Unitec Institute of Technology has today published its 2019 Annual Report which reflects a year of recovery and considerable improvement for the organisation, due in large part to the implementation of Manaakitia Te Rito, Unitec’s Renewal Strategy, underpinned by the values of Te Noho Kotahitanga, Unitec’s partnership with Māori.
It helped drive significant change throughout the year, improving academic quality, staff engagement and student and stakeholder satisfaction and also enabled the organisation to make additional savings through streamlining processes, repurposing buildings and redirecting resources.
“Building a financially sustainable business is a key part of Unitec’s Renewal Plan and while student numbers continued to fall in 2019 due to the challenges faced by ITPs across the country, we’re now in a robust position to accommodate increased demand with the capacity for future growth,” said Interim Chief Executive, Merran Davis.
Financial performance better than forecast
While the wider ITP sector continued to experience increased financial uncertainty, Unitec was additionally impacted by the change of post-study work visa policies which encouraged international students to study outside of Auckland. International numbers and associated revenue dropped considerably and overall EFTS (equivalent full-time students), excluding The Mind Lab, declined 16%, leading to a $15m reduction in associated revenue.
Despite these conditions, Unitec was able to achieve a much improved financial position, with a positive EBITDA representing a $14.4m increase on the prior year. This was achieved through significant cost reductions of $28m, aligning and right-sizing its programme portfolio to its Renewal Strategy, along with further reductions in non-essential operating and support costs. However, this wasn’t at the expense of investing in new programmes to meet stakeholder needs. Unitec’s partnerships with industry provided the foundation to launch two new qualifications during the year: The Bachelor of Veterinary Nursing and the Level 6 New Zealand Diploma in Cybersecurity – both firsts for a New Zealand-based ITP.
“We recognise that financial sustainability is primarily about putting the needs of our students first,” said Ms Davis. “Our expenditure and investment has been very focused on helping them succeed, and we’re seeing the benefits of this reflected in our new enrolment numbers and student satisfaction metrics.”
Once depreciation costs of $16m are taken into account, the organisation reported a net deficit of $11m, which is considerably less than last year ($29m in 2018). For the second year in a row, Unitec achieved an Operating Surplus of $3.5m ($3.6m surplus in 2018), despite a $12m reduction in Total Operating Revenue.
Unitec’s net cash in-flow improved considerably to $4m in 2019, up from net cash outflow of $19m in 2018. While cash flow from revenue was flat on 2018, the impact of cost reductions meant that the organisation realised $24m in positive cash flow movement over the prior year.
Unitec continued to access the concessionary loan option from the Government as part of executing its property strategy. Unitec had drawn down $40m on this loan as at 31 December 2019 and has an agreed plan for the repayment of the loan as and when due.
Student and staff engagement increases
After declining in recent years, the Student Net Promoter Score, which measures student sentiment, returned to a four-year high in 2019. Unitec’s priority groups – Māori, Pacific, International and Under 25s – all returned better scores than the previous year. Ms Davis said this was due in large part to the considerable work invested throughout the year in strengthening support to these groups and living the values of Te Noho Kotahitanga.
“It was a year of successes for our students, due in large part to the continued commitment and support of our staff who go above and beyond for them,” said Ms Davis.
Staff engagement was also at a record high, with a 14% percentage point increase on 2018’s engagement result. Ms Davis praised staff for their dedication and commitment during what had been a challenging year. “Despite difficult choices and continuing stringent financial control, staff rose to the challenge,” said Ms Davis.
Even greater gains have been made in staff and student engagement so far in 2020, and Ms Davis said the results demonstrate better outcomes for all stakeholders, despite the challenging nature of the COVID-19 situation which saw both Unitec’s campuses close under lockdown, and courses shifted online.
The full report can be viewed here.