Skip to main contentCambridge University Reporter

No 6448

Thursday 8 December 2016

Vol cxlvii No 14

pp. 200–265

Reports and Financial Statements for the year ended 31 July 2016

Financial review

Preliminary

The commentary that follows is intended to give 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 2015–16, 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, and 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 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 as follows:

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

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 endowments, capital, and current use.

Investment income from endowment and other assets.

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

Income from commercialization of intellectual property.

Accounting and presentation of financial statements

Transition to Financial Reporting Standard 102

This is the first year for which the University has presented its financial statements in accordance with FRS102, the Financial Reporting Standard Applicable in the UK and Republic of Ireland. Reference is also made to the Statement of Recommended Practice: Further and Higher Education 2015 (the SORP) which gives guidance to the sector on implementation of FRS102. The comparative figures for 2014–15 have been restated accordingly. Transition to FRS102 is considered fully in Note 39 to the Accounts.

Accounting for investment income

The main investment pool generating 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. A substantial proportion of the CUEF’s investments yield little or no income in the form of dividends, interest, or rents. In the year ended 31 July 2016, distributions by the CUEF exceeded the income received from its underlying investments by £73m (2015: £69m), the balance of the distributions being funded by drawing on long-term capital growth.

In these financial statements total investment income includes the income from the CUEF’s underlying investments rather than the distributions made by the CUEF. The impact is that investment income is £73m less than it would have been had it been based on distribution, with a corresponding increase in gains on investments.

Financial results for the year

The results for the University group for the year ended 31 July 2016 are summarized in Table 1.

Table 1

2015–16

2014–15

Change

£m

£m

%

Income

1,799 

1,722 

+4.5%

Expenditure

(1,734)

(1,683)

+3.0%

Surplus before other gains and losses

65 

39 

Gain on investments

222 

329 

Taxation

(3)

(12)

Actuarial loss

(182)

(13)

Gain/(loss) on foreign currency translation

10 

(4)

Total comprehensive income for the year

112 

339 

Total net assets

4,355 

4,243 

+2.6%

Included in 2014–15 income is £54m 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 claims have been settled by HMRC in full less tax.

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 from Cambridge Assessment and Cambridge University Press for the University’s academic activities. Table 2 gives segmental information, which is considered in further detail in Note 14 to the Accounts.

Table 2

Total

income

£m

Expenditure

£m

Investment gains

£m

Surplus before tax

£m

HEI, Trusts, and others

1,148 

(1,121)

204 

231 

Assessment

395 

(358)

17 

54 

Press

275 

(274)

1,818 

(1,753)

222 

287 

Financial support to the University from Cambridge Assessment

(19)

19 

– 

– 

1,799 

(1,734)

222 

287 

Apportionment of CUEF adjustment in the above:

HEI, Trusts, and others

(66)

66 

– 

Assessment

(7)

– 

(73)

73 

– 

The single largest source of income to the University is from sponsors of research projects. Research grants and contracts income increased to £469m (+13.8%) with growth particularly marked in UK Research Council funding. European Commission sources increased slightly to £62m; the long-term outlook for such funding remains uncertain following the decision to exit the EU. The recovery of the indirect costs of research remains insufficient and is a major concern as research activity continues to increase.

Income from tuition fees and education contracts increased by £37m to £263m (+16.4%), mainly a consequence of the first year in which University and College postgraduate fees were consolidated into a single fee. The increase is offset by the College share of the consolidated fee represented by the increase in the College fee transfer in expenditures.

Grants from HEFCE were £11m lower than in the previous year. The recurrent grant for teaching is reduced further as the new fee arrangements for Home/EU undergraduates are further phased in, and reduced funding for research is mainly the consequence of 2015–16 being the first year that HEFCE used the volume and quality measures from the latest Research Excellence Framework exercise in the QR formula (replacing those from the previous RAE results).

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 of £392m was a year-on-year increase of 7%, with continued success for the English Language assessment business stream’s IELTS product. IGCSE and international A-level revenue grew around the world, particularly in Asia. OCR’s revenues fell slightly with planned reduction from withdrawn vocational qualifications and income from general qualifications affected by the first phase of the government’s general qualifications reforms.

Cambridge University Press is the University’s publishing arm and furthers the University’s objective of advancing learning, knowledge, and research worldwide. The Press collaborates with Cambridge Assessment where of benefit, notably in English language and test materials. The Press is organized into three main streams: academic books and journals, English language teaching (ELT) materials, and education publishing. Turnover is derived from sales of educational and scholarly books, e-books, journals, apps, and related services, with some 90% of sales arising outside the UK. Income from this activity was essentially flat, but grew at constant currency, with education sales and sales linked with Cambridge English Language Assessment growing strongly, and other ELT sales delivering slower underlying growth. Journals revenues increased but academic books faced a declining market in the US and, to a lesser extent, Europe.

Donations and endowments income reported under FRS102 is likely to lead to major fluctuations from year to year since donations and endowments are recognized in income in the year when the University is entitled to the funds. In aggregate new endowments, donations for capital and in respect of heritage assets, other restricted donations, and unrestricted donations totalled £71m (2015: £58m). Part of this increase arose from the enhanced philanthropic giving related to the current fundraising campaign.

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, and rents from its non-operational properties. Total Other income increased by 7.1% to £120m.

Investment income provided by the University’s financial investments, primarily the CUEF, is an important component of the University’s funding mix. As explained above and in Note 8 to the accounts, the CUEF’s distribution, which is available for spending on operations, exceeded the income received in the year from its underling investments by £73m. On a ‘distribution basis’ investment income was £94m (2015: £92m).

Change in financial position

Table 3 shows the movement in net assets into the group analyzed into its three main segments, and summarizes the impact of transition to FRS102.

Table 3

HEI, Trusts, and others

Assessment

Press

Eliminations

Group

£m

£m

£m

£m

£m

Net assets at 31 July 2015 as previously reported

3,091 

461 

39 

(30)

3,562 

Impact of transition to FRS102

628 

(2)

42 

12 

681 

Net assets at 31 July 2015 under FRS102

3,719 

459 

81 

(18)

4,243 

Surplus for the year before tax (Table 2)

231 

54 

– 

287 

Taxation

– 

– 

(3)

– 

(3)

Actuarial loss

(145)

– 

(37)

– 

(182)

Gain on currency translation

– 

– 

10 

Net assets at 31 July 2016

3,805 

514 

52 

(18)

4,355 

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. Continued investment in infrastructure is essential if the University is to remain globally competitive.

Capital expenditure on land and buildings in the academic estate totalled £144m during the year, with a further £53m invested in equipment. Significant spending on major projects included the James Dyson Building of the Department of Engineering, Judge Business School, the Sir David Attenborough Building on the New Museums site, and major laboratory facilities on the Cambridge Biomedical Campus.

Cambridge Assessment has maintained a substantial level of investment in its technical infrastructure and is constructing a new office building to accommodate its Cambridge-based staff in a single location. Cambridge University Press also continues to invest in business systems.

North West Cambridge development

The University is developing its site at North West Cambridge. The development will help the University to maintain its global research profile through the development of a vibrant, mixed-use extension to the city, will provide affordable and suitable accommodation for University and College staff (primarily postdoctoral researchers), extensive academic and commercial research space, accommodation for postgraduate students, and local centre facilities to support the new community. The development will also provide significant housing and social 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 the retail and commercial developments contribute significantly to the viability of the development.

Phase 1 of the development is well under way and the majority of buildings will be completed in 2017, including 700 homes for University and College staff, 325 student rooms, a community centre, nursery, supermarket, and shops. The University of Cambridge Primary School opened on the site during the year. Planning work has begun on a possible second phase of the development.

Cumulative net capitalized expenditure on the development was £221m at 31 July 2016 and is included in non-current investments.

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 non-current asset investments 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 Associated Trusts are substantially entirely invested in the CUEF, and several 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, investment asset classes, and 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.

The CUEF reports its performance to 30 June. During the year ended 30 June 2016 the CUEF had an investment return of 6.3% (2015: 14.2%). The Fund has returned an annualized 10.2% return over a rolling 5-year period, which compares favourably to the long-term investment objective over this period of 7.6% annualized. The value of the CUEF at 30 June 2016 was £2,656m (2015: £2,533m).

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 at that date was:

Public equity

60%

Private investment

12%

Absolute return

13%

Credit

1%

Real assets

11%

Fixed interest/cash

3%

Broad asset allocation did not change markedly over the year. Small reductions in percentage terms were made to public equities and cash, and the allocation to private investments increased. Less liquid private credit investments continued to be favoured relative to the public credit markets and absolute return. Real assets grew in sterling terms through an increase in direct and indirect property assets and growth in an infrastructure position.

The year was challenging for active management, especially in the case of absolute return. While the CUEF’s hedge fund allocation outperformed its fund-of-funds index, both marginally underperformed a loss-making equity market (measured in US dollars). The CUEF has reduced hedge fund holdings incrementally in favour of other opportunities. In contrast, the allocations to private credit and private equity have performed well in recent years.

(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 Limited.

Long-term borrowings

In 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 to the North West Cambridge development, the funds raised have been invested in the CUEF and other investment vehicles, and to date the investment returns have exceeded the interest cost of the bonds.

The University continues to be rated Aaa (stable) by Moody’s Investor Services.

Pensions

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 accounts except to the extent discussed below. Changes to USS benefits in respect of future service were introduced during 2016 and the employers’ contribution increased to 18%. The next triennial valuation of the USS will be on 31 March 2017 and it is possible that further changes will be necessary.

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 future accrual. The University is making deficit-recovery contributions to the scheme of £14.6m per annum until 2019. 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.

Accounting for pensions has changed following the transition to FRS102. The principal change is the inclusion on the balance sheet of a liability for the present value of future contributions payable to the USS to the extent that they represent recovery payments towards covering the deficit in the USS. The liability recognized with this treatment was £127m as at 31 July 2016 (2015: £111m). The CPS and the Press schemes, being single-employer schemes, are included in the financial statements following FRS102 and the total net pension liability is £629m (2015: £439m), of which £124m relates to the Press schemes. The increase in net liability is primarily due to further reductions in the interest rates used to value the future liabilities. Pensions are discussed further in Note 32 to the Accounts.

Development and alumni relations

Philanthropy provides a 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 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 2015 with a goal of £2bn for the collegiate University. New funds raised for the University in 2015–16 totalled £74m, and more than £750m of the campaign’s goal has already been secured between the University and Colleges.

The financial outlook

Major financial risks and uncertainties continue to face the University and the sector: the impact of Brexit, the changes in the Higher Education legislative framework, and how these will affect funding for teaching and research. Research grants and contracts income is expected to continue to increase, but against the uncertainties of future European research funding, and the proposed restructuring of UK Research Councils. Fee income, subject to Brexit uncertainties, is expected to increase gently as inflationary increases in the regulated undergraduate fee are phased in, and the long-term upward trend in postgraduate student numbers continues. Pressures on major items of expenditure including pay, pensions, energy, and construction costs are likely to persist.

Cambridge Assessment’s international activities are expected to continue to grow over the next five years and OCR has stabilized. Cambridge Assessment continues its investment in its technological and physical estate to accommodate its growth and achieve operational efficiencies. Cambridge University Press expects the next few years to be challenging given the fast-moving nature of many of its markets and continuing global economic challenges. The Council has approved proposals for closer coordination of Cambridge Assessment and the Press with each other and the academic University within an overall strategy to ensure that opportunities are realized and the risks best managed.

The University faces significant challenges in funding its ambitious but essential strategic capital expenditure programme, with major academic developments planned at the Cambridge Biomedical Campus, the New Museums site, the Old Addenbrooke’s site, and West Cambridge.

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 in 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, attract the best staff and students, and 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 University’s key financial uncertainties and risks are:

the probability of further cuts to government support for teaching and research;

the continuing deficit between the costs of our education delivered to UK and EU undergraduates and the support for it from government grants and student fees;

the outcome of the restructuring of Research Councils, the funding available to them, and the potential consequential impact on the University’s research funding;

research sponsorship from EU sources following the UK’s forthcoming exit from the European Union;

the ability to recover the full economic costs of research. Charities and foundations are unwilling to cover the full costs;

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

the costs and risks of pension provision, in particular from participation in the Universities Superannuation Scheme;

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

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

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

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 further impact of the UK’s forthcoming exit from the European Union on these risks and uncertainties.

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

In conclusion

The University group’s financial operating performance over 2015–16 was satisfactory with a small overall surplus after all donations, endowments, and significant surplus from Cambridge Assessment’s activities. Overall the financial position is finely balanced with operating cash flows not sufficient to support our strategic capital programme ambitions. Additional external funding through philanthropic giving and other sources will continue to be required. The University is active in diversifying its funding sources to avoid dependence on any single stream.

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 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, the Commissary, and the external members of the Council. The approval of the Regent House is required for changes to the University’s Statutes and Ordinances and for any other matter for which in Statute or Ordinance the University’s approval must be obtained; the Council and the General Board may also decide to seek the Regent House’s approval on questions of policy which are considered likely to be controversial. 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 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. The West and North West Cambridge Estates Board reports to the Council on its oversight of the development of two key University sites.

5. Under the terms of the Memorandum of Assurance and Accountability between the University and the Higher Education Funding Council for England, 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; 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 2016

The Chancellor

Lord Sainsbury of Turville
 

The Vice-Chancellor

Professor Sir Leszek Borysiewicz
 

Heads of Colleges

Professor Ian White

Professor David Yates (until 30 September 2015)

Professor Michael Proctor (from 1 October 2015)

Mr Stuart Laing

Professor Susan Smith
 

Professors or Readers

Professor Fiona Karet

Professor Anne Davis

Professor Ross Anderson

Dr Susan Oosthuizen
 

Members of the Regent House

The Reverend Jeremy Caddick

Dr Rebecca Lingwood (until 7 September 2015)

Dr Margaret Glendenning (from 8 September 2015)

Dr David Good

Dr Rachael Padman

Dr Richard Anthony

Dr Ruth Charles

Dr Nicholas Holmes

Dr Alice Hutchings
 

Student members

Ms Priscilla Mensah (until 30 June 2016)

Mr Cornelius Roemer (until 30 June 2016)

Mr Chad Allen (from 27 November 2015)

Mr Amatey Doku (from 1 July 2016)

Ms Umang Khandelwal (from 1 July 2016)
 

External members

Mr Mark Lewisohn

Professor Dame Shirley Pearce

Mr John Shakeshaft (Deputy Chair)

Ms Sara Weller

The Chancellor, external members, student members, Professor Yates, Mr Laing, Professor Smith, Mr Caddick, 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 HEFCE under the Charities Act 2011. 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, and 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 Memorandum of Assurance and Accountability with 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 2016 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 Memorandum of Assurance and Accountability with 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 (the “University”)

Report on the financial statements


Our opinion

In our opinion, the University of Cambridge’s group financial statements and University financial statements (the “financial statements”):

• give a true and fair view of the state of the group’s and of the University’s affairs as at 31 July 2016 and of the group’s income and expenditure, 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.


What we have audited

The financial statements comprise:

• the group and University Balance Sheets as at 31 July 2016;

• the group and University Statements of Comprehensive Income for the year then ended;

• the group and University Statement of Changes in Reserves for the year then ended;

• the Consolidated Statement of Cash Flows 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 Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law (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.


Opinions on other matters prescribed in the HEFCE Audit Code of Practice 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 Memorandum of Assurance and Accountability, 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 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.


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.

We primarily focus our work in these areas by assessing the Council judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

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 222 to 231 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.

PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors
Cambridge
21 November 2016

(a)The maintenance and integrity of the University 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

General information

The Chancellor, Masters, and Scholars of the University of Cambridge (the University) is a common law corporation, governed by its Statutes and Ordinances together with applicable United Kingdom and European Union legislation. The University is a public benefit entity and an exempt charity subject to regulation by the Higher Education Funding Council for England (HEFCE) under the Charities Act 2011.

The contact address is: University of Cambridge, The Old Schools, Trinity Lane, Cambridge, CB2 1TN, UK.

The principal activities of the University and its subsidiary undertakings are teaching, research, and related activities which include: publishing services; examination and assessment services; the operation of museums, libraries, and collections; and the commercialization of intellectual property generated within the University.

Statement of compliance

The financial statements have been prepared in accordance with Financial Reporting Standard 102, The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland (FRS 102), including the public benefit entity requirements of FRS 102, and the Statement of Recommended Practice: Accounting for Further and Higher Education 2015 (the SORP).

The statement of comprehensive income 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 preparation

The financial statements have been prepared under the historical cost convention, as modified by the recognition of certain financial assets and liabilities measured at fair value.

The University has taken advantage of exemptions in FRS 102:

from preparing a statement of cash flows for the University, on the basis that it is a qualifying entity and the consolidated statement of cash flows, included in these financial statements, includes the University’s cash flows; and

from the financial instrument disclosures required under FRS 102 paragraphs 11.39 to 11.48A and paragraphs 12.26 to 12.29, in relation to the University, as the information is provided in the consolidated financial statement disclosures.

The preparation of financial statements requires judgement in the process of applying the accounting policies and the use of accounting estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable.

Basis of consolidation

The consolidated financial statements include the University and its subsidiary undertakings, details of which 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

Revenue

Income arising from the sale of goods or the provision of services is recognized in income on the exchange of the relevant goods or services. In particular:

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 services

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.

Investment income

Investment income is recognized in income in the period in which it is earned.

Grant income

All grant funding, including HEFCE grants, research grants, and capital grants, from government and other sources, is recognized in income when the University is entitled to the funding and any performance-related conditions have been met. Income received in advance of performance-related conditions being met is recognized as deferred income within creditors on the balance sheet and released to income as the conditions are met. 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.

Donations and new endowments

Donations and endowments are recognized in income when the University is entitled to the funds.

Donations are credited to endowment reserves, restricted reserves, or unrestricted reserves depending on the nature and extent of restrictions specified by the donor.

Donations with no substantial restrictions are included in unrestricted reserves.

Donations which are to be retained for the future benefit of the University are included in endowment reserves. 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.

Other donations with substantially restricted purposes are included in restricted reserves until such time as the restrictions have been met.

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 subsidiary undertakings 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 included in other comprehensive income. Otherwise, monetary assets and liabilities denominated in foreign currencies are translated into sterling at year-end rates and translation differences are included in income or expenditure.

Intangible assets and goodwill

Software development and acquisition costs are capitalized and amortized on a straight line basis over its estimated useful life of between four and ten years.

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.

Fixed assets

Land and buildings

The University has used the exemption in FRS 102 to measure operational land and buildings on the date of transition to FRS 102 at fair value and to use that fair value as deemed cost.

Operational land and buildings were valued as at 1 August 2014 by an external valuer, Gerald Eve LLP, a regulated firm of Chartered Surveyors. The valuation was prepared in accordance with the requirements of the RICS Valuation – Professional Standards, January 2014 amendment, FRS 102, and the SORP. The valuation was undertaken on a fair value basis, with specialized properties valued by reference to depreciated replacement cost and non-specialized operational properties valued on a fair value basis equating to market value on the assumption of a continuation of the existing use.

Operational land and buildings are included in the financial statements at their 2014 valuation as deemed cost, with subsequent additions at cost.

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 60 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. 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.

Investments

Non-current investments are included in the balance sheet at fair value, except for:

(a)investments in subsidiary undertakings which are stated in the University’s balance sheet at cost and eliminated on consolidation; and

(b)The North West Cambridge development, currently under construction, which is held at cost.

Other 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 realisable 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.

Pension costs

The University contributes to a number of defined benefit pension schemes for certain employees. A defined benefit scheme defines the pension benefit that an employee will receive on retirement, dependent upon several factors including length of service and remuneration.

(a)Where the University is unable to identify its share of the underlying assets and liabilities in a multi-employer 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. Where the University has entered into an agreement with such a multi-employer scheme that determines how the University will contribute to a deficit recovery plan, the University recognizes a liability for the contributions payable that arise from the agreement, to the extent that they relate to the deficit, and the resulting expense is recognized in expenditure.

(b)For other defined benefit schemes, the net liability recognized in the balance sheet in respect of each scheme is the present value of the defined benefit obligation at the reporting date less the fair value of the plan assets at the reporting date.

The defined benefit obligation is calculated using the projected unit credit method. Annually the University engages independent actuaries to calculate the obligation for each scheme. The present value is determined by discounting the estimated future payments at a discount rate based on market yields on high quality corporate bonds denominated in sterling with terms approximating to the estimated period of the future payments.

The fair value of a scheme’s assets is measured in accordance with the FRS 102 fair value hierarchy and in accordance with the University’s policy for similarly held assets. This includes the use of appropriate valuation techniques.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income. These amounts together with the return on plan assets, less amounts included in net interest, are disclosed as actuarial gains and losses.

The cost of the defined benefit plan, recognized in expenditure as staff costs, except where included in the cost of an asset, comprises the increase in pension benefit liability arising from employee service during the period and the cost of plan introductions, benefit changes, curtailments, and settlements. The net interest cost is calculated by applying the discount rate to the net liability. This cost is recognized in expenditure as a finance cost.

Segmental reporting

For the purpose of segment information presented in note 14, operating segments are defined on the basis of reports regularly reviewed by the Council, which is the University’s chief operating decision maker.

Statements of comprehensive income for the year ended 31 July 2016

Group

Year ended 31 July 2016

Group

Year ended 31 July 2015

University

Year ended 31 July 2016

University

Year ended 31 July 2015

Note

£m

£m

£m

£m

Income

Tuition fees and education contracts

263 

226 

250 

214 

Funding body grants

193 

204 

193 

204 

Research grants and contracts

469 

412 

462 

408 

Exceptional income: RDEC

54 

54 

Examination and assessment services

392 

367 

312 

303 

Publishing services

269 

266 

242 

237 

Donations and endowments

71 

58 

67 

60 

Other income

120 

112 

98 

97 

Investment income

21 

23 

18 

20 

Total income

1,799 

1,722 

1,643 

1,597 

Expenditure

Staff costs

10 

762 

765 

708 

710 

Other operating expenses

11 

862 

816 

751 

714 

Depreciation

11, 16

77 

69 

76 

68 

Interest and other finance costs

11, 12

33 

33 

33 

33 

Total expenditure

1,734 

1,683 

1,568 

1,525 

Surplus before other gains and losses

65 

39 

75 

72 

Gain on investments

18 

222 

329 

180 

267 

Surplus before tax

287 

368 

255 

339 

Taxation

13 

(3)

(12)

(2)

(13)

Surplus for the year

284 

356 

253 

326 

Other comprehensive income

Actuarial loss

25, 26

(182)

(13)

(182)

(13)

Gain / (loss) arising on foreign currency translation

10 

(4)

11 

(2)

Total comprehensive income for the year

112 

339 

82 

311 

Represented by:

Endowment comprehensive income for the year

27 

105 

152 

93 

130 

Restricted comprehensive income for the year

28 

66 

86 

66 

86 

Unrestricted comprehensive income for the year

(59)

101 

(77)

95 

112 

339 

82 

311 

Additional information:

Total income and surplus before other gains and losses 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 8, amounting to £73m (2014–15: £69m). The corresponding figures including these elements are:

Group

Year ended 31 July 2016

Group

Year ended 31 July 2015

University

Year ended

31 July 2016

University

Year ended

31 July 2015

£m

£m

£m

£m

Total income on a distribution basis

1,872

1,791

1,702

1,654

Surplus before other gains and losses on a distribution basis

138

108

134

128

Statement of changes in reserves for the year ended 31 July 2016

Endowment

£m

Restricted

£m

Unrestricted

£m

Total

£m

Group

Balance at 1 August 2014

1,262 

57 

2,585 

3,904 

Surplus for the year ended 31 July 2015

152 

86 

118 

356 

Other comprehensive income

– 

– 

(17)

(17)

Total comprehensive income for the year ended 31 July 2015

152 

86 

101 

339 

Release of restricted capital funds spent in the year ended 31 July 2015

– 

(62)

62 

– 

Balance at 31 July 2015

1,414 

81 

2,748 

4,243 

Surplus for the year ended 31 July 2016

105 

66 

113 

284 

Other comprehensive income

– 

– 

(172)

(172)

Total comprehensive income for the year ended 31 July 2016

105 

66 

(59)

112 

Release of restricted capital funds spent in the year ended 31 July 2016

– 

(68)

68 

– 

Balance at 31 July 2016

1,519 

79 

2,757 

4,355 

University

Balance at 1 August 2014

1,046 

57 

2,379 

3,482 

Surplus for the year ended 31 July 2015

130 

86 

110 

326 

Other comprehensive income

– 

– 

(15)

(15)

Total comprehensive income for the year ended 31 July 2015

130 

86 

95 

311 

Release of restricted capital funds spent in the year ended 31 July 2015

– 

(62)

62 

– 

Balance at 31 July 2015

1,176 

81 

2,536 

3,793 

Surplus for the year ended 31 July 2016

93 

66 

95 

254 

Other comprehensive income

– 

– 

(172)

(172)

Total comprehensive income for the year ended 31 July 2016

93 

66 

(77)

82 

Release of restricted capital funds spent in the year ended 31 July 2016

– 

(68)

68 

– 

Balance at 31 July 2016

1,269 

79 

2,527 

3,875 

Balance sheets as at 31 July 2016

Group

31 July 2016

Group

31 July 2015

University

31 July 2016

University

31 July 2015

Note

£m

£m

£m

£m

Non-current assets

Intangible assets and goodwill

15

75 

73 

74 

70 

Fixed assets

16

2,249 

2,080 

2,243 

2,075 

Heritage assets

17

65 

61 

65 

61 

Investments

18

2,904 

2,688 

2,440 

2,256 

5,293 

4,902 

4,822 

4,462 

Current assets

Stocks and work in progress

19

53 

55 

46 

47 

Trade and other receivables

20

368 

361 

369 

359 

Investments

21

242 

226 

694 

669 

Cash and cash equivalents

22

328 

342 

292 

312 

991 

984 

1,401 

1,387 

Creditors: amounts falling due within one year

23

(792)

(713)

(1,228)

(1,144)

Net current assets

199 

271 

173 

243 

Total assets less current liabilities

5,492 

5,173 

4,995 

4,705 

Creditors: amounts falling due after more than one year

24

(359)

(359)

(347)

(347)

Pension liabilities

25

(756)

(551)

(751)

(545)

Other retirement benefits liability

26

(22)

(20)

(22)

(20)

Total net assets

4,355 

4,243 

3,875 

3,793 

Restricted reserves

Income and expenditure reserve – endowment

27

1,519 

1,414 

1,269 

1,176 

Income and expenditure reserve – restricted

28

79 

81 

79 

81 

Unrestricted reserves

Income and expenditure reserve – unrestricted

2,757 

2,748 

2,527 

2,536 

Total reserves

4,355 

4,243 

3,875 

3,793 

The financial statements on pages 234 to 265 were approved by the Council on 21 November 2016 and signed on its behalf by:

Professor Sir Leszek Borysiewicz

Vice-Chancellor

John Shakeshaft

Member of Council

Andrew Reid

Director of Finance

Consolidated statement of cash flows for the year ended 31 July 2016

Group

Year ended

31 July 2016

Group

Year ended

31 July 2015

Note

£m

£m

Cash flow from operating activities

Surplus for the year

284 

356 

Adjustments for non-cash items:

Depreciation

11, 16

77 

69 

Amortization of intangible assets

15

23 

19 

Gain on investments

18

(222)

(329)

Decrease / (increase) in stocks and work in progress

(1)

Increase in trade and other receivables

(7)

(63)

Increase in creditors

21 

Revision of deficit recovery cost recognized in the year

10, 25

18 

62 

Other pension costs less contributions payable

25

– 

Other retirement benefit costs less contributions payable

26

– 

Receipt of donated assets

17

(3)

– 

Currency adjustments

11 

(3)

Adjustments for investing or financing activities:

Investment income

8

(21)

(23)

Interest payable

14 

13 

New endowments

6

(30)

(10)

Capital grants and donations

(109)

(94)

Gain on the sale of fixed assets

– 

Net cash inflow from operating activities

52 

20 

Cash flows from investing activities

Capital grants and donations

109 

94 

Proceeds from sales of fixed assets

– 

Proceeds of sales: North West Cambridge

20 

– 

Net disposal of other non-current asset investments

127 

117 

Net disposal of current asset investments

28 

34 

Investment income

8

21 

23 

Payments made to acquire intangible assets

(26)

(33)

Payments made to acquire fixed assets

(244)

(195)

Payments made to acquire heritage assets

(2)

(1)

Payments made re North West Cambridge development costs

(137)

(52)

Net cash outflow from investing activities

(102)

(13)

Cash flows from financing activities

New endowments

6

30 

10 

Interest paid

(14)

(13)

Capital element of of finance lease repayments

(1)

– 

Repayments of loans

(1)

(1)

Net cash inflow / (outflow) from financing activities

14 

(4)

(Reduction) / Increase in cash and cash equivalents in the year

(36)

Cash and cash equivalents at beginning of the year

330 

327 

Cash and cash equivalents at end of the year

294 

330 

Represented by:

Cash and cash equivalent assets

22

328 

342 

Bank overdrafts

23

(34)

(12)

294 

330