There was a significant change in accounting standards in 2015, financial reporting standard 102, so most universities had to renegotiate their covenants, but it was because the accounts were looking very different. The accounting standards brought about changes in how income was recognised and how some service concession arrangements, largely student accommodation arrangements, and pension costs, significantly, were recognised in the accounts. So, most universities have had to renegotiate covenants, but we're not aware of any who've had to renegotiate due to covenant breaches, other than one which the University of Wales Trinity Saint David disclosed in their financial statements—that they did need to renegotiate their financing arrangements, which they have done earlier this year, and they have now negotiated new covenants. It's a core part of financial management in universities now that you manage your relationship with your lender as well as with us. Breaching covenants in themselves is different to doing that with your lender being unaware and the factors being within your control. So, again, from that perspective, we have the covenants built into our forecasts, we require the forecasts to show how the university are planning to be within their covenants. The nature of those covenants vary, but most of them require a measure of cash flow, a ratio between the cash generated and the cost of debt, so there is close monitoring that is required because of the borrowing in the system, as well as our ongoing monitoring as well.
Thank you, Bethan.
Thank you. Just before we move on to Hefin David, can I just ask you what your view, then, is on the statement included by auditors in the accounts of Trinity Saint David that there is material uncertainty?
Yes, I'll pick up on that. The material uncertainty largely relates—there is a note in the accounts that explains the factors that are being taken into account, but it largely relates to some significant cash receipts that have been subject to timing delays and the fact that the timing of these is essentially outside the control of the institution. The main delay relates to the receipt of funding for the Egin project, which was due to be received from the Swansea city deal. That funding has been delayed, but the sums due to the university are still due to the university—it's the issue of the timing of those receipts that is causing a cash pressure. Receipt of that funding would certainly reduce the cash flow pressure at the university at the moment. Just in terms of cash flows, all universities have to ensure that they are maintaining enough cash in their system to meet their payments as they fall due. Most of their costs are incurred on a monthly basis, staff costs in particular, but the income flows into universities are now less regular. In days gone by, that funding would largely flow from us and that would also come on a monthly basis. The funding from the Student Loans Company now, for example, comes in chunks. A quarter of that money comes in in October, a quarter in February, and the majority of it, half of it, doesn't come into the university in cash until May. So, that's quite a different cash management scenario for universities to manage; it requires holding cash balances to do it.