Total CPUT reserves) Total CPUT reserves/ annual recurrent expenditure

0,82 0,74 0,78 0,82 0,74

Executive Director: Finance Mr PC Du Plessis Chairperson: Finance Committee Mr R Easthorpe