CITY OF GLASGOW COLLEGE / MERGER PROPOSAL DOCUMENT
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SECTION 6: Supporting Evidence Base
6.3 Financial Benefi ts
6.3.1 Financial Projections
The Financial Forecasts have been subject
to Due Diligence by our professional advisors.
The i nancial projections for the merged College are based on
2008-09 actual results and projected 2009-10 results for each of
the three partner colleges. Financial results have been restated
in an attempt to apply consistent accounting policies across
the three partner colleges. The restatements mainly relate to
the application of FRS17 in respect of the treatment of pension
liabilities and FRS15 for the treatment of re-valued i xed assets.
The assumptions made in arriving at the projections for the
following three i nancial years through to 2012-13 are set out
in appendix 6. These projections do not incorporate merger
related costs and savings. In summary the resultant i nancial
outcomes for the merged College are likely to be slightly
above average for the sector in terms of the projected
operating surplus and well above average in terms of net
current assets and income & expenditure account reserves.
Detailed results and projections for each of the three partner
colleges and the merged college are contained in appendix 6.
The merger will take place during a period of signii cant
pressure on public expenditure. Over the planning period
through to 2012-13 public expenditure in general might
experience cuts in real terms of up to 10%. It is not clear how
the expected cuts will impact on further education and the
College in particular. Hence i nancial projections have been
set in a period of signii cant uncertainty. In addition the
operating surplus projections are particularly sensitive to
changes to interest rates. The merged College will over the
medium term benei t from investment income generated
from cash reserves. The strength of the College's balance sheet
will be af ected by FRS17 and the related actuarial valuations
of the College's pension assets and liabilities. Experience
over the last few years has shown that it is notoriously
dii cult to predict the outcome of FRS17 valuations.
The merger does, however, provide an opportunity to
make a range of ei ciency gains, which should assist in
protecting frontline services for students. These are most
likely to arise from the following broad areas:
Expenditure Area Projected Savings £K
Management Services 650
Administrative Services 60
Employment Agency Costs 30
Marketing & Public Relations 100
ICT Maintenance Agreements 20
Membership Fees & Licences 80
Miscellaneous e.g. VAT, Audit 52
Total 992