Page 92 - DUT Annual Report 2020

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DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
Post-retirement Benefits
Consists of the following -
Pension:
Members who transferred from the AIPF (Government Pension Fund) to NTRF in 1994 are entitled to minimum defined benefits, which is guaranteed upon normal retirement age (60 years). This is a closed scheme.
MedicalAid:
The Post-Retirement Medical Aid (PRMA) Scheme of the University applies to eligible members who are former Technikon Natal staff who entered the medical aid scheme before 1 January 2000. No benefit is payable upon withdrawal. The Scheme currently has 110 employed and 175 retired members.
The actuarial valuation of the post-retirement benefits obligation as at 31 December 2020 was R140m (2019: R158m).
Other Operating Expenses
Other operating expenses decreased by 2% (2019: 31% increase) from R528m in 2019 to R520m in 2020. This is attributable to the Covid-19 pandemic which has resulted in the government imposing lockdown regulations and limiting the operations of the University.
Student Accommodation
The student accommodation department is required to cover its costs and provide resources for long- term maintenance income for student accommodation. This increased from R455m in 2019 to R546m which represents an increase of 20% (2019: 60%). This is predominantly due to the legislative changes from government namely free education to qualifying students. Expenditure incurred amounted to R477m (2019: R399m) of which R459m (2019: R379m) was in respect of operating expenditure.
STATEMENT OF FINANCIAL
POSITION
Total Assets
Total assets amounted to R6 292m (2019: R5 263m) which is an increase of 20% (2019: 17%) on the previous year. The increase is attributable mainly to property, plant and equipment, receivables and prepayments; and cash and cash equivalents which increased by 14%, 53% and 20% from the previous year respectively.
Receivables and Prepayments
Student debtors before impairment increased to R859m in 2020 from R580m, an increase of 48% (2019: 18% increase). Student debt after the impairment provision
is R583m (2019: R345m). Debt impairment provision increased by 17% compared to a 5% decrease in 2019. The reason for the increase in provision is due to the increase in outstanding student debt as a result of economic constraints in 2020. The majority of the outstanding student debt relates to the 2020 academic year.
During the year under review, the University received R1 553m from NSFAS compared to R1 119m received in 2019, representing an increase of 39% (2019: 53%). The number of students funded by NSFAS increase from 20 961 to 21 999 in 2020 and the allowance previously paid directly to students were disbursed through the university. An amount of R1 732m was received in 2020 from NSFAS and included 2019, 2018 and 2017 allocations amounting to R139.3m, R35.5m and R4.8m respectively.
Total Liabilities
Total liabilities amounted to R2 075m (2019: R1 774m) which is an increase of 17% compared to an increase of 1% in the previous year. The increase is as a result of the increase in lease liabilities and deferred revenue recognised in the current period.
Cash flow and Liquidity
The University’s cash resources continue to remain positive. Cash and cash equivalents at year end increased to R3 585m from R2 987m in the previous year. The significant portion of cash and cash equivalents relates to committed funds for the following:
Unspent restricted government grants and research funds totalling R583m (2019: R593m);
Unspent funds designated to departments amounting to R1 488m (2019: R378m);
Trade and other payables R272m (2019: R152m);
Funds retained for working capital amounting to R1 235m (2019: R818m) was increased from three to seven months capacity; and
Unencumbered amount of R1 242m (2019: R1 864m).
FINANCIAL SUSTAINABILITY
Liquidity Ratios
The liquidity ratios measure the University’s ability to meet its short-term financial obligations as they fall due. A high acid test ratio and current ratio indicates good liquidity position.
Acid Test Ratio
The acid test ratio compares the total current assets, excluding inventory, to total current liabilities. The acid test ratio of the University is 8.94:1 (2019: 11.58:1) which exceeds the norm of 1:1.