Financial Statements 2011 - Royal Holloway, University of London

Operating and Financial Review(continued)level of deposit to secure a place is being implemented to reduceuncertainty about the number of students who will enrol. The firstcount of student enrolments for 2011-12 indicates that overseasstudent numbers have increased by 414 FTEs compared to 2010-11,but these are subject to finalisation as numbers settle. In 2010-11,40% of overseas students were from China and Hong Kong. TheCollege’s overseas recruitment strategy is targeting an increase inthe level of diversification by country.Total income is at a similar level to 2009-10. This reflects a cutin HEFCE recurrent grant funding and the drop in income fromoverseas students offset by increases in other areas, includingresearch grant and contract income. Over a five-year period therehas been substantial growth in income, which has increased from£104.9m in 2006-07 to £132.2m in 2010-11. In 2010-11 teachingcontributed 52% to total income and research income was 22% ofthe total (figure 4).Figure 4: Annual income by major category (£’000)140,000120,000100,00080,00060,00040,00020,00002006/07 2007/08 2008/09 2009/10 2010/11Teaching Research Endowment & Investment OtherWhere “teaching” is defined as HEFCE teaching grant plus tuitionfees and contracts and “research” is HEFCE research grant andresearch grants and contractsFigure 5: Annual surplus as a proportion of income (£’000)8.0%7.0%6.0%5.0%4.0%3.0%2.0%1.0%0.0%2006-07 2007-08 2008-09 2009/-10 2010-11% SurplusIn figure 5, the financial surplus as a proportion of income is set outfor the last five years. In each year it has exceeded 3% of income,and was 5.0% in 2010-11, compared to 4.5% in the previousyear. This improvement was partly due to savings in staff costsas a result of voluntary severances agreed in 2009-10, as well asfrom a lower cost of staff restructuring compared to 2009-10.The surpluses provide funds for investment in the College estateand infrastructure.Major changes to government funding and fees for UK (home)and EU students are being introduced from 2012-13. TheCollege has decided to charge fees of £9,000 for all subjectsand its arrangements for providing support to students havebeen approved by OFFA (the Office for Fair Access). Underthese arrangements bursary support to students, together withexpenditure on outreach and student retention activities, is plannedto increase to over £5m by 2014/15, compared to £2.7m currently.Following the agreement of these arrangements, HEFCE announcedchanges to the controls over the number of students HEIs canadmit in 2012-13. This includes the removal of any caps on therecruitment of students with A-level (or equivalent) qualificationsof AAB or better and a reduction of 8% to adjusted core intakenumbers. The places removed by this reduction will then bereallocated through a bidding process available to HEIs chargingnet fees of £7,500 or less. An extension of these policies is to beexpected over the following two years.The College is analysing the possible effect of these changes. Theimpact will vary by subject area depending on their normal A-levelentry levels, their competitive position and the behaviour of otherHEIs in targeting the recruitment of AAB+ students. In addition thetariff level for uncapped recruitment may be reduced after 2012-13.During the year, the new Principal, Paul Layzell, has developed aManifesto through a process of consultation and this was agreed byCouncil in April 2011. The Manifesto confirms the College’s strategyto be in the top tier of UK universities and sets out the principlesand priorities necessary to maintain and strengthen this position.The changes and uncertainties affecting the funding environmentthat have been described reinforce the priorities that have beenset out in the Manifesto to strengthen academic excellence, toimprove the student experience and to make investments thatsupport these.A strategic review of the academic portfolio has been completedand a consultation is being undertaken on proposed changes toModern Languages, Classics and Computer Science. The overall aimis to achieve sustainable academic activity with departments thatare able to recruit the best-performing students and achieve thebest research outputs. In addition professional services are beingreviewed and a number of changes will take place in the comingyear, supported by investment in systems and procedures, toimprove service delivery to students and others.A number of initiatives with private sector organisations are beingdeveloped. A foundation programme for international studentswill be provided by Study Group International, with an initial smallintake in 2011-12. This is intended to increase the intake of overseasstudents, who will progress from the foundation programme toundergraduate study, and to diversify the markets from whichthey are recruited and the subjects they study. The College has4