Queen Margaret University, Edinburgh is an autonomous Scottish higher education institution. The
University’s governing instruments and arrangements are set out under the Queen Margaret
University, Edinburgh (Scotland) Order of Council 2007, amended from 1 October 2019 through
the Queen Margaret University, Edinburgh (Scotland) Amendment Order of Council 2019. The
2007 Order is made under section 45 of the Further and Higher Education (Scotland) Act 1992.
The University is registered under the Companies Acts as a company limited by guarantee, with
its registered office at Queen Margaret University Drive, Musselburgh, East Lothian, EH21 6UU.
The University has been entered into the Scottish Charity Register and is entitled, in accordance
with section 13(1) of the Charities and Trustee Investment (Scotland) Act 2005, to refer to itself as
a Charity registered in Scotland.
Scope of the Financial Statements
The financial statements presented on pages 26 to 54 comprise the consolidated results of the
University and its subsidiary company, QMU Enterprises Limited. QMU Enterprises Limited
undertakes commercial consultancy work, utilising the expertise of the University’s academic and
technical staff, and deals with vacation letting of the University’s student accommodation. The
University holds 50% of the issued share capital of Edinburgh Innovation Park Joint Venture
Company Limited. Due to the limited activity to date within the joint venture company, the results
have not been consolidated into these financial statements. Further information is provided in note
13 to the financial statements.
The financial statements have been prepared on a going concern basis in accordance with
Financial Reporting Standard 102 (FRS 102) and the Statement of Recommended Practice –
Accounting for Further and Higher Education 2019 (SORP 2019), with the Accounts Direction
issued by the Scottish Funding Council (SFC) and with the United Kingdom Companies Acts.
Information on the process which has been undertaken to inform the decision to prepare the
financial statements on a going concern basis is set out in section (A) in the statement of principal
accounting policies and include details in respect of a material uncertainty due to the material loan
repayment currently due within the going concern period.
Development of the Strategic Plan
The University’s strategic plan remains rooted in the University’s core values, and sets out a
number of strategic goals, along with targets to be achieved by the end of the current plan period
in 2025. The plan is supported by a more detailed delivery plan, which sets out specific actions,
along with timescales and owners, which will enable the achievement of the strategic plan goals
and targets. A key element of the plan remains the inclusion of key performance indicators which
the University Court uses to monitor progress towards the achievement of the goals set out in the
plan (both financial and non-financial). The University also has processes to manage the risks
which might inhibit this achievement
Results for the year
The Group's consolidated results for the year to 31 July 2023 are summarised as follows:
|Surplus (deficit) for the year
Actuarial gain in respect of pension schemes
Unrealised surplus /(deficit) on revaluation of land and buildings
Total comprehensive income /(expenditure) for the year
The main changes in the underlying outturn position compared to 2021/22 were:-
- An increase of £1.0 million in income from tuition fees and education contracts, including
additional students on new programmes, and an increase in international student numbers;
- An increase in SFC grants of £0.6 million. This included additional funding for the initial teacher
education programme, paramedic science programme and additional funding for Physio;
- A reduction of £0.7 million in income from research grants and contracts;
- An increase in other income of £1.0 million, as both summer school activity and
accommodation occupancy improved;
- An increase of £0.7 million in staff costs, of which £2.5 million related to the reduction in
pension provision adjustments, with the remaining increase reflecting salary increases;
- An increase of £1.5 million in other operating expenses, reflecting increases in utilities and
Additional information on the adjustments relating to the revaluation of land and buildings and
to actuarial gains and losses on pension schemes is provided in notes 12 and 21 respectively.
QMU Enterprises Ltd generated a profit of £347,000 (2021/22: £157,000), which was passed to
the University under deed of covenant.
Cash Flows and Liquidity
The result for the year, adjusted for the effect of non-cash items and interest, was a net cash inflow
of £4.5 million on operating activities (2021/22, £7.9 million inflow). Overall cash balances
increased by £2.2 million (2021/22; £0.4 million reduction). Unrestricted cash balances at 31 July
2023 of £17.5 million (2022: £15.2 million) represented 141 days’ expenditure (2022: 136 days).
Management of Principal Risks and Uncertainties
In common with other universities, Queen Margaret University has to manage its activities whilst
facing significant pressures on its funding as well as on its cost base. Significant risks facing the
- Funding from government through the Scottish Funding Council (SFC), the University’s main
source of income, is likely to suffer from further real-terms reductions over the next few years
as a consequence of spending cuts throughout the public sector.
- Pressure on staff costs will continue to build, both in terms of pay awards (where the University
continues to participate in the UK-wide national negotiating framework) and also in terms of
the cost of employers’ pension contributions.
- Long term inflationary pressure on non staff costs are challenging and along with staff costs
are to be addressed in the review of our operating model .
- The ability to attract and retain staff, particularly in some specialist areas, is becoming more
difficult throughout the economy, including in the University sector.
The identification and management of risks is firmly embedded within the University’s structure
and processes. An updated risk management strategy was adopted by the University Court in
2021. The institutional corporate risk register, which includes a description of actions undertaken
to mitigate risks, is formally reviewed by the Senior Leadership Team and the Audit & Risk
Committee as well as being discussed by the University Court. The Court also undertakes, from
time to time, an exercise to agree its appetite for risk, and to ensure that residual risks, after the
application of mitigating actions, sit within the agreed tolerance.
Financial Sustainability and Going Concern
The University Court has assessed the financial position of the University for the year ended 31
July 2023. The assessment period considered is the period to 31 July 2025 and further details of
this assessment can be found on page 30. The University Court has assessed a number of factors
as set out below and has concluded that there is an expectation that the University has adequate
financial resources to continue to operate for the foreseeable future while recognising that a
material uncertainty exists within the going concern assessment, solely due to the expiry of the
Barclays loan in December 2024.
In reaching its conclusion, the University Court has considered the following factors:
- At the balance sheet date the University had net current assets of £10 million.
- Cash balances at 31 July 2023 amounted to £17.5 million. The University had liquid reserves
(cash and investments) as at 31 July 2023 equivalent to approximately four months’ operating
- In the year to 31 July 2023 the University made an underlying surplus of £0.3 million before
pension provision adjustments, and generated positive net cash from operating activities of
£4.5 million. The University cash flow forecast shows an increasing cash trajectory over the
period to 31 July 2025, and no additional financing will be required to meet its liabilities.
- At the balance sheet date, the University had external financing liabilities of £19.5 million, of
which £17.2 million is payable to Barclays Bank plc with the remainder being payable to the
Scottish Funding Council. As set out in Note 16, the University intends to enter into discussions
around refinancing the element of the Barclays loan which will remain outstanding at the
scheduled repayment date of 17 December 2024. Early discussions indicate that the
University are in a strong position to refinance the outstanding amount and with updated
business reflective covenants.
- All bank loan covenants were complied with for the year ended 31 July 2023.
- In relation to future years, Management has modelled plausible downside scenarios based on
a number of adverse scenarios taking place in financial year 2024/25, including a cash-terms
reduction in SFC grants, a reduction of planned tuition fee growth, and pay and affected non
pay costs remaining higher than forecast. In these scenarios, assuming the existence of
continued loan financing, the University retains liquidity headroom and compliance with
covenants through the going concern period with both plausible and available mitigating
actions being undertaken. These mitigations include, but are not limited to, reducing
uncommitted future spend on discretionary capital and maintenance programmes, seeking
SFC funding advances and, only if necessary, reducing staff numbers.
- Management is confident the loan will be refinanced to the extent required to ensure sufficient
liquidity is retained by the University. Should the loan not be refinanced and be due for
repayment in full, without additional financing the Group and University headroom in its base
case going concern projections would be £ 3.1 million. Severe but plausible downside
scenarios erode the remaining headroom up to the period of 31 July 2025 and additional
financing would be required.
- Taking account of the business risks facing the University, we believe that the University and
the group are well placed to continue to manage their business risks successfully.
In accordance with the recommendations from the Higher Education Financial Sustainability
Strategy Group (FSSG), the University Court undertakes a formal annual assessment of the
University’s financial sustainability. This process involves reviewing a common set of financial
indicators, which have been applied to the University’s historical results and to the financial
forecasts measured over a rolling five-year period, so as to reduce the impact of any one-off
exceptional items arising in any year. The two key indicators which the University Court has agreed
to focus upon to inform its considerations around financial sustainability are:-
- Earnings before interest, taxation, depreciation and amortisation (EBITDA); and
- Net cash flow from operating activities less interest payable as a percentage of turnover.
The second indicator has been adapted from the basket of financial indicators recommended by
the FSSG as it is a more appropriate measure for the University, given its relatively high level of
borrowings as a proportion of its turnover. The targets are also set at a level which will allow
compliance with banking covenants. The results of the annual review undertaken in October 2023,
based on a rolling five-year period, were as follows:-
EBITDA as a percentage of turnover
Net cash flow from operating activities less interest payable as a percentage of turnover
The EBITDA average percentage remains above the five-year average target and maintains the
figure from July. The “Net cash flow from operating activities less interest payable as a percentage
of turnover” indicator remains well above target, reflecting the University’s relatively strong cash
Borrowings at 31 July 2023 amounted to £19.5million (31 July 2022, £21.2 million). Of this amount,
£17.2 million related to a secured loan facility with Barclays Bank plc taken out to fund the campus
development at Musselburgh, and £2.4 million related to an unsecured loan from the Scottish
Funding Council under the Financial Transactions scheme.
The Barclays Bank funding arrangement will expire on 17th December 2024 and will be refinanced
in advance. Early discussions have commenced with the incumbent and will progress to a full
market tender beginning in January 2024.
The University is involved in three pension schemes, as follows:-
Lothian Pension Fund
The Lothian Pension Fund is part of the Local Government Pension Scheme (LGPS) and is a multi-employer defined benefit scheme. The scheme’s last funding valuation took place as at 31 March
2020 and set contributions from 1 April 2021. The funding valuation showed a positive position with
an overall funding position of 106%. The Fund trustees have, in recent years, applied increases to
the level of employers’ and employees’ contributions to the scheme in order to maintain the strong
funding position. The next triennial funding valuation was performed as at 31 March 2023 and will
set contribution rates from 1 April 2024. Results are expected in early 2024.
The University’s share of the fund for 31 July 2023 is a net asset of £23.4 million (31 July 2022
restated: £18.6 million net asset). The University has recognised the pension asset at 31 July 2023
in accordance with the accounting policy adopted as set out in accounting policy (D).
Scottish Teachers’ Superannuation Scheme
The University participates in the Scottish Teachers’ Superannuation Scheme (STSS). The
scheme is an unfunded statutory public service pension scheme with benefits underwritten by the
UK Government. The scheme is financed by payments from employers and from those current
employees who are members of the scheme and paying contributions at progressively higher
marginal rates based on pensionable pay, as specified in the regulations. The rate of employer
contributions is set with reference to a funding valuation undertaken by the scheme actuary. The
last four-yearly valuation was undertaken as at 31 March 2016. This valuation informed an increase
in the employer contribution rate from 17.2% to 23.0% of pensionable pay from September 2019
and an anticipated yield of 9.4% employees contributions.
Queen Margaret University has no liability for other employer’s obligations to the multi-employer
scheme and, as the scheme is unfunded, there can be no deficit or surplus to distribute on the wind
up of the scheme or withdrawal from it.
The scheme is an unfunded multi-employer defined benefit scheme. It is accepted that the scheme
can be treated for accounting purposes as a defined contribution scheme in circumstances where
the University is unable to identify its share of the underlying assets and liabilities of the scheme.
The employer contribution rate for the period from 1 April 2022 is 23% of pensionable pay. The
employee rate applied is variable and is anticipated to provide a yield of 9.4% of pensionable pay.
While a valuation was carried out as at 31 March 2016, it is not possible to say what deficit or
surplus may affect future contributions. Work on the valuation was suspended by the UK
Government pending the decision from the Court of Appeal (McCloud (Judiciary scheme)/Sargeant
(Firefighters’ Scheme) cases) that held that the transitional protections provided as part of the 2015
reforms was unlawfully discriminated on the grounds of age. Following consultation and an announcement in February 2021 on proposals to remedy the discrimination, the UK Government
confirmed that the cost control element of the 2016 valuations could be completed. The UK
Government has also asked the Government Actuary to review whether, and to what extent, the
cost control mechanism is meeting its original objectives. The 2020 actuarial valuations will take
the report’s findings into account. The interim report is complete (restricted) and is currently being
finalised with a consultation. Alongside these announcements, the UK Government confirmed that
current employer contribution rates would stay in force until 1 April 2024.
Universities Superannuation Scheme
The Universities Superannuation Scheme (USS) is a hybrid pension scheme, providing defined
benefits (for all members), as well as defined contribution benefits. The assets of the scheme are
held in a separate trustee-administered fund. Because of the mutual nature of the scheme, the
assets are not attributed to individual institutions and a scheme-wide contribution rate is set. The
University is therefore exposed to actuarial risks associated with other institutions’ employees and
is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent
and reasonable basis. As required by Section 28 of FRS 102 (Employee Benefits), the University
therefore accounts for the scheme as if it were a wholly defined contribution scheme. As a result,
the amount charged to the consolidated Statement of Comprehensive Income and Expenditure
represents the contributions payable to the scheme in respect of the accounting period.
The University has entered into an agreement (the Recovery Plan) that determines how each
employer within the scheme will fund the overall deficit and accordingly recognises a liability for
the contributions payable that arise from the agreement (to the extent that they relate to the deficit)
and therefore an expense is recognised in the income and expenditure account.
The most recent fund valuation as at 31 March 2023 demonstrates both a material increase in the
Plan value and reduction in the Plan deficit, driven by favourable economic conditions and resulting
inflationary benefits. Proposals resulting from the valuation are under consultation and will be
completed by the legislative deadline of 30 June 2024.
Further details on pension arrangements are set out in note 21 to the financial statements.
Queen Margaret University aims to promote entry to, and provide education at, undergraduate and
postgraduate level to a diverse range of students, whatever their background. In assessing
candidates for admission to the University, we are committed to the principles of fairness,
transparency, and widening participation. Our Contextual Admissions Policy commits to making
offers to identified groups where we recognise that a range of factors may have impacted on
attainment. We offer a range of recruitment, outreach, pre and post entry activities to raise
aspiration, encourage access and maximise retention from under-represented groups in line with
our Student Experience strategy, Mainstreaming Report and Equality Outcomes, and underpinned
by the University’s Outcome Agreement with the Scottish Funding Council.
The University participates in the National Student Survey. Overall satisfaction in the 2023
results was 74%, a decrease of 2.4% compared to 2022 and 2.2% below the University's
benchmark set by The Office for Students. While a number of programmes achieved over 90% for
overall satisfaction, and benchmark data showed the University was above or the same as the
benchmark in 10 of the 28 core questions, industrial action and external changes to placement
provision had impacted negatively on a number of other programmes.
Our Employability Strategy brings together in a single document our approach to employability,
with the primary objective of providing equitable employment and careers education to all students
and graduates, providing a public statement of our commitment to their success. We consider that
our efforts are proving highly effective.
As a result of all of our efforts to develop students’ employability - at 2%, the University has the
lowest level of unemployment in Scotland for its graduates 15 months after they have graduated.
The average figure for Scotland is 5%. In addition, we are in the top 6 of Scottish universities for
the number of graduates in full-time employment 15 months after they have graduated. (Graduate
Outcome Statistics 2020/21, published by HESA in 2023).
The University made its first significant contribution to climate change with the move to new
sustainability designed and delivered campus in 2007. This was recognised though accreditation
of BREEAM excellent and CEEQUAL standards with the former achieving the highest ever score
recorded for an HE institution. The campus development reduced our annual operational carbon
mission by 38% and the holistic approach we adopted to environmental sustainability has ensured
that further operational based awards have been achieved. These include recognition for our low
carbon IT solutions, renewable fuel sources and a range of active travel awards. Our ongoing
commitment to the environment ensures that our CO2 emissions per student are regularly amongst
the very lowest across the UK HE sector.
In order to take advantage of further opportunities as they arise, the University is continuing to
focus on ensuring that its academic, infrastructure, digital, human resources and financial
strategies are closely aligned. The University continues to make good progress in a number of
areas which will ensure that it is able to achieve the objectives set out in its strategic plan during
the period through to 2025. This will, in turn, allow the University to continue to generate an
adequate level of cash in the short to medium term and to maintain an adequate level of reserves.
The Court carries out regular monitoring of the University’s financial sustainability, as described
The funding environment for Scottish higher education institutions was already challenging, with
sector-level evidence that funding for publicly funded teaching and research was insufficient to
cover the full cost of delivery. Whilst additional non-recurrent funding was made available to
mitigate the financial losses arising from COVID, indications from the most recent Scottish
Government spending review are that funding settlements for the next five years are likely to be at
a flat-cash level, which represents a significant reduction in real terms. Universities continue to
face significant pressures on costs, particularly staff costs and inflation impacted non pay costs. In
order to address this position, the University has recently developed a five-year proposition,
covering the period to 2027. This proposition involves targeting developments in three main areas,
- Increasing postgraduate student numbers;
- Developing new online provision at scale; and
- Growth in transnational education partnerships.
The long term financial health of the University will continue to depend upon its ability to grow and
diversify its income base, and to control costs, whilst making available sufficient funds needed as
an upfront investment to enable the growth areas noted above to take place.
On behalf of the University Court
13 December 2023