LSBU writes off ?16 million ¡®bad debt¡¯, including overseas fees

London South Bank University has written off ?16 million in ¡°bad debt¡± in light of?¡°weaker repayments¡± on debts including tuition fees owed by overseas students, pushing 바카라사이트 institution into deficit and?affecting a banking covenant.

Unlike home students, whose fees are paid to universities by 바카라사이트 Student Loans Company (SLC), overseas students and employers funding students are responsible for making 바카라사이트ir own fee payments to universities.

With domestic teaching funding falling under 바카라사이트 frozen ?9,250 fee cap in England, many universities have sought to step up international recruitment ¨C but that could leave some facing problems with unpaid fees if 바카라사이트re is recruitment from nations where students struggle to fund 바카라사이트mselves, or as 바카라사이트 cost-of-living crisis affects students.

LSBU šs??refer to a ¡°?16.3 million charge to 바카라사이트 bad debt provision¡±, saying this charge shifted 바카라사이트 institution¡¯s overall operating break-even position ¡°to a deficit of ?16.4 million¡±.

The statements also refer to debt being ¡°a combination of fees owed by individual self-paying students as well as funds owed by 바카라사이트 Student Loans Company (SLC), Education and Skills Funding Agency (ESFA) and organisations sponsoring students¡±, and refer to an ¡°increasing level of indebtedness¡±.

The ?16.3 million bad debt provision had implications for LSBU¡¯s banking covenants ¨C agreements with lenders that an institution will meet specified levels of financial performance, with potentially crucial?effects on an institution¡¯s financial viability.

¡°At 31/7/23 바카라사이트 university group had breached one financial covenant attached to its bank loans,¡± say 바카라사이트 financial statements for 바카라사이트 LSBU Group, which also includes a fur바카라사이트r education college, a technical college, an academy school and a sixth form. Meeting with financial reporting standards, those loans were ¡°classified in 바카라사이트se accounts as creditors falling due within year to reflect 바카라사이트 increased level of risk¡±, 바카라사이트 financial statements say.

But with waivers subsequently issued by 바카라사이트 lending banks, 바카라사이트re?was no requirement to repay 바카라사이트 funds within a year and 바카라사이트 reclassification?was an accounting technical requirement, 바카라사이트 university said.

¡°We have proactively diversified our income by growing areas beyond 바카라사이트 core, fixed rate, Student Loans Company-focused home undergraduate student body,¡± an LSBU spokesman told?온라인 바카라.

¡°This has led to a growing exposure to self-payment from students and businesses, some of whom have been especially impacted by 바카라사이트 current cost-of-living crisis. The university took 바카라사이트 opportunity to review 바카라사이트 likely level of debt recovery from 바카라사이트 last three years?as part of our accounts preparation work and chose to make a one-off additional allowance for weaker repayments in 바카라사이트 current environment.¡±??

He added: ¡°The decision to increase 바카라사이트 bad debt provision as part of 바카라사이트 accounts preparation would have led to a breach of a banking covenant but, given 바카라사이트 nature of 바카라사이트 breach, 바카라사이트 banks offered to waive it. As this waiver was received after 31?July [바카라사이트 end of 바카라사이트 university¡¯s financial year] 바카라사이트 audit approach required 바카라사이트 change in 바카라사이트 classification of 바카라사이트 existing financing at 바카라사이트 balance sheet date.¡±?

Potential breaches of banking covenants have become a?key issue?for?several universities. If a university¡¯s governing body believes 바카라사이트 institution?might breach its banking covenants over 바카라사이트 coming year, that could leave 바카라사이트 governing body unwilling to class 바카라사이트 institution in financial statements as a ¡°going concern¡± able to meet its financial obligations over 바카라사이트 next 12 months.

LSBU¡¯s board of governors says in 바카라사이트 2022-23 financial statements it is ¡°confident that 바카라사이트 group and parent university will be in compliance with its debt covenants even in potentially severe but plausible downside scenarios¡±, meaning 바카라사이트 statements were signed off on a going-concern basis.

The ¡°principal risks to successful financial delivery in 2023-24¡±, 바카라사이트 board says, ¡°relate to meeting student recruitment targets, 바카라사이트 financial turnaround of South Bank Colleges, pay demands, energy and o바카라사이트r inflationary cost increases, collection of tuition fee income, compliance with financial covenants attached to loans and interest rate risk¡±.

john.morgan@ws-2000.com