Financial update: UCT receives clean audit opinion

Dear colleagues and students

Following the University of Cape Town's (UCT) Council meeting held on 13 June 2026, I would like to share a brief update on the university’s financial position, based on the Annual Financial Statements (AFS) for the year ended 31 December 2025 and the management accounts for the period ended 30 April 2026. The AFS were approved by Council, and the management accounts were noted as part of the university’s regular governance and oversight processes.

I am also pleased to note that the university received a clean (unmodified) audit opinion, confirming that the 2025 financial statements fairly present the university’s financial position and performance.

The 2025 financial results reflect a positive but measured outcome. The university recorded a consolidated surplus of R1.35 billion, compared with R852 million in 2024. This is largely supported by the designated funding and result mainly from a timing difference. Total revenue increased to approximately R9.15 billion, while expenditure totalled approximately R8.92 billion. Revenue growth was supported by subsidies and grants, tuition and fee income, as well as donations and investment-related income. At the same time, expenditure continued to rise, with personnel costs of R5.27 billion remaining the single largest component of the cost base.

While the consolidated result is encouraging, it is important to interpret it carefully. The overall surplus was driven mainly by specifically funded activities, which generated a surplus of about R1.50 billion, and by favourable investment performance. By contrast, the Council-controlled unrestricted operating segment, which reflects the university’s core teaching and operating activities, remained under pressure and recorded a deficit of approximately R321 million, albeit improved from the prior year.

This means that, although the university’s aggregate financial position strengthened, the underlying structural pressure on the core operating budget has not yet been resolved.

The Council-controlled management accounts (general operating budget) to 30 April 2026 indicate that the university has entered the new financial year in a stable but constrained operating environment. Current forecasts point to an operating deficit for 2026, although this is expected to be somewhat better than budget. Early year performance reflects continued cost containment, particularly in staffing, infrastructure expenditure and financial aid underwriting, but also highlights pressure on revenue growth, especially from lower-than-anticipated government subsidy growth and softer tuition fee performance.

In considering the 2026 outlook, management remains appropriately cautious. A number of external and structural risks continue to affect the university’s financial trajectory. These include the ongoing challenge of student debt, NSFAS funding constraints and payment delays, and broader funding pressures in the higher education sector. In addition, the current geopolitical environment may have a direct impact on our cost base through fuel price volatility, particularly diesel used in the university’s transport fleet, as well as foreign exchange movements, which affect expenditure on library material, academic resources and software licensing. For this reason, while year-to-date results are manageable, management is cautious in interpreting performance for the remainder of the year.

The university continues to implement its financial sustainability programme, focused on cost optimisation, revenue diversification, improved procurement and operational efficiency, and the careful prioritisation of capital and strategic expenditure. These interventions remain essential to strengthening the long-term sustainability of the institution, particularly in the context of structural pressures within core operations. Management and governance committees have also reaffirmed that, based on current resources, liquidity and planning assumptions, the university remains a going concern.

In line with the auditor rotation requirements applicable to public institutions, PriceWaterhouseCoopers (PwC) has completed its five-year term, and Ernst & Young (EY) will serve as the university’s external auditors from the 2026 financial year.

In summary, the university’s 2025 financial statements reflect a strong overall financial position and sound liquidity. However, the positive reported outcome should not be read as an indication that financial pressures have been resolved. Core operations remain under strain, and the external environment remains uncertain. Our task therefore remains to balance prudent stewardship, continued investment in the academic project, and a realistic assessment of the risks that lie ahead.

I would like to thank colleagues across the university for their ongoing commitment to responsible financial management and stewardship of institutional resources.

Sincerely

Vincent Motholo, CA (SA)
Chief Financial Officer

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• From the UCT Executive
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