Request 00/08

2000 Mid-year financial return

Respond by Friday 17 March 2000

1. Executive summary

   Purpose

2. This document asks institutions to update their forecasts for the financial year 1999-2000, originally submitted to the Council in July 1999, and for details of net liquidity and guarantees to third parties. Commentaries are also requested.
3. This information helps us to monitor the financial health of institutions and their compliance with the requirements of the Financial Memorandum.

   Key points

4. The format of the mid-year financial return is largely unchanged, except that this year the return does not include the requirement for details of non-UK students on courses conducted outside the UK. Instead, this requirement will be included in the 2000 Annual operating statement, planning return and financial forecasts.
5. In Annex A, the figures for the 1999 financial forecasts should be those submitted to the HEFCE in July 1999. Figures for the probable out-turn for 1999-2000 should be prepared fully reflecting Financial Reporting Standard 12: Provisions, Contingent Liabilities and Contingent Assets (FRS 12). Paragraph 20 asks that reasons be provided for significant variances in income and expenditure compared with the July 1999 forecasts. In addition, a specific explanation should be provided for any significant variance between the results for 1999-2000 as shown in the 1999 financial forecasts, and as shown in the probable out-turn, where this arises from applying FRS 12 to the probable out-turn.
6. Copies of this document and disks for completion have been sent separately to Directors of Finance.

   Action required

7. Completed returns should be sent to the institution's Finance Adviser at the HEFCE by Friday 17 March 2000.

   Out-turn for 1999-2000

8. In July 1999, institutions submitted five-year financial forecasts and student number projections in response to HEFCE 99/30 '1999 Planning return and financial forecasts'.
9. Institutions are now asked to provide the latest estimate of the actual out-turn for the academic year 1999-2000 in the format set out at Annex A, which is consistent with the format of Table 1 in HEFCE 99/30.
10. In Annex A, the figures for the 1999 financial forecasts should be those submitted to the HEFCE in July 1999. Figures for the probable out-turn for 1999-2000 should be prepared fully reflecting FRS 12.
11. The latest estimate of the actual out-turn should take account of any notified or forecast revisions to the 1999-2000 grant allocation, as well as the impact of other known or forecast changes in income and expenditure. Examples of revisions include changes in funding council grants, holdback, MaSN penalty, special funding, expenditure, and recruitment of overseas students.

    Discretionary reserves

12. In Annex A, institutions should state the estimated level of discretionary reserves at 31 July 2000, taking account of the revised surpluses or deficits for the year. Discretionary reserves include the balances on both the Income and Expenditure Account reserve and General Endowments.
13. The Income and Expenditure Account balance should be prepared fully reflecting FRS 12.

    Net liquidity

14. Annex B should be completed by all institutions. The information helps us to monitor the financial health of institutions and their compliance with paragraph 58 of the Financial Memorandum.
15. Institutions should give details of net cash, deposits and overdrafts (as defined in Financial Reporting Standard 1 (Revised 1996): Cash Flow Statements). This should include: the actual position at 31 July 1999; the forecast position as at 31 July 2000, as shown in the 1999 forecast; and the latest estimate of the actual out-turn as at 31 July 2000.
16. If an institution had a negative net cash position for one or more periods of seven or more days consecutively during the period 1 March 1999 to 29 February 2000, the highest level of negative net cash should be shown in the final column of Annex B.
17. A negative net cash position will generally arise because net liquidity includes overdrafts as well as cash.

    Guarantees to third parties

18. Annex C requests information on all guarantees given to third parties as at 29 February 2000. ('Third parties' includes all parties not consolidated within the group's financial statements.)
19. Returns should include guarantees given on behalf of subsidiary undertakings, and those guarantees where, because the possibility of loss is remote, disclosure is not required under SSAP 18 'Accounting for contingencies'.

    Commentaries

20. Commentaries should be provided, as follows.

    Income and expenditure account

21. Reasons should be provided for significant variances in income and expenditure compared with the July 1999 forecasts. There is no prescribed format for the commentary, although the note numbers in the final column of Annex A should be used for reference.
22. The nature of any exceptional items should be explained. Where profits or losses on sale of assets or other significant costs (such as redundancy or provisions) are included in the Income and Expenditure Account, a note of the amounts and the heading under which they are included should also be given.

    Net liquidity

23. An explanation should be provided if there is a significant variance between net liquidity at 31 July 2000, as shown in the 1999 forecast, and the latest estimate of the probable out-turn.

    FRS 12 and other financial reporting standards

24. An explanation should be provided for any significant variance between the results for 1999-2000 as shown in the 1999 financial forecasts and as shown in the probable out-turn, where this arises as a result of applying FRS 12 to the probable out-turn. If the application of any other new standards is likely to have a significant impact on the 1999-2000 financial statements, this should also be explained.

    Approval and submission of return

25. Copies of this document and disks containing the tables have been sent separately to Directors of Finance. Annex A on the disk contains each institution's forecast data for 1999-2000, extracted from the 1999 financial forecasts.
26. The return should be approved and signed at Annex D by the Designated Officer of the institution. It should include:
    • two hard copies of the tables and commentaries
    • the completed disk (with files stored in either Lotus 123.WK1 format or Excel Version 5).
27. The return should be submitted by Friday 17 March 2000 to the institution's Finance Adviser at:

    HEFCE
    Northavon House
    Coldharbour Lane
    Bristol BS16 1QD

    Questions

28. Any questions arising from this request should be addressed to your HEFCE Finance Adviser:

    London and Northern Ireland
    Jennifer Blanchard	0117 931 7353	j.blanchard@hefce.ac.uk
    Karen Pritchard	0117 931 7330	k.pritchard@hefce.ac.uk
    Andrew Beazer	0117 9317223	a.beazer@hefce.ac.uk
    East and South-East
    Richard Allen	0117 931 7389	r.allen@hefce.ac.uk
    Ramesh Bassi	0117 931 7429	r.bassi@hefce.ac.uk
    South-West, East and West Midlands, Yorkshire & Humberside, North-East, North-West, Merseyside and Open University
    Philip Summers	0117 931 7376	p.summers@hefce.ac.uk
    Sian Evans	0117 931 7327	s.evans@hefce.ac.uk
    Richard Buist	0117 931 7377	r.buist@hefce.ac.uk

Annexes

These are available for downloading as an Excel workbook. (42K)