Financial review It has been a year of change and turbulence across the Higher Education sector due to the impact of the COVID-19 pandemic on our students, staff, other stakeholders and the wider financial environment. The uncertainty was exacerbated by a lockdown in March 2020 which prompted Winchester into emergency planning to establish new ways of teaching and preparing our estate to be ‘Covid safe’. Despite the lockdown’s detrimental financial impact Winchester’s robust financial management, strong governance and swift mitigating actions resulted in a successful year-end surplus of £1.5m, operating cash flow of £11.0m and a £7.6m increase in closing cash and cash equivalents. We are still challenged by the uncertainty the pandemic has caused and continue to regularly review and update our medium- and long-term financial forecasts. However, our strong performance for 2019/20 exceeded budget expectations and provides a stronger financial foothold from which to face another challenging year ahead as the world searches for a viable vaccine. This Financial Review (pages 50–54) puts the year in perspective and outlines our financial environment, finance strategy, financial KPIs, financial performance and our future outlook.
50
University of Winchester
Integrated Annual Report 2019-20
Financial environment This year the financial environment was dominated by the direct and indirect impacts of the COVID-19 pandemic. This catastrophic event has led to increased uncertainty and risk across all parts of the global economy. At a local level, Winchester experienced a number of unprecedented challenges including: • Rapidly investing in new equipment and practices for online delivery of lectures • Expenditure on campus adaptations to deliver a ‘Covid safe’ campus for the start of semester 1 • Mothballing buildings over the summer • Disruptions to summer estates works as contractors went into lockdown • Delayed opening of our new West Downs learning and teaching building • Loss of catering and conferencing income over the summer and thereafter • Putting staff onto the furlough scheme (80% of salary), if they were unable to work, and topping their salary back up to 100% • Implementing a number of cost saving initiatives and mitigating actions including a voluntary redundancy scheme • Restricted travel for international students impacting current students and future demand • Turbulent financial markets adversely impacting pension valuations
As well as the financial impact of the pandemic, Winchester encountered a University and Colleges Union (UCU) strike (representing our academic staff) in February and March 2020. The two weeks of action was over issues that were not all within Winchester’s direct control – a dispute between the UCU and the Universities and Colleges Employers' Association (UCEA). The dispute was over a number of factors, the primary one regarding the level of pay, which is negotiated at a national level by UCEA. Winchester did all it could to minimise the impact of the strike on the student experience and where lectures were impacted, we endeavoured to find suitable alternatives so that classes could go ahead. We extended deadlines for student assignments by two weeks to allow for the disruption caused by the strike and financially compensated those whose lectures were materially disrupted by the strike. The global pandemic and strike overshadowed ongoing concerns over the Government’s possible implementation of some of the Augar review recommendations, the
ongoing decline in the number of 18-year-olds living in the UK and the impacts of Brexit. Winchester is regularly reviewing the financial and operational risks associated with the withdrawal of the United Kingdom from the European Union and incorporates these into our risk register. We have undertaken a risk review of our supply chains to identify high-risk areas for further contingency planning and are reviewing our international partnerships. Winchester continues to hold regular Brexit meetings to keep abreast of the latest changes as the United Kingdom manages its exit from the European Union.
RESPONDING TO COVID-19 Winchester responded quickly to the challenges presented by the pandemic by mobilising a crossinstitutional project to manage the closure, and subsequently the reopening of the estate in preparation for the 2020/2021 academic year. The project was exemplar of our integrated thinking approach and is outlined in more detail on page 14.
