Management Accounts Model: Exemplar One
WEATHERBURY COLLEGE
FINANCIAL REPORT
FOR THE MONTH AND SEVEN MONTHS ENDED 29FEBRUARY2012
Highlights
•The operating result for the year to date is a surplus of £973,000, which is £344,000 betterthan budget.
•The full year operating forecast has been updated to include the predicted financial impact of purchasing the Mayor Street buildings(‘MSB’) and is showing a surplus of £1,024,000, which is £100,000 better than budget.
•We expect to use all our 16-18 learner responsive funding and we assume that Adult Skills funding will be on budget. Additional funding has been secured for 16-18 apprenticeships. A £100,000 favourable variance is forecast for HE education contract income.
•The current ratio for the year to date is 1.37, compared with 1.52 at 31 July 2011, with both cash and accrued expenses remaining high.
•Cash balances at the month end were £2.9 million.
•Demolition work for the new library extension was carried out in Novemberresulting in an exceptional loss on disposal of £153,000 and matching transfer from the revaluation reserve. This project is expected to be completed by September 2012.
•Financial health based on the year to date position is Good and this grading is expected to decline to satisfactory by the year end because of the purchase of the Mayor Street buildings.
•The College complies with its bank covenants and is forecast to continue to do so.
Summary results
This month / Year to date / Full yearActual / Budget / Actual / Budget / Forecast / Budget
Variance / Variance / Variance
£000 / £000 / £000 / £000 / £000 / £000
Income / 2,561 / 16 / 17,593 / (121) / 30,145 / (72)
Expenditure / 1,582 / (4) / 10,942 / 55 / 18,915 / 23
Pay costs
Non-pay costs / 696 / 182 / 5,678 / 410 / 10,206 / 149
Operating surplus / 283 / 194 / 973 / 344 / 1,024 / 100
Exceptional items
Loss on demolition of library / (153) / (153)
Loss on termination of MSB lease / (298)
Surplus after exceptional items / 283 / 820 / 573
Performance Indicators / Budget / Target / Last year end / Year to Date / Year end forecast
Current ratio / 1.20 / 1.52 / 1.37 / 1.08
Cash days in hand / 25 / 33 / 61 / 30
Cash based operating position % income / 6.0% / 5.2% / 8.2% / 7.0%
Pay costs as % of income / 63.2% / 62.3% / 62.2% / 63.3%
Borrowing as % of net assets / 80.0% / 25.5% / 23.8% / 79.6%
Income
This month / Year to date / Full yearActual / Budget / Actual / Budget / Forecast / Budget
Variance / Variance / Variance
£000 / £000 / £000 / £000 / £000 / £000
EFA Learner Responsive / 1,749 / 12,246 / 20,993
Adult Skills / 156 / 1,090 / 1,868
16-18 Apprentices / 47 / 299 / (30) / 595 / 31
Additional Support / 133 / 929 / 1,592
Capital grants / 18 / (4) / 134 / (23) / 244 / (24)
Other EFA/SFA grants / 23 / 19 / 36 / 4 / 54
HE recurrent grant / 93 / 651 / 1,217 / 100
Education contracts / 31 / 10 / 135 / (15) / 221 / (36)
Tuition fees / 156 / 2 / 1,064 / (10) / 1,717 / (124)
General grant income / 2 / (7) / 28 / (30) / 98
Catering & retail / 124 / (15) / 814 / (61) / 1,308 / (40)
Interest receivable / 7 / (1) / 48 / (8) / 70
Miscellaneous other income / 22 / 10 / 119 / 36 / 168 / 21
Total income / 2,561 / 16 / 17,593 / (121) / 30,145 / (72)
Year to date / Full Year
Learner Numbers / SLNs / FTEs / Actual / Budget variance / Forecast / Budget variance
EFA Learner Responsive / SLNs / 6,459 / 14 / 6,543
Adult Skills - Classroom delivery / Learners / 348 / 2 / 650
16-18 Apprentices / Learners / 105 / (27) / 200
HE / MASNs / 189 / 4 / 325 / 15
Full Cost / Learners / 247 / (3) / 420 / (30)
Total learners / 7,348 / (10) / 8,138 / (15)
Data included in funding returns suggest that all funding targetswill be met. Additional funding has been secured for 16-18 Apprentices and this has been recognised in the full year forecast. A budget error of £24,000 in respect of fully expended capital grants has been identified and is included in the year end forecast. HE recurrent grant income, although currently on budget, is forecast to exceed budget by at least £100,000 for the full year. This is due to the Wessex University contract and ADP rates being higher than budget. Education contract income is below budget year to date and a shortfall against the full year budget is forecast for Study Support income and 14-16 provision. Catering and retail income is below budget anda shortfall is anticipated in the year end forecast. The forecast for miscellaneous income includes rental income for the Henchard House building at Mayor Street.
Tuition fee analysis
This month / Year to date / Full yearActual / Budget / Actual / Budget / Forecast / Budget
Variance / Variance / Variance
£000 / £000 / £000 / £000 / £000 / £000
Co-funded Tuition & Exam Fees
Adult FE provision / 18 / 7 / 127 / 44 / 185 / 42
Business Centre FE provision / 10 / 3 / 67 / 20 / 74 / (7)
19+ Apprenticeships / 1 / 5 / (4) / 5 / (10)
Other / 2 / (7) / 53 / (7) / 100
Sub Total / 31 / 3 / 252 / 53 / 364 / 25
Full Cost Tuition & Exam Fees
Adult / 4 / (2) / 57 / 18 / 79 / 11
Business Centre / 34 / 1 / 139 / (86) / 226 / (160)
Sub Total / 38 / (1) / 196 / (68) / 305 / (149)
HE Tuition Fees / 87 / 616 / 5 / 1,048
Total fees / 156 / 2 / 1,064 / (10) / 1,717 / (124)
Adult tuition fees are ahead of budget and are expected to exceed the full year budget. 19+ Apprenticeship fee income is below budget. Business Centre Full Cost fees are expected to fall short of budget by up to £160,000 due to difficult economic conditions impacting on corporate clients. Other fee income includes exam resit fees for A-level programmes.
Partnership / Contracted-out provision
£000 / % of Total IncomeVolume of partnership or contracted-out provision / 200 / 0.7%
Partners / Contract value £000 / % contract-out / partner provision / % complete / Risk Assessment / Date of latest review
Learning and Skills Partnership / 150 / 75% / 90% / Low / 30/11/11
Further Education For All / 50 / 25% / 37% / High / 15/02/12
200 / 100% / 77%
The college has contracts with two external organisations to help with the delivery of its adult skills budget. The contract with the Learning and Skills Partnership is being delivered on target and represents no risks to the college. The contract with Further Education For All is currently underachieving against its target. Discussions are being held with the organisation to ensure that any risk to the college is minimised.
Pay costs
This month / Year to date / Full yearActual / Budget / Actual / Budget / Forecast / Budget
Variance / Variance / Variance
£000 / £000 / £000 / £000 / £000 / £000
Teaching related / 1,192 / (1) / 8,304 / (2) / 14,286 / 8
Other support / 29 / (1) / 201 / (10) / 328
Admin & central services / 191 / (13) / 1,251 / (7) / 2,133
Marketing / 68 / 7 / 475 / 43 / 906 / 5
Premises / 54 / 4 / 380 / 28 / 690 / 10
Catering & retail / 48 / 331 / 3 / 572
Total pay costs / 1,582 / (4) / 10,942 / 55 / 18,915 / 23
An overspend in Foundation Studies and Skills (within teaching related costs) for budgeted staffing reductions that have not been implemented is offset in part by savings from unfilled vacancies. The adverse variance in the month in Admin and central services is due to exams invigilation costs paid in the month.The forecast assumes that all current vacancies will be filled but recognises some savings from unfilled vacancies to date.
The present teaching staff deployment shows 93.2% deployment for permanent staff, with below average deployment in Sport, Music, Media & Performing Arts, Public Services and English.
The number of staff, expressed as FTEs, to which the above pay relates is analysed as:
July2011 / Change in the month / This month / Budget variance
Teaching related
Management / 38 / 37 / (1)
Established lecturers / 260 / (2) / 240 / (10)
PT lecturers/Assessors / 28 / (1) / 23 / (8)
Technicians / 24 / 1 / 21 / (1)
Faculty offices / 34 / 37 / (7)
Teaching support / 73 / (3) / 58 / 9
Sub Total - Teaching related / 457 / 1 / 416 / (18)
Other support services / 13 / 11
Admin & central services / 82 / 6 / 73 / (4)
Marketing / 37 / 31 / 4
Premises / 34 / 33 / 3
Catering / 35 / 27 / 7
Sub Total – Non teaching / 201 / 6 / 175 / 10
Total FTEs / 658 / 7 / 591 / (8)
FTEs are currently 8 above the budgeted headcount level overall, having increased by 7 in the month but reduced by 67 since July 2011. The movement in the month includes hours paid for invigilators during the January exams. The adverse variance in established lecturers includes staff in excess of budget within FSS and the schools of Science, Social Science and Public Services. The favourable variance in teaching support includes timing differences for ESW hours, some of which surplus FSS teaching staff are covering.
Non-pay costs
This month / Year to date / Full yearActual / Budget / Actual / Budget / Forecast / Budget
Variance / Variance / Variance
£000 / £000 / £000 / £000 / £000 / £000
Teaching related / 119 / 7 / 938 / (46) / 1,530
Other support / 3 / 1 / 23 / 6 / 50
Admin & central services / 59 / 58 / 624 / 194 / 1,402
Examinations / 71 / 15 / 673 / (74) / 1,047 / (20)
Marketing / 99 / 3 / 783 / (68) / 1,226
Premises
Running Costs / 66 / 12 / 523 / 23 / 966 / (31)
Rents & Leases / 67 / 5 / 494 / 9 / 663 / 201
Maintenance / 52 / 59 / 520 / 254 / 1,103 / 224
Catering & retail / 63 / 13 / 418 / 50 / 709 / 10
Depreciation / 85 / 10 / 596 / 66 / 1,320 / (185)
Interest payable / 12 / (1) / 86 / (4) / 190 / (50)
Total non-pay costs / 696 / 182 / 5,678 / 410 / 10,206 / 149
Non-pay cost variances continue to be regarded as mainly attributable to timing differences between actual and planned spend. The significant year to date adverse variance on Marketing includes printing of the prospectus and open event costs. The adverse year to date variance on examination costs is due to the timing of registration fees for adult courses. Some overspend has been forecast for the year end in line with additional fee income received. Year to date savings in premises maintenance and admin and central services are expected to reduce by the year endand the former excludes any forecast for additional expenditure as a result of the acquisition of the Mayor Streetproperties.
The full year forecast includes £201,000 for anticipated savings in lease costs following the Mayor Street purchase in March 2012. The release of £224,000 from provisions for Mayor Street leasehold obligations has also been assumed in the year end forecast. Depreciation on the freeholdMayor Street building has also been included in the year end forecast, as has estimated interest on the loan to fund the Mayor Street purchase.
Contributions to overheads
The following table shows contributions from Business Units and teaching departments to overheads and support services. Pay cost recording from Schools to Programmes is achieved through a recharges system. Overall, the report shows adverse variances in contribution of £327,000 from Business Units and £671,000 favourable variance from overheads so far this year.
The favourable variances on programmes are matched by an adverse variance on schools for the year to date and in most cases this indicates timing differences in the recording of teaching contact hours. This is expected to reverse by the year end. Whilst the majority of teaching costs are allocated through electronic registers, recharging systems for the minority non-register provision continue to be incomplete.
This month / Year to date / Full yearActual / Budget / Actual / Budget / Forecast / Budget
Variance / Variance / Variance
£000 / £000 / £000 / £000 / £000 / £000
Business Units / Departments
14-19 Programmes / 910 / (168) / 7,495 / (47) / 12,543 / (25)
Adult FE Programmes / 7 / (26) / 221 / (18) / 453 / 60
Higher Education / 97 / 6 / 621 / (15) / 1,129 / 100
Business Centre / 84 / 46 / 514 / 297 / 124 / (184)
Weatherbury Training / 95 / 55 / 521 / 283 / 381 / 21
FSS / 13 / 5 / 43 / 54 / 95
Schools / (57) / 80 / (1,840) / (881) / (1,219) / (20)
Total / 1,149 / (2) / 7,575 / (327) / 13,506 / (48)
Support Services
Study Support / 27 / (5) / 287 / 21 / 366 / (25)
Faculty Offices / (126) / 13 / (877) / 74 / (1,602)
Libraries / (28) / 7 / (215) / 29 / (418)
ILT / (4) / 2 / (36) / 1 / (64)
Student Advice & Enrichment / (27) / 24 / (341) / 12 / (607)
Staff Development / (14) / (6) / (69) / (8) / (105)
Print Shop / 38 / 36 / 56 / 46 / 17
Schools Liaison / (43) / 7 / (406) / (61) / (605)
Buses / (71) / (8) / (456) / (13) / (759)
Adult Marketing / (30) / 12 / (247) / 39 / (489) / 10
Business Centre Marketing / (25) / 1 / (160) / 21 / (311)
Estates / (291) / 102 / (2,278) / 344 / (4,350) / 193
Health,safety & environment / (17) / 2 / (119) / 16 / (212)
Commercial / 11 / (3) / 49 / (18) / 17 / (30)
Corporate / (55) / (5) / (364) / (16) / (601)
Finance / (16) / 1 / (121) / (2) / (204)
IS Services / (19) / 5 / (140) / 26 / (286)
IT Services / (90) / 7 / (598) / 78 / (1,158)
HR & Central Admin / (26) / 19 / (310) / 7 / (542)
Q&ST & Exams / (62) / (15) / (258) / 75 / (570)
Total / (866) / 196 / (6,602) / 671 / (12,482) / 148
Surplus / deficit / 283 / 194 / 973 / 344 / 1,024 / 100
Net assets
Last / As / Forecastyear / at / for
end / 29 Feb 12 / 31 Jul 12
£000 / £000 / £000
Fixed assets / 21,523 / 22,241 / 26,937
Current assets
Trade debtors / 176 / 110 / 150
Cash / 2,705 / 2,924 / 2,490
Other current assets / 396 / 302 / 300
3,277 / 3,336 / 2,940
Current liabilities
Trade creditors / 180 / 184 / 200
Payments in advance / 416 / 458 / 500
Accrued expenses / 673 / 882 / 800
Loans / 55 / 57 / 315
Other payables / 834 / 849 / 900
2,158 / 2,430 / 2,715
Net current assets / 1,119 / 906 / 225
Long term liabilities
Provisions / 470 / 413 / 225
Loans / 2,334 / 2,310 / 7,119
Net pension liability / 5,240 / 5,240 / 5,240
8,044 / 7,963 / 12,584
Net assets employed / 14,598 / 15,184 / 14,578
Significant fixed asset additions compared with the approved capital expenditure budget are:
This year to date / This year budget / Under/(Over) spend£000 / £000 / £000
SFA grant funded sensors/boilers / 340 / 434 / 94
Library Extension andRefurbishment / 946 / 1,710 / 764
Visitors' Entrance and Frontage / 72 / 300 / 228
Other building projects / 3 / (3)
Faculty offices / 54 / 30 / (24)
IT/IS / 3 / 208 / 205
Catering / 76 / 85 / 10
Minibus / 25 / 25
Other / 11 / 14 / 3
Total / 1,505 / 2,806 / 1,302
The Visitors’ Entrance and Frontage project was completed in August. Demolition work for the new library extension was carried out in November resulting in an exceptional loss on disposal and matching transfer from the revaluation reserve of £153,000. This project is currently on programme, due for completion in September 2012. Other building projects costs include the remodelling of the A-Level Faculty office which was completed over the summer and the final account for the Student Services building.
The year-end forecast includes the purchase of the Mayor Street buildings and the write off of existing Mayor Street fixed assets (building renovations and permanent fixtures and fittings).
Debtors ageing:
Last year end / Change in month / This month£000 / £000 / £000
Current / 167 / (7) / 44
30 - 60 days / 5 / (13) / 26
60 - 90 days / 2 / (31) / 7
90+ days / 29 / 9 / 57
Gross debtors / 203 / (42) / 134
less bad debt provision / (27) / (24)
Net trade debtors / 176 / (42) / 110
Significant debtors over 90 days are:
•HE students (£3,745) – 2009/10 and 2010/11 tuition fees. Court action is in progress where appropriate.
•Smith & Co (£2,500) - Business Centre LEAD programme 2009/10 fees. No response from credit control procedures. Fees disputed by customer and limited supporting documentation held by Business Centre. Court proceedings in progress.
•ITforALL (£2,600) – Excel course. Court proceedings have been put on hold. A final attempt is being made by Business Centre management to resolve the dispute.
- Wessex County Council (£9,285) - Young apprentice programme income; paid in March.
- Dorchester Books (£2,925) – Business Centre course. Credit control procedures in progress.
- Bus passes (£5,000) – Rejected direct debits – credit control procedures in progress with support from faculty offices.
Accrued expenses include purchase order commitments of £288,000 plus £50,000 and £199,000 respectively for bus and exams cost invoices yet to be received.
Other payables include payments on account for the Learner Support Fund and Bursary funds. Spend against allocated funding is:
YTD actual spend / YTD committed / Full Year allocation / Under/(over)spend£000 / £000 / £000 / £000
LSF Fund / 54 / 65 / 153 / 88
Bursary fund / 203 / 222 / 271 / 49
Provisions currently comprise £62,000 for restructuring costs, £273,000 for lease obligations and £78,000 for future pension liabilities. Provisions of £224,000 for lease obligations at Mayor Streetwill be released upon completion of the purchase.
Treasury
We comply with the existing High Streetbank covenants and the Wessex bank covenant requirements and are forecast to continue to do so.
The main factors affecting the year to date cash flow are (a) phasing of funding body grant income, and (b) delayed invoicing of bus costs (£200,000) and exam costs (£399,000) and capital project expenditure (£1,505,000).
The current ratio has decreased from 1.40 at 31 July 2011 to 1.39 at 29February, with cash balances and accrued commitments remaining high.
For the year to date, the financial health scores as Good and this grading is forecast for the year end.
Funds currently on term deposit are as follows:
From / To / Interest rate p.a. / Term / £000Bank of Dorchester / Oct-11 / Oct-12 / 2.50% / 1 year fixed / 800
Wessex Bank / Nov-11 / Nov-12 / 3.00% / 1 year fixed / 500
High Street Bank / Oct-11 / Apr-12 / 1.63% / 6 months fixed / 300
1,600
The balance of funds is invested in an instant access account with the Wessex Bank earning interest at 1.25% p.a.
Cash balances are expected to end the year at £2.5 million.
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