Skip to main contentCambridge University Reporter

No 6408

Friday 11 December 2015

Vol cxlvi No 13

pp. 224–285

Reports and Financial Statements for the year ended 31 July 2015

Financial Review

Preliminary

The commentary that follows is intended to give the readers of the financial statements an overview of the finances and operations of the University group, including Cambridge Assessment and Cambridge University Press. It should be read in conjunction with the Annual Report of the Council and the Annual Report of the General Board to the Council for the academical year 2014–15, which are published alongside these financial statements. The financial position of the teaching and research activities of the University may be seen more clearly in the Financial Management Information published in the Reporter. Further detailed information about the finances and operations of Cambridge Assessment and Cambridge University Press is given in the annual reports of those entities which are also published.

Scope of the Financial Statements

The consolidated financial statements cover the teaching and research activities of the University, its subsidiary companies which undertake activities which for legal or commercial reasons are more appropriately carried out by limited companies, Cambridge Assessment and Cambridge University Press and their subsidiary companies and joint ventures, the Gates Cambridge Trust, and certain other Trusts (the ‘Associated Trusts’).

Cambridge Assessment and Cambridge University Press are constituent parts of the corporation known as the Chancellor, Masters, and Scholars of the University of Cambridge. Cambridge Assessment’s primary work is the conduct and administration of examinations in schools and for persons who are not members of the University. Cambridge University Press is the publishing house of the University dedicated to publishing for the advancement of knowledge, education, and learning worldwide.

The Gates Cambridge Trust and the other Associated Trusts are separately constituted charities. They are deemed to be subsidiary undertakings of the University since the University appoints the majority of the trustees of each Trust. The purposes of these trusts are to support the University by enabling persons from outside the United Kingdom to benefit from education in the University by the provision of scholarships and grants and otherwise.

Mission

The mission of the University of Cambridge is to contribute to society through the pursuit of education, learning, and research at the highest international levels of excellence.

Its principal activities are teaching and learning, research, stewardship of collections and ancient buildings, and the assessment and publishing activities carried out by Cambridge Assessment and Cambridge University Press.

Funding

The sources of income of the University are:

The government, which, through the Higher Education Funding Council for England (HEFCE), provides a block grant for teaching and a grant for research, determined by the quality and volume of research as assessed through the Research Excellence Framework;

Students through fees charged for instruction and facilities;

Research income from publicly funded Research Councils, charitable foundations, the European Union, and collaborations with the private sector;

Benefactions and donations for current use;

Investment income from our accumulated endowment and other assets;

Income from services provided to external customers, including the customers of Cambridge Assessment and Cambridge University Press;

A small but increasing income from commercialization of intellectual property.

Accounting for endowment and investment income

The main investment pool generating endowment and investment income is the Cambridge University Endowment Fund (CUEF). The CUEF is managed on a total return basis, such that the amount distributed for budgetary expenditure is determined by a formula that has regard to the total return reasonably to be expected in the long term. The CUEF’s portfolio is largely invested indirectly through fund managers with the intention of maximizing total investment return. A substantial proportion of the CUEF’s current investments yield little or no income in the form of dividends, interest, or rents. In the year ended 31 July 2015, distributions by the CUEF exceeded the income received from its underlying investments by £69m (2014: £66m), the balance of the distributions being funded by drawing on long-term capital growth.

In these financial statements total endowment and investment income includes the income from CUEF’s underlying investments rather than the distributions made by the CUEF. The impact is that endowment and investment income is £69m less than it would have been had it been based on distribution, with a corresponding increase in capital gains (reflected in the statement of recognized gains and losses). For the individual trust funds and other endowment funds that have invested capital in the CUEF, the full distribution remains available as income.

Financial performance for the year

Included in the current year is recognition in income of Research and Development Expenditure Credit (RDEC) claims submitted to HMRC in respect of the University’s qualifying research expenditure for the period from April 2013 to 31 July 2015, the date at which universities ceased to be eligible for the RDEC scheme. The RDEC income is disclosed as an exceptional income in the Consolidated Income and Expenditure account. The income is taxable.

The consolidated results for the year ended 31 July 2015 are summarized in Table 1, giving in addition the position excluding RDEC income.

Table 1

2014–15

2013–14

Change

£m

£m

%

Income

1,638

1,504

8.9%

Expenditure

(1,613)

(1,510)

6.8%

Surplus / (deficit) before tax

25

(6)

Taxation

(12)

Transfer from restricted endowments

48

50

Surplus for the year retained in general reserves

61

44

Net assets

3,561

3,177

12.1%

Corresponding figures excluding RDEC income are:

Income excluding RDEC

1,584

1,504

5.3%

Expenditure

(1,613)

(1,510)

6.8%

Deficit before RDEC income (before and after tax)

(29)

(6)

The consolidated position is built up from the University’s three main segments: its core academic activities and the assessment and publishing activities carried out by Cambridge Assessment and Cambridge University Press respectively. Within the group there are a number of intra-group transactions, principally the financial and other support for the University’s academic activities made by both Cambridge Assessment and Cambridge University Press. Table 2 gives segmental information.

Table 2

Income

£m

Expenditure

£m

Surplus / (deficit)

£m

Results by segment

Education and research

1,015

1,031

(16)

Cambridge Assessment

369

336

33

Cambridge University Press

297

272

25

Financial support of the University by Cambridge Assessment

(17)

(17)

Inter-segment gain on transfer of operational property

(25)

(25)

Pension scheme and other adjustments

(1)

(9)

8

1,638

1,613

25

The University’s Research grants and contracts income increased by £26m (+6.9%) to £397m, with increases in all categories of research sponsors. Included as research income but disclosed separately is RDEC income which, as noted above, is exceptional in nature and derives from the University’s research at a rate of 10% of qualifying research and development expenditure. The cumulative claim including the estimated claim for 2014–15 totals £54m on which £12m corporation tax is payable. The University ceased to be eligible to claim for RDEC on expenditure after 31 July 2015.

Academic fees increased by £19m (+9%) with a further year of undergraduate fees at the higher rate of £9,000 and increased fees for postgraduate courses. The increase in fees was offset somewhat by a further reduction of £9m in recurrent grant from HEFCE.

Examination and assessment services are carried out by Cambridge Assessment through its three exam boards: Cambridge English Language Assessment, Cambridge International Examinations, and Oxford Cambridge and RSA Examinations (OCR). Total income increased to £367m (+8%). The international and English language assessment business streams were particularly strong and over 70% of assessment income now comes from international markets. However the UK market remains challenging as a result of changes in national policy on qualifications. Cambridge Assessment transferred £17m (2014: £16m) in the year in support of the University’s education and research activities.

Cambridge University Press is the University’s publishing arm and furthers through publication the University’s objective of advancing learning, knowledge, and research worldwide. It collaborates with Cambridge Assessment where appropriate, notably in English language materials and testing. The Press is organized into three main streams: Academic books and journals, English language teaching (ELT) materials, and Education publishing. The Press operates globally and most of its sales are made in currencies that have continued to weaken against the pound, which has again held back growth in sterling reported revenues. Underlying growth in constant currency was 5%, reflecting strong growth in ELT and Education, and growth in Academic publishing.

The University receives and generates significant Other income, including from various services provided to external customers, contributions from Health and hospital authorities, income from intellectual property managed primarily through Cambridge Enterprise Limited, unrestricted donations of £13m (2014: £13m), and rents from its non-operational properties.

The endowment and investment income provided by the University’s financial investments, primarily in the Cambridge University Endowment Fund, are an increasingly important component of the University’s funding mix. As explained above and in Note 7 to the accounts, the distribution (available for spend) by the CUEF exceeded the income received in the year from its underling investments by £69m. On a ‘distribution basis’ endowment and investment income is £95m (2014: £90m).

Change in financial position

Table 3 gives the movement in net assets showing the capital flows into the group analyzed into its three main segments, and the impact of changes in the values of investment assets.

Table 3
Movement in net assets

Education and Research

Cambridge Assessment

Cambridge University Press

University Assistants Pension Scheme

Total

£m

£m

£m

£m

£m

Net assets at 31 July 2014

3,085

400

31

(339)

3,177

Surplus / (deficit) before tax

(16)

33

8

25

Tax charge on RDEC income

(12)

(12)

Currency adjustments

(4)

(4)

New endowment capital

27

27

External funding for capital expenditure

53

53

Actuarial loss on retirement benefits

(14)

(20)

(34)

Increase in investment values

300

28

1

329

Net assets at 31 July 2015

3,437

461

14

(351)

3,561

Net assets for the University Group increased by £384m (+12%). New capital receipts for endowment and for capital expenditure in aggregate £80m were received and the investment portfolio made substantial gains in a favourable year for investment markets. Continuing low interest rates, used as the basis for valuing pension liabilities, led to an actuarial loss arising from accounting for the Group’s pension schemes on an FRS17 basis.

Capital expenditure programme

The University continues its investment in refreshing, renewing, and expanding its academic estate and equipment and in the physical facilities and IT infrastructure for Cambridge Assessment and Cambridge University Press. This continual investment in infrastructure is essential if the University is to remain globally competitive.

Capital expenditure on land and buildings in the academic estate totalled £153m made over a large number of individual projects, with the principal areas of expenditure being a new building for Chemical Engineering and Biotechnology and the Maxwell Centre, both on the West Cambridge site, the David Attenborough Building (home of the Cambridge Conservation Initiative), and various buildings on the Addenbrooke’s site. Capital expenditure on equipment for academic purposes and for IT systems totalled £22m.

Cambridge Assessment continued its investment in IT software and equipment and has commenced construction of a new headquarters building in Cambridge on land transferred from the Cambridge University Press. Cambridge University Press also continues its investment in business systems.

North West Cambridge

The University is developing its site at North West Cambridge. The development will help the University to maintain its global research profile through the provision of affordable and suitable accommodation for University and College staff (primarily postdoctoral researchers), academic and commercial research space, accommodation for postgraduate students, and local centre facilities to support the new community. The development will also provide housing and facilities for the City more generally. The development will add to the long-term strategy of the University in allowing further expansion of academic activities. The market housing, and retail and commercial developments contribute significantly to the viability of the development.

The main construction of the first phase of the development commenced during the year. This phase will provide over one third of the ultimate residential accommodation on the site, as well as local centre facilities to help establish a quality of place and sense of community from the outset. This phase will include 530 homes for University and College key workers, 325 postgraduate student rooms, land for 700 units for market sale, a local centre (including food store, shops, primary school, doctors’ surgery, community centre), and other related facilities, open space, and infrastructure.

Recent inflation pressures within the construction industry and other challenges of a project of the size and complexity of the development have caused an increase in the projected investment required in the early stages of the development, but the development remains financially attractive while delivering on its strategic aims.

Endowment and other investments

The University’s endowment and other investments support posts and activities and give important financial assistance to students. The investment assets are managed in three principal pools:

(i) Cambridge University Endowment Fund (CUEF)

The majority of fixed asset investments and endowment assets are held in the CUEF, which is managed by the University’s Investment Office with the advice and oversight of the Investment Board. Colleges and other charities linked with the University are permitted to invest in the CUEF, to gain from its scale, diversification, and professional management. The Gates Cambridge Trust and Associated Trusts are substantially invested in the CUEF, and a number of Colleges have made investments.

The CUEF’s long-run investment objective is to achieve or exceed an average annual rate of total return (i.e. income and net capital gains), net of all costs and before distributions are taken into account, equal to RPI plus 5.25%, such that after the distributions for expenditure are taken into account the capital is maintained in real terms. A further objective is to manage judiciously the risk taken in order to meet the total return objective by utilizing diversification of investment strategies, of investment asset classes, and of investment managers.

The amount distributed for expenditure in the operating budget is determined by a formula based on underlying capital values combined with factors which smooth the rate of spending changes from year to year, allowing a degree of certainty for planning purposes.

During the year ended 30 June 2015 the CUEF had an investment return of 14.2% (2014: 10.4%). After payment of distributions to investors the unit value increased by 10.2% (2014: 6.4%). The Fund has returned an annualized 12.2% return over a rolling five-year period, which compares favourably to the long-term investment objective of 8.2% p.a.

The value of the CUEF at 30 June 2015 was £2,533m (2014: £2,291m). The asset allocation and investment selection in the Fund is aimed at optimizing the expected future long-run total return bearing in mind expected future volatility. The CUEF’s asset allocation, which is discussed further in note 27 to the Accounts, at that date was:

Public equity

60%

Private investment

9%

Absolute return

14%

Credit

2%

Real assets

10%

Fixed interest/cash

5%

The CUEF maintained a dominant core allocation to public equity markets, with diversification achieved through investment in other asset classes such as direct property, private debt, and absolute return, all of which contributed positively to the overall return in the year. The CUEF’s modest allocations to liquid credit markets and real assets outside of real estate were a minor drag on performance. Broad asset allocation did not change markedly over the year; however small reductions were made to public equity allocations to permit an increase in absolute return and fixed interest.

(ii) Money market investments

The majority of the University and Group current asset investments are invested in the deposit pool. This pool is managed by the Finance Division according to guidelines on diversification, exposure, and credit quality agreed by the Finance Committee. The investments are principally short-term deposits with banks and similar institutions.

(iii) Other investment assets

Some long-term investments are held outside the CUEF including certain investment properties in Cambridge, other securities, and equity investments in spin-out companies overseen by the University’s technology transfer company Cambridge Enterprise.

Public Bond

On 17 October 2012 the University issued £350m of 3.75% unsecured bonds due October 2052. The bonds are listed on the London Stock Exchange. The net proceeds of the issue of £342m are for general corporate purposes, including investment in research facilities, accommodation, and other assets. Pending application to the capital programme and in the North West Cambridge development the funds raised are invested in the CUEF and other investment vehicles, and to date the investment returns have exceeded the interest cost of the bonds.

The University is rated Aaa (stable) by Moody’s Investor Services.

Staff costs and pensions

Staff costs make up 47% of the University group’s total cash operating expenditure and 56% in respect of the University’s education and research activities (which comprise almost three-quarters of the total group staff costs). Total staff costs increased by 9.2% over the prior year to £710m with the major part being the continued growth in research grants and contracts activity and business growth of Cambridge Assessment, set against continuing pay restraint in the current uncertain economic conditions.

The costs and risks of the pension schemes to which the University is exposed remain of concern. The Universities Superannuation Scheme (USS) is a major exposure for the University. The deficit of the USS is not reflected in the University’s balance sheet; in future years the present value of agreed deficit recovery payments will be recognized as a liability with the introduction of Financial Reporting Standard 102. Changes to USS benefits in respect of future service will be effective from 1 April 2016 and will assist in making the scheme affordable and sustainable. The University’s contribution to the USS will increase from 16% to 18% from that date.

The University group has three other major schemes: the Cambridge University Assistants’ Contributory Pension Scheme (CPS) for assistant staff, and two schemes for staff of the Cambridge University Press. The CPS is a hybrid defined benefit scheme with a Defined Contribution component and remains open to new joiners and to future accrual. The University is making deficit-recovery contributions to the scheme of £14.6m per annum for fourteen years commencing August 2011. The Cambridge University Press defined benefit schemes are closed to new joiners and are subject to a recovery plan projecting an aggregate deficit contribution of £47.6m over the nine years to 2022.

The CPS and the Press’s schemes, being single-employer schemes, are included in the financial statements following Financial Reporting Standard 17 (FRS 17). The total net pension liability under FRS 17 is £439m (2014: £417m), of which £85m relates to the Press’s schemes.

Development and alumni relations

Philanthropy provides long-term benefit that strengthens Cambridge’s financial security for posterity at a time of intensifying global competition and uncertainty. The University and the Colleges are committed to continued investment in fundraising and in building close relationships with alumni and supporters internationally. New funds for endowment, capital and for current use continue to be raised, and a new fundraising campaign was launched in October 2015 with a goal of £2bn for the Collegiate University. More than £530m of the campaign’s fundraising goal has already been secured. Priorities include greater support for graduate students, transforming the Biomedical Campus into a global centre, expanding West Cambridge as an international science and innovation hub, attracting more world-leading academics to lead teaching and research, and enriching the unique environment of the Colleges as central to Cambridge’s academic community and success.

The financial outlook

The financial landscape is continuing to evolve as policy changes in student funding are implemented and government policy for Higher Education funding and regulation develops. The recurrent research and capital grants currently made from HEFCE are likely to remain a core part of the University’s income, although the teaching grant has been severely reduced. The transition to the increased home/EU undergraduate tuition fees of £9,000 is now largely complete. Collegiate Cambridge makes a material loss on undergraduate education – and to contain this, and maintain the quality of education, the University’s undergraduate numbers will remain broadly constant. Graduate numbers are expected to continue to follow the underlying historic trend of around 2% growth per annum and with a continuing revision of our postgraduate fees should provide a steady net increase in funding.

Research grant and contract income continues to increase with other funders making up for constrained Research Council funding. This volume growth and the change in mix of sponsor categories are compounding the problem of inadequate recovery of the indirect costs of research from our sponsors.

The University faces significant challenges in funding its ambitious but essential strategic capital expenditure programme, including long-term proposals to move further major departments to the West Cambridge site, redevelop its central City sites, and expand on the Biomedical campus.

Cambridge Assessment’s international activities are expected to continue to thrive although in the UK business policy and regulatory changes are impacting OCR negatively. Cambridge Assessment has an ambitious programme of investment in systems and a major new office building in Cambridge to accommodate its growth and achieve operational efficiencies. Cambridge University Press continues to face a period of substantial change in the publishing industry with rapidly evolving customer requirements, outputs that are increasingly digital, and economic uncertainty in a number of its markets. The Press is restructuring its activities to focus on growth markets and global hubs, and on streamlining processes.

Performance of the University’s investment assets has again been strong, with favourable impact on the University’s endowment and the assets of its pension schemes. Global economic uncertainties have emerged and investment returns at the target levels look challenging over the near future.

Principal risks and uncertainties affecting the long-term financial position

The principal risks the University must address do not change: its long-term ability to maintain and develop its research funding, to attract the best staff and students, and to maintain, refresh, and renew its physical facilities. The activities of Cambridge Assessment and Cambridge University Press are subject to the pressures of international competition, and they must balance the need to generate sufficient net income to ensure that they thrive with the need to support the University’s core academic activities whenever possible.

The key financial uncertainties and risks are:

the probability of further cuts to government support for teaching and research, and the erosion in real terms of the Home/EU undergraduate fee;

the outcome of the current review of Research Councils and the funding available to them and the impact on the University’s research funding;

funding of sponsored research by charities and foundations, and their unwillingness to cover the full costs, and an increase in EC-sponsored research also at a level below full economic costs;

movements in investment markets reducing the value of the endowment and other investment assets;

the costs and risks of pension provision;

pay inflation, against a background of pay restraint in recent years;

the ability to continue to invest in buildings, infrastructure, and equipment for both teaching and research, against a background of reduced government capital funding;

the support from benefactors for endowment, capital expenditure, and for current use; and

the economic success of Cambridge Assessment and Cambridge University Press, which operate in challenging international markets. Cambridge Assessment provides an increasingly important source of unrestricted funding for the teaching and research activities of the University.

The University is proposing significant capital expenditure in the coming years on academic buildings, office buildings for Cambridge Assessment, and the North West Cambridge development. The University has strong cash flows from its operations, holds liquid assets and substantial long-term investment assets. However, it will continue to be dependent on support by benefactors to achieve its objectives.

In conclusion

The University group’s financial operating performance has allowed a surplus to be retained in general reserves for future investment. The RDEC income will be non-recurring but will provide a helpful contribution to our capital programme. Our academic activities remained finely balanced in financial terms, but Cambridge Assessment’s operations were again at a significant surplus. Operating cash flows remain strong and there was another good performance by the University’s investments in the year, building a steady long-term growth.

Future government funding through HEFCE and Research Councils is expected to give major challenges for the UK higher education sector. The University continues to diversify its funding sources to avoid dependence on any single stream and is now focusing in particular on building its philanthropic income. The principal financial challenge over the coming decade will be the funding of the strategic capital programme.

The University is one of the world’s leading academic institutions and has a reputation for outstanding academic achievement. This reputation has been built up over a long time and is an important factor in attracting the best academic staff and the best students. Maintaining the financial ability to continue to attract and retain the best staff and to provide research and teaching facilities commensurate with our standing as one of the world’s leading universities remains an ongoing challenge.

Professor Duncan Maskell
Senior Pro-Vice-Chancellor

Corporate governance

1. The following statement is provided by the Council to enable readers of the financial statements to obtain a better understanding of the arrangements in the University for the management of its resources and for audit.

2. The University endeavours to conduct its business in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty, and leadership) and within the general principles of the Higher Education Code of Governance which has been provided by the Committee of University Chairs. Further information is given at paragraph 9 below.

Under the Statutes, the Governing Body of the University is the Regent House, which comprises the resident senior members of the University and the Colleges, together with the Chancellor, the High Steward, the Deputy High Steward, and the Commissary. Subject to the Regent House, the Council of the University is the principal executive and policy-making body of the University, with general responsibility for the administration of the University, for the planning of its work, and for the management of its resources. The membership of the Council includes four external members, one of whom chairs the Audit Committee (see paragraph 7 below). The Statutes provide for the appointment of a Deputy Chair of the Council, normally one of the external members, to take the chair as necessary or when it would be inappropriate for the Vice-Chancellor to do so, in particular in relation to the Vice-Chancellor’s own accountability. The General Board of the Faculties is responsible, subject to the Regent House and to the responsibilities of the Council, for the academic and educational policy of the University.

3. The University is an exempt charity and is subject to regulation by the Higher Education Funding Council for England (HEFCE). The members of the University Council are the charity trustees and are responsible for ensuring compliance with charity law.

4. The Council is advised in carrying out its duties by a number of Committees, including the Finance Committee, the Audit Committee, the Planning and Resources Committee, the Remuneration Committee, the Investment Board, and the Risk Steering Committee. The Finance Committee is chaired by the Vice-Chancellor and advises the Council on the management of the University’s assets, including real property, monies, and securities, and on the care and maintenance of all University sites and buildings. The Audit Committee, which has a majority of external members, governs the work of the Internal and External Auditors, reporting on these matters directly to the Council. The Planning and Resources Committee is a joint committee of the Council and the General Board. Its responsibilities include the development and oversight of the University’s strategic plan, and the preparation of the University’s budget. The Remuneration Committee is chaired by an external member of the Council and advises the Council on the remuneration of senior staff in the University. The Investment Board, which has a majority of external members, advises the Council on the management of the University’s investment assets. The Risk Steering Committee is responsible to the Council for the identification of the major corporate risks and their management.

5. Under the terms of the Financial Memorandum between the University and HEFCE, the Vice-Chancellor is the Accountable Officer of the University.

6. Under the Statutes, it is the duty of the Council to exercise general supervision over the finances of all institutions in the University other than the University Press (which is governed by the Council and the Press Syndicate through separate statutory arrangements); to keep under review the University’s financial position and to make a report thereon to the University at least once in each year; to recommend bankers for appointment by the Regent House; and to prepare and publish the annual accounts of the University in accordance with UK-applicable accounting standards such that the accounts give a true and fair view of the state of affairs of the University.

7. It is the duty of the Audit Committee to keep under review the effectiveness of the University’s internal systems of financial and other controls; to advise the Council on the appointment of external and internal auditors; to consider reports submitted by the auditors, both external and internal; to monitor the implementation of recommendations made by the internal auditors; to satisfy themselves that satisfactory arrangements are adopted throughout the University for promoting economy, efficiency, and effectiveness; to establish appropriate performance measures and to monitor the effectiveness of external and internal audit; to make an annual report to the Council, the Vice-Chancellor, and to HEFCE; to receive reports from the National Audit Office and from HEFCE. Membership of the Audit Committee includes as a majority five external members (including the chair of the Committee), appointed by the Council with regard to their professional expertise and experience in comparable roles in corporate life.

8. There are Registers of Interests of Members of the Council, the General Board, the Finance Committee, and the Audit Committee, and of the senior administrative officers. Declarations of interest are made systematically at meetings.

9. The University is a self-governing community whose members act in accordance with the seven principles of public life (see paragraph 2 above) and in pursuit of the objectives and purposes of the University as set out in its Statutes. The University complies with most but not all of the voluntary Higher Education Code of Governance published in December 2014 by the Committee of University Chairs. In particular the Vice-Chancellor is chair of the Council, which does not have a majority of external members, and the Council is subject to the statutory authority of the Regent House. The University has no immediate plans to change these arrangements, which have proved reliable over many years in enabling the University to achieve its academic objectives.

Members of the Council and the charity trustees during the year ended 31 July 2015

The Chancellor

Lord Sainsbury of Turville

The Vice-Chancellor

Professor Sir Leszek Borysiewicz

Heads of Colleges

Professor Ian White
Professor David Yates
Professor Francis Kelly (to 31 December 2014)
Professor Dame Jean Thomas (to 31 December 2014)
Mr Stuart Laing (from 1 January 2015)
Professor Susan Smith (from 1 January 2015)

Professors or Readers

Professor Fiona Karet
Professor Dame Athene Donald (to 30 September 2014)
Professor Nicholas Gay (to 31 December 2014)
Professor Andrew Hopper (to 31 December 2014)
Professor Anne Davis (from 1 October 2014)
Professor Ross Anderson (from 1 January 2015)
Dr Susan Oosthuizen (from 1 January 2015)

Members of the Regent House

The Reverend Jeremy Caddick
Dr Rebecca Lingwood
Dr David Good
Dr Rachael Padman
Dr Nick Bampos (to 31 December 2014)
Dr Stephen Cowley (to 31 December 2014)
Mr Ian Du Quesnay (to 30 September 2014)
Dr Susan Oosthuizen (to 31 December 2014)
Dr Richard Anthony (from 1 January 2015)
Dr Ruth Charles (from 1 January 2015)
Dr Nicholas Holmes (from 1 January 2015)
Dr Alice Hutchings (from 3 March 2015)

Student members

Mr Richard Jones (to 30 June 2015)
Dr Evianne van Gijn (to 30 June 2015)
Ms Helen Hoogewerf McComb (to 30 June 2015)
Ms Priscilla Mensah (from 1 July 2015)
Mr Cornelius Roemer (from 1 July 2015)

External members

Mr Mark Lewisohn
Dame Mavis McDonald (Deputy Chair) (to 31 December 2014)
Professor Dame Shirley Pearce
Mr John Shakeshaft (Deputy Chair from 1 January 2015)
Ms Sara Weller (from 1 January 2015)

The Chancellor, external members, student members, Professor Yates, Professor Dame Jean Thomas, Mr Laing, Professor Smith, Mr Caddick, Mr Du Quesnay, and Dr Anthony are not employees of the University. The other members of the Council are employees of the University. No member of the Council receives payment for serving as a member of the Council.

Statement of public benefit

The University is an exempt charity subject to regulation by the Higher Education Funding Council for England (HEFCE) under the Charities Act 2006. The University reports annually on the ways in which it has delivered charitable purposes for the public benefit.

The Council, in reviewing the University’s activities in this regard, has taken into account the Charity Commission’s guidance on public benefit. The Council is satisfied that the activities of the University as described in these Reports and Financial Statements, and in the Annual Report of the Council, fully meet the public benefit requirements.

The Mission of the University

The Mission of the University is ‘to contribute to society through the pursuit of education, learning, and research at the highest international levels of excellence’. The University makes a significant contribution, through these activities, directly and most obviously to the advancement of education, research, and dissemination of knowledge.

Research

The University is widely recognized as one of the leading research universities in the world both in terms of quality and in terms of scope and breadth. Research is undertaken at the highest level across a wide range of areas. The University takes seriously its obligations to disseminate and make publicly accessible the outcomes of its academic research activities through publication, teaching, conferences, consultancy, and other knowledge transfer and outreach activities. It therefore offers public benefit through the continued advancement of knowledge across the sciences, medicine, arts, humanities, culture, and heritage.

A substantial proportion of the research undertaken in the University across the fields of clinical medicine, biomedicine, physics of medicine, and engineering leads directly to the advancement of health and the saving of lives. Research is also carried out in the area of sustainability, environmental protection, and improvement.

Research work in the University is focused at local, national, and international levels. The products of this research have a wide-ranging influence through the advancement of understanding and its application in scientific and technological advances, and through informing public debate on policy. The impact of the University’s research extends to governments, public sector bodies, and charities.

Education

The University’s research activities feed directly into its teaching at every level. Around 19,000 students, of whom 12,000 are undergraduates, pursue courses across a wide range of disciplines. The quality of the education (and, as importantly, the educational experience) which the University provides is consistently recognized by the University’s status at or near the top of national and international rankings.

The University is committed to admitting students of the highest intellectual potential, irrespective of social, racial, religious, financial, or other considerations. The University ensures that individuals from all backgrounds can benefit from the opportunities afforded by a first-rate education and are not unreasonably excluded from those opportunities by the charging of fees. The University ensures that bursaries are available where necessary and outreach activities are undertaken to improve participation by under-represented groups. Financial support is provided to students from overseas through University funds and by trusts associated with the University. Further information is available at: http://www.admin.cam.ac.uk/univ/cambridgebursary/ and http://www.graduate.study.cam.ac.uk/finance/funding.

The University is aware that there are significant variations in the educational opportunities, information, and support available to individuals. It therefore invests significant resource and effort into its access and widening participation activities. The University encourages applications from people with disabilities and from mature students.

For the wider community a broad range of lectures, seminars, and courses provide the opportunity for members of the wider public to share in the University’s educational provision. The University’s Institute of Continuing Education offers short non-credit courses, residential, and summer schools.

The University is committed to equipping those who participate in its educational programmes with the highest quality of teaching and pastoral, infrastructural, and academic support. It is fundamental to the University’s mission that its students are personally, academically, and professionally equipped to contribute positively to society. In this regard, the quality and depth of their student experience benefits them directly but also benefits the societies to which they will contribute, through their participation in the workforce and as informed and questioning citizens.

The wider applications of the University’s commitment to disseminating knowledge

The University’s publishing house, the Cambridge University Press, contributes to the University’s commitment to make publicly accessible the outcomes of academic research activities in Cambridge and from across the world by publishing peer-reviewed academic material and other educational publications. Through Cambridge Assessment, the University develops and delivers a range of widely used and respected examinations, benefiting the UK and world-wide community by offering internationally recognized qualifications, raising aspirations, and transforming lives.

Statement of internal control

1. The Council is responsible for maintaining a sound system of internal control that supports the achievement of policies, aims, and objectives, while safeguarding the public and other funds and assets for which the Council is responsible, in accordance with the Statutes and Ordinances and the Financial Memorandum with the Higher Education Funding Council for England (HEFCE).

2. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve policies, aims, and objectives; it therefore provides reasonable but not absolute assurance of effectiveness.

3. The system of internal control is designed to identify the principal risks to the achievement of policies, aims, and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively, and economically. This process was in place for the year ended 31 July 2015 and up to the date of approval of the financial statements, and accords with HEFCE guidance.

4. The Council is responsible for reviewing the effectiveness of the system of internal control. The following processes have been established:

(a)The Council meets eleven times throughout the year to consider the plans and strategic direction of the University.

(b)The Council receives periodic reports from the Chair of the Audit Committee concerning internal control and the minutes of all meetings of the Audit Committee.

(c)The Council’s Risk Steering Committee oversees risk management. The Council receives periodic reports from the Chair of the Risk Steering Committee and the minutes of all meetings of the Risk Steering Committee.

(d)The Audit Committee receives regular reports from the internal auditors, which include the internal auditors’ independent opinion on the adequacy and effectiveness of the University’s system of internal control and risk management, together with recommendations for improvement. Risk management is a standing item on the Audit Committee agenda.

(e)The University provides information (primarily through web-based resources) to those who own or manage central or School risks

(f)A system of indicators has been developed for the University’s key risks.

(g)A robust risk prioritization methodology based on risk ranking and cost-benefit analysis has been established.

The Council’s review of the effectiveness of the system of internal control is informed by the work of the internal auditors, Deloitte LLP.

5. The Council’s review of the effectiveness of the system of internal control is also informed by the work of the senior officers and the risk owners within the University, who have responsibility for the development and maintenance of the internal control framework, and by comments made by the external auditors in their management letter and other reports.

Statement of the responsibilities of the Council

Under the University’s Statutes and Ordinances it is the duty of the Council to prepare and to publish the annual accounts of the University in accordance with UK applicable accounting standards such that the accounts give a true and fair view of the state of affairs of the University.

The Council is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the University.

In preparing the financial statements the Council is required to:

(a)select suitable accounting policies and then apply them consistently;

(b)make judgements and estimates that are reasonable and prudent;

(c)state whether applicable accounting standards have been followed;

(d)prepare the financial statements on a going concern basis unless it is inappropriate to presume that the University will continue to operate;

(e)ensure that income has been applied in accordance with the University’s Statutes and Ordinances, and its Financial Memorandum with the HEFCE and the funding agreement with the National College for Teaching and Leadership; and

(f)safeguard the assets of the University and take reasonable steps to prevent and detect fraud and other irregularities.

Independent auditors' report to the Council of the University of Cambridge

Report on the financial statements


Our opinion

In our opinion, the financial statements, defined below:
 

give a true and fair view of the state of the group’s and of the University’s affairs as at 31 July 2015 and of the group’s income and expenditure, recognised gains and losses and cash flows for the year then ended;
 

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
 

have been properly prepared in accordance with the Statement of Recommended Practice – Accounting for Further and Higher Education.
 

This opinion is to be read in the context of what we say in the remainder of this report.


What we have audited

The group financial statements and University financial statements (the “financial statements”), which are prepared by the University of Cambridge, comprise:

the group and University Balance Sheets as at 31 July 2015;

the consolidated income and expenditure account for the year then ended;

the note of consolidated historical cost result for the year then ended;

the consolidated statement of total recognised gains and losses for the year then ended;

the consolidated cash flow statement for the year then ended;

the statement of principal accounting policies; and

the notes to the financial statements, which include other explanatory information.

The financial reporting framework that has been applied in their preparation is the Statement of Recommended Practice for Further and Higher Education, incorporating United Kingdom Generally Accepted Accounting Practice.

In applying the financial reporting framework, the Council has made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, it has made assumptions and considered future events.


What an audit of financial statements involves

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

whether the accounting policies are appropriate to the group and University’s circumstances and have been consistently applied and adequately disclosed;

the reasonableness of significant accounting estimates made by the Council; and

the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Annual Report of the Council, the Annual Report of the General Board to the Council and the Reports on pages 244 to 253 to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.


Opinions on other matters prescribed in the HEFCE Audit Code of Practices issued under the Further and Higher Education Act 1992


In our opinion, in all material respects:
 

funds from whatever source administered by the University for specific purposes have been properly applied to those purposes and, if relevant, managed in accordance with relevant legislation;
 

income has been applied in accordance with the Statutes and Ordinances of the University; and
 

funds provided by HEFCE have been applied in accordance with the Financial Memorandum and any other terms and conditions attached to them.
 


Other matters on which we are required to report by exception


Under the HEFCE Audit Code of Practice issued under the Further and Higher Education Act 1992 we are required to report to you if, in our opinion the statement of internal control is inconsistent with our knowledge of the University and group. We have no exceptions to report from this responsibility.


Responsibilities for the financial statements and the audit


Respective responsibilities of the Council and auditors

As explained more fully in the Statement of Responsibilities of the Council set out on page 253 the Council is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Council as a body in accordance with the Statutes and Ordinances of the University and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cambridge
23 November 2015

(a)The maintenance and integrity of the University of Cambridge’s website is the responsibility of the Council; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b)Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Statement of principal accounting policies

Basis of preparation

The financial statements have been prepared in accordance with applicable United Kingdom accounting standards and the Statement of Recommended Practice: Accounting for Further and Higher Education 2007 (the SORP).

The income and expenditure account includes captions additional to those specified by the SORP in order to present an appropriate overview for the specific circumstances of the University.

Basis of accounting

The financial statements have been prepared under the historical cost convention, modified in respect of the treatment of investments and certain operational properties which are included at valuation.

Basis of consolidation

The consolidated financial statements include the University and its subsidiary undertakings including the Gates Cambridge Trust and other Associated Trusts. Details of the subsidiary undertakings included are given in note 33. Intra-group transactions and balances are eliminated on consolidation.

The consolidated financial statements do not include the accounts of the 31 Colleges in the University (‘the Colleges’), each of which is an independent corporation. Transactions with the Colleges are disclosed in note 35.

The consolidated financial statements do not include the accounts of Cambridge University Students’ Union or of the Cambridge University Graduate Union, as these are separate bodies in which the University has no financial interest and over whose policy decisions it has no control.

Recognition of income

Unrestricted grant income

Recurrent grant from the Higher Education Funding Council for England (HEFCE) is recognized as income in the period to which it relates. Research and development expenditure credits receivable from HM Revenue and Customs are recognized as income when the relevant expenditure has been incurred and there is reasonable assurance of receipt.

Restricted grant income

Grants received for restricted purposes, principally from HEFCE and research sponsors, are recognized as income to the extent that relevant expenditure has been incurred.

Charitable donations

Charitable donations are recognized on receipt or where there is certainty of future receipt and the value can be measured reliably. The accounting treatment of a donation depends on the nature and extent of restrictions specified by the donor. Donations with no substantial restrictions are recognized as income in the income and expenditure account. Donations which are to be retained for the future benefit of the University, and other donations with substantially restricted purposes, other than for the acquisition or construction of tangible fixed assets, are recognized in the statement of total recognized gains and losses as new endowments.

Capital grants and donations

Grants and donations are received for the purposes of funding the acquisition and construction of tangible fixed assets. In the case of depreciable assets these are credited to deferred capital grants and released to income over the expected useful life of the respective assets in line with the depreciation policy. Grants and donations of, or for the acquisition of, freehold land or heritage assets, which are non-depreciable assets, are credited to income in the year of acquisition.

Academic fees

Tuition fees for degree courses are charged to students by academic term. Income is recognized for academic terms falling within the period. For short courses, income is recognized to the extent that the course duration falls within the period.

Examination and assessment services

Income from examination-based assessments is recognized when services are rendered and substantially complete. Income from qualifications not based on examination sessions is recognized in proportion to the number of modules achieved by candidates.

Publishing

In the case of books and other print publications, income is recognized on delivery of the goods to the customer. Income generated from electronic publishing, including the provision of perpetual access, is recognized when the material is initially made available. Subscriptions income is recognized evenly over subscription periods. Journals income is recognized when the journals are published and shipped.

Other income

Income is received from a range of activities including residences, catering, conferences, and other services rendered. Income is recognized on the exchange of the relevant goods or services.

Endowment and investment income

All investment income is credited to the income and expenditure account in the period in which it is earned. Income from restricted endowments not expended in the period is transferred from the income and expenditure account to restricted endowments.

Foreign currency translation

Transactions denominated in foreign currencies are recorded at the rate of exchange ruling at the date of the transactions. Where foreign branches and subsidiaries of Cambridge University Press accounting in foreign currencies operate as separate businesses, all their assets and liabilities are translated into sterling at year-end rates and the net effect of currency adjustments is taken directly to reserves. Otherwise, monetary assets and liabilities denominated in foreign currencies are translated into sterling at year-end rates and translation differences are taken to the income and expenditure account.

Tangible fixed assets

Land and buildings

Operational land and buildings are included in the financial statements at their 1994 valuation with subsequent additions at cost. On the adoption of Financial Reporting Standard (FRS) 15 (Tangible fixed assets), the University followed the transitional provision to retain the book value of land and buildings, which had last been revalued on 1 August 1994 on the basis of market value for existing use, but not to adopt a policy of revaluations of these properties in the future.

No depreciation is provided on freehold land or on assets in construction. Freehold buildings are written off on a straight line basis over their estimated useful lives, which are between 15 and 50 years, and leasehold properties are written off over the length of the lease.

Equipment

Equipment costing less than £30,000 per individual item is written off in the year of purchase. All other equipment is capitalized and depreciated so that it is written off on a straight line basis over its estimated useful life of between four and ten years.

Heritage assets

The University holds and conserves a number of collections, exhibits, artefacts, and other assets of historical, artistic, or scientific importance. In accordance with FRS 15 and FRS 30 (Heritage assets), heritage assets acquired before 1 August 1999 have not been capitalized, since reliable estimates of cost or value are not available on a cost-benefit basis. Acquisitions since 1 August 1999 have been capitalized at cost or, in the case of donated assets, at expert valuation on receipt. In line with the accounting policy in respect of equipment, the threshold for capitalizing assets is £30,000. Heritage assets are not depreciated since their long economic life and high residual value mean that any depreciation would not be material.

Intangible fixed assets: goodwill

Goodwill arises on consolidation and is based on the fair value of the consideration given for the subsidiary and the fair value of its assets at the date of acquisition. Goodwill is amortized over its estimated economic life of between five and ten years on a straight line basis. Where there is impairment in the carrying value of goodwill, the loss is included in the results of the period.

Investments

Fixed asset investments and endowment assets are included in the balance sheet at market value, except for investments in subsidiary undertakings which are stated in the University’s balance sheet at cost and eliminated on consolidation. Properties held for investment purposes are valued annually on the basis of estimated open market values on an existing use basis by Knight Frank or, in the case of local non-operational properties, by chartered surveyors employed by the University. Marketable securities are valued at midmarket valuation on 31 July. Investments in spin-out companies are valued in accordance with the International Private Equity and Venture Capital Guidelines, and other non-marketable securities are included at valuation by the Council. Current asset investments are included in the balance sheet at the lower of cost and net realizable value.

Stocks and work in progress

Stocks are stated at the lower of cost and net realizable value after making provision for slow moving and obsolete items. In respect of publishing services, (a) direct costs incurred prior to publication are included in stocks and work in progress and are written off over a period of up to three years from the publication date; and (b) the University makes full provision against the cost of stock in excess of one and a half times the most recent year’s sales on all publications dated more than two years before the reporting date.

Bond liabilities

The Bond liabilities are the unsecured Bonds issued by the University in October 2012 and listed on the London Stock Exchange. The Bonds were initially measured at the proceeds of issue less all transaction costs directly attributable to the issue. After initial recognition, the Bonds are measured at amortized cost using the effective interest rate method. Under this method the discount at which the Bonds were issued and the transaction cost are accounted for as additional interest expense over the term of the Bonds.

Endowment funds

Endowment funds are classified under three headings:

Where the donor has specified that the fund is to be permanently invested to generate an income stream for the general purposes of the University, the fund is classified as an unrestricted permanent endowment.

Where the donor has specified that the fund is to be permanently invested to generate an income stream to be applied for a restricted purpose, the fund is classified as a restricted permanent endowment.

Where the donor has specified a particular objective other than the acquisition or construction of tangible fixed assets, and that the University must or may convert the donated sum into income, the fund is classified as a restricted expendable endowment.

Pension costs

The University contributes to a number of defined benefit pension schemes and accounts for the costs in relation to these schemes in accordance with FRS 17 (Retirement benefits).

Where the University is unable to identify its share of the underlying assets and liabilities in a scheme on a reasonable and consistent basis, it accounts as if the scheme were a defined contribution scheme, so that the cost is equal to the total of contributions payable in the year.

For other defined benefit schemes, the assets of each scheme are measured at fair value, and the liabilities are measured on an actuarial basis using the projected unit method and discounted at an appropriate rate of return. The University’s share of the surplus or deficit of the scheme is recognized as an asset or liability on the balance sheet. The current service cost, being the actuarially determined present value of the pension benefits earned by employees in the current period, and the past service cost are included within staff costs. Endowment and investment income includes the net of the expected return on assets, being the actuarial forecast of total return on the assets of the scheme, and the interest cost being the notional interest cost arising from unwinding the discount on the scheme liabilities. All changes in the pension surplus or deficit due to changes in actuarial assumptions or differences between actuarial forecasts and the actual out-turn are reported in the statement of total recognized gains and losses.

Segmental reporting

The University operates in a number of different classes of business. For the purpose of segmental reporting as required by Statement of Standard Accounting Practice 25 (Segmental reporting), classes of business have been identified by reference to the nature of activity, the nature of funding, and the management organization.

Consolidated income and expenditure account for the year ended 31 July 2015

Year ended 31 July 2015

Year ended 31 July 2014

Note

£m

£m

Income

Funding body grants

1

170

179

Academic fees and support grants

2

226

207

Research grants and contracts

3

397

371

Exceptional income: Research and Development Expenditure Credits

4

54

Examination and assessment services

5

367

341

Publishing services

266

258

Other income

6

133

123

Endowment and investment income

7

25

25

Total income

1,638

1,504

Expenditure

Staff costs

8

710

650

Other operating expenses

9

798

756

Depreciation

9

92

88

Interest and other finance costs

9

13

16

Total expenditure

9

1,613

1,510

Surplus / (deficit) on continuing operations

25

(6)

Taxation

10

(12)

Surplus / (deficit) after tax

13

(6)

Transfer from restricted endowments

25

48

50

Surplus for the year retained in general reserves

26

61

44

The income and expenditure account is in respect of continuing activities.

Note of consolidated historical cost result for the year ended 31 July 2015

Note

Year ended 31 July 2015

£m

Year ended 31 July 2014

£m

Surplus / (deficit) on continuing operations

13

(6)

Realization of gains on disposal of fixed asset investments

26

95

72

Depreciation on revaluation element of tangible fixed assets

26

6

6

Historical cost surplus for the year

114

72

Additional information:

Total income and surplus on continuing operations as stated above do not include the element of Cambridge University Endowment Fund distributions funded out of long-term capital growth, as described in note 7, amounting to £69m (2014: £66m). The surplus retained in general reserves does not include the proportion of this element relating to reserves, amounting to £32m (2014: £30m). The corresponding figures including these elements are:

Year ended 31 July 2015

£m

Year ended 31 July 2014

£m

Total income on a distribution basis

1,707

1,570

Surplus for the year retained in general reserves on a distribution basis

93

74

Consolidated statement of total recognized gains and losses for the year ended 31 July 2015

Year ended 31 July 2015

Year ended 31 July 2014

Note

£m

£m

Surplus / (deficit) after tax

13

(6)

Valuation gains on investments

Endowment assets

25

173

71

Fixed asset investments

15, 26

156

68

New endowment capital

25

27

30

Loss arising on foreign currency translation

26

(4)

(9)

Actuarial loss

26

(34)

(62)

Total recognized gains relating to the year

331

92

Total gains since the last annual report

331

Reconciliation

Opening reserves and endowments

2,653

Total gains since the last annual report

331

Closing reserves and endowments

2,984

Balance sheets as at 31 July 2015

Group

31 July 2015

Group

31 July 2014

University

31 July 2015

University

31 July 2014

Note

£m

£m

£m

£m

Fixed assets

Intangible assets

13

3

4

2

2

Tangible assets

14

1,411

1,272

1,411

1,272

Investments

15

1,324

1,200

1,126

1,017

2,738

2,476

2,539

2,291

Endowment assets

16

1,455

1,303

1,213

1,082

Current assets

Stocks and work in progress

17

55

54

47

47

Debtors

18

359

296

358

310

Investments

University

19

257

308

234

270

Held on behalf of others

19

152

105

625

547

Cash at bank and in hand

67

50

39

27

890

813

1,303

1,201

Creditors: amounts falling due within one year

20

(717)

(631)

(1,147)

(1,041)

Net current assets

173

182

156

160

Total assets less current liabilities

4,366

3,961

3,908

3,533

Creditors: amounts falling due after more than one year

21

(346)

(346)

(344)

(345)

Pension liabilities

22

(439)

(417)

(89)

(79)

Other retirement benefits liability

23

(20)

(21)

(20)

(21)

Total net assets

3,561

3,177

3,455

3,088

Represented by:

Deferred capital grants

24

576

523

576

523

Endowments

Expendable endowments

25

492

442

254

225

Permanent endowments

25

963

861

959

857

25

1,455

1,303

1,213

1,082

Reserves

General reserves

26

1,098

974

1,294

1,156

Operational property revaluation reserve

26

109

115

109

115

Fixed asset investment revaluation reserve

26

322

261

263

212

26

1,529

1,350

1,666

1,483

Reserves and endowments

2,984

2,653

2,879

2,565

Minority interest in subsidiary undertakings

1

1

Total

3,561

3,177

3,455

3,088

The financial statements on pages 256 to 285 were approved by the Council on 23 November 2015 and signed on its behalf by:

Professor Sir Leszek Borysiewicz

Vice-Chancellor

John Shakeshaft

Member of Council

Andrew Reid

Director of Finance

Consolidated cash flow statement for the year ended 31 July 2015

Year ended

31 July 2015

Year ended

31 July 2014

Note

£m

£m

Net cash inflow from operating activities

28

2

4

Returns on investments and servicing of finance

29

10

11

Capital expenditure and financial investment

Purchase of tangible fixed assets

(235)

(153)

Acquisition of goodwill and other intangible fixed assets

(1)

(1)

Donations and grants for the purchase of tangible fixed assets

94

40

Proceeds of disposal of tangible fixed assets

8

6

Net disposal of long-term investments (excluding investments held on behalf of others)

84

13

New endowments received

27

31

Net cast outflow from capital expenditure and financial investment

29

(23)

(64)

Cash (outflow) before use of liquid resources and financing

(11)

(49)

Management of liquid resources:

Decrease in money market investments

30

19

39

Financing

29

(1)

(1)

Increase / (decrease) in cash in the year

7

(11)

Reconciliation of net cash flow to movement in net funds

Increase / (decrease) in cash

7

(11)

Cash (inflow) from liquid resources

(19)

(39)

Cash outflow from reduction in debt

1

1

Movement in net funds in the year

(11)

(49)

Net funds at 1 August

11

60

Net funds at 31 July

30

11