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4.9% income growth
£163m Cash and investments
£16.8m Underlying operating surplus

Financial Performance

The University continues to deliver robust financial performance with key financial health performance indicators at (or above) the sector upper quartile, building upon strong financial management in recent years.

Results for the Year 2016/17
£'000
2015/16
£'000
Variance
£000

Income

312,651 297,976 14,675
Expenditure (295,863) (269,697) (26,166)
Underlying operating surplus 16,788 28,279 (11,491)
Fundamental restructuring (9,983) - (9,983)
Gain on disposal of fixed assets 15,724 10,360 5,364
Share of operating deficit in joint venture and associate (43) (17) (26)
Surplus before tax 22,486 38,622 (16,136)
Actuarial gain/(loss) in respect of pension schemes 44,633 (19,136) 63,769
Total comprehensive income for the year 67,119 19,486 47,633
Used on this page http://www2.mmu.ac.uk/financial-statement/financial-performance/  used on ths page http://www2.mmu.ac.uk/financial-statement/financial-performance/

Income - Year-on-year growth £14.7m (4.9%)

Growth in tuition fee income of £8.3m, 3.6%, in the year to £241.3m recognises the popularity of the University in the student recruitment market.

The increase in income year-on-year particularly reflects strong demand and growth in postgraduate and apprenticeship courses.

The increase in funding body grants by £3.0m, 11.5%, to £29.1m, is as a result of an increase in capital grant income, Apprenticeship Funding from the Skills Funding Agency, and non-recurrent funding from HEFCE to support collaborative outreach programmes.

The growth in other income by £1.2m, 3.7%, is primarily a result of an increase in commercial activities.

Research grants and contract income shows a year-on- year improvement of £2.2m, 35.4%, to £8.3m in 2016/17. While the increase is largely driven by an uplift in the volume of research grants, the potential for further growth will be enabled by realising the benefit from the investment in recruiting high-performing research staff, which has enhanced the quality and number of researchers at the University.

Expenditure (excluding fundamental restructuring) - Year-on-year growth £26.2m (9.7%)

Staff costs of £176.8m in the year (an increase of £16.5m year-on-year) equates to 56.5% of income, compared with 53.8% in the prior year. The increase in employment costs being the result of the University's continued investment in student-facing academic and exceptional research staff, and pay inflation arising from national pay settlements and pension contribution changes.

Other Operating Expenses includes internally-funded bursaries and the University's Student Support Package, which totals £11.6m in the 2016/17 financial year. This sector-leading Student Support Package is awarded to provide widening

access and participation opportunities to students from lower income families.

Additional planned investment in IT software and hardware of £0.8m, compared to 2015/16, was allocated to help transform the facilities available for students and staff. Maintenance costs increased by £2.4m on the prior year, helping to ensure that the estate is continuing to adapt to accommodate the future needs of students and staff, whilst improving the environmental sustainability and impact of the University.

An additional £0.9m was allocated to support research students, enhancing the vibrant research community which is flourishing at the University.

Fundamental restructuring costs

Fundamental restructuring costs of £10.0m were recognised in the year, following the decision by the University in November 2016 to exit the Cheshire campus by the end of 2019. The fundamental restructuring costs primarily reflect the accelerated depreciation of the campus buildings, along with a provision for staff and project-related costs. Further fundamental restructuring costs are anticipated to be incurred in subsequent years, leading up to the full exit from the Cheshire campus.

Net Cash 

Cash resources (investments and cash and cash equivalents) stand at a healthy £163.0m at 31 July 2017, with year-on- year growth driven in large part by the strong operating performance and capital receipts from campus disposals. External borrowing has reduced by £2.7m year-on-year as a result of scheduled capital repayments. The graph below charts debt levels relative to cash over the past six years and demonstrates that the University is in positive net funds throughout the period.

The University aims to generate healthy operating cash flow levels (2016/17: £36.2m) to fund the future long-term investments, whilst still maintaining financial KPis. The graph below charts net liquidity days over the past six years; a period in which 87.7% of a £350m estates campus consolidation capital programme was self-funded. Net liquidity days has increased from 198 days in 2015/16 to 206 days in 2016/17, reflecting the generation of resources that will provide funding headroom to support planned strategic investment in the estate, iT infrastructure and other facilities over the next five years.

Net cash 2 x graphs - used on this page http://www2.mmu.ac.uk/financial-statement/

Pension accounting sensitivities

Pension accounting sensitivities The valuation of the Greater Manchester Pension Fund, on an FRS 102 accounting basis as at 31 July 2017, has given rise to a net deficit of £95.8m (2015/16 deficit £132.9m), reflecting a year-on-year reduction of £37.1m. This valuation movement reflects the inherent volatility of the pension valuation, and the significant sensitivities around key assumptions; in particular, the positive movement in 2016/17 primarily reflects the impact of the latest formal valuation of the pension scheme (which is undertaken every three years) and has led to a sizeable actuarial gain in the Statement of Comprehensive Income and Expenditure.

A summary of the key pension sensitivities are as follows:

Change in the assumption at 31 july 2017
Approximate %
increase to liability
Approximate monetary
value £'000

0.5% decrease in the real discount rate

11%
46,825
0.5% increase in salary increase rate
2%
7,454
0.5% increase in the pension increase rate
9%
38,648