CANTERBURY CHRIST CHURCH UNIVERSITY
MINUTES OF THE MEETING OF THE FINANCE AND GENERAL PURPOSES COMMITTEE HELD AT 4.00PM ON TUESDAY 3 NOVEMBER 2014
IN THE FREDERIC MASON ROOM AT THE PRIORY
CONFIDENTIAL
Present:Mr Frank Martin (Chair), Miss Darcy Anderson (SU President),
Mr Christopher Calcutt, Dr Gill Perkins, Ms Deborah Upton,
Vice-Chancellor
In Attendance:Mr Paul Bogle (Clerk to the Governing Body)
Mr Stephen Clark (Pro-Chancellor)
Miss Sandy Foster (Deputy Clerk)
Mr Andrew Ironside (Pro Vice-Chancellor [Resources])
Mr David Leah (Director of Finance)
Mr Ben MacPhee (SU Managing Director) [For item 10]
Mrs Heather McCulloch (Committee Officer)
Mrs Karen Pilgrim (Assistant Director of Finance (Accounting & Regulatory Systems))
Mr Lee Soden (Director of Facilities Management)
59.Apologies for Absence
There were none.
60.Declarations of Interest
There were none.
61.Chair’s Communications
The Chair welcomed Dr Gill Perkins to her first meeting of the Committee.
NOTED
62.Minutes of the Meeting of the Finance and General Purposes Committee held on 3 June 2014
The minutes of the meeting of the Finance and General Purposes Committee held on 3 June 2014 were agreed and signed as an accurate record.
63.Matters Arising not appearing elsewhere on the Agenda
63.1Access Agreement Breakdown [Minute 251 refers]
The Director of Finance provided a summary of financial support being provided as part of the University’s Access Agreement. There was an increase of £1431k in student support costs in 2014/15 compared to 2013/14, with a greater proportion of support for bursaries and outreach measures.
NOTED
63.2Polo Farm Update [Minute 250.1 refers]
The Pro Vice-Chancellor (Resources) advised the Committee that the sign-off of the final agreement with Polo Farm will take place in November. Building work had commenced before final sign-off at the risk of Polo Farm and not the University. Once the final agreement had been signed the University will make available, as previously approved by the Finance and General Purposes Committee, the £2m matched capital contribution to Polo Farm. The Pro Vice-Chancellor (Resources) thanked the Director of Facilities Management and the University Solicitor for their tenacious work towards achieving a final agreement.
The Chair requested that areport be provided at a future meeting with an update on the latest developments and a summary of the benefits of the Polo Farm project for the University.
NOTED
64.Finance and General Purposes Committee Terms of Reference [Paper G40]
Members of the Committee received Paper G40, Finance and General Purposes Committee Terms of Reference. There were no proposed changes to the terms of reference other than to the membership. The newly elected Staff Governor for Professional Services, Dr Gill Perkins, had accepted an invitation to join the Committee. Mr Cedric Frederick had been allowed to step down from the Committee by the Pro-Chancellor in view of competing outside commitments, but will remain on the HR Committee and as the Governor Champion for equality and diversity.
NOTED
65.Revised Risk Appetite Statement [Paper G41]
Members of the Committee received Paper G41, Revised Risk Appetite Statement. The Statement had been discussed at the Governing Body/SMT away days held in May this year, and had also been considered and recommended for Governing Body approval by the Audit Committee in September. As there was a financial section within the Risk Appetite Statement it had been decided that it would be appropriate for it to be considered by this Committee. The Committee was asked to note that the Statement was about the University’s approach to and appetite for risk as opposed to its strategic ambitions; the latter will be articulated in the Key Performance Indicators and the underpinning finance strategy, which will be presented at the next Committee meeting.
The Chair raised a query with regard to the statement that the University will aim to ‘ensure that annualised servicing costs of loans and long term leases does not exceed 10% of total income in any one year’ and whether it was achievable in light of the Master Planning project. The PVC (Resources) responded that the financialsection will be subject to review in light of decisions resulting from the Master Planning exercise.
In answer to a query around the figure of 45 cash liquidity days, the PVC (Resources) confirmed that 45 was a minimum figure and the average figure over a year was closer to 90 days.
RESOLVED TO RECOMMEND:
that the revised Risk Appetite Statement be approved by the Governing Body with the caveat that it could be subject to future review and revision in light of decisions resulting from the Master Planning exercise.
66.The Unitemps Proposal – future use of the subsidiary company, Medco
[Paper G42]
Members of the Committee received Paper G42, The Unitemps Proposal – future use of the subsidiary company, Medco. Under a franchised arrangement with the University of Warwick, CCCU was proposing to set up a temporary staff agency to provide employment opportunities for students and members of the local community. The model used by other universities was achieved through a trading company, and the proposal for the University was that Medco be reactivated for this purpose and supplied with funds. The Business Plan forecasted that Medco will deliver surpluses which can be covenanted back to the University.
The Chair of the Committee had accepted an invitation to become the Chair of Medco once it had been reactivated for trading purposes, and two of the Pro Vice-Chancellors would also be Board Directors. The Chair of the Governing Body and Clerk would be stepping down as Directors to ensure clear separation between the activities of the parent and subsidiary companies.
The Chair raised a query in two parts with regard to the recommendation that the Committee approve the transfer of £450k from CCCU’s main bank account to Medco (CCCU) Ltd as payment of the share capital: the first part queried whether there was a need for the transfer in light of the projected first year trading figure and the fact that Medcohad a balance sheet value of £450k; the second queried whether it was correct to say that the transfer was as payment of the share capital. With regard to the first query the executive responded that the transfer represented a cautious approach in order to maintain a liquid reserve and ensure that funds were available to pay the temporary staff. With regard to the second query the executive replied that the recommendation was as a result of advice from the University’s auditors. The Chair requested that the executive take further advice and ask if the transfer of cash should be accounted for as payment of share capital or an injection of new capital. The Director of Finance confirmed that he would raise the query with the auditors at the Audit Committee meeting later this week.
A member of the Committee raised a question concerning potential reputational risk to the University; possible risky scenarios could includeemploying an unsuitable temporary worker or the University deciding to pay its temporary workers the minimum wage only. The Vice-Chancellor replied that the issue of reputational risk was present whatever the system used. The University proposed to pay the ‘living wage’ as opposed to the ‘minimum wage’ though that could lead to a different market risk if other agencies supplied temporary workers at less than the living wage. The Vice-Chancellor noted the unique responsibility of the University’s senior post holders with regard to the preservation of the University’s reputation.
RESOLVED:
(i)that the proposed reinstatement of Medco (CCCU) Ltd to operate the Unitemps Franchised service be approved;
(ii)that the opening of a separate bank account in the name of Medco (CCCU) Ltd – Unitemps be approved;
(iii)that, subject to further advice, the transfer of £450k from CCCU’s main bank account to Medco (CCCU) Ltd as payment of the share capital be approved.
67.Financial Reports for the Year ended 31 July 2014
67.1Report on the University’s Financial Position [Paper G43]
Members of the Committee received Paper G43, Report on the University’s Financial Position for the Year ended 31 July 214. The Report contained the findings and opinion of the University’s new External Auditor, Deloitte. The Auditor’s management letter raised two minor issues around the expected life of an asset and bad debt provision. The Director of Finance highlighted the table setting out the sources of income for the University over the last two years, showing the decline in grant income and the rise in income from tuition fees. The increase in income from the previous year was only 0.2%, which highlighted the University’s need to recruit and maintain student numbers as it became increasingly dependent on tuition fee income.
In terms of expenditure, there had been a decrease of 0.4% in staff costs which included £447k of exceptional staff costs related to redundancies. Excluding exceptional staff costs, the year on year increase had been 1.9%.
An overall surplus of £6185k before taxation and exceptional items had been achieved for 2013/14, which was a slight improvement on the previous year. The end of year figure after taxation and exceptional items was lower than the previous year; the 2012/13surplus had benefitted from the sale of Salomons. The Director of Finance advised that in terms of the balance sheet an old asset related to the subsidiary company of Knight Ryan had been written off, rather than depreciated on a continuing basis, following advice from the External Auditors.
In terms of the University’s Key Performance Indicators, the figure for external borrowing as a % of total income was the only indicator that was slightly over the agreed limit and this was directly related to the purchase of the former Prison site. A member of the Committee commented that moving forward it would be useful to provide the target for each KPI in addition to the year on year movement.
The Chair welcomed a strong set of financial results for the University and highlighted the need to review some of the KPIs in the context of the new Strategic Framework and the underpinning financial strategy.
NOTED
67.2University’s Financial Statements [Paper G44]
Members of the Committee received Paper G44, the University’s Financial Statements, which were reviewed in conjunction with the Report above. The Chair of the Committee had also reviewed the Statements in his pre-meeting with members of the executive. The Committee focused on the University’s financial performance and figures contained within the Statements. It noted that the Audit Committee would be reviewing the narrative sections within the Financial Statements and recommending the Paper for approval by the Governing Body.
NOTED
68.Students’ Union 2013/14 Financial Statements and Budget 2014/15
[Paper G45]
Members of the Committee received Paper G45, Students’ Union 2013/14 Financial Statements and Budget 2014/15. With reference to the Audit Findings Report, the SU President confirmed that the Managing Director’s post had now been filled by Ben MacPhee, which had resolved anissue around purchase invoice authorisation. She confirmed that the loss-making contract with ISS Mediclean had been terminated and a new agreement for the provision of the Union’s facilities management services had been entered into with Elior.
The SU Managing Director advised the Committee that the final draft Financial Statements had been signed by the trustees. There were two new elected student trustees and five new appointed trustees.
The PVC (Resources) commented that there was a clear link between the SU’s overall business plan and the reporting requirements set out within the Financial Memorandum. This should be achieved through regular reports to this Committee. He acknowledged the Union’s desire to become more independent, and noted that it had full autonomy with regard to the core grant it received from the University. However, with regard to other funding provided by the University, there was a need to agree the level of flexibility in its use and importantly the service standards to be delivered.
The Director of Facilities Managementadvised the Committee that the Union was taking steps to reduce the subsidy it received from the University, and agreed that there was a need to demonstrate how this was being achieved. The PVC (Resources) highlighted the University’s responsibility to assure itself that effective devolved governance was in place, and in order to do that the University may wish to revise its reporting arrangements. The Chair requested that this work start in time for the next Committee meeting, and the SU President and SU Managing Director stated that they were happy to discuss how this might be taken forward.
In terms of other issues, the Committee was content with the new contract for commercial services with Elior, and with the improvement in student behaviour generally.
The Chair raised a query with regard to the Union’s wish to directly employ its own staff. The SU Managing Director advised that, since the preparation of the Report, the matter had been considered at a meeting of the Union’s trustees who had decided against the Union becoming an independent employer at this stage.
The Vice-Chancellor concluded the discussion by noting that the negotiations between the University and the Students’ Union were conducted in a spirit of partnership. The Pro Vice-Chancellor (Education and Student Experience) was a full trustee on the SU Board, and both the SU President and Managing Director were invited to attend her regular team meetings.
The Chair congratulated the Students’ Union on progress thus far.
RESOLVED:
that the Students’ Union budget for 2014/15 be approved.
69.Minutes of the Governor Master Planning Review Group [Paper G46]
Members of the Committee received Paper G46, Minutes of the Governor Master Planning Review Group. The Chair referred to the presentation earlier in the day by BDP Architects who had been awarded the contract for the master planning of the former Prison site. He confirmed that scoping work had commenced towards creating a vision of the University in twenty years’ time. The Finance and General Purposes Committee will assume responsibility for the financial strategy of the project in due course under the auspices of the Governing Body.
External advice will be engaged on the financial strategy throughthe firm, Rothschild. The PVC (Resources) will invite them to produce a high level discussion paper setting out possible funding options. The Vice-Chancellor mentioned the European Investment Bank, with whom other universities had secured favourable terms, as a potential source of capital funding for the Master Planning project.
NOTED
70.Sustainability Annual Report [Paper G47]
Members of the Committee received Paper G47, the Sustainability Annual Report. The Director of Facilities Management highlighted some of the key initiatives from the Report. More than 50 curriculum development projects had been funded as part of ongoing work related to enhancing the curriculum with sustainability perspectives through the Futures Initiative. There was also a whole range of projects being undertaken under the umbrella of the Green Academy. Students and staff had engaged in the Bioversity project, which had rehabilitated both the Johnson and Physic gardens at the University. A Low Carbon vision for 2050 document had been developed and will inform the work of the Estates Master Planning exercise. Finally some success in lowering carbon emissions had been achieved, and the University had been particularly successful in securing external funding through Salix Finance and other schemes in this regard. The Director of Facilities Management noted that the increased estate with the acquisition of the former Prison site will make these targets more challenging to meet in the future.
The Report encompassed the work of many individuals, notably Rob Thrower, Peter Rands and Tony Lavender, and had been extensively considered within the University.
The Chair welcomed the comprehensive Report and noted the generally downward trend in scope 1 and 2 carbon emissions as illustrated in graphic form. The Vice-Chancellor added his commendation of the work involved, and noted the contributions of Peter Rands and Janet Haddock-Fraser with regard to the academic sphere.
A member of the Committee raised an issue with regard to student accommodation where there was a less successful record with regard to energy savings. The Committee, including the SU President, recognised the challenges in trying to change student attitudes, particularly where students were paying an all-inclusive price for their accommodation and energy consumption. The Director of Facilities Management advised the Committee that an element of competition had been introduced with incentives for the lowest energy consumption in a student block, and student ‘green’ champions had been recruited. The SU President considered that financial incentives were most likely to succeed in motivating students to engage with this agenda.
NOTED
71.Report on the University’s Financial Position for the two month period to 30 September 2014 [Paper G48]
Members of the Committee received Paper G48, Report on the University’s Financial Position for the two month period to 30 September 2014. The Report provided an early indication of progress to date against budget; the Director of Finance included a caveat when he reported that the student fee income figures in annex A reflected the budget rather than actual activity. Student numbers were difficult to gauge at this early stage, and there was further validation work to complete with regard to second and third year returning students. A more comprehensive report on student numbers will be provided at the Governing Body meeting on 25 November. In terms of expenditure, both staff and non-staff costs were below budget for the first two months. The Director of Finance confirmed that there were no major concerns at this early stage.